ANNUAL
REPORT
2017
Meaningful progress - Excited about the future
PAGE I
ANNUAL MAG AZINE 2017
PAGE II
ANNUAL MAGAZINE 2017
CREATING MEANINGFUL IMPACT
IN THE INTEREST
OF PATIENTS
Five years have passed since ProQR began on a quest. The initial quest to
find a treatment for CF evolved into a broader goal for patients that suffer
from rare diseases. This kick-started the mission of everyone at ProQR –
to create meaningful medicines for patients in need. We are putting
ground-breaking RNA technologies to work to develop medicines that
will transform the lives of patients with severe genetic disorders – and
their loved ones. Since the start of ProQR we have come a long way in
our strategy to create a well-diversified pipeline of medicine candidates
in several therapeutic areas. In this report, we tell you about how ProQR
progressed in 2017, by our discoveries and in our programs and trials.
our courage to do things differently
University of Colorado and during his
and challenge the status quo.
career has earned a global reputation
ACCOMPLISHMENTS –
A QUICK GLANCE
We can and will make a meaningful
for translating cutting-edge science
impact – changing the lives of
into transformational new therapies
Eluforsen (formely known as QR-010) for CF
patients. Be it in a small way –
for rare diseases including cystic fibro-
• Completed second trial for eluforsen
by improving one’s quality of life.
sis, pulmonary fibrosis, pulmonary
• Announced positive data from
Or in a big way – by stopping
artery hypertension, severe immuno-
Phase 1b safety and tolerability study
a disease or by curing patients.
logic, and inflammatory diseases.
• Received FDA Fast Track designation
and Orphan Drug Designation (ODD)
At ProQR, we do it all in the interest
Dave is excited to be part of ProQR’s
in US and Europe
of patients. We’re driven, deter-
management team: “ProQR has
• Granted two key patents
mined, excited to make this differ-
a patient-centric culture committed
ence. Today, tomorrow and more
to transforming lives. Applying our
QR-110 for LCA 10
days to come, until we get it right.
RNA editing platform to precision
•
IND clearance from FDA and
medicine in hereditary forms of
commenced Phase 1/2 safety and
Building ProQR
blindness, dystrophic epidermolysis
efficacy trial
In 2017, we made important strides
bullosa, cystic fibrosis and other
• First patient in trial dosed in late 2017
in ProQR’s growth. We intensified our
rare genetic diseases will change the
• Received FDA Fast Track designation
efforts to become a robust, diversi-
way we think about advanced drug
• Presented positive preclinical proof of
fied company with a wide array of
discovery and development.”
concept data at key scientific conference
potential new medicines focused in
the areas of ophthalmology, debilitat-
The sad news of 2017 was the
QR-313 for DEB
ing skin diseases and cystic fibrosis.
passing away of Henri Termeer.
• Completed IND-enabling studies
We understand that we need every
Henri, who was our co-founder and
• Presented positive preclinical data
bit of talent, knowledge, experience
vice chairman of our Supervisory
at two European scientific meetings
and guidance to be successful and
Board, died at age 71 at his house
• Received ODD in US and Europe
we were happy to welcome new col-
in Marblehead, MA. The magazine
leagues in many departments. ProQR
is dedicated to his legacy.
Axiomer® RNA-editing platform
also welcomed Dr. Phil Zamore,
Dr. Cy Stein, Dr. Scott Armstrong
Spin-out of Amylon Therapeutics
• Presented in vivo proof of concept
•
Introduced new Axiomer® technology
and Dr. Thaddeus (Ted) Dryja to its
Since its inception in 2012,
data at two scientific meetings
Scientific Advisory Board. All are
ProQR has invested significantly
well-regarded in their respective
in discovering and developing
QR-421a and QR-411 for Usher syndrome 2A
fields and bring with them a wealth
innovative RNA therapies for severe
• Presented positive data for QR-421a
of knowledge and experience that
rare diseases. This has led to an
and QR-411
will help us to further build and
extensive pipeline of discovery
• Received ODD for QR-421a and
advance our pipeline.
and development programs.
QR-411 for US and Europe
From the start, ProQR has broad-
Fuchs endothelial corneal dystrophy,
One of our new faces is Dr. David
In 2017, one of these programs that
Created Amylon Therapeutics
ened its focus from CF to other
Stargardt’s disease and dystrophic
Rodman. As our new Executive
focused on CNS disorders was spun
as privately-held CNS focused company
areas, as we have seen the potential
epidermolysis bullosa.
Vice President Research and
out into a new company we created:
of RNA science for a range of rare
Development, Dave oversees all
Amylon Therapeutics. Amylon em-
Welcomed David Rodman
genetic diseases. Building on the
As the results from the clinical trials
clinical development at ProQR.
barked on a promising future, with
ProQR’s Executive Vice President
promise that RNA holds, we have
suggest we can change lives, we
He previously served in leadership
funding from a group of institutional
Research and Development
come to think bigger over the years.
are more energized than ever to
roles with Novartis Institutes for
and private investors. Amylon is
Our growing pipeline of therapeu-
complete our mission. The positive
Biomedical Research (NIBR) and
developing therapeutics for a rare
Advisory Board Members
tic candidates target other severe
findings on safety and efficacy is
Vertex Pharmaceuticals.
genetic brain disease. ProQR retains
disorders such as Leber’s congenital
building momentum, feeding our
Prior to moving into industry in
a majority ownership stake and
amaurosis, Usher syndrome,
passion, our impatience. It builds
2005, Dave led the Center for
remains involved through member-
Appointed several new scientific
advisory board members
Genetic Lung Diseases at the
ship on the Boards.
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ANNUAL MAGAZINE 2017
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ANNUAL MAGAZINE 2017
As you will read on the next pages, the advancements made in ProQR’s
research and development pipeline were significant. The good news
comes from all areas and programs, from cystic fibrosis to ophthalmology
and from dystrophic epidermolysis bullosa to the launch of our
next-generation Axiomer® RNA technology platform.
Encouraging
signals that
CF patients
can BENEFIT
from taking
eluforsen
ProQR’s eluforsen (QR-010)
program for cystic fibrosis (CF)
ProQR’s Ophthalmology
programs
In 2017, we were excited to com-
In 2017, the investigational new
plete and announce positive results
drug (IND) application for QR-110,
of our second global trial for
ProQR’s lead program in ophthal-
eluforsen in CF patients with
mology, was cleared by the FDA
the F508del mutation.
to start a safety and efficacy clinical
trial in both adults and children with
The Phase 1b trial showed that
LCA 10. LCA 10 is one of the most
eluforsen was safe and well-
common types of genetic blindness.
tolerated across all dose levels
The Phase 1/2 trial commenced in
and we saw encouraging signals
2017. In November, the first patient
that CF patients can benefit from
was dosed in the Phase 1/2 open-
taking eluforsen. Most patients in
label trial in patients with LCA 10.
the trial who received eluforsen
Six-month treatment data is expect-
reported having a reduction in
ed in 2018 and 12-month treatment
CF respiratory symptoms.
data in 2019.
In November, the data was
Progress was made in ProQR’s
presented at the North American
QR-421a preclinical program for
Cystic Fibrosis Conference (NACFC)
Usher syndrome 2A caused by an
in Indianapolis, Indiana. During
exon 13 mutation. Usher syndrome
the conference, ProQR held an
is the leading cause of combined
investor and analyst event at which
hearing loss and blindness. Patients
Dr. Stuart Elborn discussed the
with Usher syndrome 2A gener-
recent Phase 1b data and company
ally progress to a stage in which
management provided an update
they have very limited central and
on other candidates in the pipeline.
peripheral vision and moderate to
Also, new opportunities were
severe deafness. QR-421a received
discussed to potentially target
ODD in the US and Europe and is
other CF mutations which currently
expected to advance to the clinic
have no available therapies.
in late 2018, with data anticipated
in 2019. Our QR-411 candidate
Another milestone in 2017: ProQR
also for Usher syndrome but for
was granted two key patents
a different mutation, received ODD
protecting eluforsen in the US
in the US and Europe. QR-411 is
and Europe.
expected to follow behind QR-421a
into clinical development.
SOLID PROGRESS ON OUR MISSION TO
CREATE LIFE-
CHANGING
MEDICINES
FOR PATIENTS
IN NEED
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ANNUAL MAGAZINE 2017
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ANNUAL MAGAZINE 2017
RESEARCH AND DEVELOPMENT PIPELINE – DECEMBER 2017
Ophthalmology
DISCOVERY
DISCOVERY
PRECLINICAL DEVELOPMENT
PRECLINICAL DEVELOPMENT
PROOF OF
PROOF OF
CONCEPT TRIALS
CONCEPT TRIALS
LATE STAGE/
LATE STAGE/
REGISTRATION TRIALS
REGISTRATION TRIALS
QR-110 for LCA 10 p.Cys998X
QR-421a for Usher syndrome 2A exon 13
QRX-504 for FECD
QR-411 for Usher syndrome 2A PE40
QRX-1011 for Stargardt’s disease c.5461-10T>C
Dystrophic Epidermolysis Bullosa
DISCOVERY
PRECLINICAL DEVELOPMENT
PROOF OF
CONCEPT TRIALS
LATE STAGE/
REGISTRATION TRIALS
QR-313 for DEB exon 73
QRX-323 for DEB exon 80
QRX-333 for DEB exon 3
Cystic fibrosis
DISCOVERY
PRECLINICAL DEVELOPMENT
PROOF OF
CONCEPT TRIALS
LATE STAGE/
REGISTRATION TRIALS
Eluforsen (QR-010) for F508del
QRX-042 for W1282X
QRX-036 for G542X
QRX-052 for R553X
QRX-065 for 621+1G>T
QRX-075 for 1717-1G>A
Partially owned programs
DISCOVERY
PRECLINICAL DEVELOPMENT
PROOF OF
CONCEPT TRIALS
LATE STAGE/
REGISTRATION TRIALS
Fibrosis (undisclosed target) - Partnered with Galapagoss
Fibrosis (undisclosed target) - Partnered with Galapagos
Amylon Therapeutics - AT-010 for HCHWA-D
For the latest developments in our pipeline visit proqr.com/pipeline
Our talented
scientists
found a way
to make
SINGLE
NUCLEOTIDE
CHANGES
to RNA
We can also report progress in
Axiomer® platform
other ophthalmology preclinical
In 2017, ProQR introduced its
candidates, such as QRX-1011 for
completely novel Axiomer® platform
Stargardt’s disease and QRX-504
technology. Our talented scientists
for Fuchs endothelial corneal
found a way to make single
dystrophy (FECD).
ProQR’s program for DEB
In 2017, ProQR’s teams invested
nucleotide changes to RNA, which
can potentially treat over 200,000
genetic defects causing diseases.
time and effort into QR-313 for
Axiomer® technology was intro-
dystrophic epidermolysis bullosa,
duced in 2017 at the second annual
a rare genetic disease that can lead
ProQR’s R&D Investor Day in
to severe blistering, a poor quality
New York, and we validated this
of life and limited life expectancy.
technology with the presentation of
QR-313 also received ODD in the
in vivo proof of concept of the plat-
US and Europe during the year.
form at two scientific conferences.
Promising preclinical data were
presented at two scientific meet-
During 2018 and beyond, we plan
ings. A Phase 1/2 safety and efficacy
to build out our Axiomer® platform
clinical trial of QR-313 in DEB
in select therapeutic areas and
exon 73 patients is planned to
pursue strategic relationships to
begin in 2018. The trial is called
validate and enhance the value of
WINGS. Interim data is expected to
the technology.
be obtained in 2018 and full data is
anticipated in 2019.
WHAT’S NEXT – MILESTONES PLANNED FOR 2018 AND ONWARDS
ELUFORSEN
FOR CYSTIC
FIBROSIS
F508del
• Start Phase 2
program subject
to a partnership
QR-110
FOR LEBER’S
CONGENITAL
AMAUROSIS 10
QR-313 FOR
DYSTROPHIC
EPIDERMOLYSIS
BULLOSA
QR-421a
FOR USHER
SYNDROME
TYPE 2A
AXIOMER®
AXIOMER®
TECHNOLOGY
TECHNOLOGY
• 6-month
• Phase 1/2 clinical
• Towards the
• Develop platform
treatment data
WINGS trial to
clinic in 2018
into select
in 2018, 12-month
start in 2018
• Safety and efficacy
therapeutic areas
treatment
• First safety and
data in 2019
• Pursue strategic
results in 2019
efficacy data
• Complete Phase 1/2
in 2018, full
safety and efficacy
data in 2019
clinical trial
relationships
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ANNUAL MAG AZINE 2017
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ANNUAL MAGAZINE 2017
“The
AXIOMER®
platform is
a completely
novel
technology”
Arthur Levin, ProQR’s Scientific
Advisory Board Member
Six approved therapeutics
Based on the RNA modification
The potential of Axiomer®
platform
principle, scientists have fine-tuned
This is how Arthur Levin, ProQR’s
and developed several first in class
Scientific Advisory Board Member,
RNA therapeutics to help patients
explained the potential of the
with unmet needs. Until now, six
Axiomer® platform in an inter-
therapeutics have been approved,
view with Drug Discovery &
and twenty are currently in late
Development: “The siRNA world
state development. In the approx-
and antisense world are trying
imately 25 years since RNA thera-
to chop up the messenger RNA
peutics were first discovered, a lot
or tear up the blueprint copy of
of knowledge has been gathered in
the DNA that is messenger RNA
the field on stabilization, delivery,
and stop it from being translated.
potency and mechanisms of action.
The Axiomer® technology actu-
ally allows for the translation but
An exciting new mechanism of
it changes the blueprint for that
action was invented at the ProQR
protein slightly. What the Axiomer®
labs. Axiomer® technology is a novel
technology allows you to do is if you
way to edit the RNA, and replace
know the sequence of a particular
individual nucleotides, opening
gene and where you want it to be
up the door to potentially treating
edited you can produce the specific
thousands of genetic defects that
edit at the exact spot that you want
are currently untreatable.
it at. That is a completely novel tech-
nology as far as I know.”
ProQR RNA MEDICINE PLATFORM
(human cell)
Healthy
Protein
Disease
No (functional)
protein
Treated
Protein
RNA
RNA
Mutation
RNA
EON
DNA
Cell nucleus
DNA
Cell nucleus
DNA
Cell nucleus
BUILDING ON
THE PROMISE
OF RNA
Since the discovery of RNA technology to treat disease, the technology has
come a long way. RNA tech is emerging as a source of new important therapies.
The latest move forward in this field has sparked excitement in the scientific
community. The new editing platform – Axiomer® technology – enables us to
make single nucleotide changes to RNA in a highly specific and targeted way.
What brought us there in the past 20 years? And what does it contribute to
the search for drugs for rare genetic diseases?
At its foundation, ProQR embraced
Genetic diseases are caused by
can repair the defects in the RNA
the RNA modification technology
a defect in our genes, our DNA.
with editing oligonucleotides
for cystic fibrosis that was dis-
These broken genes cause down-
(EON’s) to address the underlying
covered by a scientist from the
stream effects on the proteins
cause of a disease.
Massachusetts General Hospital.
which cause the diseases. To make
Building on that initial technology,
proteins, our cells make a copy of
ProQR engaged several other ways
our genes, called the RNA, which
to modify the RNA for other genetic
functions as the blueprint for
mutations that cause disease.
proteins. ProQR’s technologies
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ANNUAL MAG AZINE 2017
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ANNUAL MAGAZINE 2017
ProQR’s
FOCUS
ProQR is focused at three disease area’s:
ophthalmology, debilitating skin diseases and CF therapies
Ophthalmology
impaired and, depending on the
QR-313 for the estimated 2,000
There are over 500 severe genetic
mutation, complete loss of vision
DEB exon 73 patients.
eye disorders that currently have
occurs during early childhood.
very limited treatment options.
ProQR’s QR-110 candidate, a po-
Cystic fibrosis
There are several RNA based thera-
tentially life changing therapy, is for
Cystic fibrosis (CF) is a genetic
pies approved for eye diseases and
the approximately 2,000 patients
disease that causes early morbidity
we believe our technology can be
with LCA 10 due to the p.Cys998X
and mortality. CF currently has no
translated into an important drugs
mutation in the CEP290 gene.
cure. The median age of death for
for multiple eye diseases.
CF patients is 30 years or less, and
Debilitating skin diseases
more than 90% of CF patients
Beyond ProQR’s program for
One of the debilitating skin dis-
die from respiratory failure.
Leber’s congenital amaurosis,
eases that ProQR is focused on is
To date, all but two of the therapies
we are also working on programs
epidermolysis bullosa (EB). This is
approved to treat CF patients are
for other ophthalmic indications
a group of rare genetic diseases
designed to treat the symptoms of
that include Usher syndrome,
of which dystrophic EB (DEB) is
CF rather than address the under-
Fuchs endothelial corneal
one of the most severe forms.
lying cause. CF is caused by muta-
dystrophy and Stargardt’s disease.
The hallmark of the disease is
tions in the gene that encodes for
severe blistering and wounds that
a protein called cystic fibrosis trans-
Leber’s congenital amaurosis (LCA)
result from minimal friction. There
membrane conductance regulator,
is the most common genetic cause
is currently no treatment available
or CFTR. Although there are more
of childhood blindness. LCA leads to
for DEB. Patients have a limited life
than 1,900 different genetic mu-
poor vision and blindness for which
expectancy and low quality of life.
tations that cause CF, the F508del
there is currently no approved
Children with DEB are often called
mutation that we are targeting with
treatment. The disease usually
‘Butterfly children’ as their skin is
our eluforsen candidate is the most
appears in the first year of life and
as fragile as the wings of a but-
prevalent and is present in about
is characterized by progressive loss
terfly. We are developing several
65,000 patients, representing 85%
of vision. In some cases, patients
programs for different mutations
of the 77,000 CF patients in the
eventually become severely visually
causing DEB including lead program
Western world.
142
ProQRians
Average age
37yrs
Gender
45%
55%
Nationalities
30
PAGE XI
ANNUAL MAGAZINE 2017
PAGE XI I
ANNUAL MAGAZINE 2017
DR. PETER ADAMSON, ProQR’S SENIOR
VICE PRESIDENT OPHTHALMOLOGY FRANCHISE
NAVIGATING AN
IMPROVEMENT
IN VISION
ProQR has a promising pipeline in ophthalmology programs that is built
on RNA technology. According to Dr. Peter Adamson, ProQR’s Senior
Vice President Ophthalmology Franchise, RNA may eventually help fulfill
the ultimate ophthalmology promise that seems outrageously optimistic:
to make blind people see again. In this interview Dr. Adamson expresses
his reasons for optimism and the advancements in ProQR’s quest.
“We can
potentially
MAKE
PEOPLE
SEE again”
College London and a career in big
normal in the important central
Adamson’s strong belief in the
pharma, where I had experienced
(macular) region – contrary to some
success of the clinical trials in
the potential of RNA oligonucleotides
other diseases where the tissue is
the QR-110 program is based on
in ophthalmology, I was thinking of
already degenerated. The tissue in
the clear proof of the mechanism
retiring. Then ProQR came along,
the center of the eye is normal, but it
of action for the drug. “We know
offering me a job that was all about
does not work due to a single genetic
how it works, the proof of concept
what I wanted to do. To me, one
mutation in both copies of an
is clear. In our labs we work with
of ProQR’s attractions was the RNA
important gene. We treat the tissue
very sophisticated models, allowing
oligonucleotide angle. I am con-
to make it work. In the ongoing clin-
us to grow so called ‘optic cups’.
vinced that RNA oligonucleotides
ical trial, we treat eyes of both adult
These optic cups are created from
will ultimately lead us to good thera-
populations and children between
patient skin cells that are handled
pies and drugs.”
6 and 18 – with less degraded retinas
to differentiate to create a human
and, hence, with a better chance of
retina. We have shown that when
“The great thing about how RNA can
improving functions in the retina.”
we add the RNA oligonucleotide
work for retinal diseases is that you
don’t need to worry about how to
Light, contrast or shapes
to the optic cups, we can repair
the gene defect that basically
get it where it needs to be, and
The goal of the trial is to see that
causes LCA 10. We did that on
how long it stays there, and this
the treatment is safe, and if it can
a molecular level; we now want to
appears independent of the tar-
offer patients more light perception,
show the tangible clinical benefits –
geting sequence. When we inject
more contrast sensitivity, or even
improvements in navigation or
synthetic oligonucleotides in the eye,
shape identification. “The slight-
vision – in patients.” This optic cup
we know it reaches all the cellular
est improvement would be very
model is also applied in our other
layers of the eye. We can deliver it
meaningful, as it would improve
retina programs.
there and it stays there for a predict-
patients’ navigation around every-
able time.” So you only need to
day objects, which is important for
One particular pro of the QR-110
worry about the potency and show-
them, and hence, their quality of life.
drug is its long half-life. Adamson:
Peter Adamson, ProQR’s Senior Vice
Adamson and his team at ProQR are
ing the drug does what is supposed
Potentially, we may be able to do
“It works and lasts a long time in
President Ophthalmology Franchise,
developing medicines for ophthalmic
to do. Consequently, two main rea-
more. The medicine we work on is
the eye. We expect that the num-
is passionate about the development
indications like Leber’s congenital
sons why drugs fail, are a low risk for
meant to be restorative instead of
ber of injections a patient will need
of RNA oligonucleotide drugs, which
amaurosis 10 (LCA 10), Usher
RNA therapeutics in the eye.
just slowing the rate of decline,
to get results will be low. We are
can modify RNA to treat severe inher-
syndrome, Stargardt’s disease
we hope to improve these measures
currently testing administrations
ited retinal diseases. He believes that,
and Fuchs endothelial corneal
What are the chances for the
of visual function. The otherwise
every three months, but maybe
with RNA technology, ProQR will be
dystrophy (FECD).
QR-110 program for LCA 10? “There
normal tissue of a LCA 10 patient is
six months could be sufficient.
able to develop an important class of
are about 20 types of LCA. Children
lacking a functional gene. As we are
This would be less burdensome
drugs for a number of the more than
Contribution to ophthalmology
with LCA type 10, the type we focus
able to repair this, we can potentially
to patients, their care-givers and
500 severe genetic eye disorders that
“After an extensive period as
on, are born with very poor or no
make people see again. The clinical
hospital systems than other drugs
currently have very limited treatment
Professor of Molecular Pathology
vision. The good thing is that the
trials will need to tell us if this claim
administered monthly.”
options. Powered by this belief,
(Ophthalmology) at University
anatomy of their eye is relatively
is even remotely feasible.”
PAGE XIII
ANNUAL MAG AZINE 2017
OPHTHALMOLOGY PROGRAMS
Leber’s congenital
amaurosis
QR-110
Lose sight in
first years of life
~2,000
LCA 10 due to
p.Cys998X
in CEP290
Locally
administered in
the eye. Routine
intravitreal
procedure
Anticipated
infrequent dosing
of 4 times a year
or less
PAGE XI V
ANNUAL MAGAZINE 2017
Restore vision/
prevent vision loss
in patients with
LCA 10
Usher syndrome
QR-421a and QR-411
Develop hearing and vision loss
in late childhood and turn com-
pletely blind by mid adulthood
Fuchs endothelial
corneal dystrophy
QRX-504
Blurred vision, visual acuity
reduction with middle-age onset
Stargardt’s disease
QRX-1011
Severe reduction of central
vision. First symptoms present
in first/second decade of life
Mutations in
exon 13 of USH2A
affect ~16,000
patients in the
Western world;
The PE40 mutation
affects ~1,000
patients in the
Western world
75% of FECD
patients in the
Western world
have repeat
expansion in TCF4,
however it is a
global disease
~7,000 patients in
the Western world
with c.5461-10T>C
in ABCA4
Progress in 2018
What is interesting about
What does 2018 have in store?
Stargardt’s disease and FECD is
“For QR-110, we plan to acquire
that tens of thousands of patients
the interim analysis data of the
suffer from it. Both diseases are
ABOUT DR. PETER
ADAMSON
12-patient clinical trial, after the
inherited. Both are part of a whole
Dr. Peter Adamson is an authority
majority of the LCA 10 patients have
new category of diseases in which
in the area of ophthalmology.
had six months of treatment. In the
we, at ProQR, can find treatments.
Over the years, he has authored
meantime, our other ophthalmology
We hope to advance these pro-
over 100 peer-reviewed scientific
programs are moving forward.
grams forward in 2018 – we are
publications in the domains
Two are focused on Usher syndrome
eager to move on!”
type 2A (QR-421a and QR-411).
of inflammation, ophthalmology
and neurology and retains an
For QR-421a we plan to complete
Which brings Peter Adamson back
honorary appointment at UCL,
the preparations for clinical trials
to his earlier remark about moving
Institute of Ophthalmology
in 2018. We also have two other
from the large business-oriented
where he is Professor of Molecular
projects that are still in the lead
pharmaceutical enterprises to
Pathology (Ophthalmology).
generation phase, in which no lead
a company like ProQR. “With ProQR,
Before joining ProQR in 2015,
molecule has yet been chosen:
I definitely work in a more scientific
he was Vice President and Head
QRX-1011 for Stargardt’s disease
and medical environment. This is
of Discovery Ophthalmology
and QRX-504 for Fuchs endothelial
an inventor’s company that puts the
Research at GlaxoSmithKline.
corneal dystrophy (FECD).
care for patients first.”
PAGE XV
ANNUAL MAG AZINE 2017
Photo LCA Family
PAGE XV I
ANNUAL MAGAZINE 2017
When someone watches Cristian, Silvia and their kids Edoardo (age 6)
and Beatrice (age 2) they look like the ideal, happy family. When asked,
the parents insist they are, in many ways. The fact that Beatrice,
the chatty girl playing in a ball bath, is a child with Leber’s congenital
amaurosis, does not change that.
“For us,
LCA 10
CHANGED
OUR LIVES
very much”
The family, living in Rome, have left
For many days and nights, I looked
troublesome times behind them.
in all corners of the Internet,
Now that little Beatrice has been
searching for clues. I was puzzled
diagnosed to have the rare genetic
and frightened by the idea that
disease that made her blind, a pe-
doctors seemed to be in the dark.
riod of tears and sleepless nights,
Some were quick to encourage us
of frequent and multiple-day visits
to accept that our daughter would
to hospitals has come to an end.
never be able to see. As if they
The news (“your daughter has LCA”)
wanted us to accept and get over it
was devastating, but at least the
as quickly as possible.”
uncertainty was over.
Theories ruled out one by one
Cristian explains in a mild, rational
Many different theories – from
tone: “A non-functioning protein is
‘delayed vision maturation’ to ‘ret-
causing our daughter’s blindness.
inoblastoma’ to ‘neuroblastoma’ –
This protein is supposed to help
were ruled out one by one. Finally,
the development of cilia in the
one doctor concluded that Beatrice
photoreceptor cells in the retina.
must be one of the few patients in
Beatrice’s protein doesn’t work –
the world that suffer from a rare
causing subsequent retinal
genetic disease that is known as
degeneration in her eyes.”
Leber’s congenital amaurosis.
Something unusual
While looking at Beatrice immersed
While Beatrice is her happy self,
in her play, wearing glasses to help
singing songs and playing with
protect her eyes, mother Silvia
Edoardo in a kids’ ball bath, Silvia
ponders about her daughter’s
recalls, “At birth, Beatrice looked like
life. “She does not understand the
a happy, normal baby. Soon I no-
concept of seeing – hence she is
ticed something unusual. I couldn’t
not unhappy, not knowing what she
make eye contact with Beatrice
is missing out on. She sort of feels
the way I had with Edoardo, when
and hears her way around her little
he was her age. As a mother, I knew
world. In darkness, but unaware of
instantly that something was
what having sight means. One of
wrong”, says Silvia.
our big fears is that sooner or later
she will realize she has a different
It was the start of months of
perception of the world, she will
hospital visits, first in Rome, later
understand she is missing some-
in Florence and even London.
thing. She’s already puzzled when
Cristian: “As a father, the idea of
we discover a nearby dog that didn’t
not knowing what was wrong with
bark. Beatrice is asking questions
my daughter was unbearable.
we don’t know how to answer:
LIVING WITH BLINDNESS, HOPING FOR A CURE
WELCOME
TO THE HAPPY
WORLD OF
BEATRICE
PAGE XVII
ANNUAL MAG AZINE 2017
“She sort
of FEELS
AND HEARS
her way
around her
little world”
PAGE XV III
ANNUAL MAGAZINE 2017
“Daddy, I want to make a small
will go to a regular primary school
In the meantime, Beatrice has
painting like Edoardo” or “Edoardo,
that will support her in growing up.”
come out of the ball bath. She
how was the movie at the cinema
stomps her feet and makes small
yesterday? Why can’t I come with
“Edoardo had a tough period, find-
smacking sounds with her mouth.
you?” And every time we hold our
ing out about Beatrice’s condition.
‘Echo location’, Cristian points out.
breath and fall silent. We don’t
He is very protective of her, making
“She is trying to ‘hear’ her location
know if she will ever be able to
sure that she does not fall”, Silvia
and the size of the room, very
create a painting or to watch
adds. Cristian, suddenly smiling as
much in the way dolphins do.
a movie, and deep in our hearts we
he remembers something funny:
As with many children, she devel-
hope a cure will make it possible,
“He is aware of her handicap and is
ops the use of her other senses at
but the pain we experience forces
very accommodating. When he
an extremely high pace. Some blind
us not to hope too much.”
notices she wants to give him
children advance slowly and even
She plays, sings and learns
Cristian insists that Beatrice is an
a playful punch, he comes closer
develop autistic features, but not
to make it easier for her.”
Beatrice. She is doing wonderfully”,
promising. That is how I quickly
what she is missing. She may
Good news
her proud, smiling father says.
found ProQR and recently met its
understand later. For us, LCA 10
Waiting for good news from Leiden,
easy, happy child, and seems to
Embracing life
founder, Daniel de Boer and the
changed our lives very much.
The Netherlands, or from any
be developing in some ways faster
Beatrice will have to learn life, “and
On the lookout for treatments
LCA team. They answered our ques-
We are still adapting to the new
other research center in the world,
than other children her age that
we will need to accept her condi-
The genetic tests results that
tions about the ongoing first clinical
situation and we keep giving all the
Beatrice’s parents will try to teach
can see. “She does need care, more
tion in some way”, Cristian is quick
ended the search for the expla-
trial of QR-110 for LCA 10. Beatrice
love we have.” The Rengo family
her to live a full life. “She will defi-
than a sighted child does. We, our
to add. “Fortunately, we found
nation and the cause of Beatrice’s
is too young to enroll in ProQR’s
plans ahead. “Beatrice likes biking
nitely learn braille, have an educa-
nanny and Beatrice’s grandparents
a wonderful life coach, for Beatrice
blindness, did not end the quest of
current study, we’ll be closely
and swimming, but she absolutely
tion and grow up being the happy,
are happy to provide this and lead
and for us. She is a blind psycholo-
Cristian and Silvia Rengo. “We are
watching how it advances.”
loves skiing.” Cristian: “I carry her
lovely Beatrice she already is”,
a normal life as a working family.
gist, living in Rome. She is the most
always on the lookout for treat-
in a special backpack. At age five,
Christian insists. “We will be there
Beatrice goes to a regular kinder-
active and outgoing person in the
ments that may – one day – make
Although Cristian and Silvia – both
she will be able to learn for herself,
for her, be her parents. And pray
garten supported by an additional
world, who loves motorbikes and
Beatrice see. I reached out to
highly-educated professionals
at a specialized ski school in the
for a cure, preferably sooner than
teacher, where she fits in wonder-
scuba diving – she is the embodi-
almost every LCA 10 expert in the
working in management consulting –
Dolomites. We look forward to that.”
later. Hope? Yes, of course. But we
fully with all the other kids.
ment of ‘embracing life’ and is
world. I keep track of scientists,
Every day she plays, sings and learns
a great support for all of us.”
researchers, institutes and compa-
to deal with other kids. Later, she
nies that may be on to something
passionately wish their daughter to
be able to see someday. “I am aware
that she currently does not know
don’t want to get disappointed.
Therefore, we are careful not to
hope for too much.”
PAGE XIX
ANNUAL MAG AZINE 2017
PAGE XX
ANNUAL MAGAZINE 2017
DR. TED DRYJA JOINS
SCIENTIFIC ADVISORY BOARD
“PUTTING
KNOWLEDGE-
BASED
CREATIVITY
TO WORK”
Dr. Ted Dryja joined the ProQR’s Scientific Advisory Board (SAB)
in November. The American pioneer in the field of retinal genetic diseases
brings a wealth of knowledge and experience to the table. At age 66
and after a series of important discoveries in his long career, Dr. Dryja
joined ProQR’s SAB to help push the organization forward. “I am excited
about what RNA technology may have in store for the development and
advancement of ProQR’s ophthalmology and other pipelines.”
Dr. Dryja is an ophthalmologist
the Global Head of Ophthalmology
with subspecialty training in
Research at the Novartis Institutes
ocular pathology and molecular
for BioMedical Research.
genetics. He is a member of the
faculty at the Massachusetts Eye
Hereditary ocular diseases
and Ear Infirmary and a professor of
Dr. Dryja, a member the U.S. National
ophthalmology at Harvard Medical
Academy of Sciences, is one of the
School. He previously served as
country’s most successful scientists
“Seeing
PATIENTS
and learning
about their
experiences
is crucial”
in the area of molecular genetics of
the relevance of the work he did for
hereditary ocular diseases. Digging
Novartis, as the Head of Research.
deeper into the 22-page résumé,
we find many accomplishments.
“I was responsible for selecting the
When asked for the feat that he is
drug targets, but also for leading
most proud of, Dr. Dryja answers:
the team that developed drugs or
“I am proud of finding compelling
gene therapies for those targets
evidence for the recessive nature
and for testing them in phase 1 and
of oncogenic mutations at tumor
phase 2 trials. From that period,
suppressor genes like the retino-
I hope that experience will allow me
blastoma gene – that was in 1983.
to substantially contribute to the dis-
Another major step was the identi-
covery of new therapies for genetic
fication and cloning of the retino-
defects and especially on how to
blastoma gene – one of the first
efficiently and safely test them in
human genes ever cloned based
early clinical trials. I look forward to
only on its chromosomal location.”
the discussions with the company
and other members of Scientific
“I also was the first to discover a gene
Advisory Board about ProQR’s
responsible for nonsyndromic retini-
current and future course. I feel hon-
tis pigmentosa. That first identified
ored to help fuel ProQR’s ongoing
gene was the rhodopsin gene,
quest in the ophthalmology area.”
and it turned out to account for
about 10% of all cases of retinitis
RNA, a whole new category
pigmentosa. Over the years, my
What is Dr. Dryja’s opinion on what
group subsequently identified 15
RNA technology can do for ophthal-
other genes responsible for forms
mic indications and the potential
of retinal degeneration and retinal
for therapeutics? “Pharmaceutical
dysfunction.” As this is one of the
companies have traditionally relied
areas that ProQR is working on,
on small molecule drugs based on
Dr. Dryja feels ‘at home’ with the
hydrocarbon scaffolds. Twenty to
Dutch-based biotech company.
30 years ago antibody and other
“I feel very comfortable in my new
large protein drugs were added to
role in this company. I discovered
the pharmaceutical armamentarium.
or intensively evaluated some of
RNA drugs represent a new platform
the genes the scientists of ProQR
for drugs as well as a new category
are currently working on.”
of drug target. ProQR is exploring
Developing RNA-based
therapeutics
The discoveries and other mile-
the exciting area of RNA-based
drugs, and for some diseases, could
turn out to be the optimal platform.”
stones underline the massive exper-
Though the technology leads to
tise Dr. Dryja brings to ProQR’s SAB.
promising findings, Dr. Dryja knows
ProQR expects this expertise to be
from his own experience that finding
of substantial value as the company
new RNA leads will be very challeng-
continues developing its RNA-based
ing and sometimes discouraging.
therapeutics for a growing number
“I also found that seeing patients and
of ophthalmic indications. When
learning about their experiences is
asked about the areas in which he
crucial to maintaining ones energy
intends to contribute, he points out
and motivation. It also provides clues
PAGE XXI
PAGE XXI
ANNUAL MAG AZINE 2017
Magazi ne
ANNUAL REPORT 2016
PAGE XXII
ANNUAL MAGAZINE 2017
as to the best approaches to early
in the past to scientists working
ProQR’s Scientific Advisory
clinical trials because one can learn
on therapies. And we are now
Board, which is chaired by Gerard
what symptoms or signs of a disease
living in a society in which phar-
Platenburg, Chief Innovation
are most important to patients and
maceutical and biotech companies
Officer of ProQR (pictured on the
will be most likely to change when
have the economic motivation to
right), now consists of six members:
a new therapy is started.”
spend millions to dig deeper and to
Drs. Art Levin, Annemieke
Aartsma-Rus, Phil Zamore, Cy Stein,
Exciting things in science
come up with therapies and drugs.
Eventually, one of their approaches
Scott Armstrong and Ted Dryja.
At his age, Dr. Dryja is entitled to
is going to work! There has never
relax and look back on his career,
been an historical era when there
but he has no intention of quitting.
was such a rational basis for pre-
Instead, he looks forward to a role
dicting that worthwhile therapies
that lacks most of the management
are imminent.”
and bureaucratic duties of a leader
and instead concentrates on the
Invest in imagination
clinical and scientific aspects of
The young ProQR teams, Dr. Dryja
drug discovery. “There are so many
insists, must utilize every bit of
exciting things happening in science,
their imaginations they can muster
things that can bring the next
to maintain their leadership in their
breakthrough that will substantially
field. “The advantage of youth is an
help patients.” Things that allow for
amazingly fresh outlook on inno-
hope? Some patients are afraid to
vative approaches. The impression
hope for too much… “Patients with
that success will come quickly
currently incurable, devastating
encourages them to start projects
diseases are very vulnerable.
that older, more experienced scien-
Some have been disappointed over
tists would erroneously disregard
and over again by quack therapies
as too difficult or impossible.”
or therapies that are promoted with
great hyperbole before they are
“My advice to ProQR: you are
shown to be ineffective after being
exploring an uncharted wilderness
properly tested with scientific rigor.
with the potential to revolutionize
To patients, I try to be honest and
the care of patients with blinding
compassionate. Like everybody at
diseases. It will take years to find
ProQR, I am eagerly awaiting any
the right molecules suitable for
discovery that will eventually help
clinical testing and then to test
stop or reverse genetic eye diseases
them in patients. There will be
like LCA 10. That is my motivation.”
successes and failures along the
Dr. Dryja insists that he has many
morale. Celebrate small successes
reasons for optimism. “For thou-
and learn from failures.”
way, but you need to keep up your
sands of years, doctors had no clue
about what caused diseases like
LCA 10. Today, we do know about
the basic causes of the diseases
such as which protein is fundamen-
tally abnormal or lacking, or which
cellular pathways are defective.
This knowledge is a huge advantage
compared to what was available
PAGE XXIII
ANNUAL MAG AZINE 2017
PAGE XXIV
ANNUAL MAGAZINE 2017
PROGRESS
IN ADDRESSING
THE UNDERLYING
CAUSE OF CF
ELUFORSEN FOR CYSTIC FIBROSIS
CF
Eluforsen
Lungs and
other organs
~65,000
CF patients in
the Western world
with F508del
heterozygous
or F508del
homozygous
Inhaled drug
for lung
delivery and
systemic uptake
Single agent for
F508del to treat
underlying cause
of disease
Aims to stop
progression of
disease or prevent
symptoms and
improve quality
of life
Convenient at
home dosing
of 3 times a week
or less in under
15 minutes
CF is a genetic disease that causes severe disease in vital organs like the lungs
and leads to a limited life expectancy. Most CF patients die before they reach
the age of 30; more than 90% of them die from respiratory failure. ProQR’s
lead product candidate in the CF space, eluforsen, a first-in-class RNA-based
oligonucleotide, is designed to address the underlying cause of the disease.
In 2017, the Phase 1b clinical trial for eluforsen delivered encouraging results.
Eluforsen, formerly known as QR-010,
are homozygous for F508del and
is a novel candidate medicine that
age 18 years and above. The trial
is designed to be self-administered
was conducted at 26 sites located in
of 4.0 points and is superior to
Next Steps for eluforsen
stop-codon. Approximately 12,000
Kalydeco®, a drug approved for CF
The end of Phase 1 meetings with
patients, accounting for 15% of
caused by a different mutation.
the FDA and EMA have been com-
CF patients in the Western world,
In addition, a supportive trend of im-
pleted with clear guidance to design
have a stop-codon mutation leading
proved lung function was observed
a phase 2 study. A potential design
to a severe form of CF.
up to 4.0% mean absolute change in
would involve 12 weeks of treat-
ppFEV1 compared to placebo.
ment with weekly inhaled dosing.
These changes were more apparent
The start of the Phase 2 studies will
in patients with a lower lung function
depend on ProQR finding a suitable
at baseline. There were no changes
co-development partner, which the
in weight gain and sweat chloride.
company is actively pursuing.
THE SUCCESS
OF ELUFORSEN
PHASE 1 TRIALS
Dr. J. Stuart Elborn, Clinical Chair in
Respiratory Medicine at Imperial
Exploring therapies for other
CF targets
•
Eluforsen was well tolerated
across all doses tested
through a small, handheld aerosol
10 countries in North America and
College, Consultant at Royal
Based on the results of the clinical
•
Eluforsen restored CFTR
delivery device, or nebulizer, in the
EU and enrolled 70 patients.
Brompton Hospital, and immediate
trials of eluforsen, ProQR is exploring
form of a mist inhaled into the lungs.
past-president of the European
its inhaled oligonucleotide platform
function as assessed by
nasal potential difference
Eluforsen is an RNA medicine that
Eluforsen was observed to be safe
Cystic Fibrosis Society, stated about
for stop-codon mutations (also called
•
Eluforsen demonstrated
targets the messenger RNA to lead to
and well-tolerated across all doses
the study results: “Eluforsen exceeded
‘Class I’ mutations) in CFTR.
normal CFTR protein expression.
with no serious adverse events
expectations in this study as an inno-
related to treatment. A clinically
vative investigational therapy for the
Stop-codon mutations cannot
clinically meaningful reduction
of CF respiratory symptoms
as measured by CFQ-R RSS
Positive Phase 1b clinical data
meaningful improvement of
In September 2017, ProQR an-
CF respiratory symptoms, as mea-
nounced the results of the Phase 1b
sured by CFQ-R RSS, was observed in
clinical trial for eluforsen in CF pa-
3 out of 4 multiple dose groups with
tients. The study was a randomized,
a mean improvement of 13.0 to 19.2
double-blind, placebo-controlled,
points compared to placebo. The
28-day dose-escalation trial eval-
magnitude of the benefit observed
uated the safety, tolerability and
in CFQ-R RSS for these dose groups
pharmacokinetics of eluforsen.
exceeded the established minimal
treatment of cystic fibrosis for which
be targeted with small molecule
• Use of PARI eFlow nebulizer
the need remains high. The improve-
potentiator or corrector molecules,
has been validated for delivery
ments demonstrated in reduction of
and therefore have a high unmet
of therapies to the lungs
respiratory symptoms are very encour-
medical need. ProQR intends to
•
Eluforsen was detected in
aging and intriguing and of course of
target these mutations using its
plasma following inhalation
enormous importance to people with
proprietary Axiomer® technology,
of higher dose levels
CF. The results of this study together
which has shown compelling data
• A range of active doses was
with the previous proof of concept
in non-clinical studies, to repair the
study are strongly supportive of the
stop-codon mutations in the RNA,
identified to be tested in
12-week Phase 2 studies
The trial enrolled CF patients that
clinically important difference (MCID)
further development of eluforsen.”
leading to removal of the premature
PAGE XXV
ANNUAL MAG AZINE 2017
PAGE XXV I
ANNUAL MAGAZINE 2017
2017 was a fruitful year for ProQR, in many ways. One particular
advancement was that the company established proof of concept for
the Axiomer® platform, a novel and proprietary RNA editing platform
technology. The potential of this new technology for RNA therapeutics
is immense, says Bart Klein, who was at the forefront of the Axiomer®
technology development. ProQR’s Sr. Vice President Technology
Development makes his point about the promise of Axiomer® technology:
“This opens up a whole new way of designing medicines for genetic diseases
that were previously ‘out of reach’ for existing technologies.”
“Axiomer®
technology
could change
THE ENTIRE
PLAYING
FIELD”
Before joining ProQR, Bart Klein
diseases, including ‘splicing diseases’.
was a Dutch and European patent
I find the biology of post-transcrip-
attorney with a Master’s degree in
tional gene regulation fascinating,
Chemical Biology/Molecular Biology.
more specifically the oligonucle-
What is Klein’s connection to RNA
otide-based technologies that make
therapeutics? “At the end of the 80s,
it possible to interfere with such
I wrote my master’s thesis about dif-
regulation to cure diseases.”
ferential splicing of RNA, a biological
phenomena that was new back then.
Over time, these and other biological
insights have led to new therapies
based on splice switching, a technol-
ogy underlying ProQR’s programs
in genetic eye and skin diseases, for
example. After graduating, I pursued
RNA technology has proven
to be a viable path for the
development of therapies for
underserved rare genetic
diseases. How did Axiomer®
technology come into play?
“Since the discovery of RNA editing,
a career as an Intellectual Property
new findings have led to new tech-
(IP) Specialist in life sciences and tele-
nologies. The Axiomer® platform is
communications. During my career,
a great example of this. In 2014,
I have worked for several start-ups
the foundation was laid with the idea
and established enterprises, includ-
to hijack the endogenous RNA edit-
ing Crucell, before joining ProQR.”
ing enzyme ‘ADAR’ in our cells and to
redirect it to any target of choice, just
“An important milestone came
using a chemically modified
when I met ProQR’s founders in
oligonucleotide; after the first suc-
2012 for a consulting assignment;
cesses in the lab we knew we were
I was to conduct due diligence for
on to something and built it into
an investor and soon thereafter
what it is today: a new approach to
was asked to advise ProQR in the
treat rare genetic diseases.
field of IP. I later joined ProQR and
And that’s only the start, because
since 2016 I lead the company’s
treating genetic diseases is not the
Technology Development depart-
only application of targeted RNA
ment. Coming to ProQR felt as if
editing. In fact we can now modulate
I had ‘come full circle’ with RNA,
any RNA at will, changing either the
after all those years. ProQR is
expression of a specific RNA or mod-
developing oligonucleotide-based
ulating protein function encoded by
therapies targeting several genetic
it, inside a patient’s own cells, by just
ProQR’S BART KLEIN
ABOUT THE AXIOMER® PLATFORM
“A NEW
WAY OF
DESIGNING
MEDICINES”
PAGE XXVII
ANNUAL MAG AZINE 2017
“Axiomer ®
technology
is such a
powerful
platform for
science that
WE SHOULD
NOT LIMIT
THE USE to
ProQR only”
using an oligonucleotide as drug
infectious diseases. With the
modality. Moreover, we do so with-
Axiomer® platform, we are able to
out messing with a patient’s DNA and
change the localization of proteins
avoid the related safety concerns.
that play a key part in health – and
The establishment of the Axiomer®
change their functionality! We can
technology opens up the door to
do that in a much more subtle and
treating disease causing mutations
sophisticated way than before.
that were untreatable thus far.”
We are about to modulate the struc-
ture of proteins. On an RNA level,
“It most certainly offers new possi-
we can also change the quantity of
bilities in RNA modulation, both
protein. Axiomer® platform is a next
to ProQR and other companies
step that offers precision we did not
that believe in the potential of
have before.”
RNA technology. Axiomer® plat-
form can help push current borders,
I dare say that it could change the
entire playing field!”
That is a bold statement. What
potential do you see, compared
to, for example, CRISPR?
“CRISPR is another promising new
How will ProQR put Axiomer®
platform to work?
“We believe that Axiomer® platform
forms the basis for a complete new
field of medicine. Going forward we
will further build out the platform
and intend to transform this scien-
tific breakthrough to generate new
PAGE XXV III
ANNUAL MAGAZINE 2017
Building on RNA technology
offering new treatments for
We delivered in vivo proof of con-
development. It is a new research
therapeutics for patients in need.”
RNA editing was and is still no easy
patients suffering from a wide
cept in a clinically relevant disease
tool that allows for modification of
task; the technology still has its
variety of diseases with currently
model already 2017 – a major
cells on a DNA level. But it is also
“At the same time, we believe we
secrets and complexities, which can
no or limited treatment options.
milestone! We can now edit RNA in
a very complex tool. Axiomer®
need to open the window to the
technology is considered to be more
world. Axiomer® technology is such
make clinical application difficult.
In 2017, a huge milestone for the
A new approach
different cell systems and in living
organisms. We realized at once,
elegant and less complex, with less
a powerful platform for science that
Axiomer® technology was achieved,
The Axiomer® technology builds
that this is a breakthrough that
risks involved. Its potential for
we should not limit the use to ProQR
showing we can edit a mutated RNA
early scientific developments that
supports investing in an entirely
application is wide, for many
only. We therefor plan to collaborate
in the liver and brain in living organ-
in our view missed the critical
new technology platform to treat
different therapeutic areas and
with others in strategic partnerships
isms. Bart Klein: “In short, Axiomer®
characteristics to become thera-
a wide variety of human diseases.
genetic diseases. It is estimated that
to enable the entire scientific com-
technology offers a way to make single
peutics. Gerard Platenburg, our
Today, we have a platform that is
Axiomer® technology can be utilized
munity that focuses on genetic
nucleotide changes to RNA in a highly
Chief Innovation Officer, and myself
almost ready to start treatments of
for at least 20,000 genetic mutations,
diseases to benefit from our
specific and targeted way. The essence
believed we could pull off targeted
real diseases in patients, while we
and that is only according to current
Axiomer® technology. In January
of Axiomer® technology is that it
editing by taking an entirely new
are further building out the plat-
knowledge. A lot of progress is being
2018 we entered into a first collab-
enables targeted RNA editing in living
approach; an approach based on
form. Establishing clinical proof of
made in identifying mutations, in
oration with Galapagos NV. In this
organisms, without the need for exter-
synthetic oligonucleotides and RNA
concept by treating a real disease
linking these to diseases and, in the
collaboration we are applying the
nal enzymes, needing only a synthetic
editing enzymes naturally present in
in patients is our next goal.
end, in finding therapies for patients.
Axiomer® technology EONs to
oligonucleotide as drug modality.”
the cell. ProQR provided the oppor-
After having established that,
As said before, the technology is not
genetic targets that are believed to
tunity to explore this idea and made
we will be ready to target many
limited to application to genetic mu-
be involved with fibrosis.”
Scientifically speaking, Axiomer®
resources available to perform the
more mutations and treat many
tations. In principle, any change in
technology Editing Oligonucleotides
necessary R&D work. This was late
more diseases that were previously
RNA expression or protein function
ProQR’s scientists found ways to
(EONs) recruit endogenous ADAR
2014. Already in an early stage of
‘out of reach’ for existing technol-
with benefits for patients can be
design synthetic oligonucleotides
in a patient’s cells, to make single
the research project we hit success
ogies. Since the applicability of the
realized, promising to offer treat-
that will go in to a cell and attract
nucleotide changes to a target
by redirecting the endogenous RNA
technology is in principle very wide,
ments for a wide variety of human
the ADAR enzymes to a particular
RNA to fix a mutation or make
editing enzymes to a target RNA
we plan to further build out our
diseases, such as age related
site on the RNA that they want to
a beneficial change at will, in a
of our choice. This was still in cell
partnering strategy to capture max-
diseases (think about Alzheimer’s
change. They can make that change
highly specific and targeted man-
culture, but the principles worked!
imum value from this exciting new
or Parkinson’s disease), forms of
in a very specific and directed way
ner. For physicians, the Axiomer®
The foundation for the Axiomer®
proprietary technology and impact
cancer and ultimately maybe even
without affecting the DNA.
technology holds the promise of
technology was established.
as many diseases as possible.”
‘UNLIMITED
OPTIMISM’
TO OFFER
PATIENTS A
BETTER LIFE
TITA RITSEMA, ProQR’S FIRST EMPLOYEE,
HEAD OF ProQR’S QR-313 PROGRAM
To make her point about the need for a therapy for dystrophic epidermolysis
bullosa (DEB), Tita Ritsema urges us to come with her. In a corridor of
ProQR’s home base in Leiden, she stops at the portrait of Rafi, a young girl
with a faint smile. The photo shows the girl’s many blisters. “She bends
slightly forward, probably from the itch and pain. You can tell she is in pain.
Imagine what it would be like for her and others with DEB if we came up
with something that would make the blisters go away and heal their skin.”
PAGE XXX
ANNUAL MAGAZINE 2017
“My drive
comes from
knowing that
A PATIENT IS
SUFFERING
and nothing
seems to
work”
Portrait of Rafi from our Tribute Gallery
skin that is expected to be strong.
Daniel de Boer, for what could be
The chance to make a difference
The molecules reinstall the capacity
a temporary assignment. In a meet-
Tita has worked on all of ProQR’s
of cells to make ‘velcro’ in the skin.”
ing with him and his co-founder
development programs to date.
Gerard Platenburg, they had lively
She first began on cystic fibrosis,
“2017 was a busy year where we
discussions about the business and
then moved to Leber’s congenital
made good progress. We actively
the science. “Not long after that,
amaurosis (LCA) before leading the
engaged and were supported by
Daniel insisted I come work for his
QR-313 program for DEB. “I was
the EB community including
new company. I clearly remember
involved in the decision-making that
EB experts, nurses and patient
my first day at work. He asked me to
resulted in QR-313 becoming
representatives – all of whom have
bring my own laptop. When the door
a program. I am particularly inter-
been generous in sharing their
of ProQR’s first tiny office opened,
ested in rare diseases that get little
insights to incorporate into our clin-
there was nothing there. Two desks,
or no attention from larger pharma-
ical development plans. This really
two chairs and a cabinet. Daniel had
ceutical companies. Serious diseases
has been a great community effort,
brought his own paperclips!”
that patients suffer from and believ-
such that we are ready to start the
ing there is a possibility of finding
first human clinical trial in 2018.
“Exciting and new from day one”
a therapy to help them means a lot
We are looking forward and are
It was Daniel’s story and his drive
to me. My drive comes from knowing
excited to move ahead; this trial will
that won Tita over. “His determi-
that a patient is suffering and noth-
focus on the safety and preliminary
nation was and continues to be
ing seems to work. Coming closer
efficacy of QR-313 in people with DEB
refreshing. To me, ProQR has been
and closer to what looks like a viable
due to mutations in a specific part of
new and exciting from day one.
therapy really excites me and my
The portrait is part of the Tribute
President of Dermatology leading
the COL7A1 gene called exon 73.”
We have come a long way since
team. EB is among the most severe
Gallery containing images from the
ProQR’s QR-313 program for DEB.
rare genetic disease communities
that ProQR serves. In other circum-
Ready for clinical trials
First employee
enthusiastic scientists joined the
What if we could actually offer relief
Tita Ritsema is ProQR’s first em-
company. Getting the right people
for EB patients by healing their skin
then – many knowledgeable and
of the so-called ‘orphan diseases’.
stances, one would call the photo
“We chose a topical hydrogel formu-
ployee. After leaving a job at a gene
aboard, with the right background,
with our QR-313 program?”
gallery the ‘hall of fame’, but here
lation to allow for easy application to
therapy company, she considered
mind-set (‘curious about the un-
the ‘hall of hope’ is more appropriate.
patients’ open wounds. Our hypoth-
starting her own consultancy prac-
known’), and creative drive (‘unlimit-
Patients are curious but realistic
“Hope is the right word”, says Tita
esis is that our QR-313 molecule will
tice. A former co-worker introduced
ed optimism’), was crucial to building
Thinking about the clinical trials that
Ritsema, scientist and ProQR’s Vice
help close the wounds and form new
her to ProQR’s founder and CEO,
the vibe of this company.”
lie ahead, Tita thinks ProQR will have
PAGE XXXI
ANNUAL MAG AZINE 2017
“To me,
ProQR
has been
NEW AND
EXCITING
from day
one”
of the therapies that have been
We are now entering the era in
tried and failed before, like some
which RNA technology will lead the
experiments with stem cell therapy;
world to real therapies, real cures
a risky procedure with a 25 percent
and real drugs.”
mortality rate. Therefore, any new
opportunity is welcomed. We believe
Thinking again of Rafi, Tita is
in QR-313, the indications of its
reassured that she has made the
probable success are undoubtedly
right step to join ProQR. “For two
promising. The trials will tell us what
decades, I have worked in universi-
QR-313’s true potential is.”
ties, in fundamental research – how
do cells work in organisms. It was
“The RNA key fits several doors”
my world. Shifting to gene therapy
Tita points out ProQR made the
work and now to RNA work, I am
right decision by embracing
where I want to be – with ProQR,
RNA technology. “This technology
in a very vital environment where
PAGE XXXII
ANNUAL MAGAZINE 2017
In memory
of HENRI
TERMEER
no trouble finding patients that will
works and will bring therapies
talented younger and older scien-
wish to participate. “Patients are
to many patients in the future.
tists venture into the unknown,
curious but realistic – QR-313 still
The RNA key fits several doors, but
day after day.”
In 2017, ProQR lost a dear friend
an invaluable inspirer and mentor.
of patients that are waiting for a life
has a way to go. Many are aware
we need to figure out which doors.
and co-founder Henri Termeer.
Daniel: “I especially valued his
changing treatment”.
QR-313 FOR DYSTROPHIC EPIDERMOLYSIS BULLOSA
DEB
QR-313
Blistering from
birth
Mutations in
exon 73 of
COL7A1 affect
~2,000
patients in the
Western world
Molecular targeting
with potential
disease-modification
due to formation of
functional protein
Aims to heal
wounds, restore
skin and improve
quality of life
Topically applied.
Commonly
used hydrogel,
containing QR-313
RNA therapy
Convenient
application at
home with an
anticipated
frequency of
every other day
Skin diseases are one of ProQR’s top
Although the disease itself is not life
dermal (inner) and epidermal (outer)
He unexpectedly passed away at the
ability to align business with the
age of 71, leaving behind a legacy of
interest of patients and always
ProQR will continue to work the
entrepreneurial culture that har-
do the right thing.”
path that Henri has helped define –
nesses cutting edge science and inno-
vation to better the lives of patients
afflicted with rare genetic diseases.
The determination
to search for a cure
Dinko Valerio, Chairman of ProQR’s
ProQRians mention his unparalleled
Remembering Henri, many
pioneering in the interest of patients
suffering from rare diseases.
Honoring a biotech industry icon
and visionary
Supervisory Board, remembers
drive to serve patients afflicted with
To honor Henri’s legacy and celebrate
Henri Termeer as an inspirer that
rare genetic diseases. Like Daniel,
the significant contributions to the
contributed greatly to the start and
Henri’s determination to search for
rare disease business he helped to
growth of the company by his
a cure for CF was personal.
create, fellow industry, academic and
“independent thinking and experi-
Daniel explains: “His neighbor’s son
community leaders, working closely
ence”. Daniel de Boer, founder and
in the late eighties was a CF patient.
together with Belinda and Adriana
CEO of ProQR, honors Termeer as
This inspired him to start a program
Termeer, have formed the Henri A.
“a great mentor, a visionary, a pas-
for CF at Genzyme. When the com-
Termeer Tribute Committee. On Rare
sionate patient advocate and a key
pany terminated the program after
Disease Day, February 28th 2018,
factor in establishing ProQR.”
ten years, Henri was determined
which is also Henri’s birthday, family,
not to give up – CF was “unfinished
friends and associates joined togeth-
Founding ProQR
business” as he would say.”
er to celebrate the renaming of the
Daniel vividly recalls his first meeting
with Henri in 2011. The conver-
sation in Boston about founding
Opportunity became
a responsibility
‘North plaza’ to ‘Henri A. Termeer
Square’, across from the Genzyme
Center in Cambridge, Massachusetts,
potential therapeutic areas for its RNA-
threatening, the damages caused often
skin layers together. The mutations
a company that would focus on
Though Henri is no longer with us,
which was his creation. In 2019, the
based therapies. The lead program for
are. The core of the problem of DEB is
can occur in different parts of the
finding a cure for CF. A few months
he will continue to inspire all at
Square will become home to a life-
dystrophic epidermolysis bullosa (DEB)
caused by mutation(s) in a gene in the
COL7A1 gene and cause loss or mal-
later in 2012, ProQR Therapeutics
ProQR. As he often said, the opportu-
size sculpture of Henri Termeer.
focuses on a rare genetic disease that
DNA called the COL7A1 gene. This
function of the anchoring fibrils.
causes blisters, itching and severe pain.
gene is responsible for the formation
This leads to very fragile skin that even
was founded. In the years to follow
nity to work on therapies has become
Daniel and Henri developed a strong
a responsibility at ProQR. “A responsi-
Many EB patients with severe forms
of collagen type VII (C7) protein that
slight rubbing can cause blistering.
personal relationship through build-
bility to translate the science into
To learn more and contribute, please
of the disease don’t reach the age of 30.
forms anchoring fibrils that bind the
ing the company. Henri became
a product and transform the lives
visit termeertribute.org
ANNUAL
REPORT
2017
PAGE 1 / 105
Message from the CEO
ANNUAL REPORT 2017
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 2017
2
4
5
6
8
43
46
56
59
PAGE 2 / 105
Message from the CEO
ANNUAL REPORT 2017
Message from the CEO
Dear fellow shareholders,
In the 5th year since start of our company we made solid progress on our mission to create
meaningful medicines for patients in need. We continued to execute on our strategy to
create a well-diversified pipeline of medicine candidates in several therapeutics areas. I’m
proud of my team of ProQRians that went above and beyond to bring us to where we are
today, grateful to the patients and their caregivers to participate in our clinical trials, and
humbled by the continued support of our shareholders to fund our operations.
In 2017, we completed our second trial for eluforsen (formerly known as QR‑010) in
patients with cystic fibrosis with positive results, we started a first clinical trial of QR‑110 in
patients that suffer from Leber’s congenital amaurosis 10, and completed the preparations
to start a trial of QR‑313 in dystrophic epidermolysis bullosa in 2018. We’ve also progressed
several other candidate medicines for Usher syndrome, Stargardt’s disease and Fuchs
endothelial corneal dystrophy to a stage where they are ready for development, and we are
on track to start a first clinical trial of QR‑421a for Usher syndrome around year end 2018.
Beyond that we have created a CNS focused RNA therapeutics company, called Amylon
Therapeutics, of which we are the largest shareholder, dedicated to the application of RNA
technologies for severe genetic brain diseases.
Beyond the candidate medicines in our pipeline, a scientific breakthrough in our labs led to
the invention of a completely novel platform technology called Axiomer®. Our bright
scientists found a way to make single nucleotide changes to RNA, which can potentially treat
over 20,000 disease causing genetic defects. In 2017 we validated our Axiomer platform
technology with the presentation of an in vivo proof of concept of this platform to the
scientific community. And although it’s early days, we believe that this technology forms the
foundation for a new class of medicines that will be able to treat diseases that are currently
untreatable.
I see these advancements as a testament of the progress we are making towards long term
value generation for patients, society and our shareholders. Taking our share price as a
measure of short term performance, we didn’t do well. Despite all the progress in our
pipeline, our stock price declined over 2017 and we’re starting 2018 close to our all-time-
low stock price. Translation of the progress in our company to the capital markets will
therefore be a key focus area for 2018.
Looking at 2018 is exciting: we have 2 active clinical stage programs, and soon a third and
fourth program to follow into the clinic. We have clinical data readouts in at least 2 clinical
programs in 2018, and the start of a first industry partnership with Galapagos N.V. – while
aiming for many more partnerships to follow.
PAGE 3 / 105
Message from the CEO
ANNUAL REPORT 2017
This year we will learn if the LCA 10 patients in our QR‑110 trial will be able to improve their
vision and if the DEB patients in our QR‑313 trial will be able to close their painful wounds. I
can’t wait to see those results - impacting the lives of those patients is what all this is about.
In 2017 we unexpectedly lost our friend, co-founder and board member Henri Termeer,
former CEO of Genzyme. Henri was a visionary pioneer in rare disease and we will honor
his legacy by continuing on the path we set out together to make an impact to the lives of
patients in need.
Daniel A. de Boer
PAGE 4 / 105
Key Figures
ANNUAL REPORT 2017
Key Figures
dsssds
2017
2016
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
Total 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
Average number of staff for the period
--
1,495
(31,153)
(10,840)
(40,498)
(43,675)
2,544
50,559
53,103
39,325
5,284
8,494
(34,951)
(121)
26,640
--
1,828
(31,923)
(9,478)
(39,573)
(39,103)
3,528
62,015
65,543
53,136
5,697
6,710
(34,221)
(2,539)
357
6.0
74.1
9.2
81.1
25,374,807
23,346,507
(1.72)
(0.33)
(1.67)
(1.56)
139.9
133.4
PAGE 5 / 105
Management Board
ANNUAL REPORT 2017
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
2018
The following sets forth biographical information regarding our Management Board members.
Daniel de Boer has been our founding Chief Executive Officer since our incorporation in 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 is our Chief Corporate Development Officer and General Counsel. 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 co-founder and advisor of Mytomorrows N.V., a Dutch life sciences company. 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 6 / 105
Supervisory Board
ANNUAL REPORT 2017
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. Dinko Valerio and 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
James Shannon
Paul Baart
Male
Male
Male
FR
GB
NL
July 21, 1966
Member
January 1, 2014
June 5, 1956
Member
November 9, 1950
Member
June 21, 2016
June 10, 2015
2020
2018
2021
2020
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 and is also member of the Supervisory Board
of Amylon Therapeutics B.V. 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.
Alison Lawton has served on our supervisory board since September 2014. Ms. Lawton is currently President
and Chief Operating Officer of Kaleido Biosciences Inc. From January 2014 to December 2017, Ms Lawton
served as the Chief Operating officer of Aura Biosciences Inc. and 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, 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
PAGE 7 / 105
Supervisory Board
ANNUAL REPORT 2017
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. In 2017 she joined the board of directors of Magenta Therapeutics. She also served on the board of
directors of Cubist Pharmaceuticals for three years until its acquisition by Merck &Co., Inc. in 2015 and on the
board of directors of CoLucid Pharmaceuticals until its acquisition by Eli Lilly in 2017. She is member of the
Corporate Advisory Board of 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. She earned her BSc in Pharmacology, with honors, from King’s College London.
Antoine Papiernik has served on our Supervisory Board since January 2014. Mr. Papiernik is managing partner
at Sofinnova Partners, which he joined in 1997, and was appointed chairman in 2017. 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, Gecko
Biomedical and Rgenix. Mr. Papiernik has an MBA degree from the Wharton School of Business, University of
Pennsylvania.
James Shannon, MD has served on our Supervisory Board since June 2016. Mr. Shannon has had an extensive
career in drug development and pharma. From 2012 until his retirement in 2015, Mr. Shannon was Chief
Medical Officer at GlaxoSmithKline. Prior to that he was Global Head of Pharma Development at Novartis and
Senior Vice-President, Clinical Development at Sterling Winthrop Pharmaceuticals. He held board positions at
companies including Biotie, Circassia, Crucell, Endocyte, MannKind and Cerimon Pharmaceuticals. In 2017 he
joined the board of directors of Horizon Pharma. He received his undergraduate and postgraduate degrees
at Queen's University of Belfast and is a Member of the Royal College of Physicians (UK). Mr. Shannon
currently holds board positions at Mannkind Corp (USA), myTomorrows (NL), Horizon Pharma (Ire) and
lmmodulon (UK).
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.
PAGE 8 / 105
Management Board Report
ANNUAL REPORT 2017
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 genetic rare diseases (sometimes called orphan
diseases) such as Leber’s congenital amaurosis 10, Usher syndrome type 2A, dystrophic epidermolysis
bullosa and cystic fibrosis. Based on our unique proprietary RNA 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. Our Company has its
statutory seat in Leiden, the Netherlands. The address of its headquarters and registered office is
Zernikedreef 9, 2333 CK Leiden, the Netherlands.
Since September 18, 2014, our ordinary shares have been listed on the NASDAQ Global Market under the
ticker symbol PRQR.
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 RNA platform, we are
building a pipeline of therapeutics for patients in need. Our drug development programs are based on single-
stranded RNA oligonucleotides that are chemically modified to enhance stability and cellular uptake, and
aimed to restore protein function through targeting the RNA. While all our compounds are one therapeutic
modality, a variety of mechanisms of actions may be used depending on the mutation that is targeted. We
believe that this targeted approach offers several advantages compared to other therapeutic approaches in
the treatment of the rare genetic diseases we target.
Our current pipeline consists of programs in ophthalmology, dermatology and cystic fibrosis. For
ophthalmology, we have a deep and broad pipeline that includes: QR‑110 for Leber’s congenital amaurosis
10, or LCA 10, caused by the p.Cys998X mutation in the CEP290 gene, which we are currently studying in a
Phase 1/2 clinical trial that is expected to have six-month treatment data in 2018 and twelve-month treatment
data in 2019; QR‑421a for the ophthalmic manifestations of Usher syndrome 2A due to exon 13 mutations in
the USH2A gene and QR‑411 for the ophthalmic manifestations of Usher syndrome 2A due to the PE40
mutation in the USH2A gene, which are both in pre-clinical development and with QR‑421a advancing towards
the clinic at the end of 2018; QRX-1011 for Stargardt’s disease due to an exon 39 splicing mutation in the
ABCA4 gene in discovery stage; and QRX-504 in late discovery stage for Fuchs’ endothelial corneal dystrophy
type 3, or FECD3, caused by a repeat expansion mutation in the TCF4 gene. For cystic fibrosis, a severe genetic
disease, we are developing eluforsen (formerly known as QR‑010) for the F508del mutation in CFTR, which has
completed two clinical trials in CF patients with positive data. A Phase 2 study for eluforsen is currently being
designed and is planned to commence in 2018 subject to a partnership. In addition to our eluforsen program,
we also have a discovery pipeline for other genetic mutations causing CF. In dermatology, QR‑313 targets a
specific set of mutations located in exon 73 of the COL7A1 gene that leads to dystrophic epidermolysis
bullosa, or DEB, a severe genetic blistering skin disease. IND-enabling studies of QR‑313 have been
completed and we plan to start a Phase 1/2 study in 2018. Interim data from this trial will be available in 2018
and final data in 2019.
Beyond that, we have discovered and developed a novel proprietary RNA editing platform technology called
Axiomer. Axiomer’s editing oligonucleotides, or EONs, are designed to recruit endogenous Adenosine
PAGE 9 / 105
Management Board Report
ANNUAL REPORT 2017
Deaminases Acting on RNA, or ADAR, enzymes to make single nucleotide changes in the RNA in a highly
specific and targeted manner at the desired location. We believe our Axiomer platform may be applicable to
more than 20,000 disease-causing mutations. We completed optimization of proof-of-concept in vitro and in
vivo in 2017. In January 2018, we announced a research collaboration with Galapagos N.V., where we are
applying this novel technology to target certain fibrosis targets identified by Galapagos. We plan to build out
our Axiomer platform in select therapeutic areas and continue to validate and create value for this
technology through licensing, partnering and other strategic relationships.
We have also discovered and developed together with the Leiden University Medical Center, a program for
hereditary cerebral hemorrhage with amyloidosis of the Dutch type (HCHWA-D). HCHWA-D, or Katwijks
disease, a genetically defined subpopulation of cerebral amyloid angiopathy, or CAA. In 2017, we spun out
this program into Amylon Therapeutics B.V., in which we maintain a majority ownership.
We are also developing QRX-704, an oligonucleotide-based approach for Huntington’s disease (HD), an
inherited progressive neurodegenerative disease caused by a mutation in the HTT gene, and one of the most
common genetic disorders. Patients with HD have shortened life expectancy and there is currently no
disease-modifying treatment available.
We continue to assess our development and commercialization plans for our product candidates and intend
to evaluate opportunities for beneficial collaborations or partnerships for these programs. In addition, using
our discovery engine that is designed to generate a deep and broad pipeline of product candidates, we seek
to enter into strategic partnerships for programs that we believe will benefit from such a partnership, and
advance other selected programs independently to commercialization.
Our RNA Technologies
Genes are the specific sequences of DNA that provide the blueprint used by the human body’s cells to make
proteins, which are enzymes or other molecules in cells that serve a functional purpose. Each gene consists of
a specific sequence of nucleotides that leads to the production of a specific protein. The gene’s coding DNA
sequence is transcribed into mRNA, which is subsequently translated into the specific protein. A mutation, or
defect, in a specific gene can result in the transcription of abnormal mRNA, which then can produce a
defective, misfolded or truncated protein that is unable to carry out its normal function.
In the maturing RNA therapeutics space and the developments in understanding their potential, we have
gathered a toolbox of different novel RNA technologies with which we believe we target defective mRNA in
order to restore protein functionality. Our goal to restore translation of functional proteins is unlike other
approaches in the RNA therapeutics field, such as RNAi and antisense that use RNA molecules to
downregulate genes. Our molecules are single-stranded RNA-based oligonucleotides that are chemically
modified so that no vector or envelope is needed for delivery. We believe these RNA approaches will allow us
to develop novel therapies for genetic disorders that are currently untreatable or have limited effective
treatment options.
We believe our extensive pipeline, strong team and excellent partners will lead to a sustainable future for our
company and to accomplish our quest to make a meaningful impact on the lives of patients in need.
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Research and development pipeline
QR‑110 and Leber’s Congenital Amaurosis 10 (LCA 10)
Leber’s Congenital Amaurosis 10 (LCA 10) is the most common genetic cause of blindness in childhood. LCA is
caused by a genetic defect in 20 or more associated genes. Classification of LCA is based on the disease
causing gene. The most frequently mutated LCA gene in LCA patients in North America and Europe is CEP290
(encoding centrosomal protein of 290 kDa) that is associated with LCA 10. The most common mutation is the
p.Cys998X (also known as c.2991+1655A>G) in the CEP290 gene. Although prevalence 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 10 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 for LCA 10, QR‑110, is a first-in-class oligonucleotide designed to treat the disease
by repairing the underlying cause in the mRNA, which results in the production of the normal, or 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 CEP290 protein. QR‑110 is designed to bind to the mutated location in
the pre-mRNA, thereby leading to normally spliced or wild type mRNA expression, which could lead to the
production of normal or wild type CEP290 protein. QR‑110 is designed to be administered through
intravitreal injections in the eye.
We believe the activity in pre-clinical models of LCA 10 supports the clinical development and therapeutic
potential of QR‑110. In studies conducted with QR‑110 using relevant pre-clinical LCA 10 models, QR‑110 was
observed to restore CEP290 wild type mRNA and protein levels. It was observed that QR‑110 restored CEP290
mRNA and protein levels in primary LCA 10 fibroblasts from patients that are homozygous for the p.Cys998X
mutation to approximately 100% of wild type and to approximately 50% of wild type in cells from compound
heterozygous patients. It was also observed that QR‑110 reaches the affected layer of the retina (the outer
nuclear layer) after administration by intravitreal injections. In a 3D optic cup organoid model, QR‑110
showed restoration of CEP290 wild type mRNA in a dose dependent manner.
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We are currently conducting an open-label Phase 1/2 clinical trial of QR‑110 in adult and pediatric LCA 10
patients with one or two copies of the CEP290 p.Cys998X mutation. Our ongoing Phase 1/2 safety and
tolerability study will enroll six pediatric patients (age 6 - 17) and six adults (≥ 18 years). Patient dosing
commenced in November 2017. Patients will receive one loading dose and three maintenance doses over the
period of 12 months in one eye. Three different dosing regimens will be tested: a low dose group (160 µg
loading dose / 80 µg maintenance dose), a mid dose group (320 µg loading dose / 160 µg maintenance dose)
and a high dose group (500 µg loading dose / 270 µg maintenance dose). The study is being conducted at
three sites in the U.S. and Belgium and being overseen by a Data Monitoring Committee. We expect to obtain
six-month treatment data from this study in 2018 and full twelve-month data in 2019. There is recent
precedent for an accelerated development path in another LCA subtype, and we believe this accelerated
development pathway can potentially be applied to QR‑110.
QR‑110 has been granted orphan drug designation by the FDA and European Commission and received fast
track designation by the FDA for the treatment of LCA 10.
QR‑421a and QR‑411 for Usher syndrome type 2A.
Usher syndrome is the leading cause of combined hearing loss and blindness. Patients with Usher syndrome
2A generally progress to a stage in which they have very limited central and peripheral vision and moderate
to severe deafness. To date, there are no therapies approved or product candidates in clinical development
that treat the vision loss associated with Usher syndrome 2A. Usher syndrome 2A is one of the most common
forms of Usher syndrome and is caused by mutations in the USH2A gene. We are developing QR‑421a for the
ophthalmic manifestation of Usher syndrome 2A due to exon 13 mutations and QR‑411 for the ophthalmic
manifestations of Usher syndrome 2A due to the PE40 mutation. Mutations in exon 13 of the USH2A gene
affect approximately 16,000 patients in the United States, European Union, Canada and Australia. Mutations
in PE40 of the USH2A gene affect approximately 1,000 patients in the United States, European Union, Canada
and Australia. Both product candidates are single-stranded oligonucleotides intended to be administered by
intravitreal injections and that aim to restore a functional usherin protein to restore vision.
Pre-clinical development of QR‑421a has begun and we plan to advance this program towards a Phase 1/2
safety and efficacy clinical trial at the end of 2018. The planned trial consists of a single-dose arm and a six-
month adaptive multiple dose arm. We expect to receive top-line data from the single-dose arm in the first
half of 2019 and from the adaptive multiple-dose arm later in 2019.
On February 9, 2018, we entered into a partnership agreement with Foundation Fighting Blindness (FFB),
under which FFB has agreed to provide funding of $ 7.5 million to advance our QR‑421a into the clinic and will
receive future milestone payments.
QR‑421a and QR‑411 have both been granted orphan drug designation by the FDA and European
Commission for Usher sydrome type 2.
We are also developing QRX-1011 for Stargards disease due to an exon 39 splicing mutation in ABCA4 and
QRX-504 for Fuchs’ endothelial corneal dystrophy 3. Both programs are in the optimization phase, which is
the last stage in discovery. Once optimized, we intend to advance these molecules into pre-clinical
development.
QR‑313 and Dystrophic Epidermolysis Bullosa (DEB)
Dystrophic epidermolysis bullosa (DEB) is a genetic orphan disease of the skin and other mucosal
membranes. The hallmark of the disease is severe blistering and wounds that result from minimal friction.
Patients with the recessive form of DEB (RDEB) have a limited life expectancy and low quality of life. Patients
with the dominant form (DDEB) have variable expression of the disease but this disease is also associated
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with significant morbidity. There is currently no treatment available for DEB. Intensive and costly palliative
care provided to these patients does not address the underlying cause of the disease. DEB is caused by
mutations in the COL7A1 gene which leads to an absence of functional collagen type VII (C7) protein which is
essential for the formation of anchoring fibrils that link the epidermis to the dermis.
We are developing a first-in-class single-stranded oligonucleotide, QR‑313, for patients with DEB caused by
mutations in a specific part of the COL7A1 gene called exon 73. There are multiple mutations associated with
DEB, several of which lie within exon 73. QR‑313 is designed to exclude exon 73 from the COL7A1 mRNA.
Skipping of exon 73 leads to an mRNA that lacks the mutation causing the disease. This mRNA is translated
into a truncated but functional C7 protein that is able to form anchoring fibrils and improve the strength of
the skin.
QR‑313 is being formulated in a hydrogel that will be applied topically to existing wounds in patients with
DEB. QR‑313 is designed to restore functional C7 protein with the aim to facilitate wound healing and protect
against future blistering. In pre-clinical models skipping of exon 73 by QR‑313 has been observed in a 3D
human full thickness skin model.
We are planning to commence our first in human study of QR‑313 in DEB exon 73 patients in 2018, which we
refer to as WINGS (A First in Human, Double-Blind, Randomized, Intra-Subject Placebo-Controlled, Multiple
Dose Study of QR‑313 Evaluating Safety, Proof of Mechanism, Preliminary Efficacy and Systemic Exposure in
Subjects With Recessive Dystrophic Epidermolysis Bullosa (RDEB) due to Mutation(s) in Exon 73 of the COL7A1
Gene). We plan to conduct the WINGS study as a Phase 1/2 safety and efficacy clinical trial in two parts, first
enrolling eight RDEB patients with an exon 73 mutation, and after interim analyses expect to add another
cohort of DEB patients. The study evaluaties safety, tolerability and systemic passage of QR‑313. The clinical
trial is expected to be double blinded intra-patient controlled, single or dual-wound treatment for 4 weeks,
with a follow-up period of 8 weeks. We expect to receive interim data from the first part of the trial in 2018
and full results in 2019. Beyond QR‑313, we have a pipeline of discovery-stage programs for other mutations
that cause DEB, including QRX-323 and QRX-333.
QR‑313 has been granted orphan drug designation in the United States and the European Union for the
treatment of patients with DEB with exon 73 mutations.
Eluforsen and Cystic Fibrosis (CF)
Cystic fibrosis is a genetic disease that causes early morbidity and mortality. CF currently has no cure. The
median age of death for CF patients is 30 years or less, 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, the F508del mutation that we are targeting is
the most prevalent and is present in approximately 65,000 CF patients, representing 85% of the 77,000 CF
patients in the Western world. In CF patients, 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, lung-damaging infections.
Our lead product candidate for CF, eluforsen, is a first-in-class RNA-based oligonucleotide designed to
address the underlying cause of the disease by targeting the mRNA defect encoded by the F508del mutation
in the CFTR gene of CF patients and restoring CFTR function. Eluforsen 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 eluforsen to the primary
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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 started two global clinical studies of eluforsen in 2015. In 2016, we presented positive
results from PQ‑010-002, a proof-of-concept trial demonstrating that eluforsen restores CFTR function in the
nasal linings of patients that are homozygous (who carry two allelic copies) of the F508del mutation. CFTR is
the protein channel that is defective in patients with CF, and presence or absence of function of CFTR can be
measured by an important biomarker called the nasal potential difference, or NPD, assay. Following four
weeks of topical therapy, eluforsen improved the CFTR-mediated total chloride response, a direct measure of
CFTR function. This was confirmed by the restoration of other indicators of CFTR function, such as the sodium
channel activity. In subjects that were compound heterozygous (who carry one copy of the F508del mutation
and one other disease causing mutation), no meaningful difference was measured. Eluforsen was observed
to be well-tolerated in all subjects.
The Phase 1b clinical trial, which we refer to as PQ-010-001, is a randomized, double-blind, placebo-
controlled, 28-day dose-escalation trial that was conducted in 26 sites in North America and Europe. The
primary endpoint of the trial was to evaluate the safety, tolerability and pharmacokinetics, of single and
multiple ascending doses of inhaled eluforsen in CF patients carrying two copies (homozygotes) of the
F508del mutation. This trial also assessed a number of exploratory efficacy endpoints, although the trial was
not powered for statistical significance on these endpoints. The results of the single-dose cohorts were
reported in 2016 and all doses were safe and well-tolerated. In September 2017, we reported the preliminary
results of the multiple-dose cohorts in which 36 subjects were enrolled. Eluforsen was observed to be safe
and well-tolerated across all doses with no serious adverse events related to treatment. A clinically
meaningful improvement of CF respiratory symptoms, as measured by CFQ-R RSS (Cystic Fibrosis
Questionnaire-Revised Respiratory Symptom Score) was observed in 3 out of 4 multiple dose groups with a
mean improvement of 13.0 to 19.2 points compared to placebo. The magnitude of the benefit observed in
CFQ-R RSS for these dose groups exceeded the established minimal clinically important difference of 4.0
points. In addition, a supportive trend of improved lung function was observed up to 4.0% mean absolute
change in ppFEV1 compared to placebo. There were no changes in weight gain and sweat chloride. A Phase 2
trial is currently under design and is planned to commence in 2018 subject to a partnership.
Eluforsen has been granted orphan drug designation in the United States and the European Union and has
received Fast Track designation from the FDA for the treatment of patients with CF due to the F508del
mutation.
Besides our program for CF caused by the F508del mutation, we are working on other CFTR mutations that
could be treated using our RNA technologies. We could potentially target up to 12,000 patients, representing
an estimated 15% of CF patients in the Western world, with these programs.
Axiomer RNA Editing Technology Platform
As a result of several years research conducted at ProQR in collaboration with academic partners, ProQR has
invented and patented a novel RNA editing platform technology called Axiomer. Axiomer is a platform that
can modify individual RNA bases and therefore target certain genetic mutations that cause disease. This
technology uses the well-established therapeutic modality of single stranded RNA oligonucleotides, designed
in a way to recruit an endogenous enzymatic complex called ADAR, and guided to make a change to the RNA
exactly where we want it. We call the molecules Editing OligoNucleotides, or EONs. The Axiomer EONs can
specifically target G-to-A mutations, and can therefore potentially treat over 20.00 disease causing G-to-A
mutations that are described in literature.
Recruitment of endogenous RNA editing enzymes by oligonucleotides represents a significant therapeutic
opportunity for a new type of drugs that can treat genetic disorders by reversing the underlying mutations.
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Deamination of adenosines into inosines (A-to-I editing) is the most common type of single-nucleotide post-
transcriptional editing, with a predictable change in the base-pairing specificity: As inosine base-pairs with
cytosines, the editing effectively results in an A-to-G conversion, which in turn can affect RNA processing (e.g.
splicing or RNA stability) or the codon identity during translation. The reaction is catalyzed by the ADAR
enzymes (Adenosine deaminases acting on RNA), and takes place on different substrates, including (pre-)
mRNAs, miRNAs and lncRNAs, and in a range of disease-relevant tissues. We have invented and developed an
approach where the endogenous ADAR can be recruited by using an oligonucleotide only, without the need
for overexpression of ADAR (fusion) proteins or long guide RNAs. The oligonucleotides, referred to as Editing
Oligonucleotides (EONs), are designed so as to allow the editing reaction to be specific for the target
adenosine and to bestow general drug-like properties, without interfering with ADAR binding and activity. The
design includes structural features and chemical modifications of the oligonucleotide backbone, to provide
for stability and cellular uptake, and enable the EONs to recruit the endogenous ADARs and direct them to
specifically edit one selected adenosine, while suppressing the editing of other, off-target adenosines. We
have named this proprietary innovative technology Axiomer RNA editing technology.
We have provided proof of concept for our Axiomer technology in a mouse model of the Hurler syndrome, a
lysosomal storage disorder caused by inactivation of the alpha-L-iduronidase enzyme. The underlying G-to-A
mutation is corrected by EON-directed A-to-I editing in the Idua transcript, resulting in restoration of protein
translation and enzymatic activity. In vitro work with additional models indicates that the EONs are generally
applicable for the correction of mRNA G-to-A mutations, over 20,000 of which are known to cause
monogenetic disorders. We are currently exploring the use of our Axiomer RNA Editing technology to
continue to develop therapies for genetic disorders that have no or less effective or less safe treatment
options in select therapeutic areas. In addition to initiating in-house programs, we plan to continue to
validate and create value for our Axiomer technology by entering into licensing and collaboration agreements
in select therapeutic areas. In January 2018, we announced a research collaboration agreement with
Galapagos, N.V. where we are applying our novel Axiomer technology to fibrosis targets identified by
Galapagos. We are also using our Axiomer technology to target several premature stop codon mutations in
CF.
Discovery Programs
On our mission to make a positive impact to the lives of patients that suffer from rare diseases, we
continuously look for ways to apply our science and know-how to expand our reach. As a part of that we are
building out our platform technologies to new diseases and therapeutic areas. As our technologies can
potentially treat thousands of disease causing mutations we have to prioritize where to apply our science
next. We therefore have a rigorous evaluation process in identifying programs for our pipeline that includes
establishing genetic causality, ability to deliver drug 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 deliver
therapeutic benefits to affected patients.
QRX-704 for Huntington’s Disease
QRX-704 is a discovery stage oligonucleotide approach for the treatment of Huntington’s disease (HD). HD is
an inherited progressive neurodegenerative disease, and one of the most common genetic disorders, with
symptoms including involuntary movements, incoordination, impaired speech, cognitive decline, and
depression. Patients with HD have shortened life expectancy, and there is currently no disease-modifying
treatment available. The disease is caused by an expanded repeat of CAG nucleotides in the HTT gene,
resulting in a mutated huntingtin protein. When the mutated protein is present in the cells, small
polyglutamine-containing protein fragments are formed. These fragments stick to each other, and
accumulate in nerve cells, interfering with normal cellular functions, eventually leading to cell death. QRX-704
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is designed to modify the HTT mRNA to prevent the formation of the toxic fragments, while the huntingtin
protein remains functional.
Our Strategy
We are dedicated to improving the lives of patients and their loved ones through the development of RNA-
therapies for severe genetic orphan diseases. We have an initial focus on patients with Leber’s congenital
amaurosis 10, Usher syndrome 2A, dystrophic epidermolysis bullosa and cystic fibrosis. Key elements of our
strategy include:
Develop drugs for patients in need. Through our patient-centric approach we work to develop best-in-
class therapies and to advance the understanding of conditions that we target. As RNA therapies have
become an established modality we are translating new applications in a pipeline of products for patients
suffering from rare diseases. We believe this strategy enables us to build a sustainable independent
business.
Rapidly advance our ophthalmology franchise, including QR‑110 for the treatment of LCA. We recognize
the great opportunity for oligonucleotides in the ophthalmology space and therefore have established an
ophthalmology franchise with programs for LCA 10, Usher syndrome 2A, Fuchs’ endothelial corneal
dystrophy 3 and Stargardt’s disease. We are currently conducting a Phase 1/2 clinical trial of our lead
product candidate, QR‑110, in adults and children with LCA 10, the leading genetic cause of blindness in
childhood. Patient dosing commenced in late 2017 and we expect to obtain six-month treatment data in
2018 and full twelve-month data in 2019.
Extensively broaden our ophthalmology portfolio by advancing QR‑421a and QR‑411 for Usher syndrome
2A into clinical development. For Usher syndrome 2A, a progressive disease leading to hearing loss and
blindness, we are developing QR‑421a for the ophthalmic manifestation of Usher syndrome 2A due to
exon 13 mutations, and QR‑411, also for Usher syndrome 2A due to the PE40 mutation. In 2018, we plan
to advance QR‑421a towards a Phase 1/2 clinical trial with results expected in 2019. Other programs in
our ophthalmology franchise include QRX-1011 for Stargardt’s disease and QRX-504 for Fuchs’
endothelial corneal dystrophy 3, both in the optimization phase, considered the last stage of discovery.
Once optimized, we intend to advance these molecules into pre-clinical development.
Initiate the first in human clinical trial for QR‑313, our lead dermatology candidate, for the treatment
of DEB. Our QR‑313 candidate is designed to address the underlying cause of DEB, a severe genetic
blistering skin disease due to mutations in exon 73 of the COL7A1 gene. A Phase 1/2 study for QR‑313 is
planned to start in 2018 and we expect to obtain interim data in 2018 and full data in 2019. Beyond
QR‑313, we have a pipeline of discovery-stage programs for other mutations that cause DEB, including
QRX-323 and QRX-333.
Expand our Axiomer RNA-editing platform into select therapeutic areas and capture value through
product and business development efforts. Our novel and proprietary RNA editing platform technology,
called Axiomer, is a new way to use oligonucleotides to edit single nucleotides in the RNA. We believe our
Axiomer technology may be applicable to more than 20,000 disease-causing mutations. In 2018 and
beyond, we plan to build out Axiomer in select therapeutic areas and continue to validate and create
value for the platform through pursuing licensing, partnering and other strategic relationships.
Seek a partner to develop and commercialize eluforsen for the treatment of CF. Our lead product
candidate for CF, eluforsen, has generated compelling data in pre-clinical and two global clinical studies
in CF patients. Results from our Phase 1b study announced in 2017 found eluforsen to be safe and well-
tolerated and demonstrated encouraging efficacy responses. The positive data support the potential of
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eluforsen as a disease-modifying therapy for CF patients with two copies of the F508del mutation. We
intend to pursue a strategic partnership for the development and commercialization of eluforsen and
start a planned Phase 2 trial in 2018. We are also studying applications of RNA technologies for other CF
mutations which currently have no available therapies.
Leverage our pipeline through considering out-licensing, spinouts or collaborative partnerships. We
plan to continue to advance the programs and technologies in our discovery pipeline and ensure that
these programs have the potential to make an impact for patients in these areas of unmet need, we will
consider strategic alternatives that include spinouts, out-licensing or collaborative partnerships with
pharmaceutical companies. These partnerships may provide us with further validation of our approach,
funding to advance our product candidates and access to development, manufacturing and commercial
expertise and capabilities.
Patient Centric Approach
ProQR aims to develop best-in-class therapies as well as to improve patient care through awareness,
education, and advancing the understanding of conditions that we target. In order to achieve this goal, ProQR
strives to integrate the patient voice into our decision-making throughout the drug development process.
Because we believe that a patient-centric strategy is crucial to our success, we have established the Patient
and Medical Community Engagement (PMCE) team. This dedicated team’s purpose is to listen to and
represent the patient voice internally as well as to collaborate externally with the communities we serve.
Leber’s Congenital Amaurosis
LCA Background
LCA is the most common genetic cause of blindness in childhood. We believe that the p.Cys998X mutation
(also known as c.2991+1655A>G) in the CEP290 (Centrosomal protein of 290 kDa) gene is the most prevalent
mutation which generally accounts for the most severe disease phenotype (LCA 10). Patients affected by this
mutation typically lose sight in the first years of life. In LCA 10 patients, this mutation leads to significant
decrease in CEP290 protein within the photoreceptor cells in the retina. Clinical features of LCA 10 include
loss of vision, involuntary eye movement or nystagmus, abnormalities of pupil reactions and no detectable
photoreceptor electrical signals on electroretinography (ERG).
Representation of the p.Cys998X
mutation causing LCA 10
Wild type
Leber’s congenital amaurosis type 10
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LCA Genetics
The p.Cys998X mutation is a single nucleotide
substitution in the CEP290 gene that creates a new
splice site, also called a cryptic splice site, between
exon 26 and 27. During the splicing of the pre-
mRNA this causes a part of the intron, or
pseudoexon, to be included in the mRNA. The
pseudoexon contains a premature stop codon
thus the mRNA is not translated into the full length
CEP290 protein. The CEP290 protein is involved in
the formation and stability of the connecting cilium
in photoreceptor cells, which facilitates the
transport of proteins from the inner segment to
the outer segment of the cell. When CEP290 is
absent, there is a disturbance in normal protein
transport to the outer segments which provokes
the shortening of the outer segment and its
inability to perform its light transducing function.
LCA Prevalence and Diagnosis
LCA is caused by a genetic defect in 20 or more
associated genes. The most common mutation is
the p.Cys998X in the CEP290 gene causing LCA 10. Although diagnosis rates vary, our estimations indicate this
mutation to occur in approximately 2,000 patients in the Western world.
Patients are initially diagnosed through the presence of clinical symptoms. Nystagmus, rapid involuntary
movements of the eyes, tends to be the first symptom visible as well as oculo-digital signs comprising eye
poking, pressing, and rubbing. Vision impairment or blindness becomes obvious as age increases. After an
ophthalmological examination, LCA is diagnosed. A genetic screening including all known mutations causing
LCA is performed to confirm the diagnosis and determine the type of LCA in order to give the patient the
most accurate prognosis possible (approximately 30% of all patients carry a mutation that has not been
identified to date).
Approaches for the Treatment of LCA 10
There are currently no disease modifying treatments approved or potential treatments in clinical trials for
patients with p.Cys998X associated LCA 10, a form of LCA. There are other approaches in pre-clinical
development for the p.Cys998X mutation that target the disease at the DNA level. The eye is highly suitable
for oligonucleotide therapies as it is a contained organ with physical cellular barriers, which strongly limits the
free entry and exit of cells and larger molecules in and out of the eye, therefore limiting the systemic
exposure of locally administered therapies.
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QR‑110 for LCA 10, splice correction for
p.Cys998X CEP290 mRNA
QR‑110 binds to pre-mRNA and silences the cryptic splice site
leading to production of normal mRNA.
QR‑110 for the Treatment of LCA 10
Our lead product candidate in the LCA 10
space, QR‑110, is a first-in-class single-
stranded RNA oligonucleotide of 17
nucleotides long. It is designed to treat the
disease by binding to the pre-mRNA and
thereby silencing the cryptic splice site
caused by the p.Cys998X mutation. The
splicing machinery can thus splice the pre-
mRNA correctly resulting in normal mRNA
and we expect the production of full-length
functional wild type CEP290 protein. The
intended route of delivery is through
intravitreal injection.
Clinical Development for QR‑110
We believe the activity seen in our pre-clinical models of LCA 10 provided strong support for the clinical
development and therapeutic potential of QR‑110. We are currently conducting a Phase 1/2 study for QR‑110
(PQ-110-001: NCT03140969) which commenced with the first patient dosed in November 2017.
PQ-110-001 is an open-label trial that will include approximately six children (age 6 - 17 years) and six adults
(≥ 18 years) who have LCA 10 due to one or two copies of the p.Cys998X mutation in the CEP290 gene. During
the trial, subjects will receive four intravitreal injections of QR‑110 into one eye; one every three months. The
QR‑110 trial is being conducted in three centers with significant expertise in genetic retinal disease in the U.S.
and Europe. We expect to obtain six-month interim data from this study in 2018 and full twelve-month data
in 2019.
The primary objectives of the trial will be safety and tolerability. Secondary objectives will include the
pharmacokinetics and restoration/improvement of visual function and retinal structure through ophthalmic
endpoints such as visual acuity, full field stimulus testing (FST), optical coherence tomography (OCT), pupillary
light reflex (PLR), mobility course and fixation stability.
Pre-clinical evidence for QR‑110
We have conducted in vitro and in vivo pre-clinical studies that we believe support the clinical development to
explore the therapeutic potential of QR‑110.
QR‑110 assessment in patient fibroblasts
Since QR‑110 targets the splicing process, the most direct measurable outcome of activity is the profiling and
quantification of CEP290 transcripts (wild type and mutant) and protein before and after treatment. In pre-
clinical studies to date, QR‑110 has demonstrated restoration of CEP290 wild type (correctly spliced) mRNA
and protein in cultured fibroblast cells of LCA 10 patients homozygous and compound heterozygous for the
p.Cys998X mutation.
Homozygous cells (p.Cys998X/p.Cys998X; LFB-3) (figure A)
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Compound heterozygous cells (p.Cys998X/p.Lys1575X; LFB-6) (figure B)
Effect of QR‑110 at the mRNA and protein level in fibroblast cells from LCA 10 patients that are A) homozygous and B)
compound heterozygous for the p.Cys998X mutation. Normalized wild type and mutant CEP290 mRNA expression
(copies/ng) after transfection of LCA 10 fibroblasts with QR‑110, analyzed with one-step ddPCR. For protein data (Western
Blot), expression is shown relative to control cells without the mutation. Error bars show mean with SEM. *p<0.05,
**p<0.01, ***p<0.001, vs. mock treated cells, Student’s t-test.
The figure above summarizes the observations from our pre-clinical data that treatment with QR‑110 may be
able to increase the expression of wild type CEP290 mRNA and protein in fibroblast cells from LCA 10 patients
that are homozygous for the p.Cys998X mutation. Furthermore, we observed that treatment with QR‑110
resulted in a decrease in levels of mutant mRNA (figure A, left and center). The mRNA and protein profile
restoration trend is also observed in LCA 10 fibroblasts that are compound heterozygous for the p.Cys998X
mutation (figure B, left and center).
Changes in the mRNA profile are supported by a wild type CEP290 protein increase illustrated by Western
blot. Results demonstrate that in LCA 10 fibroblasts that are homozygous for the p.Cys998X mutation, in vitro
treatment with QR‑110 restored CEP290 protein levels to that of control cells (figure A, right panel). In LCA 10
fibroblasts that are compound heterozygous for the p.Cys998X mutation, QR‑110 treatment in vitro restored
CEP290 protein levels to ~50% of control cells (figure B, right panel). This is expected since in these compound
heterozygous cells only one mutated allele carries the p.Cys998X mutation and therefore only one allele can
be targeted by QR‑110 treatment. People that are heterozygous for the p.Cys998X mutation, with one normal
allele and one allele carrying the p.Cys998X mutation, are asymptomatic. This indicates that correction of one
diseased allele could be enough to prevent or stop progression of the disease.
QR‑110 activity in optic cup model
Optic cups are a retinal organoid model derived from fibroblasts of a LCA 10 patient harvested through skin
biopsies. The cells are reprogrammed into induced pluripotent stem cells, or iPSC, and later differentiated
into retinal pigmented epithelium cells and neural retinal cells, also known as three-dimensional optic cups.
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Optic cups constitute a convenient and clinically relevant model system to thoroughly study the mechanisms
of inherited retinal degeneration since, unlike the classic cell models, these 3D organoids simulate the
disease phenotype and provide an appropriate cellular model with the genetic mutations in genomic context.
The clinical and molecular relevance of the optic cup model, coupled with the absence of an animal model,
makes the optic cup the best model in which to simulate the mechanisms of LCA 10 and effectively test the
potential of QR‑110.
LCA 10 patient derived optic cups were exposed to QR‑110. First, we observed from the results that QR‑110 is
able to enter the cells without use of any transfection agents. Second, QR‑110 elicited a dose-dependent
restoration of CEP290 wild type mRNA expression. And third, increased CEP290 mRNA expression was also
associated with a commensurate decrease in mutant CEP290 mRNA.
Generation of LCA 10 patient iPSC-derived optic cups
QR‑110 increases wild type CEP290 mRNA levels in a
dose-dependent manner in LCA 10 optic cups
LCA 10 homozygous optic cups
LCA 10 p.Cys998X homozygous patient fibroblasts were reprogrammed into iPSC which were differentiated into
optic cups for 96 days and treated with different amounts of QR‑110 for another 28 days (Parfitt et al. 2016) and
analyzed using end-point PCR.
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Retinal Distribution of QR‑110
Labelled QR‑110 (green) administered via intravitreal injection into wild type mice eyes. We demonstrated
that QR‑110 enters the target cells of the retina, including the photoreceptor cells. QR‑110 was detected 60
days (the maximum time point tested) following a single injection.
QR‑110 reaches target cells after intravitreal injection
Retinal distribution of 6FAM-labelled QR‑110 following single intravitreal
injection of 100 µg in wild type mice.
Usher Syndrome 2A
QR‑421a and QR‑411 for Usher Syndrome 2A
Usher syndrome is the leading cause of combined deafness and blindness. Patients with this syndrome
generally progress to a stage in which they have very limited central and peripheral vision and moderate to
severe deafness. The retinal phenotype, known as retinitis pigmentosa or RP, is characterized by
photoreceptor degeneration that leads to progressive vision loss. Patients first experience defective dark
adaption, loss of peripheral visual field when photoreceptor degeneration progresses, and eventually have
only a residual central island of vision, which ultimately progresses to complete blindness. Like LCA, RP is a
retinal ciliopathy.
Usher syndrome 2A is caused by mutations in the USH2A gene, encoding the protein usherin. Pathogenic
mutations in the USH2A gene disrupt the production of usherin, a protein expressed in photoreceptors where
it is required for their maintenance. Usherin is also expressed in the ear, where it is required for normal
development of cochlear hair cells and hence, normal hearing. In the eye, defects in usherin cause RP. Our
programs will target RP in patients with mutations in USH2A with Usher syndrome 2A as well as a subtype of
non-syndromic retinitis pigmentosa, in which patients experience visual loss but do not suffer from hearing
loss. Exon 13 mutations represent the most common mutations in the USH2A gene.
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QR‑421a USH2A exon 13 splice correction
Splice correction for PE40 USH2A mRNA
QR‑421a is being developed as a treatment for RP caused by mutations in exon 13 of the USH2A gene.
Pathogenic mutations in exon 13, including the prevalent c.2299delG, disrupt the production of usherin in
retinal photoreceptors, where it is required for their maintenance. QR‑421a aims to modify splicing of USH2A
pre-mRNA such that the exon 13 is excised from the mature mRNA. The excision of exon 13 leads to an in-
frame deletion in the USH2A mRNA. Since exon 13 encodes for a repetitive part of the usherin protein,
excision of it leads to a fully functional usherin protein. Similar to approach of QR‑110, QR‑411 is targeted at
correcting the splicing of a pseudoexon between exons 40 and 41. In patients the specific c.7595-2144A>G
(PE40) mutation leads to the aberrant inclusion of this pseudoexon in the mature mRNA and consequently a
non-functional protein. Correction of the splicing pattern with QR‑411 will lead to a fully functional usherin
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protein. It was observed that QR‑421a and QR‑411 reach the correct layer of the retina (the outer nuclear
layer) after intravitreal administration to mice. Neither QR‑421a nor QR‑411 will be suitable for patients
presenting with any other mutations involved in RP where they do not have at least one exon 13 mutated
allele or a PE40 mutation targeted by QR‑421a or QR‑411 respectively.
Clinical Presentation of Usher Syndrome 2A
RP is characterized by limited visual field and the presence of visual defects such as reduced visual acuity,
poor photo- and contrast sensitivity. The first visual symptoms often appear during the second decade of life
and start with night blindness due to the start of degeneration of rod photoreceptors. When rod
degeneration progresses, patients lose their peripheral visual field. Progression of rod degeneration
continues with the degeneration of cones which eventually results in complete blindness. The rate and
degree of vision loss vary within and among families. The diagnosis of the disease is based on clinical
symptoms and ophthalmologic evaluations. Usher syndrome is both clinically and genetically a
heterogeneous disease. Usher syndrome 2A is characterized by congenital moderate-to-severe bilateral
hearing loss, the degree of hearing loss may become more severe over time. Individuals with Usher
syndrome 2A present with progressive RP. In contrast with Usher syndrome types, Usher syndrome 2A
patients do not suffer from vestibular dysfunction.
Disease Prevalence and Diagnosis
Although accurate prevalence figures do not exist, the number of patients with Usher syndrome 2A and non-
syndromic retinitis pigmentosa due to USH2A exon 13 mutations is estimated to be around 16,000 in the
Western World. In Europe, the PE40 mutation is present in approximately 3-7% of the total Usher syndrome
2A population providing us with an estimate of 1,000 patients. This number could be a considerable
underestimate as many of these patients are unaware of the second disease causing allele following exome
sequencing suggesting a causative mutation is intronic. While the hearing deficit in patients with Usher
syndrome 2A can be at least partially restored using hearing aids or cochlear implants, there is no approved
treatment for RP in Usher syndrome 2A and disease management is supportive.
Approaches for the treatment of RP associated with Usher syndrome 2A
Vitamin A and docosahexaenoic acid (DHA) supplementations have been proposed as pharmacological
treatment options. Both therapies have shown a good safety profile but limited clinical benefit. We believe
QR‑421a and QR‑411 are the only product candidates in development for the treatment of patients with RP
caused by mutations in exon 13 or PE40 mutations of the USH2A gene. Both QR‑421a and QR‑411 modulate
splicing by enhancing exon-skipping which ultimately results in mature mRNA that can be translated into a
shortened but functional usherin protein or a wild type USH2A mature mRNA and usherin protein. As RP is in
most part a peripheral retinal disease, it is not particularly amenable to gene therapy approaches due to the
need to administer viral vectors by sub-retinal injection and the due to the size of the USH2A gene, which is
beyond the packaging limit of most viral vectors.
Pre-clinical evidence for QR‑421a
QR‑421a-effected exon exclusion has been shown in a retinoblastoma cell line and two dimensional
photoreceptor progenitor cells derived from primary fibroblasts of an USH2A c.2299delG homozygous
patient.
Uptake of QR‑421a by human photoreceptor-like cells resulting in a biochemically demonstrable change
in the USH2A pre-mRNA has been showed demonstrated with use of two dimensional photoreceptor
progenitor cells.
A zebrafish model carrying a mutation (premature stop codon) in exon 13 has been developed. The
zebrafish model has been used to show that exon 13 skipping at the mRNA level results in restoration of
usherin protein expression and restoration of electroretinogram (ERG) activity.
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Exon-13 splicing oligos restore ERG in exon-13 mutant fish
Pre-clinical evidence for QR‑411
QR‑411-effected exon exclusion has been shown in patient fibroblasts and two dimensional
photoreceptor progenitor cells derived from primary fibroblasts of an USH2A c.7595-2144A>G (PE40)
compound heterozygous patient.
QR‑411 demonstrates exon exclusion of human PE40 in a humanized Ush2A zebrafish mode.
QR‑411 increases wild type USH2A mRNA
Expression of wild type (blue bars) and PE40 (black bars) mRNA in a compound heterozygous
patient fibroblast cell line carrying one allele containing the PE40 mutation and the other allele
an exon 13 mutation (c.2391_2392del) after treatment with 10, 25, or 50 nM QR‑411.
Clinical Development of QR‑421a and QR‑411
QR‑421a and QR‑411 are currently undergoing IND-enabling studies. We plan to advance the QR‑421a
program towards a Phase 1/2 clinical trial at the end of 2018. The clinical trial will consist of a single-dose arm
and a six-month adaptive multiple dose arm. We expect to receive top-line data from the single-dose arm in
the first half of 2019 and from the adaptive multiple dose arm later in 2019.
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Research Grants
On February 9, 2018, we entered into an agreement with Foundation Fighting Blindness, or FFB, under which
FFB will provide funding of $ 7.5 million to advance QR‑421a into the clinic and will receive future milestone
payments totaling $ 37.5 million.
Fuchs’ Endothelial Corneal Dystrophy 3
Fuchs’ endothelial corneal dystrophy 3 (FECD3) is a common, autosomal dominant, degenerative, age-related
condition. The disease primarily affects the corneal endothelium, with characteristic focal outgrowths termed
“guttae” and associated reduction in cell density. Progressive endothelial cell loss will ultimately lead to fluid
accumulation, progressive corneal clouding, reduced visual acuity, and painful epithelial bullae. FECD3 is
caused by a trinucleotide CTG repeat expansion situated within a non-coding, intronic region of the TCF4
gene. Transcripts containing >50 copies of the repeat accumulate as nuclear RNA foci and are believed to
sequester RNA-splicing factors, including the MBNL1 protein. This leads to a functional deficiency of these
proteins and subsequent global disruption of mRNA splicing. QRX-504 is an antisense oligonucleotide which
targets the trinucleotide repeat expansion leading to a reduction in splicing factor sequestration. It has been
observed that following intraocular injection into mice, QRX-504 distributes within the corneal endothelium.
QRX-504 for FECD
Clinical Presentation of FECD3
Patients usually present with symptoms during their fifth to sixth decade. Early-stage disease is typically
managed with topical hypertonic saline to reduce corneal swelling, but surgical intervention is currently the
only treatment option available to patients with advanced disease.
Disease Prevalence and Diagnosis
It is estimated FECD affects more than 4% of individuals over the age 40 in the U.S, and similar prevalence is
noted for other global regions. Patients usually present with guttae, a reduction in corneal endothelial cell
density and corneal oedema. FECD3 is the major cause in patients in the Western world.
Approaches for the treatment FECD3
There are currently no treatment options for vision loss in patients with any form of FECD, other than corneal
(endothelium) transplantation. This requires surgery where the damaged cornea is removed and replaced
with a healthy donor cornea. However, transplantation has several limitations, including the availability of
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donors, risk of rejection, the inherent risk of an invasive procedure and is only available to patients with
advanced FECD.
QRX-504 for the treatment of FECD3
QRX-504 aims to toxic gain of function TCF4 mRNA releasing sequestered splicing factors and restoring
endothelial cell homeostasis.
Stargardt’s Disease
Stargardt’s disease is the most common inherited macular dystrophy causing progressive impairment of
central vision. It is associated with mutations in the ABCA4 gene, encoding photoreceptor cell-specific ATP-
binding cassette transporter 4 protein. The disease is inherited in an autosomal recessive fashion. The ABCA4
protein is predominantly expressed in the retina, where it is involved in transport of N-retinylidene-PE.
Absence of ABCA4 results in the failure to clear these toxic substances, resulting in the loss in photoreceptor
cells. A large number of disease-causing mutations have been found in ABCA4. c.5461-10T>C is the third most
frequent ABCA4 mutation, and causes a severe form of Stargardt’s disease. This mutation is located in intron
38, and leads to skipping of exon 39, or of exon 39 and exon 40 in the mRNA. This aberrant splicing pattern
results in reduced ABCA4 protein level. QRX-1011 targets the ABCA4 pre-mRNA and results in the retention of
exon 39 and exon 40, leading to the production of a mature wild type mRNA and protein.
QRX-1011 for Stargardt’s Disease
Clinical Presentation of Stargardt’s Disease
The most common symptom of Stargardt’s disease is slow loss of central vision in both eyes. Onset of the
disease is typically in childhood or young adulthood. Patients notice gray, black, or hazy spots in the center of
their vision, have reduced light adaptation with increased light sensitivity, and some patients also experience
color blindness as the disease progresses. Most patients with Stargardt’s disease will progress to legal
blindness or worse and may also suffer constriction of the visual field as they age.
Disease Prevalence
It is estimated there are 7,000 Stargardt’s disease patients in the Western world with the c.5461-10T>C
mutation in ABCA4.
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Approaches for the treatment of Stargardt’s disease
Currently, there is no treatment available for Stargardt’s disease. Patients are often advised to wear
eyeglasses or sunglasses that block UV light to reduce the possibility of additional eye damage caused by the
sun and to avoid taking vitamin A supplements, but these measures do not prevent the progression of the
disease. As Stargardt’s disease due to the ABCA4 c.5461-10T>C mutation is inherited in an autosomal
recessive manner, the condition may be amenable to gene therapy approaches where the complete loss of
ABCA4 function is complemented by simple gene replacement.
QRX-1011 for the treatment of Stargardt’s disease
QRX-1011 is a first-in-class single-stranded oligonucleotide designed to treat vision loss caused by the specific
c.5461-10T>C mutation in the ABCA4 gene which leads to a splicing defect. Using an antisense oligonucleotide
which modulates splicing of the mRNA, QRX-1011-mediated correction in the mRNA level leads to inclusion of
the deleted exons and formation of functional, wild type ABCA4 protein which will potentially stop and
perhaps reverse the progression of the disease.
Dystrophic Epidermolysis Bullosa (DEB)
DEB Background
Epidermolysis bullosa (EB) is a rare genetic disorder, primarily manifesting as a debilitating disease of the skin
and mucosal membranes. It is characterized by mechanical fragility of epithelial tissues, blister formation,
scarring and, in some subtypes, involvement of multiple other organs. EB is classified into four main
subtypes, namely EB simplex (EBS), junctional EB (JEB), dystrophic epidermolysis bullosa (DEB), and Kindler
Syndrome (KS). The four main EB subtypes are distinguished by the level of the skin at which blisters develop.
In DEB, the outer layer of the skin, the epidermis, separates from the inner layer, the dermis. This separation
renders the skin fragile and causes severe blistering and has downstream effects such as wound infection,
scarring, and SCC (squamous cell carcinoma). All mucosal membranes are affected in DEB, therefore
blistering is not limited to the skin, but is also present in the mouth, esophagus and downstream intestines.
DEB is usually a chronic, seriously debilitating disease with a shortened life expectancy due to malnutrition,
infections, and malignancies.
DEB Genetics
The disease is caused by mutations in the COL7A1 gene. This gene is responsible for the production of a
protein called collagen type VII (also referred to as C7), which is a major component of the anchoring fibril
located below the basement membrane that normally links the epidermis and the dermis together. DEB
causing mutations occur more often in certain parts of the gene. One of those parts is exon 73.
DEB Prevalence and Diagnosis
DEB is a genetic disease that in some cases is inherited as an autosomal dominant (DDEB) and in others as an
autosomal recessive trait (RDEB). The prevalence of DEB could differ across countries due to founder effects
and differences in ethnic composition. While spatial variations, compounded with the scarcity of available
data, make accurate calculations difficult, the estimated number of DEB patients in the Western world is
approximately 6,000 of which approximately 2,000 have a mutation in exon 73.
Diagnostic testing for DEB is based on the identification of the level of skin cleavage via immunofluorescence
antigen mapping with C7 specific antibodies and/or determination of anchoring fibrils using transmission
electron microscopy.
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Approaches for the Treatment of DEB
Currently, no disease modifying treatment is available for DEB. Palliative treatment is the only treatment
available for DEB patients and constitutes a time-consuming daily activity. Palliative treatment primarily
consists of care of (new) blisters by puncturing and draining to prevent further spread from fluid pressure,
wound management to prevent infections, prevention of skin trauma to avoid new blister formation, and
pain and itch relief.
QR‑313 for the treatment of DEB
QR‑313 is designed to specifically target mutations in exon 73 of the COL7A1 gene. QR‑313 binds to a specific
sequence in the COL7A1 pre-mRNA, thereby excluding exon 73 from the mature mRNA. This leads to a
shortened version of the C7 protein that is functional in the formation of anchoring fibrils.
Because of the exon skipping approach, QR‑313 is not specific to a single mutation but instead targets any
mutation contained in exon 73.
Functional C7 protein: Restoration through QR‑313 Treatment
Schematic shows pathway for generation of C7 protein in the healthy and disease situations (left and center
diagrams, respectively). Hybridization of QR‑313 to a specific sequence in COL7A1 pre-mRNA results in the
exclusion of exon 73 from the mRNA, which leads to the production of a truncated but still functional C7
protein (right diagram).
Pre-clinical evidence for QR‑313
Clinical development of QR‑313 focuses on topical delivery in the wounded skin of patients, with the aim to
improve wound healing and reduce skin fragility. Therefore, we formulate QR‑313 into a hydrogel for wound
application that can be incorporated in the standard of care of patients.
Activity of QR‑313 in cells and human skin equivalents
The activity of QR‑313 was investigated in 3 different in vitro test systems; cell lines, primary cells, and human
skin equivalents (HSEs). HSEs are composed of both a dermal layer containing fibroblasts and an epidermal
layer containing keratinocytes. The keratinocytes are fully differentiated to form all the different layers in the
epidermis, including the stratum corneum. The culturing of HSEs is done at the air-liquid interface and
therefore mimics the human situation. Moreover, by removing the epidermis from a portion of the skin
equivalent, the blistering phenotype of DEB can be modeled.
Experiments have shown
Efficient exon 73 skip in the wild type (WT) fibroblast cell line (HeLa) as well as in in WT and mutant
HaCaT keratinocytes in a dose-dependent manner
Dose-dependent exon 73 skip in WT and RDEB patient Human Primary Fibroblasts (HPF) (Figure 1)
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Exon skip in HSEs after treatment with QR‑313 using the same concentration, formulation and topical
application as planned to use in patients (Figure 2)
An increase in C7 expression in RDEB patient fibroblasts after treatment with QR‑313 (Figure 3)
Functionality of the shortened protein C7Δ73. It forms stable trimers, is present in anchoring fibrils at
the dermal-epidermal junction, and binds its interacting partners collagen type IV and laminin-332.
The effect of QR‑313 was assessed in HPFs from an RDEB patient, which contain one pathogenic mutation in
exon 73 of COL7A1 and another pathogenic mutation on the other allele. Results showed efficient skipping of
exon 73 from COL7A1 mRNA after 24 hours, and an increasing efficiency after 48 hours, with a near absence
of the full length transcript that contains exon 73. In a subsequent set of experiments also lower
concentrations were tested in RDEB HPFs as well as wild type HPFs. The results showed a clear dose response
for QR‑313 with increasing exon skip percentages in both RDEB and wild type HPFs. With the high doses of
QR‑313 a median skip of 77% for wild type and 87% for RDEB HPFs is reached.
Sequence analysis on the 150 bp product demonstrates removal of the complete exon 73 from the mRNA.
This provides further evidence that QR‑313 acts via its intended mode of action in human cells and efficiently
skips exon 73 in the COL7A1 mRNA.
Exon 73 exclusion from COL7A1 mRNA in RDEB and WT HPFs following treatment with QR‑313
Splicing products of COL7A1 mRNA following transfection with QR‑313 or a scrambled version of QR‑313 (SCR). Wild
type HPFs and RDEB patient HPFs were transfected for 24 or 48 hours with 3.1 - 200 nM QR‑313 or 100 nM scrambled.
PEI transfection agent only was used as a negative control. Exon 73 skip in COL7A1 mRNA was measured using RT-PCR.
A. Representative Lab on a Chip result of exon 73 skip in RDEB HPFs. Treatment with SCR or PEI as negative control
resulted in the production of a 350 bp fragment representing the wild type, full length amplicon (including exon 73)
while treatment with QR‑313 resulted in the production of a 150 bp fragment representing the modified mRNA
product, which excludes exon 73 (Δ exon 73). The full length COL7A1 band fades with increasing concentration or
incubation time of QR‑313, while the intensity of the Δ exon 73 band increases. B. Quantification of exon skip in wild
type HPFs and RDEB HPFs after 24 hours of incubation. A dose-dependent increase in exon skip is observed from 3.1
to 50 nM. Higher concentrations do not further increase the exon skip percentage. Median and range of 3
independent experiments are shown.
In 3D models of the skin, so-called HSEs, the dose-response of Cy5-QR‑313 was assessed in a range of 10-
1000 µg by application in 200 mg carbomer hydrogel to HSEs wounds of approximately 2 cm2. The clinical
situation was mimicked, so no transfection reagent was used. After 24 or 48 hours of incubation, RNA
isolation was performed on both the dermal fibroblasts and the epidermal keratinocytes. The samples were
analyzed for exclusion of exon 73 using RT-PCR. QR‑313 activity was shown in RDEB-like wounded skin in both
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dermal fibroblasts and epidermal keratinocytes. In the dermal fibroblasts, exon 73 exclusion was shown in 40
and 80% of the models treated with 100 or 1,000 µg QR‑313 for 24 hours, respectively. After 48 hours, exon
exclusion was observed in 100% of the models in the dermal fibroblasts. In the epidermal keratinocytes, exon
exclusion was shown in 10 and 30% of the models treated with 100 and 1,000 µg QR‑313 for 24 hours,
respectively. After 48 hours, models showing exon exclusion in keratinocytes increased to 30% and 80% for
100 µg and 1000 µg, respectively. After 24 hours exon skip was not detected in dermis or epidermis after
treatment with 10 µg, while after 48 hours 8% of models showed exon skip in both dermis and epidermis.
Exon 73 skip in COL7A1 mRNA in HSEs following treatment with Cy5-labelled QR‑313
A. HSEs were treated for 24 hours with 50 µL of 0.5 mg/mL PBS formulation or 50 mg of the 0.5 mg/g
carbomer gel formulation. RNA was then isolated from the dermal part of the model and RT-PCR analysis was
performed. The different COL7A1 mRNA products were analyzed for length. The 350 bp fragment represents
the wild type, full length amplicon including exon 73 mRNA, while the 150 bp nucleotide fragment represents
the exon skip COL7A1 mRNA product Δ exon 73. B. HSEs were treated for 24 or 48 hours with carbomer gel
formulated with a total dose of 10, 100 or 1000 µg Cy5-QR‑313. After 24 or 48 hours incubation total RNA was
isolated from both the dermal fibroblasts and epidermal keratinocytes separately. The graphs depict the
percentage of models that demonstrate exon 73 exclusion for the dermal fibroblasts and epidermis. Data is
representative of 2 different donors, 6 replicates
per donor.
Following assessment of the COL7A1 mRNA splice product, collage type VII (C7) protein production in
compound heterozygous RDEB patient fibroblasts was assessed. Cells were seeded onto chamber slides and
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subsequently transfected with 100 nM QR‑313 or scrambled QR‑313 as a negative control using PEI as a
transfection agent. The cells were fixed and stained for C7 protein 72 hours after transfection, and the nuclei
were stained with DAPI before fluorescence imaging was performed.
After treatment with PEI alone, RDEB HPFs show minimal expression of C7 (the patient from which the cells
were received has residual expression of the NC1 domain, against which the antibody is reactive), in contrast
to WT HPFs, where C7 staining is clearly visible in the cytoplasm (pseudo-coloured in green). Seventy-two
hours after transfection, C7 staining in the RDEB HPFs is observed in the cytoplasm similar to the staining in
WT HPFs, confirming C7 protein formation. In contrast, transfection with the scrambled did not result in an
increase in C7 staining compared to PEI alone.
Immunofluorescent staining of C7 in WT HPFs and RDEB HPFs
WT HPFs or RDEB HPFs with a heterozygous mutation in exon 73 were
transfected either only with PEI, with 100 nM QR‑313 or with 100 nm
scrambled QR‑313. After 72 hours, cells were fixed and stained for C7
(green) using indirect immunofluorescence and with DAPI (blue) to visualize
the nuclei. Scale bar indicates 20 µm.
In vivo uptake
In vivo uptake of QR‑313 in the skin was tested in Göttingen minipigs. The uptake and distribution of Cy5-
labeled QR‑313 formulated in a carbomer gel was tested after topical application on intact and wounded skin.
Split-thickness wounds, which remove the epidermis and leave most of the dermis intact (2 cm by 3 cm and
approximately 0.35 mm depth) were created on the backs of the animals using a dermatome. Cy5-labeled
QR‑313 DP (0.5 mg/g in 0.75% carbomer gel) was either applied as a single dose (SD) or multiple dose (MD) on
days 1, 3 and 5. Skin biopsies were either taken 2 days after wounding (SD) or 7 days after wounding (MD)
(this corresponds to 2 days after last dosing). Cy5-labeled QR‑313 was not able to penetrate intact minipig
skin.
Two days after the SD application on wounded skin, Cy5-labeled QR‑313 had diffused into the dermis of the
wound bed. For MD, Cy5-labeled QR‑313 was still visualized in the wound bed after 7 days, however the
depth of diffusion is reduced compared to the SD after 2 days. After 7 days, the epidermis had fully migrated
over the wound bed (below the wound scab), and therefore the dermis was no longer exposed. The newly
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formed epidermis has taken up Cy5-labeled QR‑313 and co-localization with the nucleus was observed using
confocal microscopy imaging.
Delivery of Cy5-labeled QR‑313 in wounded skin in Göttingen minipigs
Single dose
Multiple dose
Biopsy taken at day 2
Biopsy taken at day 7
Histology sections of minipig skin 2 or 7 days after wounding. Left picture: skin
exposed to Cy5-labelled QR‑313 for 2 days after single dosing. Right picture: skin
exposed to Cy5-labelled QR‑313 after multiple dosing (3 administrations). Cy5-labelled
QR‑313 is depicted in red, nuclei are depicted in blue. White dotted line represents
border between epidermis and dermis.
Planned Phase 1/2 Study for QR‑313
We are planning to commence our first in human study of QR‑313 in DEB exon 73 patients in 2018, which we
refer to as WINGS (A First in Human, Double-Blind, Randomized, Intra-Subject Placebo-Controlled, Multiple
Dose Study of QR‑313 Evaluating Safety, Proof of Mechanism, Preliminary Efficacy and Systemic Exposure in
Subjects With Recessive Dystrophic Epidermolysis Bullosa (RDEB) due to Mutation(s) in Exon 73 of the COL7A1
Gene). We plan to conduct the WINGS study as a Phase 1/2 safety and efficacy clinical trial in two parts, first
enrolling eight RDEB patients with an exon 73 mutation, and after interim analyses expect to add another
cohort of DEB patients. The study evaluaties safety, tolerability and systemic passage of QR‑313. The clinical
trial is expected to be double blinded intra-patient controlled, single or dual-wound treatment for 4 weeks,
with a follow-up period of 8 weeks. We expect to receive interim data from the first part of the trial in 2018
and full results in 2019. Beyond QR‑313, we have a pipeline of discovery-stage programs for other mutations
that cause DEB, including QRX-323 and QRX-333.
Cystic Fibrosis
Cystic Fibrosis Background
CF is the most common fatal inherited disease in the Western world and affects 77,000 patients. There is no
cure for CF. CF patients require lifelong treatment with multiple daily medications, frequent hospitalizations
and ultimately lung transplants, which can extend life for five years on average. The quality of life for CF
patients is compromised by approximately four hours of self-care per day and frequent outpatient doctor
visits and hospitalizations.
Chloride ion flow by wild type CFTR and F508del CFTR
Wild type
F508del
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CF is caused by mutations in a gene
that encodes the CFTR protein. The
CFTR protein channel regulates the
movement, or efflux, of specific ions
in and out of the cells of organs like
the lungs, pancreas and
gastrointestinal tract. Through
regulation of these ions, the amount
of salts in the fluid both inside and
outside the cell remains balanced. In
CF patients, however, the CFTR
protein is defective and cannot
perform its normal function of
transporting ions across the cell
membrane, and this results in an
environment characterized by thick
mucus in vital organs such as the lung, the pancreas and the gastrointestinal tract. The figure illustrates a
defective CFTR protein hampering the efflux of chloride in lung epithelial cells.
The lack of functional CFTR in CF patients is particularly problematic in the lungs, where the build-up of thick
mucus obstructs parts of the lung, allows bacteria to grow unfettered and impairs the functionality of the
local immune system. Of all the manifestations of CF, lung disease is the most critical and is characterized by
a combination of airway obstruction, infection and inflammation such that more than 90% of all CF patients
die of respiratory failure. In the pancreas, the buildup of mucus prevents the release of digestive enzymes
that help the body break down food and absorb important nutrients. In the GI tract, the thick mucus leads to
impaired ability to absorb nutrients. The median age of death for all CF patients is 30 years or less.
According to the medical literature, restoration of as little as approximately 15% of wild type CFTR function in
CF patients should result in a therapeutic benefit.
Cystic Fibrosis Genetics
CF is an autosomal recessive disease. A normal, healthy gene has two alleles that encode for a given protein.
In an autosomal recessive disease such as CF, a patient has a mutation in both alleles. Non-affected carriers
have a mutation in only one of the alleles. CF patients have a defect in the gene encoding for the CFTR
protein, and they either have two copies of the same mutation, referred to as homozygotes, or one copy of
two different mutations, referred to as compound heterozygotes. Although over 1,900 CF-causing gene
mutations have been identified, approximately 85% of CF patients in the Western world are affected by the
F508del mutation. Of which approximately 45% are homozygous for the F508del mutation and approximately
40% are compound heterozygous for the F508del mutation.
In the F508del mutation, the genetic defect is a deletion of three of the coding base pairs, or nucleotides, in
the CFTR gene that results in the transcription of defective mRNA, which results in the production of CFTR
protein that is misfolded and can neither migrate to its normal location on the surface of epithelial cells nor
perform its normal function.
Cystic Fibrosis Incidence and Diagnosis
CF affect approximately 77,000 patients in the Western world. Many individuals are also non-affected carriers
of a mutated CFTR gene. Carrier results across ethnic groups in the United States are well established, and
reports from the American College of Obstetricians and Gynecologists indicate rates of one out of 25 in non-
Hispanic Caucasians, one out of 58 in Hispanic Caucasians, one out of 61 in African Americans, and one out of
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94 in Asian Americans. While the life expectancy of CF patients has improved over the last three decades, the
median age of death is still only 30 years or less.
Most CF patients in the United States, the European Union, Canada and Australia are now diagnosed at birth
through newborn screening, and more than 75% of CF patients are diagnosed by the age of two. CF can be
diagnosed by conducting a Nasal Potential Difference, or NPD, test that measures CFTR activity in the nose, or
a pilocarpine iontophoretic sweat chloride test, which measures the amount of salt in a person’s sweat. A
genetic test is also often used to confirm a CF diagnosis and/or identify the disease-causing mutations. In a
genetic test, a blood sample or cells from the inside of the cheek are taken and sent to a laboratory that
specializes in genetic testing.
Approaches to the Treatment of Cystic Fibrosis
Treatment overview
There is no cure for CF, and to date, all but one of the therapies approved to treat CF patients have been
designed to treat the symptoms rather than address the underlying cause. CF patients require lifelong
treatment with multiple daily medications, frequent hospitalizations and ultimately lung transplant, which is
life-extending but not curative. In the United States, the average CF patient incurs approximately $ 50,000 per
year in expenses for outpatient medications and services and substantial additional costs for frequent
hospitalizations. As the median age of death for CF patients is 30 years or less, this results in an average
lifetime cost per CF patient in the U.S. of $ 1,350,000 in outpatient expenses alone. CF patients who can be
treated with Vertex’s Kalydeco or Orkambi have additional annual costs of approximately $ 300,000.
Standards of care are generally similar across Western European nations.
Palliative treatments
The current standard of care for CF patients includes palliative treatment to manage the symptoms of the
disease. In CF patients, the thick mucus that builds up in the lungs and other vital organs such as the
pancreas and gastrointestinal tract hampers mucus clearance and leads to airway obstruction and difficulty
absorbing nutrients, leading to poor growth and development. Primary treatment options include inhaled
therapies such as rhDNase, marketed as Pulmozyme, which thins the mucus in the lungs, as well as
pancreatic enzyme replacement therapy, which improves absorption of nutrients. Due to the proliferation of
bacteria on the mucus build-up, CF patients often develop chronic lung infections that require inhaled
antibiotics treatments, such as TOBI or Cayston, to suppress the infections. CF patients also take a number of
other prescribed and over-the-counter medications to alleviate the symptoms of CF and reduce
complications, including bronchodilators, inhaled corticosteroids, and ursodeoxycholic acid for biliary tree
dysfunction.
Potentiators for certain non-F508del mutations
For a subset of patients who suffer from the G551D and other gating mutations of the CFTR gene, Vertex
Pharmaceuticals has developed a “potentiator” molecule marketed under the trade name Kalydeco
(ivacaftor). This product was approved by the FDA in 2012 to treat patients with the G551D mutation and, in
2014, the label was expanded to include eight additional gating mutations. In 2015, the label was further
expanded to include a total of ten gating mutations and children as young as two years old. Vertex has
estimated that approximately 2,400 CF patients in the U.S., Europe and Australia have a G551D or a non-
G551D gating mutation. Gating mutations are characterized by the presence of CFTR at the cell surface that
does not open and close the ion channels properly. Kalydeco is believed to keep the ion channels open for
longer. For this population of CF patients, medication costs are approximately $ 300,000 per year for
Kalydeco prescriptions. Kalydeco is an exciting development as it provides a proof of concept that it is
possible to target the defective CFTR protein that causes CF and improve key symptoms of the disease.
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The F508del mutation affects approximately 85% of CF patients in the Western world. Unlike the “gating”
mutations, F508del is a “processing” mutation, and as such, CFTR with the F508del mutation is not expressed
at the cell surface and cannot be potentiated by small potentiating molecules like Kalydeco.
Potentiator/corrector combination for F508del mutations
For patients aged 6 years and above and homozygous for the F508del mutation, Vertex Pharmaceuticals has
received regulatory approval for Orkambi. Orkambi is a fixed-dose combination of lumacaftor and ivacaftor
(Kalydeco). Lumacaftor is a new molecular entity also referred to as a CFTR “corrector” that is purported to
work by stabilizing and promoting the folding of the defective F508del CFTR and thereby increasing the
likelihood that the CFTR channel will be found at the cell membrane. Kalydeco purportedly potentiates the
activity of CFTR channel at the cell surface. We believe the clinical benefit of Orkambi for many homozygous
F508del patients is not commensurate with the benefit demonstrated by Kalydeco in the G551D population,
but is comparable to some of the symptom relief medications approved for use with CF. In March 2017,
Vertex reported Phase 3 results of a new fixed-dose combination of tezacaftor and ivacaftor. This
combination demonstrated clinical benefits of the same magnitude than Orkambi, but was better tolerated. A
marketing application has been submitted in the United States and European Union. Commercialization is
anticipated to begin in 2018. Approximately 12,000 US patients could be treated with Orkambi or with the
tezacaftor-ivacaftor at an estimated annual cost of approximately $ 260,000 or more in addition to the cost of
standard of care. In July 2017, Vertex reported preliminary results of next-generation correctors (VX-440, VX-
152 and VX-659) being used in combination with tezacaftor and ivacaftor, to be developed as triple
combination regimens. Data showed that such triple combinations improved lung function, sweat chloride
and respiratory symptoms in CF patients with one or two copies of the F508del mutation. Data from ongoing
Phase 2 trials are expected in the beginning of 2018. We believe these studies validate that F508del CFTR is a
treatable target and indicate there is still a need for more efficacious therapies.
Gene Therapy
Gene therapy is a process in which a functional gene is introduced into a cell to override the effects of a
defective gene. The CFTR gene was first identified in 1989. Since that time, several academic consortia and
drug-development companies have attempted to develop gene therapies targeting mutations in the CFTR
gene. These companies aimed to permanently correct the CFTR gene at the DNA level by delivering full-length
CFTR genes to lung epithelial cells to express wild type CFTR protein. However, these programs encountered
limitations faced by gene therapy in general as well as limitations specific to the CFTR gene. These barriers
included safety concerns, challenges in delivery of the gene therapy constructs to target cells in the lungs,
challenges of both delivery and incorporation into the genome given the size and complexity of the CFTR
gene, and immunologic responses to the gene therapy vectors. The most advanced effort in gene therapy for
CF is with an academic consortium in the U.K. In 2015, the Gene Therapy Consortium presented results of a
136-patient trial using a CFTR gene delivered in a liposome envelope. While the trial showed no overall
efficacy, specific subgroups did show a modest benefit in lung function compared to the placebo group. The
Gene Therapy Consortium has announced that they will conduct a follow-up trial of gene therapy in the
future but that a different vector will be needed for delivery of the gene.
Our RNA Approach
Eluforsen is a first-in-class RNA oligonucleotide designed to address the underlying cause of the disease by
targeting the mRNA in CF patients that have the F508del mutation. Eluforsen is designed to bind to the
defective CFTR mRNA and restore CFTR function. We believe we are currently the only company pursuing this
novel approach for CF patients.
Eluforsen for Treatment of CF
We are developing eluforsen as an inhaled treatment for CF patients. Eluforsen is a single-stranded RNA
oligonucleotide designed to restore CFTR function in CF patients with the F508del gene mutation. Eluforsen is
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33 nucleotides long and is designed to bind to the CFTR mRNA sequences that are adjacent to the deleted
F508del region of the mRNA.
The figure below represents, from left to right, wild type CFTR function in a normal cell, impaired CFTR
function in a cell with a F508del mutation and a F508del mutated cell treated with eluforsen, which would be
expected to result in restoration of chloride efflux.
Chloride ion flow: restoration
through eluforsen treatment
F508del + eluforsen
Clinical Development for eluforsen
We conducted two clinical trials of eluforsen in parallel. Study
PQ-010-002 is a proof-of-concept trial evaluating topical
administration of eluforsen and its effect on the nasal potential
difference (NPD), a biomarker of CFTR function. This trial
opened for enrollment in September 2015 and was completed
in September 2016. Study PQ-010-001 is a Phase 1b safety and
tolerability trial. This trial opened for enrollment in June 2015
and was completed in September 2017.
PQ-010-002 Proof-of Concept NPD study
The NPD assay is a standard test for detection and
quantification of CFTR function in the airways in CF patients.
The NPD test is a well-accepted diagnostic tool and has been
used in multiple therapeutic intervention trials to demonstrate
the restoration of CFTR mediated ion transport in pre-clinical
animal models and in CF patients. Our trial was designed to
investigate the ability of eluforsen to restore CFTR function in
patients. Restoration of CFTR function has been observed in
pre-clinical NPD studies using mouse models. The primary outcome measure was to determine the effect of
topical administration of eluforsen to the nasal mucosa on the restoration of CFTR mediated chloride
transport as measured by NPD in CF patients with the F508del CFTR mutation. Secondary endpoints included
maximal basal potential difference reflecting sodium channel activity. Nasal administration is not the
intended route of administration for eluforsen. However, the nasal epithelium is the most accessible site for
measuring CFTR function in humans and provides a human model of epithelial cell uptake and restoration of
CFTR function. All subjects were adults over 18 years old with CF either homozygous for the F508del mutation
or compound heterozygotes with one copy of the F508del mutation and one copy of another disease causing
mutation. The trial was conducted in five sites in the U.S., France and Belgium. Eluforsen was administered
intranasal 5 mg in each nostril 3 times weekly for 4 weeks (12 doses). The NPD measurements were done at
baseline, after 6 doses (Day 15), after 11 doses (Day 26) and 21 days after the last dose (Day 47).
Final results were reported at the European Society of Cystic Fibrosis (ECFS) conference in June 2017. In the
per-protocol population of subjects homozygous for the F508del mutation meeting the pre-specified
inclusion criteria (n=7), the average change from baseline in NPD at day 26 was statistically significant, -4.1
mV (p=0.0389). This finding was supported by a change in sodium channel activity (specifically, a measure
called max basal potential difference, or PD) and other sensitivity analyses of the NPD measurements, all
pointing to strong evidence of restoration of CFTR activity. In subjects that are compound heterozygous for
the F508del mutation, the average change from baseline in NPD was not significantly different at day 26. A
responder analysis of individual subjects assessing the impact of the second mutation is currently ongoing.
Eluforsen administered via the intranasal route was observed to be well tolerated.
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Eluforsen improves CFTR function in F508del homozygous
CF patients as measured by NPD
N= 7 (per protocol population). Parameter = within subject change from baseline in Cl-free+iso.
Average both nostrils. Baseline = average of 2 most recent pre-dose assessments. P = one-sided 5%
paired t-test.
We observed from the results of this trial that eluforsen improved CFTR function in homozygous F508del
patients as evidenced by both the increase in CFTR activity measured in the CFTR-mediated total chloride
response and the decrease in sodium channel activity as measured by the max basal potential difference.
The magnitude of the change observed in this trial is similar to that published for other commercially
available treatment in CF patients with the G551D mutation and superior to data published for lumacaftor in
patients with the F508del mutation.
Putting eluforsen clinical NPD results in perspective
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PQ-010-001 Phase 1b Safety and Tolerability Trial
This clinical trial was a Phase 1b, randomized, double-blind, placebo-controlled, 28-day dose-escalation trial
to evaluate the safety, tolerability and pharmacokinetics of eluforsen. The trial enrolled CF patients that are
homozygous for F508del and age 18 years and above. The trial was conducted at 26 sites located in 10
countries in North America and EU and enrolled 70 patients. The trial consisted of 4 single ascending dose
cohorts and 4 multiple ascending dose cohorts (12 doses over 4 weeks). In each cohort of 8 patients, the
randomization was 3:1, meaning that 6 patients received eluforsen and 2 patients received placebo.
Eluforsen was given as a nebulized solution to the lower airways after chest physiotherapy, which is a
standard procedure used with other currently administered inhaled medications. This method of drug
administration is common in CF patients. The primary outcome measures were to characterize safety,
tolerability and pharmacokinetics of eluforsen in CF patients. Pharmacokinetics was assessed in serum, urine
and sputum to establish the safety and to give indications of uptake into the lung and systemic circulation in
order to provide PK/PD information to design our future trials. We also assessed exploratory efficacy
outcome measures, including lung function, sweat chloride levels, weight gain, as well as respiratory
symptoms and quality-of-life measures specific to CF.
The results of the single-dose cohorts were reported in 2016 and all doses were safe and well-tolerated. In
September 2017, we reported the preliminary results of the multiple-dose cohorts in which 36 subjects were
enrolled. Eluforsen was observed to be safe and well-tolerated across all doses with no serious adverse
events related to treatment. A clinically meaningful improvement of CF respiratory symptoms, as measured
by CFQ-R RSS, was observed in 3 out of 4 multiple dose groups with a mean improvement of 13.0 to 19.2
points compared to placebo. The magnitude of the benefit observed in CFQ-R RSS for these dose groups
exceeded the established minimal clinically important difference (MCID) of 4.0 points. In addition, a
supportive trend of improved lung function was observed up to 4.0% mean absolute change in ppFEV1
compared to placebo. There were no changes in weight gain and sweat chloride.
Improvement in respiratory symptoms as
measured
by CFQ-R RSS at end of treatment
Change in lung function (ppFEV1)
at end of treatment
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PQ-010-003 Phase 2 Trial
PQ-001-003 is currently planned as a Phase 2 multicenter, randomized, double-blind, placebo-controlled 12-
week trial to evaluate the safety, efficacy, and pharmacokinetics of eluforsen in cystic fibrosis subjects with
the F508del mutation. The trial will be conducted at clinical centers in North America, EU and possibly other
countries. We plan to commence this trial in 2018 subject to a potential partnership.
Besides our program for eluforsen for CF caused by the F508del mutation, we are working on other CFTR
mutations that can potentially be treated using our RNA technologies. We could potentially target an
estimated 15% of the CF population, up to 12,000 patients in the Western world, with these programs.
Inhaled administration of eluforsen
To achieve broad distribution to CF-affected organs, we deliver eluforsen through inhalation by means of a
small handheld nebulizer, a method of drug delivery used to administer medication in the form of a mist
inhaled into the lungs. On October 8, 2014 we entered into an agreement with PARI Pharma GmbH, pursuant
to which the Company is granted an exclusive license to the use of PARI’s eFlow technology for the
administration of oligonucleotide-based drugs in the F508del mutation in cystic fibrosis. The nebulizer device
rapidly and efficiently processes a therapeutic agent through the microscopic holes of a mesh and creates a
mist to provide rapid and consistent delivery to the lungs. Commercially-available nebulizers are currently
used for other CF therapies and in other clinical studies involving inhaled oligonucleotides.
Research Grants
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 eluforsen. In 2015, the Company and its academic partners
received a grant from the European Union under the Horizon 2020 research and innovation programme
under grant agreement No. 633545. The maximum amount of € 6.0 million was granted to support the
clinical development of eluforsen. In 2017, ProQR also received additional tranches totaling € 0.3 million
under the Innovation credit program or “Innovatiekrediet” by the Dutch government, through its agency RVO
(previously: “AgentschapNL”) of the Ministry of Economic Affairs, for the cystic fibrosis development program.
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, Leber’s congenital amaurosis, and
epidermolysis bullosa. 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 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 the welfare of animals and humans participating in our pre-clinical and
clinical studies for reasons of ethics, quality, reliability and applicability of scientific studies. For conducting
high quality (scientific) animal research, animal welfare is a prerequisite. By actively pursuing the 3R principles
(Reduce, Refine and Replace), we are committed to minimalizing the number of animals needed, minimizing
discomfort and pain of animals used and to using alternatives to animal research whenever possible in
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research and in the obligatory animal studies. All our current studies are approved by the (institutional or
national) animal care and use committees.
Our aim is to monitor continually that animal experiments will be performed only if there are no viable or
legal alternatives. Additionally, case by case, it will be evaluated if advances can be made in study designs
(such as by ex-vivo studies or by conduction of small pilot (tolerability) studies first), or by using new
technologies to achieve adequate statistical power without increasing the number of animals, combining
studies, and improving use of toxicokinetic data to optimize dose selection.
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. CRO facilities are audited in person prior contracting. The housing, husbandry and animal
welfare 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.
In 2015 we became part of an interdisciplinary consortium with Utrecht University (Faculty of Veterinary
medicine and Ethics Institute), Radboud University (Medical Center, SYRCLE) and another private company,
partly financed by The Netherlands Organization for Scientific Research, Responsible Innovation grant. The
project proposes a more integrated approach towards innovation in the field of animal testing and focuses
on translational strategies. ProQR is involved in the part of the project that aims to deliver step stones for
practical guidelines to build robust translational strategies, to design innovative experiments (including
animal models) for cystic fibrosis and develop a translational strategy for CF as a showcase.
Main financial developments
Financial position
In 2017, our operating activities stabilised. Operating costs were in line with last year while our liquidity and
solvency went down due to a decrease in cash and cash equivalents. At December 31, 2017, ProQR’s cash and
cash equivalents amounted to € 48,099,000 compared to € 59,200,000 at December 31, 2016. During the year
2017, operating cash used amounted to € 34,951,000, compared to € 34,221,000 in 2016. Total equity
decreased to € 39,325,000.
As at December 31, 2017, we had borrowings of € 7,244,000, which consisted of borrowings from a
government body and convertible loans. Based on the current state of affairs and existing funding, taking into
account our current cash position and projected cash flows, it is justified that the financial statements are
prepared on a going concern basis.
Income statement
We have generated losses since our formation in February 2012. For the years ended December 31, 2017 and
2016, we incurred net losses of € 43,675,000 and € 39,103,000, respectively. As at December 31, 2017, we had
an accumulated deficit of € 119,370,000. 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
candidates eluforsen, QR‑110 and QR‑313, advance QR 421a 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
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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 (€ 2.5 million) to support the clinical development of eluforsen. In
2015, the European Commission (EC) through its Horizon 2020 program awarded us and our academic
partners a grant of € 6 million to support the clinical development of eluforsen (ProQR: € 4.6 million). Other
income amounted to € 1,495,000 in 2017, compared to € 1,828,000 in 2016. We expect to continue generating
other income from new grant applications in 2018.
Research and development costs amount to € 31,153,000, compared to € 31,923,000 in 2016. These research
and development costs comprise allocated employee costs including share-based payments, the costs of
materials and laboratory consumables, the costs for production of clinical and pre-clinical compounds and
outsourced activities, license and intellectual property costs and other allocated costs. These costs were
primarily related to our product candidates, eluforsen, QR‑110, QR‑313 and QR‑421a, and our innovation unit.
Our research and development expense is highly dependent on the development phases of our product
candidates and is expected to stay at the same level, although it may fluctuate significantly from period to
period.
Costs were incurred for the advancement of our pipeline, which included clinical development of eluforsen,
QR‑110 and QR‑313, preclinical development of QR‑421a and progress of our innovation programs. The
variances in research and development costs between the years ended December 31, 2017 and 2016 are
mainly due to:
costs we incurred on clinical trials for eluforsen, particularly in 2016, and for QR‑110 and QR313 in 2017;
slightly decreased staff costs. The number of full-time equivalent employees working on research and
development decreased from 100 at December 31, 2016 to 96 at December 31, 2017;
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;
costs for the production of QR‑313 and QR‑421a compounds, including the costs of GMP batches in
preparation of our clinical studies;
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;
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 € 10,840,000 in 2017 from € 9,478,000 in 2016. These general
and administrative costs comprise employee costs, office costs, general consultancy costs and other costs. As
a public company, we face increased legal, accounting, administrative and other costs and expenses. The
increase was primarily related to:
increased staff costs associated with the increase of our general and administrative staff from 33 full-
time equivalent employees at December 31, 2016 to 34 full-time equivalent employees at December 31,
2017;
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;
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increased costs for legal support, accounting and other consultancy costs, including costs incurred in
preparation of offerings in 2017; 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 2016 share-based compensation amounted to € 4,024,000, compared to € 2,454,000 in 2016. Net financial
expenses amounted to € 3,175,000, compared to a net financial income of € 470,000 in 2016. Financial
income & expenses mainly result from foreign exchange differences on cash denominated in U.S. dollars and
can fluctuate significantly. 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.
Outlook
In 2018, we continue to invest in our organization, while we continue our pre-clinical studies and clinical
development of our product candidates and increase investments in our other research programs. Our goal
is to realise this at our current operational level. A significant increase in headcount is not expected. 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 30, 2018
On behalf of the Management Board,
Daniel de Boer
CEO
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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 its stakeholders.
Sadly, in 2017 our co-founder and fellow Board-member Henri Termeer passed away. As a Board we lost not
just an influential and independent thinker but also a close friend. Henri’s involvement was critical in the
formative years of ProQR. His thoughtful enthusiasm and support as an early investor and mentor to
management played an important role in the various phases of the Company’s development. Without Henri
we could not have progressed as we did: growing from an ambitious plan in 2012 to a company with a
pipeline of promising drugs and technologies developed by a talented and dedicated team and backed by
strong and loyal investors. The Board misses him dearly. We concluded that replacing Henri is impossible and
it was decided to assess the composition and need to extend the current Board in 2018.
The Supervisory Board and its sub-committees held frequent and productive interactions with the Executive
Board. Where appropriate, decision taking was endorsed by the Supervisory Board and matters of both short
term as well as long term strategic importance were discussed in a constructive and transparent manner.
Below is a more specific description of the Supervisory Board’s activities during the financial year 2017 and
other relevant information on its functioning.
Activities of the Supervisory Board
The Supervisory Board and the Board of Directors met multiple times during 2017 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 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 met three times in 2017.
Compensation report 2017
In September 2014, the Supervisory Board adopted our Compensation Policy. This Compensation Policy also
applied to the financial year 2017 and will apply to subsequent years. Attraction and retention of world class
talent is a prerequisite for the success of ProQR and competitive compensation plays a vital role in our ability
to achieve this. The Compensation Committee elected to offer compensation for all employees including the
Management Board into a fixed annual salary and a variable, performance related, short and long term
incentive element. The Compensation Policy is designed based on the following principles:
Three compensation pillars consisting of:
Annual Base Salary;
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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 behavior, discourage unjustified
risk taking and minimize any gaming opportunity;
This Compensation Policy should pay for performance, considering 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 group, 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 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 2017 have been set at € 354,000 for the CEO, Daniel de Boer and at
€ 299,000 for the chief corporate development officer and general counsel, René Beukema.
Short Term Incentive
The Compensation Committee reviewed the performance of the Company during 2017 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 late 2017
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 2017. For 2017 the individual bonuses have been set at € 217,000 for Daniel de
Boer and € 113,000 for René Beukema. Final installment of these bonuses will be paid in cash in the first
quarter of 2018.
Long Term Incentive
Based on the recommendation of the Compensation Committee, the Supervisory Board decided to grant
stock options in 2017 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 € 4.65 have been
granted with respect to 239,717 shares to the CEO, Daniel de Boer and 101,408 shares to the chief corporate
development officer and general counsel, René Beukema.
Pensions
The pension contributions paid during 2016 amount to € 8,000 for the CEO, Daniel de Boer and € 15,000 for
the chief corporate development officer and general counsel, René Beukema.
Internal pay ratio
The internal pay ratio between the average pay of our employees and our Management Board is calculated
based on the average remuneration based on short term and long term incentives. The pay ratio is 8:1 for
2017.
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Supervisory Board remuneration
In June 2016, our shareholders approved an amended compensation policy whereby members of our
Supervisory Board receive board fees of € 25,000 per year and the chairperson receives board fees of
€ 30,000 per year. In addition, each board committee chairperson receives € 5,000 per year for service on
such committee (except for the chairperson for the nominating committee who receives € 3,000), and each
other member of a board committee receives € 3,000 per year for service on such committee. On top of that,
Supervisory Board members were granted options as set out in Note 23 to the financial statements or
$ 55,000 in cash.
Nominating and Corporate Governance Committee
Following the passing away of our Boardmember Henri Termeer in 2017 and based on discussions held, it
was concluded that the Supervisory Board will assess its composition in 2018.
Audit Committee
The audit committee met five times in 2017. Main topics addressed were the quarterly results, financial risk
management, compliance and SOx implementation, the audit plan and management letter of the external
auditor, cash management, tax and corporate governance.
The audit committee also reviewed ProQR’s annual financial statements, including non-financial information,
prior to publication thereof. These financial statements for 2017 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
27, 2018. The Supervisory Board is of the opinion that the Financial Statements 2017 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 concluded no changes are necessary
based on this review and pending a review planned for 2018. 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. We thank our
shareholders for their continued support.
Leiden, March 30, 2018
On behalf of the Supervisory Board,
Dinko Valerio
Chairman
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Corporate Governance
ProQR values the importance of complying with Corporate Governance regulations. At the same time, the
Board of Directors is of the opinion that certain deviations from the provisions of the new Dutch Corporate
Governance Code 2016 (“DCGC” or “the Code”) are justified, in view of our activities, our size and the specific
circumstances in which we operate. In such cases, which are mentioned in this corporate governance
statement, we apply the “comply or explain” principle.
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.
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 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.
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.mccg.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
ProQR is dedicated to improve the lives of our patients and their loved ones through the development of RNA
therapies for severe genetic orphan diseases. ProQR has an initial focus on patients with CF, LCA, EB and
Usher. The expectations and interests of our stakeholders is a key reference point in establishing our long
term strategy.
The Management Board’s role is to develop long term value creation by means of a strategy to pursue the
long term success of ProQR. The strategy contains multiple elements linked to the new Corporate
Governance Code:
Implementation and feasibility;
Business model applied by the company;
Opportunities and risks;
Operational and financial objectives;
Interest of shareholders;
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Any other relevant aspects such as environment, charity and patient organizations.
The Management Board executes the strategy by assuming the authority and responsibilities assigned to it by
Dutch corporate law and by combining expertise and experience with entrepreneurial leadership. The
Management Board operates 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 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.
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.
A succession plan for Management Board members is in place that is aimed at retaining the balance in the
requisite expertise, experience and diversity.
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
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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 terms of four years. 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 Supervisory Board appoints a chairman from among its members.
With the exception of Dinko Valerio and Antoine Papiernik, each member of our Supervisory Board has been
and remains fully independent within the meaning of best practice provision 2.1.8 of the DCGC. Mr. Dinko
Valerio has provided a convertible loan to Amylon Therapeutics B.V. This loan becomes payable on demand
after 24 months in equal quarterly terms. Mr. Papiernik is affiliated with Sofinnova which holds 11.4 % of our
shares. Both are therefore not independent within the meaning of best practice provision 2.1.7.iii of the
Code. We feel this deviation is justified by their specific knowledge and experience of our business. Based on
the above, we comply with best practice provision 2.1.7 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
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.
A succession plan for Supervisory Board members is in place that is aimed at retaining the balance in the
requisite expertise, experience and diversity.
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), Alison Lawton and James Shannon. Each member
satisfies the independence requirements of the NASDAQ listing standards / Rule 10A-3(b)(1) under the
Exchange Act, and each member meets the criteria for independence set forth in best practice 2.1.8 of the
DCGC. Paul Baart qualifies 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
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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;
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, including risks relating to cyber
security;
annually reviewing the need for an internal audit function:
the Board of Directors has decided not to create an internal audit function for the time being, since the
current scope of the business does not justify such a fulltime role. The Board of Directors has delegated
an active role to its Audit Committee in the design, implementation and monitoring of internal risk
management and control system to manage the significant risks to which the Company is exposed.
Compensation Committee
Our compensation committee consists of James Shannon (chairman), Dinko Valerio 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 meets the criteria for independence set forth in best practice 2.1.8 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 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 3.4.1.
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) 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 2.1.8 of the DCGC. The nominating and corporate
governance committee assists our Supervisory Board in selecting individuals qualified to become our
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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,
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 2017, 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. ProQR maintains a culture that reflects that ProQR is a multicultural company representing
employees from over twenty countries. The culture is represented by the commitment to conducting our
business ethically and to observing applicable laws, rules and regulations. In this context the Code of Conduct
and Whistleblower policy are implemented and strongly anchored in the organization. Effectiveness of the
Code of Conduct is monitored periodically.
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.
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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, 2017, 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.
A system has been implemented based on the COSO (Committee of Sponsoring Organizations of the
Treadway Commission) framework with the support of an external consulting firm. As part of this
implementation, financial risks have been identified in a risk and control matrix, in which each risk is assessed
on its importance based on probability and potential impact. For the key risks of each process controls or
management measures were then defined and the operating effectiveness of these controls have been
tested.
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, Oegstgeest, Leidschendam, Katwijk, Noordwijk,
Wassenaar, Amsterdam, Rotterdam, The Hague, or Schiphol Airport (municipality of Haarlemmermeer), 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.
Annually, at least one general meeting of shareholders shall 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
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
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adoption of our annual accounts, the appropriation of our profits or losses, discharge of the members of the
Management Board for their management, discharge of the members of the Supervisory Board for their
supervision on the management 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.
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
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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.
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,
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at this stage, we do not comply with all the provisions of the DCGC for specific reasons. The main deviations
from best practice provisions are listed below.
Pursuant to the best practice provisions 3.1.2.vi and 3.1.2.vii 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
competitiveness.
Pursuant to best practice provision 3.2.3 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 3.3.2 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 3.3.3, any shares held by Supervisory Board members are long-term
investments. We do not request our Supervisory Board members to comply with 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 4.3.3 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 4.3.3 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 4.2.3 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
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.
PAGE 55 / 105
Corporate Governance
ANNUAL REPORT 2017
Best practice provision 4.2.2 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 56 / 105
Risk Management
ANNUAL REPORT 2017
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, for enhancing our control environment as
well as compliance with the U.S. SEC’s Sarbanes Oxley (SOx) Act of 2002, which we are required to as a
company listed on the NASDAQ. As part of the SOx implementation program, our Risk & Control framework
was further enhanced in 2017, focusing on IT and entity level controls. Improvement of our Risk & Control
framework is an ongoing effort for the Company.
We have defined our risk tolerance on a number of internal and external factors including:
Financial strength in the long run;
Liquidity in the short run;
Business performance measures;
Scientific risks and opportunities;
Compliance with relevant rules and regulations;
Reputation.
The identification and analysis of risks is an ongoing process that is naturally a critical component of internal
control. On the basis of these factors and ProQR’s risk tolerance, improvement of our Risk & Control
framework and monitoring of the risks is an ongoing effort for the Company.
Our main risks are those that threaten the achievement of the Company’s corporate objectives, including
compliance. 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 appetite /
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
clinical trials that are needed to
obtain product approval.
therefore generate revenues.
efficacy of products can only be
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.
Risk related to
Risk area
Expected impact upon
materialization
Risk-mitigating actions
PAGE 57 / 105
Risk Management
ANNUAL REPORT 2017
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
We may not benefit from
We take orphan drug
orphan product status for
eluforsen, QR‑110, QR‑313, QRX-
411 and QR‑421a or obtain such
status for any other product
canditates.
rewards including fee reduc-
requirements into consideration
tions and market exclusivity.
in the design of our clinical
Sales could be impacted if other
development plans.
products are granted
authorization for the same
indications as eluforsen,
QR‑110, QR‑313, QRX-411 and
QR‑421a.
We may be precluded from
We may encounter delays in
We take orphan drug
obtaining marketing
marketing our products for a
requirements into consideration
authorization for our products
significant period of time.
in the design of our clinical
when our competitors have
obtained market exclusivity
before we do.
development plans.
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
Intellectual Property
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.
The Company is highly
dependent on its portfolio of
Inadequate intellectual property
protection or enforcement may
The Company files and
prosecutes patent applications
patents and other intellectual
property, proprietary
impede the Company’s ability to
compete effectively. If the
to protect its products and
technologies to the best of its
information and knowhow and
its ability to protect and enforce
Company is not able to protect
its trade secrets, know-how or
knowledge and with assistance
from internal and external
these assets.
other proprietary information,
the value of its technology and
counsel. Prior to disclosing any
confidential information to third
The Company is subject to the
risk of infringing third party
product candidates could be
significantly diminished.
parties, the Company maintains
strict confidentiality standards
intellectual property rights.
Intellectual property rights
conflicts may result in costly
and agreements for
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.
PAGE 58 / 105
Risk Management
ANNUAL REPORT 2017
Risk related to
Risk area
Expected impact upon
materialization
Risk-mitigating actions
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 delivery technologies,
designation application, we
are more effective, our ability to
attempt to have data exclusivity
develop and successfully
for our products. Development
commercialize our product
in other companies is essentially
candidates may be adversely
out of our control but we
affected.
monitor the competitive
landscape and incorporate that
into our business strategy.
The above risks have not materialized in 2017. 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 59 / 105
Financial Statements 2017
ANNUAL REPORT 2017
Financial Statements 2017
Consolidated statement of financial position at December 31, 2017
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
Share capital
Share premium
Reserves
Accumulated deficit
Equity attributable to owners of the Company
Non-controlling interests
TOTAL EQUITY
LIABILITIES
Non-current liabilities
Borrowings
Current liabilities
Borrowings
Trade payables
Social securities and other taxes
Pension premiums
Deferred income
Other current liabilities
Note
December 31,
2017
December 31,
2016
€ 1,000
€ 1,000
7
8
9
10
11
12
13
14
39
2,505
2,544
396
2,064
48,099
50,559
90
3,438
3,528
395
2,420
59,200
62,015
53,103
65,543
1,457
148,763
8,513
(119,370)
39,363
(38)
39,325
5,284
5,284
1,960
546
1,019
--
347
4,622
8,494
934
123,597
4,338
(75,733)
53,136
--
53,136
5,697
5,697
--
328
312
13
--
6,057
6,710
TOTAL LIABILITIES
13,778
12,407
TOTAL EQUITY AND LIABILITIES
53,103
65,543
The accompanying notes are an integral part of these financial statements.
PAGE 60 / 105
Financial Statements 2017
ANNUAL REPORT 2017
Consolidated statement of profit or loss and comprehensive income for the year ended
December 31, 2017
Note
2017
€ 1,000
2016
€ 1,000
15
16
18
19
1,495
1,828
(31,153)
(10,840)
(31,923)
(9,478)
(41,993)
(41,401)
(40,498)
(3,175)
(39,573)
470
(43,673)
(39,103)
(2)
--
(43,675)
(39,103)
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
Result for the year
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
151
(16)
Total comprehensive income for the year
(attributable to equity holders of the Company)
Result attributable to
Owners of the Company
Non-controlling interests
(43,524)
(39,119)
(43,637)
(38)
(43,675)
(39,103)
--
(39,103)
Share information
20
Weighted average number of shares outstanding1
25,374,807
23,346,507
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.
(1.72)
(1.72)
(1.67)
(1.67)
1 Basic and diluted earnings are equal due to the anti-dilutive nature of the options outstanding since the Company is loss-
making.
Consolidated statement of changes in equity for the year ended December 31, 2017
PAGE 61 / 105
Financial Statements 2017
ANNUAL REPORT 2017
Attributable to owners of the Company
Share
Capital
Share
Premium
Equity
Settled
Employee
Benefit
Reserve
Translation
Reserve
Accumulated
Deficit
Total
Non-
controlling
Interests
Total
Equity
€ 1,000
€ 1,000
€ 1,000
€ 1,000
€ 1,000
€ 1,000
€ 1,000
€ 1,000
Balance at January 1, 2016
934
123,595
1,899
Result for the year
Other comprehensive income
Recognition of share-based payments
Share options exercised
--
--
--
0
--
--
--
2
--
--
2,454
--
1
--
(16)
--
--
(36,630)
89,799
(39,103)
(39,103)
--
--
--
(16)
2,454
2
Balance at December 31, 2016
934
123,597
4,353
(15)
(75,733)
53,136
--
--
--
--
--
--
89,799
(39,103)
(16)
2,454
2
53,136
Result for the year
Other comprehensive income
Recognition of share-based payments
Issue of ordinary shares
Issue of treasury shares
Share options exercised
--
--
--
343
180
0
--
--
--
25,342
(180)
4
--
--
4,024
--
--
--
--
151
--
--
--
--
(43,637)
(43,637)
(38)
(43,675)
--
--
--
--
--
151
4,024
25,685
0
4
--
--
--
--
--
151
4,024
25,685
0
4
Balance at December 31, 2017
1,457
148,763
8,377
136
(119,370)
39,363
(38)
39,325
The accompanying notes are an integral part of these financial statements.
PAGE 62 / 105
Financial Statements 2017
ANNUAL REPORT 2017
Consolidated statement of cash flows for the year ended December 31, 2017
Cash flow from operating activities
Result for the year
Adjustments for:
— Amortization & depreciation
— Share-based compensation
— Financial income and expense
— Net foreign exchange gain / (loss)
Changes in working capital
Cash used in operations
Corporate income tax paid
Interest received/(paid)
Note
2017
€ 1,000
2016
€ 1,000
(43,675)
(39,103)
7, 8
12
18
1,065
4,024
3,175
151
164
(35,096)
(2)
147
1,245
2,454
(470)
(16)
1,433
(34,457)
--
236
Net cash used in operating activities
(34,951)
(34,221)
Cash flow from investing activities
Purchases of intangible assets
Purchases of property, plant and equipment
--
(121)
--
(2,539)
Net cash used in investing activities
(121)
(2,539)
Cash flow from financing activities
Proceeds from issuance of shares, net of transaction costs
Proceeds from exercise of share options
Proceeds from borrowings
Proceeds from convertible loans
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.
25,685
4
301
650
--
26,640
--
2
370
--
(15)
357
(8,432)
(36,403)
(2,669)
59,200
738
94,865
48,099
59,200
13
13
13
11
11
PAGE 63 / 105
Financial Statements 2017
ANNUAL REPORT 2017
Notes to the consolidated financial statements for the year ended December 31, 2017
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 (Chamber of Commerce no.
54600790) and was 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 Zernikedreef 9, 2333 CK Leiden, the Netherlands.
At December 31, 2017, 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 VI B.V. (the Netherlands, 100%);
ProQR Therapeutics VII B.V. (the Netherlands, 100%);
ProQR Therapeutics VIII B.V. (the Netherlands, 100%);
ProQR Therapeutics IX B.V. (the Netherlands, 100%);
Amylon Therapeutics B.V. (the Netherlands, 80%);
ProQR Therapeutics I Inc. (United States, 100%).
ProQR Therapeutics N.V. is also statutory director of Stichting Bewaarneming Aandelen ProQR (“ESOP
Foundation”) and has full control over this entity.
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 and the
ESOP Foundation.
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.
PAGE 64 / 105
Financial Statements 2017
ANNUAL REPORT 2017
(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 2017 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.
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.
(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(d)
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 as stated above, the Company uses the closing price of the
ordinary shares on the previous business day as exercise price of the options granted.
PAGE 65 / 105
Financial Statements 2017
ANNUAL REPORT 2017
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.
(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
Grant income is not recognized until there is reasonable assurance that the Company will comply with the
conditions attached to them. Grants are recognized in profit or loss on a systematic basis over the period the
Company recognizes as expenses the related costs for which the grants are expected to compensate.
(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, 2017, 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 has power over the
entity, 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 Group reassesses whether or not it controls an
entity if facts and circumstances indicate that there are changes to one or more of these elements. 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.
PAGE 66 / 105
Financial Statements 2017
ANNUAL REPORT 2017
(ii) Non-controlling interests
NCI are measured at their proportionate share of the acquiree's identifiable net assets at the acquisition
date. Changes in the Group's interest in a subsidiary that do not result in a loss of control are accounted for
as equity transactions.
(iii) 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.
(iv) 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
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 on a systematic basis over the period the
Company recognizes as expenses the related costs for which the grants are expected to compensate.
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(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 recognized on a net basis within the labor costs.
Subsidies relating to labor costs are deferred and recognized in the income statement in 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.
(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 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
employees have rendered the service entitling them to the contributions. 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
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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.
(ii) Research and development
Research expenditures are recognized as expenses as incurred. Costs incurred on development projects are
recognized as intangible assets as 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.
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(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.
(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 of disposal 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
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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.
(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) Compound financial instruments
Compound financial instruments issued by the Group comprise convertible notes denominated in euro that
can be converted to share capital at the option of the holder, when the number of shares to be issued is fixed
and does not vary with changes in fair value.
The liability component of a compound financial instrument is recognised initially at the fair value of a similar
liability that does not have an equity conversion option. The equity component is recognised initially at the
difference between the fair value of the compound financial instrument as a whole and the fair value of the
liability component. Any directly attributable transaction costs are allocated to the liability and equity
components in proportion to their initial carrying amounts.
Subsequent to initial recognition, the liability component of a compound financial instrument is measured at
amortised cost using the effective interest method. The equity component of a compound financial
instrument is not remeasured.
Interest related to the financial liability is recognised in profit or loss. On conversion, the financial liability is
reclassified to equity and no gain or loss is recognised.
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(iii) 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.
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.
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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 January 1, 2018, 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 January 1, 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 January 1, 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 January 1, 2019, with early adoption
permitted and is expected to have an effect on our balance sheet of approximately € 5 million.
The adoption of these Standards and Interpretations are not expected to have a material effect on the
financial statements.
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.
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(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, 2017 there was a net liability in U.S. Dollars of € 0.7 million (2016: € 2.4 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 weakening of the U.S. Dollar by 10% against all other currencies at December 31, 2017
would have affected the measurement of our cash balances denominated in a U.S. Dollar and affected equity
and profit or loss by € 2.5 million (2016: € 2.5 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.
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 several loans with fixed interest rates, totaling € 7,244,000 at December 31, 2017 (2016:
€ 5,697,000). 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 held at ABN Amro, Rabobank and Wells Fargo. 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 A2 or A at a minimum by at least one NRSRO).
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Financial Statements 2017
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At December 31, 2017 and December 31, 2016, substantially all of our cash and cash equivalents were held at
three large institutions, Rabobank, ABN Amro and Wells Fargo. All institutions are highly rated (ratings of Aa2,
A1 and A2 for Rabobank, ABN Amro and Wells Fargo 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, 2017
Borrowings
Trade payables and other payables
At December 31, 2016
Borrowings
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
1,960
6,534
980
--
5,981
--
Less than
1 year
Between
1 and 2 years
Between
2 and 5 years
€ 1,000
€ 1,000
€ 1,000
--
6,710
6,710
1,839
--
1,839
4,860
--
4,860
Over
5 years
€ 1,000
--
--
Over
5 years
€ 1,000
--
--
--
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:
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Financial Statements 2017
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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 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.
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Financial Statements 2017
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7. Intangible Assets
dsssds
Balance at January 1, 2016
Cost
Accumulated amortization
Carrying amount
Additions
Amortization
Movement for the period
Balance at December 31, 2016
Cost
Accumulated amortization
Carrying amount
Additions
Amortization
Movement for the period
Balance at December 31, 2017
Cost
Accumulated amortization
Carrying amount
Licenses
Software
€ 1,000
€ 1,000
Total
€ 1,000
39
--
39
--
--
--
39
--
39
--
--
--
39
--
39
152
(50)
102
--
(51)
(51)
152
(101)
51
--
(51)
(51)
152
(152)
--
191
(50)
141
--
(51)
(51)
191
(101)
90
--
(51)
(51)
191
(152)
39
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.
The amortization charge for 2017 is included in the general and administrative costs for an amount of
€ 51,000 (2016: € 51,000).
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Financial Statements 2017
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8. Property, Plant and Equipment (‘PP&E’)
dsssds
Balance at January 1, 2016
Cost
Accumulated depreciation
Carrying amount
Additions
Depreciation
Transfer
Disposals
Movement for the period
Balance at December 31, 2016
Cost
Accumulated depreciation
Carrying amount
Additions
Depreciation
Disposals
Movement for the period
Balance at December 31, 2017
Cost
Accumulated depreciation
Carrying amount
Leasehold
improvements
Laboratory
equipment
Other
Total
€ 1,000
€ 1,000
€ 1,000
€ 1,000
985
(94)
891
1,166
(499)
(196)
(23)
448
1,847
(508)
1,339
9
(294)
--
(285)
1,856
(802)
1,054
1,136
(305)
831
806
(340)
--
--
466
1,957
(660)
1,297
47
(409)
--
(362)
2,004
(1,069)
935
651
(174)
477
461
(332)
196
--
325
1,283
(481)
802
26
(312)
--
(286)
1,309
(793)
516
2,772
(573)
2,199
2,433
(1,171)
--
(23)
1,239
5,087
(1,649)
3,438
82
(1,015)
--
(933)
5,169
(2,664)
2,505
The depreciation charge for 2017 is included in the research and development costs for an amount of
€ 836,000 (2016: € 907,000) and in the general and administrative costs for an amount of € 179,000
(2016: € 264,000).
9. Social Security and Other Taxes
dsssds
Value added tax
Wage tax
December 31,
2017
December 31,
2016
€ 1,000
€ 1,000
396
--
396
395
--
395
All receivables are considered short-term and due within one year.
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Financial Statements 2017
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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,
2017
December 31,
2016
€ 1,000
€ 1,000
1,991
73
2,064
1,250
1,170
2,420
December 31,
2017
December 31,
2016
€ 1,000
€ 1,000
48,099
--
48,099
56,354
2,846
59,200
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
Balance at January 1
Issued for cash
Exercise of share options
Treasury shares issued
Balance at December 31
Number of ordinary shares
2017
2016
23,346,856
23,345,965
8,573,975
1,034
4,503,149
--
891
--
36,425,014
23,346,856
The authorized share capital of the Company amounting to € 3,000,000 consists of 37,500,000 ordinary
shares and 37,500,000 preference shares with a par value of € 0.04 per share. At December 31, 2017,
36,425,014 ordinary shares were issued and fully paid in cash, of which 4,503,149 were held by the Company
as treasury shares (2016: 1,173,958).
On October 2, 2015, the Company filed a shelf registration statement, which permitted: (a) the offering,
issuance and sale by the Company of up to a maximum aggregate offering price of $ 200,000,000
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Financial Statements 2017
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(€ 166,764,000) of its ordinary shares, warrants and/or units; and (b) as part of the $ 200,000,000, the offering,
issuance and sale by us of up to a maximum aggregate offering price of $ 60,000,000 (€ 50,029,000) of its
ordinary shares that may be issued and sold under a sales agreement with Cantor Fitzgerald & Co in one or
more at-the-market offerings. In 2017, the Company has issued 976,477 shares pursuant to its current at-the-
market offering program, resulting in proceeds of € 4,138,000, net of € 127,000 of offering expenses.
On June 28, 2017, the Company agreed to the issuance of 1,200,000 ordinary shares to institutional investors
at an issue price of $ 5.00 (€ 4.40) per share in a registered direct offering with gross proceeds of € 5,278,000.
The closing of the offering was effected on July 3, 2017. Transaction costs amounted to € 414,000, resulting in
net proceeds of € 4,864,000.
In November 2017, the Company consummated an underwritten public offering and concurrent registered
direct offering of 6,397,498 ordinary shares at an issue price of $ 3.25 (€ 2.76) per share. The gross proceeds
from both offerings amounted to € 17,671,000 while the transaction costs amounted to € 988,000, resulting
in net proceeds of € 16,683,000.
(b) 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’. On September 25, 2017, we
established a Dutch foundation named Stichting Bewaarneming Aandelen ProQR for holding shares in trust
for employees, members of the Management Board and members of the Supervisory Board of the Company
and its group companies who from time to time will exercise options under the Company’s equity incentive
plans.
(c) Translation reserve
The translation reserve comprises all foreign currency differences arising from the translation of the financial
statements of foreign operations.
(d) 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
€ 4,024,000 in 2017 (2016: € 2,454,000), of which € 2,059,000 (2016: € 1,480,000) was recorded in general and
administrative costs and € 1,965,000 (2016: € 974,000) was recorded in research and development costs
based on employee allocation.
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
following assumptions:
PAGE 80 / 105
Financial Statements 2017
ANNUAL REPORT 2017
dsssds
Risk-free interest rate
Expected dividend yield
Expected volatility
Expected life in years
Options
granted in 2017
Options
granted in 2016
1.913%
0%
88.7%
5 years
1.467%
0%
86.3%
5 years
The resulting weighted average grant date fair value of the options amounted to € 3.21 in 2017 (2016:
€ 3.72). 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
Expired
2017
2016
Number of
options
Average
exercise price
Number of
options
Average
exercise price
2,205,989
1,199,447
(72,527)
(1,034)
--
€ 4.88
€ 4.63
€ 5.56
€ 3.54
--
1,108,935
1,214,126
(116,181)
(891)
--
€ 4.19
€ 5.49
€ 4.64
€ 2.38
--
€ 4.88
Balance at December 31
3,331,875
€ 4.78
2,205,989
Exercisable
1,148,893
615,246
The options outstanding at December 31, 2017 had an exercise price in the range of € 1.11 to € 20.34
(2016: € 1.11 to € 20.34) and a weighted-average contractual life of 7.9 years (2016: 8.3 years).
The weighted-average share price at the date of exercise for share options exercised in 2017 was € 4.32
(2016: € 4.23).
Please refer to Note 23 for the options granted to key management personnel.
13. Non-current liabilities
(a) Borrowings
dsssds
Innovation credit
Accrued interest on innovation credit
Convertible loans
Total borrowings
Current portion
PAGE 81 / 105
Financial Statements 2017
ANNUAL REPORT 2017
December 31,
2017
December 31,
2016
€ 1,000
€ 1,000
4,899
1,683
662
4,598
1,099
--
7,244
5,697
(1,960)
5,284
--
5,697
Innovation credit (“Innovatiekrediet”)
On June 1, 2012, ProQR was awarded an Innovation credit by the Dutch government, through its agency RVO
of the Ministry of Economic Affairs, for the Company’s cystic fibrosis program. Amounts were drawn under
this facility in the course of the years 2013 through 2017. The credit covers 35% of the costs incurred in
respect of the program up to an initial maximum of € 5.0 million.
The credit is interest-bearing at a rate of 10% per annum. The credit, including accrued interest, is repayable
in three installments on November 30, 2018, November 30, 2019 and November 30, 2020, 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.
Convertible loans
Convertible loans were issued to Amylon Therapeutics B.V. in 2017 and are interest-bearing at an average
rate of 8% per annum. They are convertible into a variable number of ordinary shares within 36 months at
the option of the holder or the Company in case financing criteria are met. Any unconverted loans become
payable on demand after 24 months in equal quarterly terms.
14. Current Liabilities
dsssds
Borrowings
Trade payables
Social securities and other taxes
Pension premiums
Deferred income
Accrued expenses and other liabilities
December 31,
2017
December 31,
2016
€ 1,000
€ 1,000
1,960
546
1,019
--
347
4,622
8,494
--
328
312
13
--
6,057
6,710
PAGE 82 / 105
Financial Statements 2017
ANNUAL REPORT 2017
At December 31, 2017, current liabilities included deferred income resulting from installments received of the
€ 6 million grant (ProQR: € 4.6 million) from the European Commission (EC) under the Horizon 2020 program
to finance the clinical development of eluforsen.
15. Other income
dsssds
Grant income
Rental income from property subleases
2017
€ 1,000
870
625
1,495
2016
€ 1,000
1,632
196
1,828
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 (€ 2.5 million) to support the clinical development of eluforsen. 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: € 4.6 million) to support the clinical development of eluforsen through
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 € 31,153,000 in 2017 (2016: € 31,923,000) 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
2017
€ 1,000
11,855
1,285
860
4,024
18,024
2016
€ 1,000
10,184
1,093
764
2,454
14,495
Average number of employees for the period
139.9
133.4
Employees per activity at December 31 (converted to FTE):
dsssds
Research and Development
General and Administrative
PAGE 83 / 105
Financial Statements 2017
ANNUAL REPORT 2017
December 31,
2017
December 31,
2016
96.2
34.0
130.2
100.4
32.9
133.3
Of all employees 125.2 FTE are employed in the Netherlands (2016: 128.3 FTE).
Included in the wages and salaries for 2017 is a credit of € 723,000 (2016: € 807,000) 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
2017
€ 1,000
2016
€ 1,000
90
270
(596)
(538)
(2,669)
3,175
738
470
2017
€ 1,000
2016
€ 1,000
Income tax provision based on domestic rate
10,918
9,776
Tax effect of:
Non-deductible expenses
Tax incentives
Current year losses for which no deferred tax asset was recognized
Change in unrecognized deductible temporary differences
Income tax charge
Effective tax rate
(634)
--
(10,257)
(25)
2
0%
(622)
(46)
(9,045)
(63)
--
0%
PAGE 84 / 105
Financial Statements 2017
ANNUAL REPORT 2017
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, 2017, the Company has a total amount of € 123.9 million (2016: € 82.9 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.
dsssds
Result attributable to equity holders of the Company (€ 1,000)
Weighted average number of shares outstanding
Basic (and diluted) earnings per share (€ per share)
2017
2016
(43,637)
(39,103)
25,374,807
23,346,507
(1.72)
(1.68)
(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, the Netherlands where it currently has entered into rental
agreements for laboratory space and offices.
The lease expenditure charged to the income statement in 2017 amounts to € 2,103,000 (2016: € 1,849,000).
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,
2017
December 31,
2016
€ 1,000
€ 1,000
1,607
3,312
--
4,919
1,775
5,508
--
7,283
PAGE 85 / 105
Financial Statements 2017
ANNUAL REPORT 2017
The Company leased out a part of its office in the U.S. and the Netherlands. In 2017, total sublease income
amounted to € 625,000 (2016: € 196,000), which is recorded in other income. 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,
2017
December 31,
2016
€ 1,000
174
--
--
174
€ 1,000
463
--
--
463
22. Commitments and Contingencies
(a) Claims
There are no claims known to management related to the activities of the Company.
(b) Patent license agreements
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 (€ 584,000) 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 (€ 8,000) 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 has entered into various other Patent License Agreements, including those with Radboud
University Medical Center, Leiden University Medical Centre, Inserm Transfert and Assistance-Publique-
Hôpiteaux de Paris, and PARI Pharma GmbH, under which the Company is granted world-wide exclusive
licenses pursuant to which the Company may have certain royalty obligations in relation to its product
candidates. Pursuant to the terms of these agreements, the Company has made upfront payments, is
obligated to make milestone payments and has to make sales-based royalty payments after market
authorization. In specific cases, the Company has the option to make a one-time payment to buy of royalty
obligations or in case the Company terminates an agreement before or after regulatory approval of the
product. The Company may terminate an agreement for any reason.
(c) Clinical support agreements
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 (€ 2.5 million) to support the clinical development of eluforsen.
Pursuant to the terms of the agreement, the Company is obligated to make a one-time milestone payment to
CFFT of up to approximately $ 16 million (€ 13 million), payable in three equal annual installments following
the first commercial sale of eluforsen, 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 (€ 2.5
million) if net sales of eluforsen exceed $ 500 million (€ 417 million) in a calendar year. Lastly, the Company is
obligated to make a payment to CFFT of up to approximately $ 6 million (€ 5 million) if it transfers, sells or
PAGE 86 / 105
Financial Statements 2017
ANNUAL REPORT 2017
licenses eluforsen other than for certain clinical or development purposes, or if the Company enters into a
change of control transaction prior to commercialization. However, the payment in the previous sentence
may be set-off against the $ 16 million milestone payment. 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.
On February 9, 2018, the Company entered into an agreement with Foundation Fighting Blindness (FFB),
under which FFB will provide funding of $ 7.5 million (€ 6.3 million) to advance QR‑421a into the clinic and will
receive future milestone payments.
Pursuant to the terms of the agreement, the Company is obligated to make a one-time milestone payment to
FFB of up to approximately $ 37.5 million (€ 31.3 million), payable in four equal annual installments following
the first commercial sale of QR‑421a, the first of which is due within 60 days following the first commercial
sale. The Company is also obligated to make a payment to FFB of up to approximately $ 15 million (€ 12.5
million) if it transfers, sells or licenses QR‑421a other than for certain clinical or development purposes, or if
the Company enters into a change of control transaction. However, the payment in the previous sentence
may be set-off against the $ 37.5 million milestone payment. Either FFB 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 € 7,704,000 at
December 31, 2017 (2016: € 8,856,000). Of these obligations an amount of € 6,094,000 is due in 2018, 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
The remuneration of the Supervisory Board members in 2017 is set out in the table below:
dsssds
2017
Mr. Dinko Valerio
Mr. Henri Termeer
Mr. Antoine Papiernik
Ms. Alison Lawton
Mr. Paul Baart
Mr. James Shannon
Short term
employee
benefits
Post
employment
benefits
Share-based
payment
Total
€ 1,000
€ 1,000
€ 1,000
€ 1,000
36
28
76
31
84
33
288
--
--
--
--
--
--
--
87
160
--
99
--
92
438
123
188
76
130
84
125
726
The remuneration of the Supervisory Board members in 2016 is set out in the table below:
dsssds
2016
PAGE 87 / 105
Financial Statements 2017
ANNUAL REPORT 2017
Short term
employee
benefits
Post
employment
benefits
Share-based
payment
Total
€ 1,000
€ 1,000
€ 1,000
€ 1,000
36
31
78
31
82
29
287
--
--
--
--
--
--
--
52
51
--
74
--
27
204
88
82
78
105
82
56
491
Mr. Dinko Valerio
Mr. Henri Termeer
Mr. Antoine Papiernik
Ms. Alison Lawton
Mr. Paul Baart
Mr. James Shannon
As at December 31, 2017:
Mr. Valerio holds 1,043,420 ordinary shares in the Company, as well as 88,425 options. These options
vest in four annual equal tranches of 25% starting for the first time as of the first anniversary of the date
of grant. In 2016, Mr. Valerio was granted 23,989 options under the Option Plan to acquire depositary
receipts issued for ordinary shares at an exercise price of € 6.08 per option. In 2017, Mr. Valerio was
granted 32,164 options at an average exercise price of € 4.65 per option.
On September 12, 2017, Mr. Valerio provided a convertible loan to Amylon Therapeutics B.V. This loan is
interest-bearing at an average rate of 8% per annum and is convertible into a variable number of
ordinary shares within 36 months at the option of the holder or the Company in case financing criteria
are met. Any unconverted loans become payable on demand after 24 months in equal quarterly terms.
Mr. Termeer passed away on May 12, 2017. His full board fee was awarded post mortem.
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 3,625,925
ordinary shares, Mr. Papiernik may be deemed to have share voting and investment power with respect
to such shares.
Ms. Lawton holds 68,973 options. In 2016, Ms. Lawton was granted 23,989 options under the Option
Plan to acquire depositary receipts issued for ordinary shares at an exercise price of € 6.08 per option.
In 2017, she was granted 32,164 options with an average exercise price of € 4.65 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.
Mr. James Shannon holds 61,538 ordinary shares in the Company and 65,233 options. In 2016, he was
granted 33,069 options under the Option Plan to acquire depositary receipts issued for ordinary shares
at an exercise price of € 4.32 per option. In 2017, he was granted 32,164 options at an exercise price of
€ 4.65 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.
PAGE 88 / 105
Financial Statements 2017
ANNUAL REPORT 2017
(b) Compensation of key management
Our Management Board is supported by our officers, or senior management. The total remuneration of the
Management Board and senior management in 2017 amounted to € 5,096,000 with the details set out in the
table below:
dsssds
Mr. D.A. de Boer1
Mr. R.K. Beukema2
Management Board
Senior Management
2017
Short term
employee
benefits
Post
employment
benefits
Share-based
payment
Total
€ 1,000
€ 1,000
€ 1,000
€ 1,000
570
411
981
1,719
2,700
8
15
23
66
89
622
261
883
1,424
2,307
1,200
687
1,887
3,209
5,096
1
2
Short term employee benefits includes a bonus for Mr. Daniel de Boer of € 217,000 based on goals realised in 2017.
Short term employee benefits includes a bonus for Mr. René Beukema of € 113,000 based on goals realised in 2017.
The total remuneration of the Management Board and senior management in 2016 amounted to € 3,038,000
with the details set out in the table below:
dsssds
2016
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
429
346
775
1,020
1,795
7
13
20
48
68
391
165
556
619
1,175
827
524
1,351
1,687
3,038
1
2
Short term employee benefits includes a bonus for Mr. Daniel de Boer of € 131,000 based on goals realised in 2016.
Short term employee benefits includes a bonus for Mr. René Beukema of € 76,000 based on goals realised in 2016.
As at December 31, 2017:
Mr. de Boer holds 1,152,293 ordinary shares in the Company as well as 449,338 options. In 2016, Mr. de
Boer was awarded a total number of 129,727 options to acquire ordinary shares at € 6.64 per option. In
2017, he was awarded 239,717 options at an exercise price of € 4.65 per option. These options vest over
four years in equal annual installments and had a remaining weighted-average contractual life of 8.3
years at December 31, 2017.
Mr. Beukema holds 346,239 ordinary shares in the Company as well as 299,081 options. In 2016, Mr.
Beukema was awarded 50,608 options to acquire ordinary shares at € 6.64 per option. In 2017, he was
awarded 101,408 options at an exercise price of € 4.65 per option. These options vest over four years in
PAGE 89 / 105
Financial Statements 2017
ANNUAL REPORT 2017
equal annual installments and had a remaining weighted-average contractual life of 7.3 years at
December 31, 2017.
ProQR does not grant any loans, advanced payments and guarantees to members of the Management and
Supervisory Board.
24. Subsequent events
In January 2018, ProQR announced a research collaboration with Galapagos, where the Company’s Axiomer
technology will be applied to certain fibrosis targets identified by Galapagos. The Axiomer platform may be
applicable to more than 20,000 disease-causing mutations. The Company plans to develop its Axiomer
platform in select therapeutic areas and continue to validate and create value for this novel technology
through licensing, partnering and other strategic relationships.
In February 2018, the Company entered into a partnership with Foundation Fighting Blindness in which
ProQR will receive up to $ 7.5 million (€ 6.3 million) in funding from FFB for the pre-clinical and clinical
development of QR‑421a for Usher syndrome type 2A targeting mutations in exon 13.
PAGE 90 / 105
Financial Statements 2017
ANNUAL REPORT 2017
Company balance sheet at December 31, 2017
(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
Borrowings
Current liabilities
Trade payables
Social securities and other taxes
Pension premiums
Deferred income
Other current liabilities
Note
December 31,
2017
December 31,
2016
€ 1,000
€ 1,000
27
28
29
30
31
32
13
--
--
0
0
379
20,615
47,029
68,023
--
--
0
0
395
12,217
59,042
71,654
68,023
71,654
1,457
148,763
8,377
136
(75,733)
(43,484)
39,516
934
123,597
4,343
(15)
(36,630)
(39,103)
53,136
20,710
12,175
6,582
6,582
184
214
--
347
470
5,697
5,697
--
106
--
--
540
646
33
1,215
TOTAL LIABILITIES
28,507
18,518
TOTAL EQUITY AND LIABILITIES
68,023
71,654
The accompanying notes are an integral part of these financial statements.
Company income statement for the year ended December 31, 2017
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 91 / 105
Financial Statements 2017
ANNUAL REPORT 2017
2017
€ 1,000
(34,123)
(9,361)
2016
€ 1,000
(37,537)
(1,566)
(43,484)
(39,103)
PAGE 92 / 105
Financial Statements 2017
ANNUAL REPORT 2017
Notes to the Company financial statements for the year ended December 31, 2017
25. General
The company financial statements are part of the 2017 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 63 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 asset 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,
2017
December 31,
2016
€ 1,000
€ 1,000
0
0
0
0
Movements in financial fixed assets were as follows:
dsssds
Net asset value as of January 1
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 93 / 105
Financial Statements 2017
ANNUAL REPORT 2017
Participating
interests
in group
companies
Total
€ 1,000
€ 1,000
0
(34,123)
151
33,972
0
0
(34,123)
151
33,972
0
At December 31, 2017, 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 VI B.V.
ProQR Therapeutics VII B.V.
ProQR Therapeutics VIII B.V.
ProQR Therapeutics IX B.V.
Amylon Therapeutics 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
Leiden, the Netherlands
Leiden, the Netherlands
Leiden, the Netherlands
Leiden, the Netherlands
Leiden, the Netherlands
Delaware, United States
100%
100%
100%
100%
100%
100%
100%
100%
100%
80%
100%
ProQR Therapeutics N.V. is also statutory director of Stichting Bewaarneming Aandelen ProQR (“ESOP
Foundation”). 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,
2017
December 31,
2016
€ 1,000
€ 1,000
379
379
395
395
PAGE 94 / 105
Financial Statements 2017
ANNUAL REPORT 2017
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,
2017
December 31,
2016
€ 1,000
€ 1,000
20,400
210
5
20,615
10,854
235
1,128
12,217
December 31,
2017
December 31,
2016
€ 1,000
€ 1,000
47,029
--
47,029
56,196
2,846
59,042
The cash at banks is at full disposal of the Company. Bank deposits are convertible into cash upon request of
the Company.
PAGE 95 / 105
Financial Statements 2017
ANNUAL REPORT 2017
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
€ 1,000
Balance at January 1,
2016
Retained result
Foreign exchange
differences
Recognition of share-
based payments
Share options exercised
Result for the year
Balance at
December 31, 2016
Retained result
Foreign exchange
differences
Recognition of share-
based payments
Issue of ordinary shares
Issue of treasury shares
Share options exercised
Result for the year
Balance at
December 31, 2017
(15,798)
(20,832)
89,799
(20,832)
20,832
934
123,595
1,899
--
--
--
0
--
--
--
--
2
--
--
--
2,454
--
--
1
--
(16)
--
--
--
--
--
--
--
934
123,597
4,353
(15)
(36,630)
(39,103)
53,136
--
(39,103)
39,103
--
--
--
343
180
0
--
--
--
--
25,342
(180)
4
--
--
--
4,024
--
--
--
--
151
--
--
--
--
--
--
--
--
--
--
--
(43,484)
(43,484)
(39,103)
(39,103)
--
(16)
2,454
2
--
151
4,024
25,685
--
4
--
--
--
--
--
--
--
--
1,457
148,763
8,377
136
(75,733)
(43,484)
39,516
The 2016 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 2017 result to the accumulated deficit. For more details we refer to note 12 to the
consolidated financial statements.
PAGE 96 / 105
Financial Statements 2017
ANNUAL REPORT 2017
Reconciliation of shareholders’ equity and net result per the consolidated financial statements
with shareholders’ equity and net result per the company financial statements
dsssds
December 31,
2017
December 31,
2016
€ 1,000
€ 1,000
Shareholders’ equity according to the consolidated balance sheet
Share in results of participating interests with negative equity
39,325
191
53,136
--
Shareholders’ equity according to the company balance sheet
39,516
53,136
dsssds
December 31,
2017
December 31,
2016
€ 1,000
€ 1,000
Net result according to the consolidated profit and loss account
Share in results of participating interests with negative equity
(43,675)
191
(39,103)
--
Net result according to the company profit and loss account
(43,484)
(39,103)
32. Provisions
dsssds
December 31,
2017
December 31,
2016
Provision for negative equity group companies
€ 1,000
€ 1,000
Balance at January 1
Provisions made during the year
Balance at December 31
33. Current Liabilities
dsssds
Trade payables
Social securities and other taxes
Pension premiums
Deferred income
Accrued expenses and other liabilities
12,175
8,535
1,922
10,253
20,710
12,175
December 31,
2017
December 31,
2016
€ 1,000
€ 1,000
184
214
--
347
470
1,215
--
106
--
--
540
646
PAGE 97 / 105
Financial Statements 2017
ANNUAL REPORT 2017
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 (€ 2.5 million) to support the clinical development of eluforsen.
Pursuant to the terms of the agreement, the Company is obligated to make a one-time milestone payment to
CFFT of up to approximately $ 16 million (€ 13 million), payable in three equal annual installments following
the first commercial sale of eluforsen, 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 (€ 2.5
million) if net sales of eluforsen exceed $ 500 million (€ 417 million) in a calendar year. Lastly, the Company is
obligated to make a payment to CFFT of up to approximately $ 6 million (€ 5 million) if it transfers, sells or
licenses eluforsen other than for certain clinical or development purposes, or if the Company enters into a
change of control transaction prior to commercialization. However, the payment in the previous sentence
may be set-off against the $ 16 million milestone payment. 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:
dsssds
Audit fees
Audit-related fees
Tax fees
All other fees
Audit fees
2017
€ 1,000
2016
€ 1,000
175
140
--
--
315
165
39
--
--
204
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.
PAGE 98 / 105
Financial Statements 2017
ANNUAL REPORT 2017
Signing of the Annual Report
Leiden, March 30, 2018,
D.A. de Boer
D. Valerio
R.K. Beukema
A.B. Papiernik
A. Lawton
P.R. Baart
J.S.S. Shannon
PAGE 99 / 105
Financial Statements 2017
ANNUAL REPORT 2017
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.
2.
The profit is at the free disposal of the General Meeting of Shareholders.
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.
PAGE 100 / 105
Financial Statements 2017
ANNUAL REPORT 2017
Independent auditor’s report
To the Shareholders and the Supervisory Board of ProQR Therapeutics N.V.
Report on the audit of the financial statements 2017
Our Opinion
We have audited the financial statements 2017 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 at December 31, 2017, and of its result and its cash flows for 2017 in accordance
with International Financial Reporting Standards as adopted by the European Union (EU-IFRS) 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 at December 31, 2017, and of its result for 2017 in accordance with Part 9 of Book
2 of the Dutch Civil Code.
The consolidated financial statements comprise:
The statement of financial position as at 31 December 2017.
The following statements for 2017: the income statement, the statements of 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 as at December 31, 2017.
The company income statement for 2017.
The notes comprising a summary of the accounting policies and other explanatory
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 EU Regulation on specific
requirements regarding statutory audit of public-interest entities, the Wet toezicht accountantsorganisaties
(Wta, Audit firms supervision act), the Verordening inzake de onafhankelijkheid van accountants bij
assurance-opdrachten (ViO, Code of Ethics for Professional Accountants, a regulation with respect to
independence) and other relevant independence regulations in the Netherlands. Furthermore we have
complied with the Verordening gedrags- en beroepsregels accountants (VGBA, Dutch Code of Ethics).
We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
PAGE 101 / 105
Financial Statements 2017
ANNUAL REPORT 2017
Materiality
Based on our professional judgement we determined the materiality for the financial statements as a whole
at € 2.000.000. The materiality is based on 5% of total expenses. 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 € 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..
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
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
Description
Our response
The total research and development expenses for
In addition to control testing our audit procedures
the year 2017 amount to EUR 31.2 million. These
included, amongst others, the review of the
research and development expenses consist of
agreements with suppliers and the related
payroll costs of employees as well as outsourced
accounting evaluation as well as the timing of
research and development activities with third party
expenses recognized. In addition, we tested the
suppliers. The research and development activities
progress of projects based on confirmations sent to
with these suppliers are concluded in master service
significant vendors, we performed inquiries of
agreements and statements of work. These
project managers and inspected purchase orders
outsourced research and development activities are
and work orders in order to determine the correct
typically performed over a period of time and as a
cut-off of R&D expenses and accruals.
consequence the allocation of expenses to the
reporting period is based on the progress of the
The scope and nature of the procedures performed
work which involves (significant) judgement.
were sufficient and appropriate to address the risks
of material misstatement in R&D expenses.
PAGE 102 / 105
Financial Statements 2017
ANNUAL REPORT 2017
Significant contracts
Description
Our response
ProQR Therapeutics N.V. concluded several
In addition to control testing our audit procedures
significant contracts, such as the above mentioned
included, amongst others, the review of the contract
research and development agreements. These
register, obtaining external confirmations on
contracts contain terms and conditions that may
significant R&D contracts and the review of the
require complex accounting and/or significant long-
contract terms and related accounting evaluation of
term commitments that require disclosure in the
the impact on the financial statements including
financial statements.
disclosures of the commitments.
The scope and nature of the procedures performed
were sufficient and appropriate to address the risk
of material misstatements of commitments and
contingencies related to the significant contracts.
Cash and cash equivalents
Description
Our response
The total cash and cash equivalents as per
In addition to control testing our procedures
December 31, 2017 amount to EUR 48.1 million. We
included detailed reconciliations of the bank
focused on this area as the cash and cash
balances to bank confirmations, recalculating
equivalents are significant to the financial
foreign exchange results on these balances and a
statements.
review of the statements, confirmations and
underlying agreements for deposit balances to
assess the presentation and disclosure in the
financial statements.
The scope and nature of the procedures performed
were sufficient and appropriate to address the risks
of material misstatement in the cash and cash
equivalents.
Report on the other information included in the annual accounts
In addition to the financial statements and our auditor’s report thereon, the annual accounts contain other
information that consists of:
Management Board's Report
Other Information as required by Part 9 of Book 2 of the Dutch Civil Code
Based on the following procedures performed, we conclude that the other information:
Is consistent with the financial statements and does not contain material misstatements.
Contains the information as required by Part 9 of Book 2 of the Dutch Civil Code.
PAGE 103 / 105
Financial Statements 2017
ANNUAL REPORT 2017
We have read the other information. Based on our knowledge and understanding obtained through our audit
of the financial statements or otherwise, we have considered whether the other information contains
material misstatements.
By performing these procedures, we comply with the requirements of Part 9 of Book 2 of the Dutch Civil Code
and the Dutch Standard 720. The scope of the procedures performed is substantially less than the scope of
those performed in our audit of the financial statements.
Management is responsible for the preparation of the other information, including the Management Board's
Report in accordance with Part 9 of Book 2 of the Dutch Civil Code, and the other information as required by
Part 9 of Book 2 of the Dutch Civil Code.
Report on other legal and regulatory requirements
Engagement
We were engaged by the Supervisory Board as auditor of ProQR Therapeutics N.V. starting with the audit for
the year 2012 and have operated as statutory auditor ever since that financial year.
No prohibited non-audit services
We have not provided prohibited non-audit services as referred to in Article 5(1) of the EU Regulation on
specific requirements regarding statutory audit of public-interest entities.
Description of responsibilities regarding 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. 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 frameworks 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
detect all material errors and fraud during our audit.
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
PAGE 104 / 105
Financial Statements 2017
ANNUAL REPORT 2017
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.
We have exercised professional judgement 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 to cease 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.
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. On this basis, we selected group entities for which an audit or review had to be carried
out on the complete set of financial information or specific items.
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
identified during our audit. In this respect we also submit an additional report to the audit committee in
accordance with Article 11 of the EU Regulation on specific requirements regarding statutory audit of public-
interest entities. The information included in this additional report is consistent with our audit opinion in this
auditor’s report.
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.
PAGE 105 / 105
Financial Statements 2017
ANNUAL REPORT 2017
From the matters communicated with the Supervisory Board, we determine the key audit matters: those
matters that were of most significance in the audit of the financial statements. We describe these matters in
our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in
extremely rare circumstances, not communicating the matter is in the public interest.
Amsterdam, March 30, 2018
Deloitte Accountants B.V.
I.A. Buitendijk
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and our programs
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proqr.com/pipeline
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Annual Report
proqr.com/ar2017
ProQR Therapeutics N.V. T : +31 88 166 7000 W : www.proqr.com E : info@proqr.comZernikedreef 9, 2333 CK Leiden,The Netherlands