ANNUAL
REPORT
2018
Future medicines in sight
UNMET NEED IN RARE DISEASES
AN EYE ON
THE GOAL
At ProQR, we focus on areas where there remains significant unmet need for
new treatments. For most people living with rare genetic diseases, there are no
therapies available. This may be due to the rarity of their disease or difficulties
in treating with conventional methods. We hold a strong belief that people
with rare diseases should enjoy a high quality of life and be able to enjoy it
with their loved ones. Over the last several years, this goal has brought many
good things to us, and the people we aim to help using our RNA therapies.
In this magazine, we want to highlight what we have worked on and achieved
in 2018, but also provide a glimpse into what 2019 will bring.
In recent years we have focused
developed for people with Leber’s
more on eye diseases. The reason
congenital amaurosis 10 (LCA10).
for this is two-fold as most genetic
LCA is the most common genetic
eye diseases don’t have a treatment
cause of childhood blindness of
and RNA therapies are well suited to
which LCA10 is one of the most
treat these types of diseases.
severe forms affecting about 2,000
This focus has yielded results such
patients in the Western world.
as our positive clinical data for
In LCA10 a process called photo-
sepofarsen (formerly named
transduction is disrupted in the light
QR-110). Sepofarsen is being
detecting cells (photoreceptor cells)
Every
minute
of every
day, TEN
CHILDREN
AROUND
THE WORLD
are born
with a rare
genetic
disease
PAGE II
Ma ga zine
ANNUAL REP ORT 2018
in the retina, due to a mistake in the
implants that help mitigate most
CEP290 gene. The mistake, or mu-
of the hearing loss these patients
tation, changes the CEP290 protein
experience. We are proud that 2018
so that it cannot function properly
saw the start of preclinical testing
causing poor vision and blindness.
of QR-421a, and even more proud
Sepofarsen is our effort to repair
that we partnered with Foundation
the mutation in the RNA, resulting
Fighting Blindness (FFB). The $7.5 of
in a normal protein to improve
million funding provided by FFB for
vision. In September of 2018, we
the clinical development of QR-421a
presented interim results from the
is more than just monetary support
ongoing Phase 1/2 clinical study
but a vote of confidence in our
demonstrating that most partici-
patient-centric drug development
pants experienced vision improve-
approach. We aim to publish interim
ment following treatment with
results from the Phase 1/2 clinical
sepofarsen. It’s really encouraging
study of QR-421a, called STELLAR,
to see beneficial results for patients
in 2019.
in the first study, which we plan to
finish in 2019. Additionally, we are
We are also working on another
also planning to start a Phase 2/3
therapy for RP, caused by a different
clinical study for sepofarsen called
mutation called autosomal dominant
ILLUMINATE. The ILLUMINATE trial
retinitis pigmentosa (adRP). This
has the potential to be the final study
disease is related to the light-
required for market approval for
sensitive protein rhodopsin, which
sepofarsen. Read more about this in
transforms light into neural signals
our interview with Dr. David Rodman,
for the brain. In patients with adRP
Executive Vice President of Research
this function is impaired. Our drug
& Development at ProQR.
candidate, QR-1123, aims to block
the formation of the mutated
Another big development is our
rhodopsin protein, potentially
investigational therapy for Usher
stopping or reversing vision loss.
syndrome type 2. Usher syndrome
QR-1123, which was initially
is a devastating disease combining
discovered by Ionis pharmaceuticals,
deafness and blindness. There are
was obtained by ProQR with an
three types, which are determined
exclusive worldwide license. In 2019,
by the severity of hearing loss,
we are planning to start a Phase 1/2
the presence or absence of balance
clinical study for QR-1123.
problems, and the age of onset of
symptoms. Type 2 is caused by
Butterfly Wings
a DNA mutation that results in a
While we are excited about our
lack of usherin protein, resulting
progress in ophthalmic diseases,
in retinitis pigmentosa (RP) that
it’s by no means the only path we
disrupts eye function. Our drug
are exploring. The effort we started
QR-421a circumvents the mutation
in dystrophic epidermolysis bullosa
by skipping over the mutated
(DEB) is continuing to progress. DEB
part of the gene. This generates a
is one of the more severe forms of
shorter yet still functional usherin
EB, caused by a weak connection
protein, with the aim to stop or even
between the dermis (inner layer)
reverse the vision loss. As a therapy,
and epidermis (outer layer) of the
it would complement the cochlear
skin. This connection is weakened
PAG E III
Magazi ne
ANNUAL R EPORT 2018
PAGE IV
Ma ga zine
ANNUAL REP ORT 2018
by a DNA mutation that inhibits
started the first clinical study
$5 million from EB Research
the connective function of the
(Phase 1/2) for QR-313, called
Partnership and EB Medical
protein collagen (type VII). It results
WINGS. A newly formed company,
Research Foundation to develop
in the blistering of skin and mucosal
Wings Therapeutics, dedicated to
QR-313 for patients with dystrophic
membranes. Those affected have
developing therapies for DEB will
epidermolysis bullosa.
to live with constant pain, infections
continue development of QR-313
RESEARCH AND DEVELOPMENT PIPELINE – DECEMBER 2018
Ophthalmology
and risk of malnutrition. Because
and complete the WINGS study.
In September, we finalized a success-
DISCOVERY
PRECLINICAL DEVELOPMENT
their skin is as fragile as a butterfly,
children with DEB are sometimes
Financial sustainability
ful public offering of ProQR shares.
We sold 6,612,500 shares at $15.75
called ‘butterfly children.’ It’s a
Looking back at 2018, there are also
per share, raising approximately
heart-breaking disease and so
financial reasons to be encouraged
$104 million. And to close the year,
far only palliative treatments
with our progress. We started the
in December we were granted
are available.
year with €48.1 million in cash and
€5 million from the Dutch
throughout the year have been
government as innovation credit
At ProQR we discovered an
successful in raising capital to
for the development of sepofarsen.
investigational drug called QR-313
fund the development of all the
With all this, we ended the year with
for a subgroup of DEB patients.
programs that can potentially have
€105.6 million in cash, which will
By skipping the disease-causing
a meaningful impact on patients.
fund the development of four of
mutation, a shorter but functional
At the beginning of 2018 we
more clinical programs, including
collagen protein is expected to
received the already mentioned
the potentially pivotal trial for
Sepofarsen (QR-110) for LCA10 p.Cys998X
QR-421a for Usher syndrome 2A exon 13
QR-1123 for P23H adRP - discovered by Ionis
QR-504 for FECD3
be formed. This should result
$7.5 million from the Foundation
sepofarsen and advance our early
QR-411 for Usher syndrome 2A PE-40
in better wound healing and
Fighting Blindness. In addition
stage pipeline, providing a cash
prevent blistering. In 2018, we
we were granted approximately
runway into 2021.
PROOF OF
CONCEPT TRIALS
LATE STAGE/
REGISTRATIONAL
TRIALS
5-YEAR PLAN: ProQR’S VISION2023
We have always set ambitious goals to help as many patients
programs in our pipeline. In order to bring our medicines to
as possible using our RNA therapies. In the coming five years
patients as efficiently as possible we intend to independently
our aim is to build out our platform for the discovery and
commercialize the eye programs in our pipeline. Most of our
development of programs in eye diseases in order to have
pipeline will be focused on eye diseases because we think
marketing approval for at least two programs and have three
this is where we can have the biggest impact, but we plan to
additional programs in late stage clinical studies by the end of
also develop programs in other areas where there is a strong
2023. Beyond that we plan to have at least seven additional
need for new therapies, such as skin and brain diseases.
QR-1011 for Stargardt’s disease c.5461-10T>C
QRX-461 for Usher syndrome undisclosed mutation
QRX-136 for LCA undisclosed mutation
Beyond ophthalmology
DISCOVERY
PRECLINICAL DEVELOPMENT
PROOF OF
CONCEPT TRIALS
LATE STAGE/
REGISTRATIONAL
TRIALS
QRX-704 for Huntington’s Disease
2
COMMERCIAL
PRODUCTS
3
LATE STAGE
PROGRAMS
7
EARLY STAGE
PROGRAMS
For the latest developments in our pipeline visit www.proqr.com/pipeline/
or scan the QR-code on the back of this magazine
PAG E V
Magazi ne
ANNUAL R EPORT 2018
PAGE VI
Ma ga zine
ANNUAL REP ORT 2018
AT A GLANCE:
WHAT ARE
RNA THERAPIES?
RNA therapies: it’s what we do, but it can sometimes sound complicated.
If you want to learn more – keep reading. Here we’ll explain how cells function,
and how RNA therapy can intervene in genetic diseases.
ProQR RNA MEDICINE PLATFORM
(human cell)
Healthy
Healthy
Disease
Disease
Treated
Treated
Protein
Protein
Protein
RNA
DNA
RNA
DNA
RNA THERAPY
RNA
DNA
Cell
Nucleus
Cell
Nucleus
Cell
Nucleus
Check out the video on www.proqr.com/we-are-proqr/ if you want to learn more
OUR TOOLBOX OF RNA THERAPIES
At ProQR, we use different types of RNA therapies,
Mutant-specific knockdown
depending on what type of mutation causes a disease.
People inherit two copies of each gene, one from each
Together, these technologies form our ‘toolbox’ to
of their parents. Sometimes, a mutation in one version
repair RNA. Here they are explained in a nutshell.
of the gene leads to a toxic protein that causes a disease.
Splice correction
It is possible to design an RNA therapy that only destroys
(knocks down) the mutated version of the RNA. The toxic
Sometimes a mutation causes the cell to incorrectly splice
protein is therefore not made and the cause of the disease is
the RNA, either leaving behind parts of RNA that should
removed. This is how QR-1123 for adRP is designed to work.
have been cut out or cutting out parts that should have
remained. An RNA therapy can be designed to ‘hide’
Repeat targeting
the mutation that allows the cell to splice the RNA
Sometimes a mutation causes a stretch of DNA to be
correctly and restore the function of the protein. This is
copied a few times, these copies are also present in
DNA lies at the core of normal
Genetic diseases are caused by
Using RNA therapies, which are
how sepofarsen for LCA10, QR-411 for Usher syndrome
the RNA. This is called a ‘repeat’, and may cause disease
cellular function. It contains
mistakes, or mutations, in the DNA.
basically short pieces of RNA made
and QR-1011 for Stargardt’s disease are designed to work.
by creating a toxic RNA or protein. An RNA therapy
genes, which are the genetic
These mutations are copied
in a laboratory, we aim to repair
instructions on how to make
into the RNA blueprint, which
the RNA blueprint to restore the
Exon skipping
can be designed that targets and blocks the toxic function
of these repeats to prevent their negative effect.
the functional building blocks of
means the protein is also not made
function of the protein. This way,
A mutation that causes a disease can sometimes be repaired
This is how QR-504 for FECD3 is designed to work.
the cell, such as proteins. However
correctly. Malfunctioning proteins
we can target the underlying cause
using the exon skipping method. An RNA therapy can be
to get from the DNA to protein,
can cause cells to not function
of the disease without making
designed to cause the cell to ‘skip’ the part of the RNA (the
RNA editing
the information in the DNA is first
properly causing the disease.
permanent changes to the DNA.
exon) that contains the mutation so that the rest of the
Scientists at ProQR have developed a completely novel
copied into RNA. The RNA acts as
For example, if an essential protein
Scientists around the world, includ-
RNA can still make a protein. The protein is a little shorter
technique to repair RNA. An RNA therapy can be
the blueprint for making proteins.
is not working in the eye this may
ing those at ProQR, have developed
than normal, but can still perform its function. This is
designed to actively recruit the cell’s own RNA editing
Proteins are responsible for making
lead to blindness.
a toolbox of novel ways to repair
how QR-421a for Usher syndrome is designed to work.
system which can edit certain mutations in the RNA
sure that the cells in your body
RNA. As a result, depending on the
function normally.
We take an innovative approach
type of mutation, we can choose
to treating genetic diseases.
the best tool to do the job.
back to its healthy form. This technique is used for
ProQR’s Axiomer® platform that can potentially be used
to repair thousands of disease causing mutations.
PAGE VIII
Ma ga zine
ANNUAL REP ORT 2018
It has been roughly two years since David Rodman became the Executive
Vice-President Research & Development at ProQR. He was appointed to
apply his knowledge of study design and genetic diseases on our pipeline.
In September of 2018, we were able to present positive interim results from
the clinical study for sepofarsen, our potential therapy for Leber’s congenital
amaurosis 10 (LCA10), a genetic disease causing blindness in childhood.
“After two
weeks he
called his
doctor
and said
HE WAS
ABLE TO
READ SIGNS”
How did you feel when you got
the results?
learn. This makes it a modern study
design that has been done before,
“My feelings can be best described
but it’s the first time it would be
by talking about one of the patients,
applied in an eye disease. With rare
a 42-year old fella who had been
diseases and small patient groups
born with LCA10. Within years of
it’s essential to be flexible in study
birth he was already down to just
design, and thankfully the regulators
tunnel vision, but he was still able
are enthusiastic and willing to listen.”
to read and function with glasses
until his early twenties. By the time
he entered the study, he could only
distinguish light from dark. We then
Seeing the success of sepofarsen,
what’s your vision for ProQR
in eye diseases?
gave him the treatment, and when
“We’re at a stage now where we
he came back after four weeks he
want to go both narrow and deep.
was able to see bright lights in
Now that we’ve shown that our RNA
different colors. He was scheduled
therapy had an effect on LCA10,
to come in another month, but after
we want to exploit that. We are do-
two weeks he called his doctor and
ing an extensive search to make an
said he was able to read signs.
inventory of all genetic eye diseases,
That was something he hadn’t done
and select the ones that can be
in twenty years. Then when he
fixed using our toolbox of RNA
came in for his second treatment
therapies. This would give us
he was reading letters on an eye
a theoretical playing field. At the
chart, for the first time since he was
same time, we need to learn more
a kid. That’s tremendous. It was
about patients, because a lot of
great for the company too, because
people with vision problems don’t
it’s really fortunate to see every-
know what genetic mutation is
thing we work for come together
causing their disease. This is why
so early on in the process.
we work with foundations like
Foundation Fighting Blindness who
We did this study with 11 patients
provide genetic testing to patients.
and got very consistent responses,
We could probably end up with a
so we’re going to move to the next
list of hundreds of diseases that we
phase. We will start a seamless
could potentially target, but then
adaptive Phase 2/3 clinical study
we have to prioritize.
that could be the last study we
have to do before we get market
The eye is a very good treatment
approval. That it’s an adaptive
area for RNA therapies. One major
study means that we can adapt the
issue with RNA therapies in general
design as we go, based on what we
is that it’s difficult to deliver it intact
DAVID RODMAN, EXECUTIVE VICE PRESIDENT
RESEARCH & DEVELOPMENT
TOWARDS
A THERAPY
FOR ONE
PATIENT
PAG E IX
Magazi ne
ANNUAL REPORT 2018
PAGE X
Ma ga zine
ANNUAL REP ORT 2018
SEPOFARSEN (QR-110) FOR LEBER’S CONGENITAL AMAUROSIS
QR-1123 FOR P23H ADRP
LCA10
SEPOFARSEN
P23H ADRP
QR-1123
Lose sight in
first years of life
p.Cys998X
mutation affects
~2,000
patients in the
Western world
Locally administered
in the eye. Routine
procedure
Anticipated
infrequent dosing
of 2 times a year
Goal: Restore
vision/ prevent
vision loss in
patients with LCA10
Progressive reduction
in night & peripheral
vision. Blindness is
frequent in
mid-adulthood
~2,500
patients with P23H
adRP in United States
Locally administered
in the eye. Routine
procedure
Anticipated
infrequent dosing
of 2 times a year
Goal: Restore vision/
prevent vision loss
in patients with
P23H adRP
QR-421A FOR USHER SYNDROME
Develop hearing
and vision loss in
childhood and are
completely blind
by mid adulthood
USH2A exon 13
mutations affect
~16,000
patients in the
Western world
“We could
end up
with a list of
HUNDREDS
OF DISEASES
that we
could
potentially
target”
to the relevant tissue, but in the
Besides looking narrowly at LCA,
a stage of tunnel vision and ending
Instead of repairing the RNA like
foreseeable future. Once we get
eye this problem doesn’t exist.
we are also taking a broader
with complete blindness and
we do for LCA and Usher, in adRP,
the first programs I just described
We can just inject it into the liquid
perspective on retinal diseases.
there is no therapy available to
we are trying to selectively break
done, and we’ve established the
in the eye, actually a common pro-
For example, we have started
them. This made me enthusiastic
down the mutated version of the
potential of RNA therapies in the
cedure that is used for many drugs
a clinical study in patients with
about trying to make a difference.
RNA that creates a toxic protein,
eye, then the next step is to get to
nowadays. The RNA therapy then
vision loss due to Usher syndrome.
Secondly, the disease progresses
and not the healthy one.
what we call N=1 studies. To scale
automatically spreads and enters
This disease is the most common
more slowly which means that
down from rare diseases with
all of the retinal cells, where it can
cause of combined deafness and
measuring the effect of the disease
The work on adRP also made me
a few thousand patients in the
act. Another reason is that we
blindness. This drug, QR-421a, uses
and the therapy takes a long time.
realize that with such subtle differ-
world to diseases with only hun-
have a very good and novel sys-
exon skipping, a different mode of
Ionis, the partner that discovered
ences, we need to rethink what we
dreds and, finally being able to
tem to test potential therapies in.
action to hopefully restore the vision
the drug, had just followed a group
measure in our clinical study too.
treat versions of the disease that
We can take stem cells from
loss that these patients experience.
of patients closely for two years to
What actually matters to the
are so rare that it affects perhaps
a patient’s skin and grow these
We are expecting to report the first
map the progression. We can now
patient? I think we should mea-
just one patient in the whole world.
into ‘retina in a dish’, what we call
results from this study in 2019.”
use that knowledge and save time
sure, for example, if a therapy
Obviously, this will blur the bound-
the optic-cup organoid model.
This means we can test drugs in
a very relevant setting, and the
results suggest that it can predict
what the drug can do in the real
eye. A nice benefit is that these
For another eye disease,
autosomal dominant retinitis
pigmentosa (adRP), you have
licensed a program from Ionis.
What’s the story there?
in testing the drug. This helps the
lets them run an errand quicker,
ary between study and treatment,
patients quicker. The third reason
or allows them to drive a car.
so we need to find a way to treat
is that the disease is caused by
We are also exploring the possibili-
individual patients with a new drug
a very different type of mutation
ties of virtual reality for this.
in a safe way while tracking their
than we have thus far targeted.
well-being. Once we have figured
The type of RNA therapy is there-
Our aspiration for eye therapies
that out, we will be able to help
organoid models reduce the need
“There are a few reasons really.
fore different too, which gives us
is that we want to start at least
a lot more patients.”
for animal testing too.
Firstly, adRP patients go through
a chance to learn to work with it.
one new program a year, for the
PAG E XI
Magazi ne
ANNUAL R EPORT 2018
PAGE XII
Ma ga zine
ANNUAL REP ORT 2018
MAARTJE, LIVING WITH USHER SYNDROME
I WANT MY DAUGHTER
TO BE ABLE TO DREAM,
AND KEEP DREAMING
At a glance, it’s hard to tell Maartje de Kok – 41, married and mother of
four – has Usher syndrome. Though she manages her life very well, it took
her a long time to get to that point. “I have learned to be optimistic, but the
sombreness is always there.”
“I have
learned
to be
optimistic,
but THE
SOMBRENESS
IS ALWAYS
THERE”
during the day too. By the time
syndrome, informing people about
left. What can I do?’ and decided to
I was 15 I was an avid netball player,
life with Usher and raising funds for
do a writing course and get a job.
playing in the highest junior team.
scientific research. “With our cam-
What I really rediscovered, I should
But then during the summer I did
paigns we stimulate young patients
say, is my dreams. I dared to look
a lot of reading in the sun with-
to ‘come out of the closet,’ and create
into the future again.”
out sunglasses, and my vision got
awareness” she says. “It’s important
worse quite quickly. Because of my
that we start understanding the
A therapy is something she thinks
experience and talent I was able to
disease. For this reason the Usher
about with some ambiguity.
compensate for a while, but in the
syndrome foundation supports
“It’s scary to allow hope into my life,
end I had to stop playing netball.
the CRUSH study at Radboudumc
because everything has always
It was the same with going out;
in Nijmegen, the Netherlands.
been about things getting worse.
I had trained myself to memorize
The study and accompanying
And I’ve heard promises from
the route to the bathroom in a bar,
database should uncover how
doctors and researches before –
for example. And when we cycled
the disease progresses.”
we were going to have a cure in
home in the dark I would just focus
10 years, and that was 20 years ago.
Maartje lives in a brand new house
Usher syndrome type 2, and that her
on the markings on the bike path or
A few years ago, Maartje spent two
On the other hand, one of my daugh-
with her husband Peter and her kids
field of vision is only six degrees,
the lights in front of me.”
weeks hiking the pilgrim’s path to
ters has Usher syndrome too. Jente
Amber (11), the twins Ingmar and
instead of 180. But it’s something
Santiago de Compostela. During
is eight years old, and she still has so
Jente (8) and Kiki (6). She has a job as
she has struggled with for a long
As she got older, Maartje struggled
those weeks she was challenged in
many milestones ahead of her. With
a social worker, helping parents who
time. “I knew for sure when I was 19,
with the new reality of losing both
new ways. “A buddy accompanied
Usher syndrome the clock is really
have children with a visual handicap.
although my ophthalmologist
hearing and vision. “I used to have
me to guide me through the hills.
ticking; if there is a therapy before
Together with Peter she manages
had her suspicions when I was 15.
terrible nightmares when I was
Every day we slept in a different
she’s 15, she might be able to keep
her household quite effectively,
I got hearing aids when I was 2.5
adjusting to the idea of having
place, which meant every day I had
playing netball, which she enjoys
and last summer she even gave back
years old already, but only in hind-
Usher, and I’ve suffered two burn-
to learn new routes to the bath-
just like I did. If the therapy comes
the guide dog that she had had for
sight was it obvious that my eyesight
outs and struggled with depression.
room and exits. I managed very
when she’s 18, netball and driving
seven weeks. “It was the sweetest
was deteriorating as well. I couldn’t
Before I got the diagnosis I felt like
well though, and applied all kinds
a car might be out of the question
dog, but it just felt like an extra child.
play games in the dark during school
I was ready to spread my wings and
of tricks. It was a healing experience,
but riding a bike or studying might
Every time I finally had some time
camp when I was 12, and I once fell
make something of my life, but then
and I found a lot of calm.”
not. And it goes on like that. That’s
to sit down, I had to walk the dog.
off the stage during a school musical
it got taken away from me.”
the time pressure that we’re under.
It’s just better this way.”
because somebody turned off the
She also found a renewed ambition
I know how Usher narrows life’s path
To an outsider it might not be
This night blindness slowly pro-
in social work and was involved in
her education. “I thought to myself
happen to her. I want her to be able
immediately obvious that she has
gressed until it affected my vision
setting up a foundation for Usher
‘Let’s say I have ten years of vision
to dream, and keep dreaming.”
lights before I reached backstage.
Maartje managed to obtain a degree
to work, to be productive and to use
of choices, and I don’t want that to
PAG E XIII
Magazi ne
ANNUAL REPORT 2018
PAGE XIV
Ma ga zine
ANNUAL REP ORT 2018
At ProQR, we want to attract talented scientists to take the field of RNA
therapies to a higher level. For Seda Yilmaz-Elis, working in this field was
the only thing she wanted after finishing her PhD. Now she works in our
Black Box Innovation group, identifying the RNA therapies of tomorrow.
“Working
as a scientist
at ProQR
is basically
MY DREAM
JOB”
Seda came to the Netherlands
for her PhD, which she did on
the application of RNA therapies
But what about other
methods like gene editing
and gene therapy?
(antisense oligonucleotides), at the
“The advantage of an RNA therapy
Leiden University Medical Center.
is that we can take away the under-
“After that I was in love with RNA
lying cause of the disease in the
therapies,” she recalls. “It was new,
RNA, without permanently changing
it was very innovative, and I still
the patient’s genetic material,
think it’s the therapy of the future.
or DNA. This makes the treatment
I also liked the translational applica-
reversible compared to gene editing
bility of what I was working on.
or gene therapy that make the
You do something in the lab, and
changes for life. Secondly, antisense
you can see the results in the pa-
oligonucleotides do not usually
tients later; from bench to bedside,
require complex delivery systems,
that is extremely motivating.
like viral vectors for gene therapies.
So when I completed my PhD,
In most cases we can deliver it as
I wanted to continue in this field
a ‘naked molecule’ and it will reach
and working as a scientist at ProQR
the cells. This makes manufacturing
was basically my dream job.”
and testing a lot easier.”
Fast forward a few years, and
Seda made her dream come true –
she started working at ProQR
Your job at ProQR is in the ‘Black
Box Innovation’ department.
That sounds exciting, what is it?
as an Associate Director and
“Yes, it is super exciting! In a nut-
project leader.
Why do you like RNA therapies
so much?
shell, we aim to find new applica-
tions for ProQR’s toolbox of
RNA Therapies. ProQR works on
a number of diseases and therapeu-
“They can do the same job as
tic areas like the eye. In the Black
conventional drugs, but have
Box we have a broader approach.
broader applications. If the disease
We try to find new diseases and
is the result of an error in the DNA,
even completely new therapeutic
an RNA therapy can often fix it.
areas that can benefit from RNA
For example, they can be designed
therapies. While we investigate,
for a specific mutation, so it’s
we always keep an eye out for rare
potentially really personalized
diseases, and target the ‘undruggable’.
medicine. The therapy works with
This is risky of course, but I like to
short pieces of RNA, called anti-
root for the underdog.”
sense oligonucleotides, it’s relative-
ly easy to manufacture once you
How does that work?
know what it needs to look like.”
“First we try to identify a genetic
disease, its gene and mutation(s).
SEDA YILMAZ-ELIS, ASSOCIATE DIRECTOR
BLACK BOX INNOVATION
EXPLORING
THE POTENTIAL
OF RNA
THERAPIES
PAGE XVI
Ma ga zine
ANNUAL REP ORT 2018
PAGE XV
Magazi ne
ANNUAL R EPORT 2018
“It is risky,
but I like to
root for the
UNDERDOG”
ORGANOID MODELS
FOR OLIGONUCLEOTIDE
TESTING
We are looking for genetic defects
done and positive, we hand the
that can potentially be solved by
best drug candidate over to the
our RNA technology. We then
clinical department to prepare it
design an antisense oligonucle-
for clinical studies to test the
otide, which is a short piece of RNA
therapy in patients.”
ProQR uses organoid models to test the
that might be able fix the issue.
candidates for RNA therapy. An organoid
The design is done ‘in silico’, which
Do you do all this by yourself?
model is a simplified organ grown in
means on the computer, using
“No, it’s always a team job and I’m
a laboratory, using live human cells.
databases and software. The design
glad I have a great team with very
They are made by extracting stem cells
is only the start, the next step is
dedicated and motivated people,
from the skin of patients with the disease
finding out which configuration of
everybody has his/her own ex-
that the therapy is aimed at. These stem
the design works best. This is done
pertise and we also work in close
cells can be triggered to become an
by screening many similar designs
collaboration with the other teams
organ of choice – for example an eye.
in cell cultures. The screening will
within ProQR. Luckily we have
When successful, these stem cells create
give us a first impression of the
a lot of expertise in-house but when
a simplified eye, called an optic cup.
therapy’s potential to improve the
we need expertise from outside
They can then be treated with the drug
disease. It helps a lot that we can
we also cooperate with the expert
candidates, and the results can tell you
do our own oligonucleotide man-
groups at the universities or with
something about whether the therapy
ufacturing in-house, which makes
other companies depending on
will work. The great advantage of this
it quicker and more cost-effective
the need.“
approach is that we can predict earlier
to test hundreds of candidates in
if a therapy can be successful, reducing
order to find the most effective one.
cost and time. Another benefit is that
After four years, is it still your
dream job?
these models reduce the need for animal
When we have selected the best
“Yes! ProQR is a very nice organi-
testing. ProQR currently has these
candidates, we can go to the next
zation to work in. We are a very
models in place for skin and eyes.
phase of testing. The models we
dedicated group of people that put
use for this are very sophisticated.
a lot of effort into making patients’
We can for example take stem cells
lives better. Within the company,
from a patient with the disease we
there is always room for improving
want to target and grow the cells
your skills, learning new things
into mini organs called organoids.
every day. The open culture with
Our ophthalmology group lets
very little hierarchy creates an
those cells develop into simplified
atmosphere where everybody
eyes which allows us to predict
can freely reach out to each other.
if the therapy would work in the
So when you have an idea it’s easy
actual eye of that patient. We also
to get people to listen, which is criti-
do initial tests to see if the therapy
cal when you want to innovate.”
Retinal organoid in development
is safe. Then, when all the tests are
PAG E XVII
Magazi ne
ANNUAL REPORT 2018
PAGE XVIII
Ma ga zine
ANNUAL REP ORT 2018
“It DOESN’T
STOP after
granting an
application
for funds”
20 to 30 million dollars a year on
In terms of partners, if it’s compa-
research and clinical trials. But that
nies for the clinical development,
doesn’t mean much if patients don’t
we aim for parties that have a proven
benefit from it. So we select care-
track record in safety, and that have
fully and try to bring research into
been able to bring something to
blindness and retinal degeneration
the clinic or even the market.
further. To achieve this, we have an
When it’s researchers we scrutinize
application process for our grants,
their science. We want the scientists
and pull in outside subject experts
we support to succeed. The group
from all over the world to help us
in Nijmegen, at Radboud University,
select the best ones. We really want
is a good example. They belong
to pick groups and companies that
to the best groups in the world,
have a good chance of succeeding.
and have been an FFB center for
years, receiving many investments
As Chief Science Officer, it’s my
from us. We actually funded their
personal job to facilitate the ongoing
research that is now being taken to
research, to tackle upcoming
the clinic by ProQR as sepofarsen,
problems and to make sure we get
which has gotten some very nice
optimal results. Because it doesn’t
results. Still preliminary, but looking
stop after granting an application
very promising. It’s important to
for funds. We keep pushing for the
get that proof of concept. Now we
best preventions and cures, so that
know that RNA therapies have the
blind people benefit the most.
potential to do what we believe it
If we don’t get the most bang for
will do in treating these diseases.”
our buck, it’s just a waste of funds.”
What kind of collaborations
do you pursue?
How about the developments
with QR-421a for Usher
syndrome?
“If you talk about research focus,
“Well, it’s not as far as sepofarsen,
we don’t believe in any particular
but the collaboration with ProQR
type of drug. The diseases causing
so far has been fantastic. They’re
blindness are as diverse as the
transparent, forthcoming and I’m
mutations that cause them, and
impressed with their level of profes-
there is no silver bullet that will take
sionalism. They really know how to
care of it all. We therefore consider
bring something to the clinic with
gene therapy, gene editing, RNA
a high regard for safety. We’re actu-
therapy – they all have potential.
ally looking at additional projects to
We also look at other diseases
work on together.”
for inspiration. Take Parkinson’s
disease or Alzheimer’s disease for
example. These are brain-related,
Do you feel like they mirror
your high regard for patients?
so they are based on neurobiology
“Definitely. They really go the extra
just like retinal diseases. The eye
mile to ensure safety. My personal
is the window to the brain and as
yardstick is whether I would put
such, understanding neurobiology
my own children in a trial. If I can’t
has implications for both brain and
say that, then I don’t want to be in-
retinal diseases.
volved. And with ProQR, the answer
is ‘absolutely.”
STEPHEN ROSE, CHIEF RESEARCH OFFICER
FOUNDATION FIGHTING BLINDNESS
WE PUSH FOR
THE BEST RESEARCH,
SO THAT PATIENTS
BENEFIT THE MOST
The work we do at ProQR would not be possible without the help from
patient organizations and foundations. One of our main supporters
is the Foundation Fighting Blindness (FFB), who generously provided
7.5 million dollars of funding for the clinical development of QR-421a,
our drug candidate for Usher Syndrome. We checked in with Stephen Rose,
Chief Science Officer at FFB, to talk about their perspective.
The Foundation Fighting
Blindness is a strong force
in research funding when it
comes to blindness. How does
the foundation approach this?
“With everything we do, the interest
of patients is our top priority.
We actually are the world’s leading
private funder of inherited retinal
disease research, spending
PAG E XIX
Magazi ne
ANNUAL REPORT 2018
“ProQR
really goes
the extra
mile to
ENSURE
SAFETY”
You seem to have a strong
personal connection with
the foundation’s cause…
Do you engage patients outside
of studies?
“Yes, and it’s amazing how this
“I do – I have two actually. I have
has changed since the foundation
a relative with a rare inherited form
started in 1971. In the beginning,
of retinal degeneration, and the
we looked at blindness as needing
more common age-related macular
one cure. But now we know there
degeneration runs in my family.
are hundreds of different reasons,
I participate in a clinical study
mechanisms and varieties of retinal
because of this, and I can tell you –
degeneration. Obviously a big part
some of those tests are not a lot of
of this is genetics, so we provide
fun! But it means that I have an ap-
programs for patients to test for
preciation for the tests that patients
known genes, but also to identify
are required to complete in order
new mutations. We still find new
participate in our studies, and that
ones every year.”
motivates me to really think about
when tests are necessary and why.
On a higher level, we often don’t
How do you see the future for
blind people?
realize how much we use vision –
“I’m cautiously optimistic. We’ve
it’s underappreciated. Blind people
been going at it for almost half
have to learn everything by heart,
a century, but the last five years the
like the layout of their apartment or
advances have been out of propor-
the way to the shop, and they rely
tion, really great. It’s also hard to
on others to help them by putting
be specific. Will we find therapies
stuff back in the same place every
for everything? That’s a tall order.
time. Can you imagine what hap-
Will we be able to slow the progress
pens if someone carelessly leaves
of diseases? No doubt. Even in the
the dishwasher door down?
quest for the Holy Grail, which is
We organize ‘dinners in the dark’ as
regrowing the retina from stem
a fundraiser, and it’s really powerful
cells, we are making progress –
for donors to have to learn that
even though it has a way to go.
the potatoes are at six o’ clock on
In the end, it’s our job as a founda-
their plate, or to keep track of their
tion to go out of business.”
glass of water.”
PAGE XX
Ma ga zine
ANNUAL REP ORT 2018
We are with
124
ProQRians
WHAT ARE IRDS?
Nationalities
Average age
Gender
Inherited retinal diseases are a collection
the most common cause of severe visual
of rare retinal degenerations or retinal
impairment or blindness in children and
dystrophies, in which a genetic mutation
people of working age. It is estimated that
causes loss of function or death of the
IRDs affect more than 2 million people
light sensitive (photoreceptor) cells in
worldwide. To date, around 300 genes
the retina. Most common IRDs include
have been identified that can cause IRDs
retinitis pigmentosa, Usher syndrome,
when mutated. For the vast majority of
Leber’s congenital amaurosis and
IRDs no therapy is currently available.
Stargardt’s disease. They represent
27
39yrs
44%
56%
PAG E XXI
Magazi ne
ANNUAL REPORT 2018
PAGE XXII
Ma ga zine
ANNUAL REP ORT 2018
“ProQR is
PATIENT-
FOCUSED
in a way
I’ve never
seen before”
JESSICA IBBITSON, VICE PRESIDENT
OF CLINICAL AND DEVELOPMENT OPERATIONS
BREAKING
BARRIERS TO
BETTER THERAPIES
New therapies are thoroughly tested in clinical studies. This is necessary to ensure
they are safe and efficacious, but for a company like ProQR, which aims to treat
small groups of patients with rare diseases, innovating within the system is essential
to removing the obstacles on the way to caring for patients. As one of our new faces
of 2018, Jessica Ibbitson is trying to rethink the way we do clinical studies.
Jessica joined ProQR at the
beginning of 2018, after sev-
eral positions in the pharma
industry. Her last job before
the transition to Leiden was at
Vertex Pharmaceuticals, where
she worked on rare diseases.
What drew you to ProQR?
“I loved what I was doing, but when
ProQR approached me I knew
I couldn’t pass up on their offer.
I was attracted by the fact that it
was a smaller company, working
on rare diseases too and patient-
focused in a way I’ve never seen
before. I saw an opportunity to
be disruptive in terms of how we
approach clinical studies.”
How do you see that now,
after almost a year? What are
your goals?
because a direct relationship with
care. To guarantee this, we work
a doctor who has only one point of
side-by-side to explain our vision
contact means that things move not
in a way that makes them comfort-
“One way I’m trying to make ProQR
only better, but quicker too.”
able. They really are our partners
different is in our relationship with
the hospitals that run our studies.
We aim to have not just a closer
Which barriers are you going
to tackle next?
in this, so we have to take this
journey together.
relationship with them but a part-
“Well, in 2019 we’re starting to intro-
The other two ideas we are going
nership. Even though we work with
duce more digital technologies into
to implement in the next year are
clinical research organizations,
our clinical trials. This, too, is about
more patient-centric. We are going
we recognize that it adds more
eliminating barriers for participation
to launch wearable and voice-
links to a chain so we’ve decided
in clinical research. For example,
assistant devices. They are two
to take on tasks in order to reduce
we are trying to stimulate doctors
sides to the same coin, because
those links. By taking on more tasks
to record more patient information
both are ways to increase data,
ourselves, we can limit the adminis-
digitally, on our eSource platform.
reduce cost and reduce the burden
trative burden of the doctor,
This overcomes the inefficiency of
on the patient and the hospital.
so that they can spend more time
double data entry, making it faster,
The wearable is a bracelet that
with their patients. But there is
more accurate and less costly.
tracks activity and sleep. This is
more to this. A direct relationship
But let’s not forget that it also gener-
very relevant for many patients
also means that information travels
ates insight more quickly, because it
with eye-related diseases, because
more freely, which means that it’s
will instantly tell everyone involved
when you’re visually impaired your
much easier for us to understand
how a treatment is going. And since
day/night rhythm can also suffer.
the daily practice of care, and what
this also allows the doctor to spend
Of course the bracelet measures
the challenges and barriers are for
more time with the patient, it cre-
these things in real time, so it gives
hospitals, doctors and patients.
ates more value too.”
us and the doctor much more data
To make sure that they have no
hesitations about joining a study,
we need to eliminate as many of
these barriers as possible.
How is the reception of this
technology among doctors
and hospitals?
to work with, and may uncover
effects of the therapy that we
would have otherwise missed.
“They are excited. We are aware
The voice system is software that
These barriers are not only about
that the world of clinical practice
you can install on your voice assistant
value and information. As a small-
is very risk-averse. They have to
that you can talk to and give
er biotech company, we have to
get used to new technology, and
commands, like the Alexa device.
think about efficiency as well – and
be sure that changing their ways
The potential it carries is different,
often these goals go hand in hand,
doesn’t affect the quality of their
but multi-faceted. For example,
PAG E XXIII
Magazi ne
ANNUAL REPORT 2018
PAGE XXI V
Ma ga zine
ANNUAL REP ORT 2018
it can take questionnaires from
patients without the need for them
What is your ideal future
scenario?
to carry and store papers, which
“We already went from a company
is quicker and relieves patient
that was maybe more traditional in
burden. It could also remind them
study design, to, in a very short time,
to go to an appointment at the
becoming really technology and
hospital or to take their medication,
digitally focused in terms of how we
which helps compliance. And last
execute studies. Looking ahead, the
but not least, talking is much easier
ultimate disruption for me would be
for patients with eye-diseases than
to have broken all barriers. One ideal
reading and writing. Both the
I have is ‘siteless clinical studies.’
wearable and the voice assistant
The need for a physician or hospital
have the potential to reduce the
will never go away completely,
time needed for visits to the study
but what if we could give patients
hospital. This is significant for the
a box containing their medication,
patients that we work for; as some
their wearable and other needs, and
of them have to fly or cross borders
they would be fully empowered.
to visit the specialist.”
Then patients from all over the world
could participate in our studies.”
“One ideal
I have is
‘SITELESS
CLINICAL
STUDIES’”
THE THRU MY EYES APP
One digital innovation that Jessica
is especially excited about is the
Thru My Eyes app. It’s an app we
developed that allows people to expe-
rience how patients with a certain eye-
disease are perceiving the world.
Jessica: “The app is a simple but clever
idea based around one question: how
does a patient actually see? Using sliders,
you can simulate certain characteristics of
a disease, such as tunnel vision or visual
acuity (sharpness of vision) on what the
phone’s camera is seeing. We coupled it to
medically relevant values, so it’s possible
to set it to a certain individual’s diagnosis.
This is a great tool for the patient’s loved
ones to really get an idea of what he
or she is going through. We’re eager to
develop the app further, adding more
disease simulations and functionalities.”
Download the app via
www.thrumyeyes.app
ANNUAL
REPORT
2018
Message from the CEO
Key Figures
Management Board
Supervisory Board
Management Board Report
Supervisory Board Report
Corporate Governance
Risk Management
Financial Statements 2018
2
3
4
5
7
35
38
48
51
Dear fellow shareholders,
A first look at interim results in our Phase 1/2 clinical trial suggests that our lead product
candidate, sepofarsen, improved vision in patients with Leber’s congenital amaurosis 10,
the leading genetic cause of blindness in childhood. This is very encouraging and shows
that our choice to focus on developing RNA therapies for rare genetic eye diseases is the
right one. Only a small percentage of the 300 known genetic eye diseases currently have a
treatment and we feel the responsibility to change that. Therefore, we are rapidly advancing
our pipeline to have five programs for genetic eye disease in clinical trials in the next two
years including QR-421a for Usher syndrome, the leading cause of combined deafness and
blindness and QR-1123 for autosomal dominant retinitis pigmentosa.
During our R&D Day we laid out ‘ProQR’s Vision 2023’ that details our strategy for the next
five years. In this vision we have set ourselves the goal to build ProQR out into a multi-
product independent commercial company for inherited retinal diseases by the end of
2023. In this period we aim to have our first two products approved and independently
commercialized in the Western world, have three or more programs in late stage
development, and have at least seven programs in earlier stages of development. This is a
set of very ambitious goals that we aim for on our path to making a major impact to a large
number of people around the world.
But we also look beyond genetic eye diseases into other areas where our RNA repair
technologies can make a difference for patients. We plan to advance several other
preclinical programs in our broader rare disease pipeline of RNA therapies for patients in
need.
Daniel A. de Boer
dsssds
2018
2017
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
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
--
5,761
(29,514)
(12,540)
(36,293)
(37,086)
1,864
108,367
110,231
92,685
9,386
8,160
(28,493)
(312)
86,457
--
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
13.3
84.1
6.0
74.1
34,052,520
25,374,807
(1.08)
1.69
(1.72)
(0.33)
127.7
139.9
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 our Management Board member, his respective age
and his position 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
2022
The following sets forth biographical information regarding our Management Board members.
Daniel de Boer is our founding Chief Executive Officer since our incorporation in 2012. Daniel is a serial-
entrepreneur and passionate advocate for rare disease patients. He assembled a group of successful biotech
executives as co-founders and built a team of a 150 experienced scientists and drug developers, devoted to
creating RNA therapies for patients in need. Under Daniel’s leadership ProQR initiated clinical trials in
multiple development programs for rare diseases, and raised over $ 300M in funding, including an IPO on
Nasdaq. Daniel is responsible for the overall strategy and general business in the company. Before founding
ProQR, Daniel was founder and Chief Executive Officer of RNA Systems, PC Basic and Running IT, companies
he led through phases of growth, developing and launching several products in multiple European countries.
Daniel was also a co-founder of Amylon Therapeutics, a company developing therapies for genetic brain
diseases. In 2018 Daniel was named "Emerging Entrepreneur of the Year" by EY.
During 2018 René Beukema was 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. Mr. Beukema left the Company January 1, 2019.
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 dates of birth. 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
Alison Lawton
Female
Antoine Papiernik Male
James Shannon
Paul Baart
Male
Male
NL
US
FR
GB
NL
August 3, 1956 Chairman
January 1, 2014
September 26, 1961 Member
September 17, 2014
July 21, 1966 Member
January 1, 2014
June 5, 1956 Member
November 9, 1950 Member
June 21, 2016
June 10, 2015
2020
2022
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. 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 former 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. In
2017 Mr Valerio became a boardmember of Amylon Therapeutics B.V., a 80% owned affiliate of ProQR
Therapeutics N.V. 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 Chief
Executive Officer, President and Director of Kaleido Biosciences where she was previously President and
Chief Operating Officer since Dec 2017. Previously, Ms. Lawton was Chief Operating Officer at Aura
Biosciences, Inc, from 2015 to 2017, Ms. Lawton served as Chief Operating Officer at OvaScience Inc., a life
sciences company, from January 2013 to January 2014. In addition, from 2014 to 2017, Ms. Lawton served as
a biotech consultant for various companies, including as Chief Operating Officer consultant at X4
Pharmaceuticals. 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 Outcomes and Strategic Pricing, Global Public Policy, and Global Product Safety & Risk
Management. Before joining Genzyme, Ms. Lawton worked for seven years in the United Kingdom at Parke-
Davis, a pharmaceutical company. Ms. Lawton serves on the board of directors of Verastem, Inc., a public
biopharmaceutical company. She also served on the board of directors of Cubist Pharmaceuticals for three
years until its acquisition by Merck &Co., Inc. in 2015. She currently sits on the Scientific Advisory Board for
the Massachusetts Life Science Center. 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)m Ethical Oncology Science (EOS, sold to ClovisOncology) and Recor Medical (sold to Otsuka). Mr.
Papiernik is also a board member of private companies MedDay Pharmaceuticals, MD Start, Shockwave
Medical, Reflexion Medical, Gecko Biomedical, SafeHeal, Highlife 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), myTomonows (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
Registeraccountants exam.
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 2 and autosomal dominant retinitis
pigmentosa. Based on our unique proprietary RNA platform technologies, we are growing our pipeline with
patients and loved ones in mind.
ProQR was founded in February 2012 by Daniel de Boer, Gerard Platenburg, the late Henri Termeer and
Dinko Valerio. Mr. de Boer is a passionate and driven entrepreneur and an advocate for patients with severe
genetic diseases. He has assembled an experienced team of successful biotech executives as co-founders,
management team members and early investors. The team has extensive experience in the discovery and
development of products in multiple therapeutic areas. As of December 31, 2018, we had raised € 251 million
in gross proceeds from our public offerings of shares on the NASDAQ Global Market and private placements
of equity securities. In addition, we have received grants, loans and other funding from patient organizations
and government institutions supporting our programs, including from Foundation Fighting Blindness,
Epidermolysis Bullosa Research Partnership, Epidermolysis Bullosa Medical Research and the Dutch
government under the innovation credit program. ProQR headquarters are located in Leiden, the
Netherlands.
Our legal name is ProQR Therapeutics N.V. and we were incorporated in the Netherlands, on February 21,
2012. We 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, telephone number
+31 88 166 7000. The name and address of our agent for service in the United States is CT Corporation
System, 111 Eighth Avenue, New York, NY 10011. We also rent offices in the United States in Cambridge, MA.
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 rare diseases. 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 intended to
correct the underlying cause of the disease through repairing the genetic defect in the RNA. While all our
compounds are RNA-based, a variety of mechanisms of actions may be used depending on the type of
mutation causing the disease. 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 and dermatology. In ophthalmology, we have a
deep and broad pipeline with sepofarsen (formerly named QR-110) for Leber’s congenital amaurosis 10, or
LCA10 as our most advanced program. We are currently planning to start a potential pivotal Phase 2/3 clinical
trial with sepofarsen during the first half of 2019 while completing a Phase 1/2 clinical trial that reported a
rapid and sustained improvement in vision during an interim analysis. In dermatology, our most advanced
program, QR-313, targets dystrophic epidermolysis bullosa, or DEB, a severe genetic blistering skin disease.
We recently announced that post a planned interim analysis from our ongoing blinded Phase 1/2 clinical trial
and a strategic review of our portfolio, further development of this program will be conducted by Wings
Therapeutics.
Beyond our clinical portfolio, 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 Deaminases Acting on RNA, or ADAR, enzymes to make single nucleotide changes in
the RNA in a highly specific and targeted manner at a desired location. We believe our Axiomer platform may
be applicable to more than 20,000 disease-causing mutations.
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 Repair Technologies
DNA contains genes that provide the instructions for the body to make all the functional building blocks of
the cells, such as proteins. To get from DNA to protein, the cell first copies the information in the DNA into
RNA during a process called transcription. The RNA then acts as the blueprint for making proteins during a
process called translation. Genetic diseases are caused by mutations, or defects, in the DNA. These mutations
are copied into the RNA blueprint, which means the resulting protein is also made incorrectly. The result is a
missing, defective or toxic protein that prevents the cell from carrying out its normal function causing the
disease.
We have gathered a toolbox of novel RNA repair technologies with which we believe we can use to target
genetic diseases that are currently untreatable or have limited effective treatment options. Repairing RNA can
take away the underlying genetic cause of the disease without having to make permanent changes to a
patient’s DNA. Our current molecules are all single-stranded RNA-based oligonucleotides that are chemically
modified so that no vector or envelope is needed for delivery.
The toolbox of technologies range from splice correction in which we aim to restore normal messenger RNA
and protein, exon skipping in which we aim to exclude the mutated part of the RNA and restore protein
function to a gapmer technology that could prevent the formation of a toxic mutated protein. We believe our
RNA repair approach has several advantages over DNA approaches such as gene therapy and gene editing.
These RNA repair approaches could allow us to develop novel RNA therapies for genetic diseases and make a
meaningful impact on the lives of patients suffering from them.
Research and development pipeline
Sepofarsen for Leber’s Congenital Amaurosis 10
Leber’s Congenital Amaurosis (LCA) is the most common genetic cause of blindness in childhood of which
LCA10 is one of most severe forms. People with LCA10 typically become blind within the first few years of life
and there are currently no approved therapies. 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.
We are developing sepofarsen (formerly named QR-110) for patients who have LCA10 due to the p.Cys998X
mutation. Sepofarsen aims to repair the underlying cause in the RNA by splice correction. This RNA splice
correction is designed to result in the production of the normal, or wild type, CEP290 protein stopping or
potentially reversing the disease. Sepofarsen is designed to be administered through intravitreal injections in
the eye.
A Phase 1/2 clinical trial is ongoing in adults and children with LCA10 due to the p.Cys998X mutation. In
September 2018, we reported an interim analysis confirmed clinical proof-of-concept as shown by a rapid
and sustained improvement in vision in the majority of patients. In January 2019, we reached agreement with
the U.S. Food and Drug Administration (FDA) on the design of a proposed Phase 2/3 clinical trial for
sepofarsen. This planned Phase 2/3 clinical trial, named ILLUMINATE, is expected to start during the first half
of 2019 and could serve as the sole registration trial for the program. Beyond sepofarsen, we have an
additional discovery-stage program, QRX-136, for another mutation in CEP290.
Sepofarsen has been granted orphan drug designation by the FDA and European Commission and received
fast track designation by the U.S. FDA
QR-421a and QR-411 for Usher syndrome type 2
Usher syndrome is the leading cause of combined hearing loss and blindness. To date, there are no therapies
approved or product candidates in clinical development that treat the vision loss associated with the disease.
Usher syndrome type 2 is one of the most common forms of Usher syndrome and is caused by mutations in
the USH2A gene which encodes a protein called usherin.
We are developing QR-421a for USH2A exon 13 mutations and QR-411 for the USH2A PE40 mutation. In the
Western world, approximately 16,000 patients have vision loss due to mutations in exon 13 of the USH2A
gene and approximately 1,000 patients are affected by the PE40 mutation. Both product candidates are RNA
therapies intended to be administered by intravitreal injections and that aim to restore functional usherin
protein in the eye to restore vision. Beyond QR-421a and QR-411 we have an additional discovery-stage
program, QRX-461, for another mutation in USH2A.
Clinical development of QR-421a has begun and we plan to announce data from the ongoing Phase 1/2 safety
and efficacy trial, named STELLAR, in mid-2019. QR-411 is currently in preclinical testing.
QR-421a and QR-411 have received orphan drug designation from the FDA and EMA. QR-421a was also
granted fast track designation by the FDA.
QR-1123 for autosomal dominant retinitis pigmentosa
Autosomal-dominant retinitis pigmentosa (adRP) is characterized by progressive loss of vision. Symptoms
typically start in early teenage years and include night blindness and reduction of the peripheral vision
leading to tunnel vision. Eventually patients lose their central vision and become completely blind during
adulthood. In the United States, the P23H mutation in the RHO gene is the most common mutation causing
adRP and affects approximately 2,500 patients.
We are developing QR-1123 that was discovered by Ionis Pharmaceuticals and in-licensed by us in October
2018. QR-1123 is designed for the treatment of P23H adRP by suppressing the formation of the toxic mutant
protein. By mutant-specific knockdown, QR-1123 selectively targets the mutant P23H RNA for destruction by
RNase H1 cleavage without affecting the wild-type RNA. By reducing the mutant RNA, the resulting toxicity-
induced loss of photoreceptors and subsequent loss of vision can potentially be stopped or reversed.
Currently, the QR-1123 program is undergoing the final preparation stages for IND submission. We plan to
advance the QR-1123 program into a Phase 1/2 clinical trial during 2019.
QR-313 for Dystrophic Epidermolysis Bullosa (DEB)
Dystrophic epidermolysis bullosa (DEB) is a devastating skin disease that results in severe blistering and
poorly healing wounds over the entire body, including mucosal membranes. Patients with the recessive form
of DEB (RDEB) have a limited life expectancy and low quality of life. There is currently no treatment available
for DEB besides intensive and costly palliative care. 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 outer layers of skin, the epidermis, to the dermis.
We are developing QR-313 for exon 73 mutations in the COL7A1 gene. Approximately 2,000 DEB patients in
the Western world have a mutation in this part of the gene. QR-313 is designed to be topically applied to a
patient’s wounds as a hydrogel and aims to restore functional C7 protein that is able to form anchoring fibrils
to improve the strength of the skin. Beyond QR-313, we have a pipeline of discovery-stage programs for other
mutations that cause DEB.
Subsequent to a planned interim analysis and strategic review, management has elected to transfer conduct
and completion of the ongoing Phase 1/2 study to Wings Therapeutics. The ongoing Phase 1/2 trial in patients
with DEB due to a mutation in exon 73 will remain blinded and continues to enroll patients. ProQR will work
closely with Wings Therapeutics and EBRP to support its efforts to advance QR-313 for patients with DEB.
QR-313 has received orphan drug designation from the FDA and EMA.
Eluforsen for Cystic Fibrosis (CF)
Cystic fibrosis (CF) causes viscous mucus to accumulate in vital organs disrupting several processes in the
body. Pancreatic enzymes are blocked from entering the intestines and the thick layer of mucus in the lungs
is a great environment for destructive bacteria. The thick mucus makes it hard to clear the lungs from these
bacteria and results in regular infections and inflammation. This process injures the lungs and leads to
frequent hospitalizations and lung failure.
We are developing eluforsen for the most common mutation causing CF, the F508del mutation in the CFTR
gene, affecting approximately 85% of all CF patients. Two global clinical trials for eluforsen in people with CF
have been completed. Study 001, a Phase 1b safety and tolerability clinical trial in 70 CF patients and Study
002, a proof of concept clinical trial in 18 CF patients. In both clinical trials eluforsen was observed to be safe
and well-tolerated and both trials showed encouraging signals that eluforsen has the potential to be a
meaningful therapy for people with CF that have two copies of the F508del mutation (homozygotes).
Eluforsen has received orphan drug designation from the FDA and EMA. Eluforsen was also granted fast track
designation by the FDA.
Axiomer® RNA Editing Technology
The Axiomer® platform is a novel, proprietary RNA editing technology invented at ProQR. The technology is
based on editing oligonucleotides, or EONs, designed to recruit ADAR enzymes (Adenosine Deaminases
Acting on RNA) to make single nucleotide changes in the RNA in a highly specific and targeted manner at a
desired location. The approach, for which ProQR is pursuing patent protection, allows the recruitment of
endogenous ADARs by using EONs as the sole drug modality, doing away with the need for overexpression of
(artificial) ADAR proteins, guide RNAs or other large, complex components.
Recruitment of endogenous RNA-editing enzymes by EONs represents a significant therapeutic opportunity
for a new type of drugs that can treat genetic diseases by reversing the underlying mutations. ADARs are
present in most human cells and naturally make adenosine-to-inosine (A-to-I) changes in RNA. Since an
inosine is interpreted by the cell as a guanosine, an EON-mediated, targeted editing reaction has the potential
to effectively modify any chosen adenosine (A) in any RNA to a guanosine (G). This can either restore the
original sequence, or bring about an intended de novo A to G change, in order to treat genetic disease.
Current estimations point to over 20,000 G to A mutations in the human population that cause disease.
In vitro and in vivo work indicates that the EONs are generally applicable for the correction of mRNA G-to-A
mutations. Together with the leading academic experts in RNA editing, we continue to advance our Axiomer
RNA Editing technology to develop therapies for genetic diseases.
Early stage pipeline
Beyond the programs mentioned above we have additional early stage programs in our pipeline targeting
genetic diseases with profound unmet medical need.
QR-504 for Fuchs endothelial corneal dystrophy
Fuchs’ endothelial corneal dystrophy 3 (FECD3) is a common, autosomal dominant, degenerative condition of
the eye. With age the endothelial cells are lost, ultimately leading to progressive corneal clouding, reduced
vision and painful epithelial bullae. There are currently no treatment options other than corneal
(endothelium) transplantation for patients with advanced disease. The availability of donors, risk of rejection,
and the inherent risk of an invasive procedure are some of the limitations of this procedure. FECD3 is caused
by a trinucleotide CTG repeat expansion in the TCF4 gene. It is estimated that FECD affects more than 4% of
individuals over the age 40 in the U.S., and similar prevalence is noted for other global regions. The mutated
TCF4 mRNAs accumulate as nuclear RNA foci and globally disrupt mRNA splicing in the corneal endothelial
cells. QR-504 targets the mutated mRNA with the aim to reduce the accumulation and splicing disruption.
QR-504 is currently in discovery stage and we intend to commence IND-enabling studies.
QR-1011 for Stargardt’s disease
Stargardt’s disease is the most common inherited macular dystrophy causing progressive loss of central
vision. Most patients with Stargardt’s disease will progress to legal blindness or worse as they age. Currently,
there is no treatment available. It is associated with mutations in the ABCA4 gene resulting in the loss of
photoreceptor cells in the retina. The c.5461-10T>C mutation affects about 7,000 patients in the Western
world and leads to aberrant splicing of ABCA4 mRNA. QR-1011 aims to restore normal splicing leading to the
production of wild type mRNA and protein thereby stopping or potentially reversing the disease. QR-1011 is
currently in the advanced lead optimization phase.
QRX-704 for Huntington’s Disease
Huntington’s disease (HD) is an inherited progressive neurodegenerative disease, and one of the most
common genetic disorders. Symptoms include involuntary movements, incoordination, impaired speech,
cognitive decline and depression. Patients with HD have a 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 that is cleaved into toxic fragments, which
accumulate in nerve cells. QRX-704 is designed to modify HTT mRNA to prevent the formation of the toxic
fragments, while the huntingtin protein remains functional. QRX-704 is currently in discovery stage.
Our Strategy
We are dedicated to improving the lives of patients and their loved ones through the development of RNA
therapies for severe genetic rare diseases. We believe the strategy as outlined below enables us to build a
sustainable independent business which creates value for all stakeholders involved. 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.
Rapidly advance our ophthalmology platform. The initial results of sepofarsen in restoring vision as
observed during the interim analysis of the Phase 1/2 trial have built confidence in the potential
opportunity for RNA therapies in treating genetic eye diseases. Therefore, we plan to rapidly advance our
programs in ophthalmology for a range of genetic eye diseases for which there are no or limited
treatment options. As part of our five-year plan known as our “ProQR Vision 2023 strategy”, by 2023, we
aim to obtain marketing approvals for the first two products in our ophthalmology pipeline, and build a
deep pipeline of ten or more programs beyond those two products, of which we expect three to be in late
stage development.
Commercialize portfolio of ophthalmic medicines independently. We plan to commercialize our portfolio
of medicines for inherited retinal diseases (IRDs) independently in North America and Europe, and seek
partners for other geographic areas. While building the commercial infrastructure for an expected
commercial launch of sepofarsen in 2021, we expect this same infrastructure to serve patients with other
IRDs like Usher syndrome or Stargardt’s disease as IRD patients are typically seen by one of the 30 IRD
hub centers.
Leverage our pipeline through strategic consideration of out-licensing, spinouts or collaborative
partnerships. We plan to continue to advance the programs and technologies in our discovery pipeline
beyond ophthalmology and selectively engage with partners for development and commercialization of
programs and products that we do not intend to independently develop.
Expand our Axiomer RNA-editing platform into select therapeutic areas. Our novel and proprietary RNA
editing platform technology, 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 2019 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.
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 as
we believe that a patient-centric strategy is crucial to our success. Therefore, our Patient and Medical
Community Engagement (PMCE) team actively collaborates with and listens to the communities we serve to
ensure that the patient voice is represented internally.
Sepofarsen for Leber’s Congenital Amaurosis 10 (LCA10)
LCA background
Leber’s Congenital Amaurosis (LCA) is the most common genetic cause of blindness in childhood. 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 (LCA10). This
mutation leads to significant decrease in CEP290 protein within the photoreceptor cells in the retina. Patients
affected by this mutation typically lose sight in the first years of life. Clinical features of LCA10 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 LCA10
LCA genetics
More than 20 genes have
been associated with the
genetic defect that causes
LCA. The most common
mutation is the p.Cys998X
in the CEP290 gene
causing LCA10. 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. 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 of the photoreceptor cell which provokes the
shortening of the outer segment and its inability to perform its light transducing function.
LCA Prevalence and Diagnosis
LCA affects about 15,000 patients in the Western world. Although diagnosis rates vary, our estimations
indicate the most common p.Cys998X mutation occurs 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 LCA10
There are currently no disease modifying treatments approved for patients with p.Cys998X associated LCA10
and disease management is currently supportive in nature. The eye is highly suitable for oligonucleotide
therapies as it is a contained organ with physical cellular barriers. These natural barriers 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.
Sepofarsen for LCA10, splice correction for
p.Cys998X CEP290 mRNA
Sepofarsen binds to pre-mRNA and silences the cryptic splice
site leading to production of normal mRNA
Sepofarsen for the treatment of LCA10
Sepofarsen (formerly named QR-110) is
designed to treat LCA10 by splice correction.
By binding to the pre-mRNA sepofarsen aims
to silence the cryptic splice site caused by the
p.Cys998X mutation. The splicing machinery
can thus process the pre-mRNA correctly
resulting in normal mRNA and we expect the
production of full-length functional wild type
CEP290 protein. Sepofarsen is designed to be
administered by intravitreal injection.
Sepofarsen has received orphan drug
designation from the U.S. FDA and European
Commission. Sepofarsen was also granted fast
track designation by the U.S. FDA.
Clinical Development for Sepofarsen
The activity seen in our preclinical models of
LCA10 provided strong support for the clinical
development and therapeutic potential of
sepofarsen. The clinical development of
sepofarsen began in the second half of 2017
with a Phase 1/2 open-label, multiple dose,
dose escalation study to evaluate the safety
and tolerability of sepofarsen, study
PQ-110-001. This trial is currently ongoing
(enrollment complete) and includes five children (age 8 - 17 years) and six adults (≥ 18 years) who have LCA10
due to one or two copies of the p.Cys998X mutation in the CEP290 gene. Participants were to receive up to
four intravitreal injections of sepofarsen into one eye; every three months. Based on updated data suggesting
a longer half-life of sepofarsen in the retina, dosing of patients has been adjusted to once every six months
after receiving their first 2 injections 3 months apart. The study is being conducted in three centers with
significant expertise in genetic retinal disease in the U.S. and Europe.
The primary objectives of the trial are safety and tolerability. Secondary objectives include the
pharmacokinetics and restoration/improvement of visual function and retinal structure through ophthalmic
endpoints such as best-corrected visual acuity (BCVA), full-field stimulus testing (FST), optical coherence
tomography (OCT), pupillary light reflex (PLR), mobility course and oculomotor instability (OCI). Reports of
substantial improvement in vision in one subject led to the decision to perform an interim analysis of data
collected as of August 16, 2018.
Safety data:
At the time of the interim analysis (August 16, 2018), treatment-emergent adverse events (TEAEs) reported
were mostly mild and there had been no signs of intraocular inflammation. Mild local reactions related to the
injection procedure such as conjunctival hemorrhage were reported; such events are typical with intravitreal
injection. To support regulatory discussions (in December 2018) related to advancing the program into a
potential registrational trial, a further safety follow-up was conducted after the interim analysis, in which,
adverse events observed after longer duration of treatment included mild cystoid macular edema and lens
opacities. The cystoid macular edema was observed in two patients in the highest dose tested and was
responsive to standard of care treatment. There were six participants with lens opacities, of which three went
on to have corrective lens replacement. These events were considered likely related to study medication and
are consistent with those seen for other ophthalmic and intravitreal oligonucleotide therapies. Dosing
adjustments (dose and dosing interval) were made. There have been no discontinuations from the study.
Efficacy data:
The interim analysis of efficacy data from PQ-110-001 confirmed clinical proof-of-concept as shown by
improvement in BCVA and supported by improvement in performance on the mobility course and reduced
involuntary eye movement (nystagmus). Mechanistic proof-of-concept was confirmed by improvement in FST.
Importantly, the four endpoints analyzed showed concordant improvement (Table 1). In approximately 60%
of subjects, multiple independent measures of visual function were improved in the treated eye, but not in
the contralateral eye.
Table 1 Summary of Efficacy Endpoints Assessed for the Interim Analysis (Data Cutoff 16 August 2018)
Endpoint
Units
Direction
Showing
Improvement
Responder
Threshold
Change from Baseline at Month 3
Mean (SEM)
Treated
Untreated
Overall
Best corrected visual acuity
(ETDRS/BRVT) (n=8)
Full field stimulus red (FST
red) (n=7)
Full field stimulus blue (FST
blue) (n=7)
Mobility course (n=7)
OCI (nystagmus tracking)
(n=7)
LogMAR
↓= improved
> -0.3
-0.67 (0.32)
0.02 (0.05)
cd/m2
↓= improved
-0.74 (0.35)
-0.23 (0.18)
cd/m2
Level
↓= improved
↑= improved
> 2
-0.91 (0.38)
2.57 (1.19)
-0.02 (0.11)
1.36 (1.04)
Log10mm
↓= improved
-0.14 (0.08)
-0.04 (0.06)
Abbreviations: BRVT=Berkeley Rudimentary Vision Test; cd/m2=logarithm of candelas/square meter; ETDRS=Early Treatment
Diabetic Retinopathy Study; LogMAR=Logarithm of the Minimum Angle of Resolution; OCI = Oculomotor Instability
Measurements of best corrected visual acuity (BCVA), functional vision (mobility), and nystagmus confirm
vision improvement in these subjects. In addition, clear improvement in FST was seen at both red and blue
wavelengths in the treated eye only.
BCVA is an accepted registration endpoint for treatments of retinal diseases, with a generally-accepted
threshold for clinically meaningful improvement of -0.3 LogMAR (15 letters on an eye chart). At Month 3, this
threshold was exceeded in treated, but not untreated eyes, in the overall population, both in adult and
pediatric subjects.
Performance on a mobility course was also improved, and nystagmus was reduced. Concordant
improvement in the mechanistic and functional outcome measures confirm that these observations are due
to on-target benefits of sepofarsen. Results from the individual endpoints are discussed in more detail below.
Best Corrected Visual Acuity (BCVA)
To assess BCVA, either the ETDRS eye charts or BRVT eye charts (for subjects with more severe visual
impairment) were used. ETDRS is useful up to LogMAR 1.6, and BVRT extends the range to LogMAR 4.0, or
mere light perception.
Data from the three-month assessment of BCVA are shown for the available eight subjects in Figure 1. The
dark and light green bars on the left represent mean (SEM) and median change from baseline, respectively,
for the treated eye, and the gray bars (undetectable) on the right represent mean (SEM) and median change
from baseline for the contralateral eye. Red triangles for the median bars represent individual subject values.
The dotted horizontal line represents the clinically meaningful level of -0.3 LogMAR.
In the treated eye, both mean and median change from baseline were above the clinically meaningful
threshold, while the contralateral eye showed no meaningful improvement. As can be seen in Figure 1,
clinically meaningful improvement was seen in the treated eyes of 5 of the 8 subjects at Month 3, but no
subject showed clinically meaningful improvement in the contralateral eye. Importantly, some subjects who
were only able to perceive hand movement were able to read larger letters on the ETDRS eye chart at three-
month.
Although the study was not powered to show statistical significance, comparison of the mean change from
baseline in treated eyes to contralateral eyes at three-month was significant (p=0.011; Wilcoxon’s rank-sum
test).
Figure 1 Mean (SEM) and Median Change from Baseline in BCVA at Month 3 (Interim Analysis)
Figure 2 Mean Change from Baseline in BCVA through Month 6 (Interim Analysis)
Figure 2 shows mean changes over time for all available BCVA measurements for the treated eye (green line) and
contralateral eye (gray line). The mean for the treated eye increased to a clinically meaningful extent after the loading
dose, and remained stable thereafter. Clinically meaningful improvements were observed for the treated eye but not
for the contralateral eye. This figure shows the three-month data for all eight subjects but also includes the six-month
data for the four patients who had reached six-months at the time of the assessment.
Full-Field Stimulus Test (FST):
The FST is a sensitive mechanistic outcome measure. This test is similar to a hearing test, but instead of
subjects pushing a button when they first hear a progressively louder tone, in FST they push a button when
they detect a progressively brighter red or blue light flashed across the entire retina. As FST is a very sensitive
test, it was hypothesized that improvement in FST would be the earliest and most sensitive indication that
sepofarsen was engaging its target.
Figure 3 shows the three-month mean (SEM) change from baseline in ability to see both blue and red
wavelengths. The dark bars represent the treated eye and the lighter bars represent the contralateral eye.
Improvement was observed in the treated, but not the contralateral eye for both wavelengths. Figure 4 shows
the stability of the response over time using all available data. Improvement in the treated eye was observed
to be well maintained. This figure shows the three-month data for seven subjects but also includes the six-
month data for the four patients who had reached six months at the time of the assessment.
Figure 3 Mean (SEM) Change from Baseline
in Full-field Stimulus Test at Month 3
(Interim Analysis)
Figure 4 Mean Change from Baseline
in Full-field Stimulus Test through Month 6
(Interim Analysis)
Mobility Course
A mobility course suitable for patients with LCA10 was developed to quantify improvements in functional
vision. The tool involves different layouts of increasing complexity, using multiple light levels. In total, the
series of courses produces 19 levels, with level 1 being the ability to navigate a short, straight course with a
single brightly-backlit obstacle; the other end of the spectrum at level 19 is the ability to navigate a very dimly-
lit complex course with multiple obstacles. Improvement is measured by the number of levels a patient is
able to navigate.
Figure 5 shows the three-month mean (SEM) change from baseline in number of levels subjects are able to
navigate. The green bar represents the treated eye and the gray bar represents the contralateral eye. Red
triangles represent individual subject data points. Figure 6 shows the stability of the response over time using
all available data. The green line represents the treated eye and the gray line represents the contralateral
eye. The dotted horizontal line represents the anticipated clinically meaningful threshold for improvement of
two levels, or approximately a ten-fold reduction in light required for the subject to successfully navigate the
mobility course.
Clinically meaningful improvement was seen in the treated eye at three-months. Clinically meaningful
improvement was also seen in the contralateral eye in some patients at three months. However, the group
mean for the contralateral eye did not reach the level of being clinically meaningful. Also, this improvement in
the contralateral eye appears to be transient, as shown in Figure 6.
Results from the mobility assessment support the functional significance of the best-corrected visual acuity
improvement.
Figure 5 Mean (SEM) Change from Baseline in
Mobility Course Results at Month 3
(Interim Analysis)
Figure 6 Mean Change from Baseline in Mobility
Course Results through Month 6
(Interim Analysis)
Oculomotor instability (OCI)
Oculomotor Instability (OCI) (measurement of nystagmus) was also assessed for the interim analysis.
Nystagmus is involuntary eye movements due to the inability to fixate. Oculomotor Instability quantifies
nystagmus using laser tracking measurement of eye movement.
Figure 7 shows the three-month mean (SEM) change from baseline in level of nystagmus. The green bar
represents the treated eye and the gray bar represents the contralateral eye. Red triangles represent
individual subject data points. Figure 8 shows the stability of the response over time using all available data.
The green line represents the treated eye and the gray line represents the contralateral eye. This figure
shows the three-month data for seven subjects but also includes the six-month data for the four patients
who had reached six months at the time of the assessment.
Nystagmus was observed to be improved in the treated eye at three months, compared to both baseline and
the contralateral eye. This improvement was also noted by study investigators during their initial clinical
assessment prior to OCI testing. As can be seen in the right panel, improvement in OCI was maintained in the
treated eye over time, and potentially increased.
Figure 7 Mean (SEM) Change from Baseline in
Oculomotor Instability at Month 3
(Interim Analysis)
Figure 8 Mean Change from Baseline in
Oculomotor Instability through Month 6
(Interim Analysis)
Conclusions from Study PQ-110-001 (Interim Analysis)
Available data from the interim analysis of PQ-110-001 support the clinical proof-of-concept of sepofarsen as
shown by improvement in BCVA and supported by improvement in performance on the mobility course and
reduced involuntary eye movement (nystagmus). Mechanistic proof-of-concept was supported by
improvement in FST. Importantly, the four endpoints analyzed showed concordant improvement. In
approximately 60% of subjects, multiple independent measures of visual function were improved in the
treated eye, but not in the contralateral eye. Treatment-emergent adverse events reported beyond the
interim analysis were mostly mild except for three lens opacity events that were reported as moderate or
severe. We intend to conduct further testing of the long-term safety and efficacy of sepofarsen, as well as
initiation of trials to explore dose response in a controlled manner.
Next steps in clinical development of sepofarsen
Study PQ-110-002 is an extension study to continue to provide treatment to subjects completing study
PQ-110-001 for which the benefit/risk is positive. Study PQ-110-002 will allow for additional assessment of
long-term safety, tolerability and (systemic) exposure of sepofarsen, as well as efficacy assessments, including
sustained efficacy. Treatment of the contralateral eye may also be initiated.
In addition, the ILLUMINATE study (PQ-110-003) will also be initiated. This study is a double-masked,
randomized, controlled, multiple-dose study to evaluate the efficacy, safety, tolerability and systemic
exposure of sepofarsen administered via intravitreal injection in subjects with LCA due to the CEP290
p.Cys998X mutation. ILLUMINATE will include two active dose levels and a sham control group. Efficacy
assessments, including BCVA, mobility course score, retinal imaging, functional assessments of vision,
patient-reported outcome (PRO) measures, as well as safety assessments will be performed at selected study
visits. The primary endpoint will be assessed at 12 months of treatment, but all efficacy and safety
assessments will continue to be followed during the 24-month treatment period. Treatment of the
contralateral eye may also be initiated.
Beyond sepofarsen we have an additional discovery-stage program, QRX-136, for another mutation in CEP290.
Preclinical evidence for sepofarsen
We have conducted in vitro and in vivo preclinical studies that support the clinical development of sepofarsen.
Sepofarsen assessment in patient fibroblasts
Since sepofarsen 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
preclinical studies, sepofarsen demonstrated restoration of CEP290 wild-type (correctly spliced) mRNA and
protein in cultured fibroblast cells of LCA10 patients homozygous and compound heterozygous for the
p.Cys998X mutation.
Sepofarsen activity in optic cup model
Optic cups are a retinal organoid model derived from fibroblasts of a LCA10 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.
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 LCA10 and effectively test the
potential of sepofarsen.
LCA10 patient derived optic cups were exposed to sepofarsen. First, we observed from the results that
sepofarsen is able to enter the cells without use of any transfection agents. Second, sepofarsen elicited a
dose-dependent restoration of CEP290 wild type mRNA expression. And third, increased CEP290 mRNA
expression was also associated with an increase in functional measures such as percentage of ciliated cells
and the length of the cilia.
Retinal Distribution of sepofarsen
Using labelled sepofarsen administered via intravitreal injection into wild type mice eyes, we demonstrated
that sepofarsen enters the target cells of the retina, including the photoreceptor cells. Sepofarsen has a long
tissue half-life, with a current estimation of approximately 200 days based on data obtained in a non-human
primate model for a closely related oligonucleotide.
QR-421a and QR-411 for Usher Syndrome Type 2 and non-syndromic retinitis pigmentosa (NSRP)
Usher Syndrome Type 2 Background
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. Patients are usually born with moderate to severe hearing loss that may worsen over time.
The retinal phenotype, known as retinitis pigmentosa, or RP, is characterized by photoreceptor degeneration
that leads to progressive vision loss. The first visual symptoms typically 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 until patients only have a residual central
island of vision (tunnel vision). Progression of rod degeneration continues with the degeneration of cones
which eventually results in complete blindness.
Representation of exon 13
mutations causing Usher syndrome type 2
Representation of the PE40
mutation causing Usher syndrome type 2
Usher Syndrome Type 2 Genetics
Usher syndrome type 2 is
caused by mutations in the
USH2A gene, encoding the
protein usherin. Mutations in the
USH2A gene can 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. Mutations in USH2A
can also cause NSRP, 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.
Disease Prevalence and
Diagnosis
The diagnosis of the disease is
based on clinical symptoms and
ophthalmologic evaluations. A
genetic screening can determine
the specific mutation that is
causing the disease. Although
accurate prevalence figures do
not exist, the number of patients
with vision loss 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 type 2 population providing us with an estimate of 1,000
patients in the Western world. 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.
Approaches for the treatment of Usher Syndrome Type 2
While the hearing deficit in patients with Usher syndrome type 2 can be at least partially mitigated using
hearing aids or cochlear implants, there is no approved treatment for the vision loss associated with USH2A
mutations and disease management is supportive in nature. 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 in the USH2A gene. Due to the size of the USH2A protein, this type of RP is not amenable to a gene
therapy approach. Also, given the disease affects both the peripheral and central retina, current limitations of
the sub retinal procedure used in gene replacement and gene editing approaches, would make those
approaches not amenable to targeting peripheral diseases.
QR-421a and QR-411 for the Treatment of Usher Syndrome Type 2
QR-421a is being developed as a treatment for RP caused by mutations in exon 13 of the USH2A gene.
Mutations in exon 13, including the prevalent c.2299delG mutation, can disrupt the production of usherin.
Usherin is required for photoreceptor maintenance. QR-421a aims to induce excision, or skipping, of exon 13
from USH2A mRNA leading to an in-frame deletion in the USH2A mRNA. Since exon 13 encodes for a repetitive
part of the usherin protein, excision of exon 13 is expected to lead to a (partially) functional usherin protein.
Because of the exon skipping approach, QR-421a is not specific to a single mutation but targets any mutation
present in exon 13 of the USH2A gene.
Similar to the approach of sepofarsen, QR-411 is targeted at correcting the splicing of a pseudoexon. In
patients the specific c.7595-2144A>G (PE40) mutation leads to the aberrant inclusion of this pseudoexon in
the mature mRNA and consequently absence of a functional usherin protein. Correction of splicing with
QR-411 can lead to restoration of normal, wild-type usherin protein.
QR-421a USH2A exon 13
exon skip
QR-411 USH2A PE40
splice correction
QR-421a and QR-411 have received orphan drug designation from the FDA and EMA. QR-421a was also
granted fast track designation by the FDA.
Clinical Development of QR-421a
We believe that results of preclinical studies provide support for the clinical development and therapeutic
potential of QR-421a. The QR-421a clinical development program has been initiated with the first-in-human
STELLAR study (PQ-421a -001), a Phase 1/2 study designed to evaluate the safety and tolerability of a single
IVT injection of QR-421a in subjects with RP due to mutations in exon 13 of the USH2A gene. A potential dose
response relationship and duration of effect following a single dose of QR-421a, based on improvements in
retinal structure or visual field, will also be investigated to inform selection of dose level(s) and dosing
intervals for subsequent studies. Improvement of visual function and retinal structure will be measured by
several endpoints such as visual acuity (BCVA), visual field and optical coherence tomography (OCT). Changes
in quality of life in the trial subjects will also be evaluated.
A total of 18 adult subjects are planned to be enrolled in three study cohorts, investigating three dose levels
of QR-421a. Additional dose levels may be evaluated based on ongoing safety and efficacy data monitoring.
Per dose cohort, a minimum of four subjects will be treated with QR-421a and a minimum of two subjects will
receive a control sham-procedure. Once the last subject in a dose cohort reaches week 12, an interim analysis
will be performed to evaluate available safety and efficacy data. QR-421a will be administered by unilateral
intravitreal injection. Each subject will receive a single dose of QR-421a or sham procedure in their worse eye
and will be assessed for safety, tolerability and efficacy at follow-up visits. An extension study, which would
permit continued dosing of eligible subjects who complete PQ-421a-001, is planned.
An IND has recently been accepted by the FDA for the start of the first-in-human STELLAR study which will be
conducted at expert sites in North America and Europe. In March 2019, the first patient was dosed in the
Phase 1/2 STELLAR clinical trial for QR-421a in patients with Usher syndrome type 2 or non-syndromic
retinitis pigmentosa (RP).
Design of Phase 1/2 STELLAR Study of QR-421a
Beyond QR-421a and QR-411 we have an additional discovery-stage program, QRX-461, for another mutation
in USH2A.
Preclinical evidence for QR-421a
In preclinical data we observed:
QR-421a induced an in vitro concentration-dependent USH2A exon 13 skip in human retinal organoids
Translation of ush2a ∆exon 13 mRNA into functional Ush2a protein, as confirmed by visualization of
protein in the photoreceptors and ERG b-wave restoration in zebrafish model; and
QR-421a showed rapid clearance from vitreous with prolonged retention and activity in retina in non
human primates
Concentration-Dependent Increase of USH2A Exon 13 Skip After One Month of
Exposure to QR-421a in c.2299delG Homozygous Patient Retinal Organoids
Exon-13 splicing oligos restore ERG in exon-13 mutant fish
Pharmacokinetics in non human primates
Clinical Development of QR-411
QR-411 is currently undergoing IND-enabling studies. We plan to advance the QR-411 program towards a
Phase 1/2 clinical study in 2020. The clinical trial will consist of a single-dose study to determine safety,
tolerability and efficacy.
Preclinical evidence for QR-411
QR-411-effected splice correction has been observed 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 splice correction by the exclusion of human PE40 in a humanized Ush2A zebrafish
model.
QR-411 increases wild type USH2A mRNA
(1) 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.
QR-411 splice correction of pseudoexon 40 in mutant zebrafish
QR-1123 for autosomal dominant retinitis pigmentosa (adRP)
adRP Background
Retinitis pigmentosa (RP) is a group of hereditary retinal diseases in which patients first experience loss of
night vision in childhood followed by loss of peripheral vision in young adulthood, and central vision in later
life which ultimately progresses to complete blindness. The worldwide prevalence of RP is about 1 in 4000 for
a total of more than 1 million affected individuals. The disease can be inherited as an autosomal-dominant
(about 30–40% of cases), autosomal-recessive (50–60%), or X-linked (5–15%) trait.
Autosomal-dominant RP (adRP) is characterized by abnormal, diminished or absent a- and b-waves in the
electroretinogram (ERG), reduced peripheral vision (visual field) and the presence of visual defects such as
reduced visual acuity and poor photo- and contrast sensitivity. Symptoms typically start in the early teenage
years, which include night blindness and reduction of the peripheral vision due to the degeneration of the
rod photoreceptors. As the disease progresses, cone photoreceptors are also affected, which translates into
loss of central vision and eventually complete blindness in adulthood.
adRP Genetics
Mutations in more than 25 genes can cause adRP, but most commonly mutations are found in the rhodopsin
(RHO) gene, accounting for approximately 25% of adRP cases. The rhodopsin protein is a light sensitive
pigment that is present in the rod photoreceptors in the retina. Rhodopsin, when exposed to light, undergoes
conformational changes that are converted into an electrical signal which is sent to the brain where it is
interpreted as vision. In the United States, the most prevalent mutation associated with adRP is the P23H
mutation (also known as c.68C>A) in the RHO gene. The mutant P23H rhodopsin protein is misfolded and
toxic to the rod photoreceptor cells causing loss of vision. Although some wild-type protein is being made,
there is substantial evidence that the mutant P23H rhodopsin protein elicits a dominant-negative mechanism,
such that it diminishes the function of the wild-type protein.
Representation of the p.Cys998X mutation causing LCA10
Disease Prevalence and
Diagnosis
In the United States the
P23H mutation in the RHO
gene is the most common
mutation causing adRP
and affects approximately
2,500 patients. The
diagnosis of adRP is
based on clinical
symptoms and ophthal-
mologic evaluations. A
genetic screening can
determine what specific
mutation is causing the
disease.
Approaches for the treatment of adRP
We believe QR-1123 is the only candidate in development for the treatment of patients with adRP caused by
the P23H mutation and disease management is currently supportive.
QR-1123 for the treatment of adRP
QR-1123, discovered by Ionis Pharmaceuticals and in-licensed by ProQR in 2018, is designed for the
treatment of P23H adRP. QR-1123 is a gapmer that aims to suppress the formation of the mutant protein by
selectively targeting the mutant RNA and causing its destruction by RNase H1 cleavage without affecting the
wild-type RNA. With reducing the mutant RNA we believe the toxicity-induced loss of the photoreceptors and
subsequent loss of vision can be stopped or potentially reversed.
QR-1123 for adRP, mutant specific knock-down
of P23H mRNA
Clinical Development of QR-1123
Currently, the QR-1123 program is
undergoing the final preparation stages for
IND submission. We plan to advance the
QR-1123 program towards a Phase 1/2
clinical trial during 2019.
Preclinical evidence for QR-1123
QR-1123 is specific for P23H mutant RNA
In vitro and in vivo experiments have been
performed to study the specificity of
QR-1123 for the P23H mutant RNA. Cell
models expressing wild-type or P23H
mutant human RHO were used to
determine the selectivity of QR-1123
induced knock-down of P23H mRNA. QR-
1123 was observed to selectively target the
human P23H mutant rhodopsin mRNA,
whilst sparing the human wild-type mRNA
(Figure 2, left panel).
Mice expressing either human wild-type or
P23H RHO were used to determine the
ability of QR-1123 to selectively target the
P23H mutant mRNA in vivo following
intravitreal delivery. The mice were treated
with either QR-1123 or a control and the
other (contralateral) eye was injected with
saline solution and used as a comparator control. As expected, in mice expressing wild-type RHO, no
difference was observed between the two study groups (Figure 2, right panel) while mutant P23HRHO mRNA
was reduced after a single QR-1123 injection in the hP23HTg mice eyes (Figure 2, center panel) confirming the
specificity for the P23H allele.
Figure 2: Transgenic mice expressing human P23H RHO treated with QR-1123 or a control; data are presented as
percent of contralateral eye PBS-treated RNA level. Right Panel: Transgenic mice expressing human wild-type (WT) RHO
treated with QR-1123 or a control; data are presented as percent of contralateral eye PBS-treated RNA level.
QR-1123 surrogate improves ERG in P23H rat model
A rat model of P23H adRP undergoes degeneration and photoreceptor cell loss that is generally characteristic
of human P23H adRP although the degeneration in these rats is more aggressive than is observed in humans.
Approximately 25% of photoreceptor cells are lost by Day 15 in these animals, and there are few functional
photoreceptor cells by 29 weeks of age. Rats received saline in their left eyes and either QR-1123 surrogate or
control intravitreal treatment in the right eyes once on Day 10 and again on Day 21 after birth. On Day 42 (32
days following the first injection) the rats’ photoreceptor cell response was measured by ERG. The rats given
QR-1123 surrogate had an improved scotopic a-wave response amplitude at all stimulus intensities (Fig. 3, left
panel). This improved response was not observed in the control-treated eyes (Fig. 3, left panel).
Figure 3: ONL preservation and ERG improvement after QR-1123 treatment. Left Panel: Representative retinal
micrographs of P23H-1 rhodopsin transgenic rat eyes from the PBS or QR-1123 surrogate-treated eye 30 days post IVT
injection. Right Panel: Improved ERG response in P23H-1 transgenic rats after a single QR-1123 surrogate treatment with
IVT injections at P13 (A) or P14 (B), with ERG measurements made at P48. (A, B). Amplitude versus stimulus intensity
curves for scotopic a-waves (circles). The scotopic a-waves of eyes injected with QR-1123 surrogate were significantly
greater than PBS-injected contralateral eyes while eyes treated with control were similar to those of PBS-injected
contralateral eyes (t-test; *P < 0.05; **P < 0.01; ***P < 0.001; ****P < 0.0001). In the data points without apparent error
bars, the error bars are obscured by the symbol.
QR-1123 reduces retinal degeneration in mouse model
A mouse model of P23H adRP shows degeneration of photoreceptor cells in the retina (reduced cell rows in
the outer nuclear layer (ONL)) at about 3 months of age. A single intravitreal (IVT) administration of QR-1123
retarded the progressive retinal degeneration, as measured at 60 days after the single treatment (Figure 4,
top panel). Importantly, the activity was observed throughout all regions of the retina (Figure 4, lower
panel). This shows that QR-1123 has the capability to stop retinal degeneration and indicates that a
mechanism based on inhibition of the formation of toxic mutant version of rhodopsin protein has the
potential to improve a clinically relevant functional outcome in RP.
Figure 4: Preservation of ONL in a Tg mouse model after treatment with QR-1123. Top panel: Depicted is a spider diagram
of the outer nuclear layer measurements of the entire retina of eyes treated with either PBS (red line) or QR-1123 treated
eyes (Green line). Lower Left panel: Average superior region ONL thickness at baseline and in PBS and QR-1123 treated
mice. Lower Right panel: Average inferior region ONL thickness at baseline and in PBS and QR-1123 treated mice. Two-
tailed t test; **p < 0.01, ****p<0.0001.
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 animals,
before its efficacy and safety can be tested in humans. ProQR attaches great importance to the welfare of
animals in our preclinical 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), ProQR is committed to reduce the number of animals needed,
minimize discomfort and pain of animals used, and use alternatives to animal research whenever possible.
Animal experiments will be performed only if there are no alternatives such as performing in silico, in-vitro or
ex-vivo studies. On a case by case basis, study designs of animal studies will be evaluated with the aim to
identify opportunities for reduction of the number of animals needed to achieve the objectives of the study.
By the conduction of small pilot (tolerability) studies first, or by using new technologies to achieve adequate
statistical power without increasing the number of animals, by combining studies and by improving the use of
toxicokinetic and modelling data to optimize dose selection, ProQR further pursues the ambitions to reduce,
refine and replace animal studies. Approval by the (institutional or national) animal care and use committees
is required prior the execution of in vivo studies.
External collaborators contracted for the execution of our in-vivo preclinical 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 to ensure that the housing, husbandry
and animal welfare complies with the highest international standards. Personnel responsible for housing,
husbandry and care of the animals must have received adequate and relevant documented education.
In 2015 ProQR 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 work package 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 other rare genetic diseases.
Manufacturing and Supply
We do not currently own or operate manufacturing facilities for the production of clinical or commercial
quantities of any of our product candidates. We currently contract with drug product manufacturers for the
production of sepofarsen solution for intravitreal injection, QR-421a solution for intravitreal injection and QR-
1123 for intravitreal injection, and we expect to continue to do so to meet the planned clinical requirements
of our product candidates.
Currently, each of our active ingredients for our manufacturing activities are supplied by single source
suppliers. We have agreements for the supply of such active ingredients with manufacturers that we believe
have sufficient capacity to meet our demands. In addition, we believe that adequate alternative sources for
such supplies exist. We typically order clinical supplies and services on a purchase order basis and do not
enter into long-term dedicated capacity or minimum supply arrangements.
We do have clinical manufacturing processes developed at a back-up GMP manufacturer. Manufacturing is
subject to extensive regulations that impose various procedural and documentation requirements, which
govern record keeping, manufacturing processes and controls, personnel, quality control and quality
assurance, amongst others. The contract manufacturing organizations we use manufacture our product
candidates under cGMP conditions. cGMP is a regulatory standard for the production of pharmaceuticals that
will be used in humans.
Competition
The pharmaceutical industry is highly competitive and subject to rapid and significant technological change.
Our potential competitors include large pharmaceutical, biotechnology, specialty pharmaceutical, and generic
drug companies, academic institutions, government agencies and research institutions. Key competitive
factors affecting the commercial success of our product candidates are likely to be efficacy, safety and
tolerability profile, delivery, reliability, convenience of dosing, patient recruitment for clinical studies, price
and reimbursement. Many of our existing or potential competitors have substantially greater financial,
technical and human resources than we do and significantly greater experience in the discovery and
development of product candidates, obtaining FDA, EMA and other regulatory approvals of products and the
commercialization of those products. Mergers and acquisitions in the pharmaceutical and biotechnology
industries may result in even more resources being concentrated among a small number of our competitors.
Accordingly, our competitors may be more successful than we may be in obtaining FDA or EMA approval for
therapies and achieving widespread market acceptance. Our competitors’ products may be more effective, or
more effectively marketed and sold, than any product candidate we may commercialize and may render our
therapies obsolete or non-competitive before we can recover development and commercialization expenses.
Our competitors are working on similar technologies in the field of RNA repair and RNA editing, but also in
the field of gene editing and gene therapy as well as other types of therapies, such as small molecules,
protein replacement or antibodies. The industry targeting hereditary ophthalmology indications is driven by
gene therapy (Spark Therapeutics/Genable, AGTC, Sanofi, Oxford Biomedica), gene editing (Editas Medicine;
ciberer, OxfordBioMedica and Harvard Medical School), and other approaches (Wave life sciences).
In the field of DEB, a number of companies are seeking to identify and develop drugs. There are four general
clusters of potential disease modifying treatments for RDEB: autologous gene therapies (Krystal Biotech,
Abeona, Fibrocell, King’s Collegeand Holostem Terapie Avanzate), allogeneic cell therapies (Allogeneic Cell
Therapies, University of Minnesota, Anterogen and King’s College), RNA modulation therapies (University of
Southern California) and protein replacement therapies (Phoenix Tissue Repair). In regards to palliative
treatments, the therapies that are currently under development are symptomatic and focus on reducing a
secondary EB manifestation (Amicus, Amryt, and Tarix Orphan).
Main financial developments
Financial position
In 2018, our operating costs were in line with last year while our liquidity and solvency went up due to an
increase in cash and cash equivalents. At December 31, 2018, ProQR’s cash and cash equivalents amounted
to € 105,580,000 compared to € 48,099,000 at December 31, 2017. During the year 2018, operating cash used
amounted to € 28,493,000, compared to € 34,951,000 in 2017. Total equity increased to € 92,685,000.
As at December 31, 2018, we had borrowings of € 9,386,000, 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, 2018 and
2017, we incurred net losses of € 37,086,000 and € 43,675,000, respectively. As at December 31, 2018, we had
an accumulated deficit of € 155,443,000. 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 sepofarsen and QR 421a, advance QR-1123 into clinical development, increase investments in our
other research programs, apply for marketing approval of our product candidates and, if approved, build a
sales and marketing infrastructure for the commercialization of our product candidates. To date, we have not
generated any revenues from royalties or product sales. Based on our current plans, we do not expect to
generate royalty or product revenues for the foreseeable future.
Other income is incidental by nature. In 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, formerly known as QR-010 (ProQR: € 4.6 million). On February 9, 2018, the Company entered into a
partnership agreement with Foundation Fighting Blindness (FFB), under which FFB has agreed to provide
funding of $ 7.5 million for the pre-clinical and clinical development of QR-421a for Usher syndrome type 2A
targeting mutations in exon 13. On June 5, 2018, the Company entered into a partnership agreement with EB
Research Partnership (EBRP) and EB Medical Research Foundation (EBMRF) under which EBRP and EBMRF
have agreed to provide funding of $ 5.0 million for the clinical development of QR-313 for Dystrophic
Epidermolysis Bullosa targeting mutations in exon 73. Other income amounted to € 5,761,000 compared to
€ 1,495,000 in 2017. We expect to continue generating other income from new grant applications in 2019.
Research and development costs amount to € 29,514,000 in 2018 compared to€ 31,153,000 in 2017. 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, sepofarsen, 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 sepofarsen
eluforsen 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, 2018 and 2017 are
mainly due to:
costs we incurred on clinical trials for sepofarsen, particularly in 2018;
costs we incurred on clinical trials for eluforsen, particularly in 2017, decreasing in 2018 after completion
of the clinical studies. No additional clinical study activities are planned;
slightly decreased staff costs. The number of full-time equivalent employees working on research and
development decreased from 96 at December 31, 2017 to 89 at December 31, 2018;
In November 2018, the Company issued 112,473 shares in the aggregate amount of $ 2.5 million, at
$ 22.23 per share to Ionis. Under the terms of the agreement made an upfront payment in ordinary
shares to its common stock, to Ionis upon signing the worldwide license agreement. The Company was
granted an exclusive worldwide license to QR-1123 and relevant patents. The Company will also make
future milestone payments, certain of which will be made in equity and others in cash or equity at the
company’s discretion, and royalties on net sales of 20% through the royalty term.
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 in 2017, 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 decrease in the number of employees, and increased costs for the
use of laboratories;
project-related consultancy costs, including regulatory and intellectual property support; and
decreased 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 € 12,540,000 in 2018 from € 10,840,000 in 2017. 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 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;
increased costs for legal support, accounting and other consultancy costs, including costs incurred in
preparation of offerings in 2018; and
decreased 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 2018 share-based compensation amounted to € 3,224,000, compared to € 4,024,000 in 2017. Net financial
expenses amounted to € 792,000, compared to € 3,175,000 in 2017. 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 2019, 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 28, 2019
On behalf of the Management Board,
Daniel de Boer
CEO
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.
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 2018 and
other relevant information on its functioning.
Activities of the Supervisory Board
The Supervisory Board and the Board of Directors met multiple times during 2018 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 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 2 times in 2018.
Compensation report 2018
In June 2016, the General Meeting of Shareholders adopted our Compensation Policy. This Compensation
Policy also applied to the financial year 2018 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;
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 2019 have been set at € 404,000 for the CEO, Daniel de Boer. René
Beukema resigned as per the end of 2018 and received a severance payment of € 324,000.
Short Term Incentive
The Compensation Committee reviewed the performance of the Company during 2018 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 2018
that the Company has achieved 125% of the objectives that had been set to determine the individual bonus
awards for the year 2018. For 2018 the individual bonus has been set at € 281,000 for Daniel de Boer and at
€ 134,000 for René Beukema. Final installment of these bonuses will be paid in cash in the first quarter of
2019.
Long Term Incentive
Based on the recommendation of the Compensation Committee, the Supervisory Board decided to grant
stock options in 2018 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 € 2.74 have been
granted with respect to 379,285 shares to the CEO, Daniel de Boer and 140,932 shares to the chief corporate
development officer and general counsel, René Beukema.
Pensions
The pension contributions paid during 2018 amount to € 9,000 for the CEO, Daniel de Boer and € 16,000 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
2018.
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
The Supervisory Board assessed its composition in 2018. It was concluded that the composition of the
Supervisory Board is satisfactory and appropriate for current the phase of the company. Looking forward the
supervisory board expressed a desire to seek three new candidate members over the next 18 months with
knowledge and/or expertise of rare disease, ophthalmology, and/or commercialization and a candidate who
is capable of taking over the chair position of the audit committee.
Audit Committee
The audit committee met 5 times in 2018. 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 2018 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
26, 2019. The Supervisory Board is of the opinion that the Financial Statements 2018 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 functioning and competencies and concluded that it’s functioning and
competencies are appropriate for the current phase of the company, but expressed an intent to seek new
candidates as described above. The performance and composition of the Management Board were also
found to be adequate. 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. The Supervisory Board is grateful for René
Beukema’s invaluable contributions and dedication to ProQR as a member of our management Board. His
commitment has been exemplary for all ProQRians. We thank our shareholders for their continued support.
Leiden, March 28, 2019
On behalf of the Supervisory Board,
Dinko Valerio
Chairman
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. Most deviations are justified 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 a focus on patients with LCA, Usher and EB. 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;
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.
In view of the resignation of Mr Beukema a new succession plan for Management Board members will be
established by the Supervisory Board in 2019 that is aimed at retaining 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
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 7.1% of our
shares. Both are therefore not independent within the meaning of best practice provision 2.1.8 of the Code.
We feel their membership of the supervisory board is justified by their specific knowledge and experience of
our business. Moreover, we do comply with best practice provision 2.1.7 of the DCGC, as only two out of 5
supervisory board members are not independent under best practice provision 2.1.8 of the Code and they
are so under different criteria of said provision 2.1.8.
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
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 Supervisory Board 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 Supervisory Board 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, with the exception of Dinko Valerio, as set forth above. 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 and Paul Baart
satisfies 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 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 2018, 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.
General Meeting of Shareholders
General meetings of shareholders may be 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
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
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,
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.
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.
Controls and procedures
In accordance with the Dutch Corporate Governance Code, we have assessed the design and operational
effectiveness of our Risk & Control framework. Based on the activities performed during 2018, and in
accordance with provision 1.4.3, the Management Board considers that:
this report provides sufficient insights into any failings in the effectiveness of the internal risk
management and control systems;
the aforementioned systems provide reasonable assurance that the financial reporting does not contain
any material inaccuracies;
based on the current state of affairs, it is justified that the financial reporting is prepared on a going
concern basis; and
the report states those material risks and uncertainties that are relevant to the expectation of the
company’s continuity for the period of twelve months after the preparation of this report.
In accordance with the Dutch Financial Supervision Act, section 5.25c, the Management Board declares that,
to the best of its knowledge:
the financial statements for 2018 provide, in accordance with IFRS as endorsed by the EU, a true and fair
view of the consolidated assets, liabilities and financial position as at December 31, 2018, and of the 2018
consolidated income statement of ProQR Therapeutics N.V.;
the annual report provides a true and fair view of the situation as at December 31, 2018, and the state of
affairs during the financial year 2018, together with a description of the principal risks faced by the Group
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 do as a
company listed on the NASDAQ. As part of the SOx implementation program, our Risk & Control framework
was further enhanced in 2018, 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 might not be able
The Company would be unable
This is an inherent risk with drug
to demonstrate safety and
efficacy in the preclinical studies
to commercialize the products
and therefore generate
development as the safety and
efficacy of products can only be
and clinical trials that are
revenues.
needed to obtain product
approval.
assessed when these studies
are conducted. However, the
Company has multiple products
in the pipeline and therefore is
diversified. The Company also
monitors the progress of the
programs and aims to make
decisions that mitigate safety
and efficacy related risks.
Risk related to
Risk area
Expected impact upon
materialization
Risk-mitigating actions
The regulatory approval process
is lengthy, time-consuming and
Failure to comply with the
requirements in the regulatory
Although the Company
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
the product.
withdrawal of approvals as well
as fines.
necessary, this is an inherent
risk in biotech drug
development and therefore has
limited mitigation abilities.
We may not able to maintain
orphan product status for
We may not benefit from
rewards including fee reduc-
We take orphan drug
requirements into consideration
eluforsen, sepofarsen (formerly:
QR‑110), QR-411 and QR‑421a
tions and market exclusivity.
in the design of our clinical
Sales could be impacted if other
development plans.
or obtain such status for any
other product canditates.
products are granted
authorization for the same
indications as eluforsen,
sepofarsen, QR-411 and
QR‑421a.
We may be precluded from
obtaining marketing
We may encounter delays in
marketing our products for a
We take orphan drug
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
Dependence on Third
Parties
financing through third party
under collaboration agreements
external factors and is therefore
collaboration agreements and
government subsidies.
and/or the reevaluation or
withdrawal of government
not entirely in the Company’s
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.
The Company relies upon third-
Failure of third parties to
The Company reviews and
party contractors and service
provide services of a suitable
monitors the activities of the
providers for the execution of
quality and within acceptable
third parties. These include
several aspects of its preclinical
and clinical development
timeframes may cause delay or
failure of the Company's
setting contractual deliverables,
quality assurance audits and
programs, which include CRO’s,
development programs.
performance reports, among
third party manufacturers and
other service providers.
other activities.
Intellectual Property
The Company is highly
Inadequate intellectual property
The Company files and
dependent on its portfolio of
protection or enforcement may
prosecutes patent applications
patents and other intellectual
impede the Company’s ability to
to protect its products and
property, proprietary
information and knowhow and
compete effectively. If the
Company is not able to protect
technologies to the best of its
knowledge and with assistance
its ability to protect and enforce
its trade secrets, know-how or
from internal and external
these assets.
other proprietary information,
counsel. Prior to disclosing any
The Company is subject to the
the value of its technology and
product candidates could be
confidential information to third
parties, the Company maintains
risk of infringing third party
significantly diminished.
strict confidentiality standards
intellectual property rights.
Intellectual property rights
and agreements for
collaborating parties.
conflicts may result in costly
litigation and could result in the
Company having to pay
substantial damages or limit the
Company’s ability to
commercialize its product
candidates.
Risk related to
Risk area
Expected impact upon
materialization
Risk-mitigating actions
Commercialization of Our
Product Candidates
We face competition from
entities that have developed or
If our competitors develop
technologies or product
Competition is an inherent risk
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,
are more effective, our ability to
designation application, we
attempt to have data exclusivity
develop and successfully
for our products. Development
commercialize our product
in other companies is essentially
candidates may be adversely
affected.
out of our control but we
monitor the competitive
landscape and incorporate that
into our business strategy.
Reimbursement from
third-party payors
The availability of
reimbursement by
If reimbursement is not
available, or is available only to
The ability of third party
financing is dependent on
governmental and private
limited levels, we may not be
external factors and is therefore
payors is essential for most
able to successfully
not entirely in the Company’s
patients to be able to afford
expensive treatments. Sales of
commercialize any product
candidate. Even if coverage is
control. The Company monitors
the market conditions for
any of our product candidates, if
provided, the approved
opportunities to seek
approved, will depend
reimbursement amount may
reimbursement.
substantially on the extent to
which the costs of these product
not be high enough to allow us
to establish or maintain pricing
candidates will be paid by health
sufficient to realize a sufficient
maintenance, managed care,
return on our investment.
pharmacy benefit and similar
healthcare management
organizations, or reimbursed by
government health
administration authorities,
private health coverage insurers
and other third-party payors.
The above risks have not materialized in 2018. 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.
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,
2018
December 31,
2017
€ 1,000
€ 1,000
7
8
9
10
11
12
13
14
--
1,864
1,864
1,243
1,544
105,580
108,367
39
2,505
2,544
396
2,064
48,099
50,559
110,231
53,103
1,726
235,744
10,888
(155,443)
92,915
(230)
92,685
1,457
148,763
8,513
(119,370)
39,363
(38)
39,325
9,386
9,386
--
135
--
7
545
7,473
8,160
5,284
5,284
1,960
546
1,019
--
347
4,622
8,494
TOTAL LIABILITIES
17,546
13,778
TOTAL EQUITY AND LIABILITIES
110,231
53,103
The accompanying notes are an integral part of these financial statements.
Note
2018
€ 1,000
2017
€ 1,000
15
16
18
19
5,761
1,495
(29,514)
(12,540)
(31,153)
(10,840)
(42,054)
(41,993)
(36,293)
(792)
(40,498)
(3,175)
(37,085)
(43,673)
(1)
(2)
(37,086)
(43,675)
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
(28)
151
Total comprehensive income for the year
(attributable to equity holders of the Company)
Result attributable to
Owners of the Company
Non-controlling interests
(37,114)
(43,524)
(36,894)
(192)
(37,086)
(43,637)
(38)
(43,675)
Share information
20
Weighted average number of shares outstanding1
34,052,520
25,374,807
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.
(1.08)
(1.08)
(1.72)
(1.72)
1 Basic and diluted earnings are equal due to the anti-dilutive nature of the options outstanding since the Company is loss-
making.
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, 2017
934
123,597
4,353
(15)
(75,733)
53,136
--
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
Result for the year
Other comprehensive income
Recognition of share-based payments
Issue of ordinary shares
Share options lapsed
Share options exercised
--
--
4
265
--
--
--
--
2,185
83,926
--
870
--
--
3,224
--
(97)
(724)
--
(28)
--
--
--
--
(36,984)
(36,894)
(192)
(37,086)
--
--
--
97
724
(28)
5,413
84,191
--
870
--
--
--
--
--
(28)
5,413
84,191
--
870
Balance at December 31, 2018
1,726
235,744
10,780
108
(155,443)
92,915
(230)
92,685
The accompanying notes are an integral part of these financial statements.
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
2018
€ 1,000
2017
€ 1,000
(37,086)
(43,675)
7, 8
12
18
992
5,413
792
(28)
1,295
(28,622)
(1)
130
1,065
4,024
3,175
151
164
(35,096)
(2)
147
Net cash used in operating activities
(28,493)
(34,951)
Cash flow from investing activities
Purchases of intangible assets
Purchases of property, plant and equipment
--
(312)
--
(121)
Net cash used in investing activities
(312)
(121)
Cash flow from financing activities
Proceeds from issuance of shares, net of transaction costs
84,191
25,685
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.
13
13
13
11
11
870
264
1,132
--
4
301
650
--
86,457
26,640
57,652
(8,432)
(171)
48,099
(2,669)
59,200
105,580
48,099
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, 2018, 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%);
ProQR Therapeutics I Inc. (United States, 100%);
Amylon Therapeutics B.V. (the Netherlands, 80%);
Amylon Therapeutics, Inc. (Unites States, a 100% subsidiary of Amylon Therapeutics B.V.)
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.
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.
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.
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.
The Management Board of ProQR has, upon preparing and finalizing the 2018 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.
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.
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
(Government) Grant income is not recognized until there is reasonable assurance that the Company will
comply with the conditions attached to them. (Government) 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.
The financial statements have been prepared on the basis of International Financial Reporting Standards
(“IFRS”), as issued by the International Accounting Standards Board (“IASB”).
IFRS 9
IFRS 9 contains three principal classification categories for financial assets: measured at amortized cost,
FVOCI and FVTPL. The classification of financial assets under IFRS 9 is generally based on the business model
in which a financial asset is managed and its contractual cash flow characteristics. IFRS 9 eliminates the
previous IAS 39 categories of held to maturity, loans and receivables and available for sale.
IFRS 9 largely retains the existing requirements in IAS 39 for the classification and measurement of financial
liabilities. The adoption of IFRS 9 has not had a significant effect on the Group’s accounting policies related to
financial liabilities and derivative financial instruments.
Other new Standards and Interpretations, which became effective as of January 1, 2018, did not have a
material impact on our financial statements.
The Company has consistently applied the following accounting policies to all periods presented in these
consolidated financial statements.
(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.
(ii) Non-controlling interests (“NCI”)
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 derecognizes the assets and liabilities of the subsidiary,
and any non-controlling interests and other components of equity. Any resulting gain or loss is recognized 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 unrealized income and expenses arising from intra-group
transactions, are eliminated. Unrealized gains arising from transactions with equity-accounted investees are
eliminated against the investment to the extent of the Group’s interest in the investee. Unrealized losses are
eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of
impairment.
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.
(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.
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.
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.
(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.
Income tax expense represents the sum of the tax currently payable and deferred tax. It is recognized in
profit or loss except to the extent that it relates to a business combination, or items recognized directly in
equity or in OCI.
(i) Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported
in the income statement because of items of income or expense that are taxable or deductible in other years
and items that are never taxable or deductible. The Company’s liability for current tax is calculated using tax
rates that have been enacted or substantively enacted by the end of the reporting period.
(ii) Deferred tax
Deferred tax is recognized on differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation of taxable profit.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to
the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the
asset to be recovered. Since the Company does not expect to be profitable in the foreseeable future, its
deferred tax assets are valued at nil.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in
which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or
substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and
assets reflects the tax consequences that would follow from the manner in which the Company expects, at
the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
(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) Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and any
accumulated impairment losses. If significant parts of an item of property, plant and equipment have
different useful lives, then they are accounted for as separate items (major components) of property, plant
and equipment. Any gain or loss on disposal of an item of property, plant and equipment is recognized in
profit or loss.
(ii) Depreciation
Depreciation is calculated to write off the cost of items of property, plant and equipment less their estimated
residual values using the straight-line method over their estimated useful lives, and is recognized in profit or
loss. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is
reasonably certain that the Company will obtain ownership by the end of the lease term.
The estimated useful lives of property, plant and equipment for current and comparative periods are as
follows:
leasehold improvements:
5 - 10 years;
laboratory equipment:
other:
5 years;
3 - 5 years.
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if
appropriate.
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.
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 and subsequently measured at
amortized cost or fair value on the basis of the entity’s business model for managing the financial assets and
the contractual cash flow characteristics of the financial assets.
Specifically:
debt instruments that are held within a business model whose objective is to collect the contractual
cash flows, and that have contractual cash flows that are solely payments of principal and interest on
the principal amount outstanding, are measured subsequently at amortised cost, and
all other debt investments and equity investments are measured subsequently at fair value through
profit or loss (FVTPL).
Contract 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.
The group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime
expected loss allowance for all trade receivables. To measure the expected credit losses, trade receivables
have been grouped based on shared credit risk characteristics and the days past due. Trade receivables are
written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable
expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with
the group, and a failure to make contractual payments for a period of greater than 120 days past due.
Impairment losses on trade receivables and contract assets are presented as net impairment losses within
operating profit. Subsequent recoveries of amounts previously written off are credited against the same line
item.
Previous accounting policy for impairment of trade receivables
In the prior year, 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’.
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.
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 recognized 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
amortized cost using the effective interest method. The equity component of a compound financial
instrument is not remeasured.
Interest related to the financial liability is recognized in profit or loss. On conversion, the financial liability is
reclassified to equity and no gain or loss is recognized.
(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.
(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.
A number of new standards, amendments to standards and interpretations are effective for annual periods
beginning after January 1, 2019, 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 16 Leases
IFRS 16 specifies how a company will recognize, measure, present and disclose leases. The standard provides
a single lessee accounting model, requiring lessees to recognize 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.
The impact on the income statement is that current operating expenses will be replaced by depreciation and
interest. Total expenses (depreciation for 'right of use' assets and interest on lease liabilities) are higher in the
earlier years of a typical lease and lower in the later years, in comparison with current accounting for
operating leases. The main impact on the statement of cash flows is higher cash flows from operating
activities, since cash payments for the principal part of the lease liability are classified in the net cash flow
from financing activities by approximately € 1.2 million.
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 € 2.3 million.
There are no other standards that are not yet effective and that would be expected to have a material impact
on the entity in the current or future reporting periods and on foreseeable future transactions.
The Company’s activities expose it to a variety of financial risks: market risk (including currency risk, interest
rate risk and price risk), credit risk and liquidity risk. The Company’s overall financial risk management seeks
to minimize potential adverse effects resulting from unpredictability of financial markets on the Company’s
financial performance.
Financial risk management is carried out by the finance department. The finance department identifies and
evaluates financial risks and proposes mitigating actions if deemed appropriate.
(a) Market risk
Market risk is the risk that changes in market prices – such as foreign exchange rates, interest rates and
equity prices – will affect the Company’s income or the value of its holdings of financial instruments. The
objective of market risk management is to manage and control market risk exposures within acceptable
parameters, while optimizing the return.
Foreign exchange risk
Foreign exchange risk arises from future commercial transactions and recognized assets and liabilities in
foreign currencies, primarily with respect to the U.S. Dollar. The Company has an exposure associated with
the time delay between entering into a contract, budget or forecast and the realization thereof. The Company
operates a foreign exchange policy to manage the foreign exchange risk against the functional currency
based on the Company’s cash balances and the projected future spend per major currency.
At December 31, 2018 there was a net liability in U.S. Dollars of € 0.1 million (2017: € 0.7 million). Foreign
currency denominated receivables and trade payables are short term in nature (generally 30 to 45 days). As a
result foreign exchange rate movements on receivables and trade payables, during the years presented had
an immaterial effect on the financial statements.
At year-end, a substantial amount of our cash balances are denominated in U.S. Dollars. This amount reflects
our current expectation of future expenditure in U.S. dollars.
A reasonably possible weakening of the U.S. Dollar by 10% against all other currencies at December 31, 2018
would have affected the measurement of our cash balances denominated in a U.S. Dollar and affected equity
and profit or loss by € 2.4 million (2017: € 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 designated for sale, 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 € 9,386,000 at December 31, 2018 (2017:
€ 7,244,000). 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).
At December 31, 2018 and December 31, 2017, 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 Aa3,
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, 2018
Borrowings
Trade payables and other payables
At December 31, 2017
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
--
8,160
8,160
797
--
797
8,984
--
8,984
Less than
1 year
Between
1 and 2 years
Between
2 and 5 years
€ 1,000
€ 1,000
€ 1,000
1,960
6,534
8,494
980
--
980
5,981
--
5,981
Over
5 years
€ 1,000
--
--
--
Over
5 years
€ 1,000
--
--
--
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.
For financial instruments that are measured on the balance sheet at fair value, IFRS 13 requires disclosure of
fair value measurements by level of the following fair value measurement hierarchy:
quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
inputs other than quoted prices included within level 1 that are observable for the asset or liability, either
directly (that is, as prices) or indirectly (that is, derived from prices) (level 2); and
inputs for the asset or liability that are not based on observable market data (that is, unobservable
inputs) (level 3).
The 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.
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.
dsssds
Balance at January 1, 2017
Cost
Accumulated amortization
Carrying amount
Additions
Amortization
Movement for the period
Balance at December 31, 2017
Cost
Accumulated amortization
Carrying amount
Additions
Impairment charge
Amortization
Movement for the period
Balance at December 31, 2018
Cost
Accumulated amortization
Carrying amount
Licenses
Software
€ 1,000
€ 1,000
Total
€ 1,000
39
--
39
--
--
--
39
--
39
--
(39)
--
(39)
39
(39)
--
152
(101)
51
--
(51)
(51)
152
(152)
--
--
--
--
--
152
(152)
--
191
(101)
90
--
(51)
(51)
191
(152)
39
--
(39)
--
--
191
(191)
--
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 has been impaired and is included in the general
and administrative costs for an amount of € 39,000 (2017: € -).
The amortization charge for 2018 is included in the general and administrative costs for an amount of € -
(2017: € 51,000).
dsssds
Balance at January 1, 2017
Cost
Accumulated depreciation
Carrying amount
Additions
Depreciation
Disposals
Movement for the period
Balance at December 31, 2017
Cost
Accumulated depreciation
Carrying amount
Additions
Depreciation
Disposals
Movement for the period
Balance at December 31, 2018
Cost
Accumulated depreciation
Carrying amount
Leasehold
improvements
Laboratory
equipment
Other
Total
€ 1,000
€ 1,000
€ 1,000
€ 1,000
1,847
(508)
1,339
9
(294)
--
(285)
1,856
(802)
1,054
18
(296)
--
(278)
1,874
(1,098)
776
1,957
(660)
1,297
47
(409)
--
(362)
2,004
(1,069)
935
281
(419)
--
(138)
2,285
(1,488)
797
1,283
(481)
802
26
(312)
--
(286)
1,309
(793)
516
13
(238)
--
(225)
1,322
(1,031)
291
5,087
(1,649)
3,438
82
(1,015)
--
(933)
5,169
(2,664)
2,505
312
(953)
--
(641)
5,481
(3,617)
1,864
The depreciation charge for 2018 is included in the research and development costs for an amount of
€ 725,000 (2017: € 836,000) and in the general and administrative costs for an amount of € 228,000 (2017:
€ 179,000).
dsssds
Value added tax
Wage tax
All receivables are considered short-term and due within one year.
dsssds
Prepayments
Other receivables
All receivables are considered short-term and due within one year.
dsssds
Cash at banks
Bank deposits
The cash at banks is at full disposal of the Company.
December 31,
2018
December 31,
2017
€ 1,000
€ 1,000
311
932
1,243
396
--
396
December 31,
2018
December 31,
2017
€ 1,000
€ 1,000
645
899
1,544
1,991
73
2,064
December 31,
2018
December 31,
2017
€ 1,000
€ 1,000
105,580
--
105,580
48,099
--
48,099
dsssds
Balance at January 1
Issued for cash
Issued for services
Exercise of share options
Treasury shares issued (transferred)
Balance at December 31
Number of ordinary shares
2018
2017
36,425,014
23,346,856
6,612,500
8,573,975
112,473
226,098
--
1,034
(226,098)
4,503,149
43,149,987
36,425,014
The authorized share capital of the Company amounting to € 7,200,000 consists of 90,000,000 ordinary
shares and 90,000,000 preference shares with a par value of € 0.04 per share. At December 31, 2018,
43,149,987 ordinary shares were issued and fully paid in cash, of which 4,277,051 were held by the Company
as treasury shares (2017: 4,503,149).
In 2017, the Company has issued 976,477 shares pursuant to its then-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.
In September 2018, the Company consummated an underwritten public offering and concurrent registered
direct offering of 6,612,500 ordinary shares at an issue price of $ 15.75 per share. The gross proceeds from
this offering amounted to € 89,983,000 while the transaction costs amounted to € 5,792,000, resulting in net
proceeds of € 84,191,000.
In November 2018, the Company issued 112,473 shares in the aggregate amount of $ 2.5 million, at $ 22.23
(€ 19.46) per share to Ionis Pharmaceuticals, Inc. Under the terms of the agreement, an upfront payment in
ordinary shares to its common stock was made to Ionis upon signing the worldwide license agreement. The
Company was granted an exclusive worldwide license to QR-1123 and relevant patents. The Company will
also make future milestone payments, certain of which will be made in equity and others in cash or equity at
the company’s discretion, and royalties on net sales of 20% through the royalty term.
On November 7, 2018, 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 $ 300,000,000 of its
ordinary shares, warrants and/or units; and (b) as part of the $ 300,000,000, the offering, issuance and sale by
us of up to a maximum aggregate offering price of $ 75,000,000 of its ordinary shares that may be issued and
sold under a sales agreement with H.C. Wainwright & Co in one or more at-the-market offerings.
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.
The translation reserve comprises all foreign currency differences arising from the translation of the financial
statements of foreign operations.
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
€ 3,224,000 in 2018 (2017: € 4,024,000), of which € 2,167,000 (2017: € 2,059,000) was recorded in general and
administrative costs and € 1,057,000 (2017: € 1,965,000) 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:
dsssds
Risk-free interest rate
Expected dividend yield
Expected volatility
Expected life in years
Options
granted in 2018
Options
granted in 2017
2.223%
0%
80.9%
5 years
1.913%
0%
88.7%
5 years
The resulting weighted average grant date fair value of the options amounted to € 2.02 in 2018 (2017: € 3.21).
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
Balance at December 31
2018
2017
Number of
options
Average
exercise price
Number of
options
Average
exercise price
3,331,875
1,570,366
(142,467)
(226,098)
(22,164)
4,511,512
€ 4.78
€ 3.11
€ 4.29
€ 4.02
€ 6.42
€ 4.24
2,205,989
1,199,447
(72,527)
(1,034)
--
3,331,875
€ 4.88
€ 4.63
€ 5.56
€ 3.54
--
€ 4.78
Exercisable
1,683,731
1,148,893
The options outstanding at December 31, 2018 had an exercise price in the range of € 1.11 to € 20.34 (2017:
€ 1.11 to € 20.34) and a weighted-average contractual life of 7.6 years (2017: 7.9 years).
The weighted-average share price at the date of exercise for share options exercised in 2018 was € 15.36
(2017: € 4.23).
Please refer to Note 23 for the options granted to key management personnel.
dsssds
Innovation credit
Convertible loans
Accrued interest
Total borrowings
Current portion
December 31,
2018
December 31,
2017
€ 1,000
€ 1,000
5,164
1,871
2,351
4,899
662
1,683
9,386
7,244
--
9,386
(1,960)
5,284
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 € 5.0 million.
The credit is interest-bearing at a rate of 10% per annum. Early October 2018 ProQR received a conditional
waiver of the € 5 million Innovation credit. The total loan of € 7.4 million including interest will be waived after
3 years if certain conditions are met. The conditions are reviewed by RVO on an annual basis.
On December 10, 2018 ProQR was awarded an Innovation credit by the Dutch government, through its
agency RVO of the Ministry of Economic Affairs, for the QR-110 program. Amounts will be drawn under this
facility from 2018 through 2021. The credit of € 4.7 million through December 31, 2021 will be used to
conduct the Phase 2/3 clinical study and efforts to obtain regulatory and ethical market approval (NDA/MAA)
of QR-110 for LCA10, of which € 163,000 has been received in 2018. The credit, including accrued interest of
10% per annum, is repayable depending on obtaining market approval. The credit covers 35% of the costs
incurred in respect of the program up to € 4.7 million.
The assets which are co-financed with the granted innovation credits 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 2018 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 -36 months in equal quarterly terms.
In March 2018, we entered into a convertible loan (the “Loan”), pursuant to which we borrowed an aggregate
of € 260,000 from the lender. The loan bears interest at a rate of 3% per annum. The outstanding principal
and interest under the Loan is convertible into our ordinary shares upon the first to occur of the following
events, at the election of the lender for (i) or (ii): (i) our public announcement of a strategic business
partnership aimed at joint development of, or development by the partner of, our Huntington’s disease
program, in which case the lender may convert the outstanding Loan amount into our ordinary shares at the
then-prevailing trading price less a 25% discount; (ii) our public announcement of our decision to
independently develop our Huntington’s disease program in the future, in which case the lender may convert
the outstanding Loan amount into our ordinary shares at the then-prevailing trading price; or, (iii) on or
around March 30, 2020 at the then-prevailing trading price plus a 25% premium. In no event are we required,
nor are we permitted, to issue ordinary shares in an amount that exceeds 0.5% of the total number of
ordinary shares outstanding immediately prior to the entry into the Loan. The Loan agreement restricts the
lender’s ability to transfer the Loan, and prohibits the lender from entering into or engaging in any hedge,
swap, short sale, derivative transaction or other agreement or arrangement that transfers any ownership of,
or interests in, the Loan or our ordinary shares issued or issuable upon conversion of the Loan. The Loan and
the ordinary shares issuable upon conversion of the Loan were issued in reliance on a private placement
exemption from registration under the Securities Act of 1933, as amended.
dsssds
Borrowings
Trade payables
Social securities and other taxes
Pension premiums
Deferred income
Accrued expenses and other liabilities
December 31,
2018
December 31,
2017
€ 1,000
€ 1,000
--
135
--
7
545
7,473
8,160
1,960
546
1,019
--
347
4,622
8,494
At December 31, 2018, current liabilities included deferred income resulting from funds received for one of
our research and innovation programs.
dsssds
Grant income
Rental income from property subleases
Other income
2018
€ 1,000
5,378
174
209
5,761
2017
€ 1,000
870
625
--
1,495
Other income is incidental by nature. 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). 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. This
program has ended at December 31, 2017 and the final amount of € 1.3 million has been recognized as other
income in 2018.
On February 9, 2018, the Company entered into a partnership agreement with Foundation Fighting Blindness
(FFB), under which FFB has agreed to provide funding of $ 7.5 million for the preclinical and clinical
development of QR-421a for Usher syndrome type 2A targeting mutations in exon 13. In 2018 € 2.5 million
has been recognized as other income.
On June 5, 2018, the Company entered into a partnership agreement with EB Research Partnership (EBRP)
and EB Medical Research Foundation (EBMRF) under which EBRP and EBMRF have agreed to provide funding
of $ 5.0 million for the clinical development of QR-313 for Dystrophic Epidermolysis Bullosa targeting
mutations in exon 73. In 2018 € 1.3 million has been recognized as other income.
Grants are recognized in other income in the same period in which the related R&D costs are recognized.
Research and development costs amounted to € 29,514,000 in 2018 (2017: € 31,153,000) 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.
dsssds
Wages and salaries
Social security costs
Pension costs – defined contribution plans
Equity-settled share based payments
2018
€ 1,000
11,558
1,346
868
3,224
16,996
2017
€ 1,000
11,855
1,285
860
4,024
18,024
Average number of employees for the period
127.7
139.9
Employees per activity at December 31 (converted to FTE):
dsssds
Research and Development
General and Administrative
December 31,
2018
December 31,
2017
89.2
29.6
118.8
96.2
34.0
130.2
Of all employees 112.8 FTE are employed in the Netherlands (2017: 125.2 FTE).
Included in the wages and salaries for 2018 is a credit of € 1,294,000 (2017: € 723,000) with respect to WBSO
subsidies.
dsssds
Interest income
Current accounts and deposits
Interest costs
Interest on loans and borrowings
Foreign exchange result
Net foreign exchange benefit/(loss)
2018
€ 1,000
2017
€ 1,000
189
90
(810)
(596)
(171)
(2,669)
(792)
3,175
The calculation of the tax charge is as follows:
dsssds
2018
€ 1,000
2017
€ 1,000
Income tax provision based on domestic rate
9,106
10,918
Tax effect of:
Non-deductible expenses
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
(818)-
1,448
--
(9,710)
(25)
1
0%
(634)
--
--
(10,257)
(25)
2
0%
Due to the operating losses incurred since inception the Company has no tax provisions as of the balance
sheet date. Furthermore, no significant temporary differences exist between accounting and tax results.
Realization of deferred tax assets is dependent on future earnings, if any, the timing and amount of which are
uncertain. Accordingly, the Company has not yet recognized any deferred tax asset related to operating
losses. As per December 31, 2018, the Company has a total amount of € 162.6 million (2017: € 123.9 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.
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)
2018
2017
(36,894)
(43,637)
34,052,520
25,374,807
(1.08)
(1.72)
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.
The Company did not declare dividends for any of the years presented in these financial statements.
Since 2012, the Company is domiciled in Leiden, the Netherlands, where it currently has entered into rental
agreements for laboratory space and offices and since late 2018 in Cambridge, Massachusetts, USA.
We lease facilities of approximately 2,960 square meters in total, located at Zernikedreef in Leiden, the
Netherlands, where our headquarters and our laboratories are located. The lease for this facility terminates
on December 31, 2020, and subject to the provisions of the lease, may then be renewed for subsequent
5 year terms. In May 2018, we entered into an agreement to lease additional office space in the US, at CIC
Cambridge. Per January 2019, we rent an office of approximately 60 square meters, located at 245 Main
Street, Cambridge, MA 02142. We believe that our existing facilities are adequate to meet current needs and
that suitable alternative spaces will be available in the future on commercially reasonable terms.
The lease expenditure charged to the income statement in 2018 amounts to € 1,813,000 (2017: € 2,103,000).
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,
2018
December 31,
2017
€ 1,000
€ 1,000
1,233
1,233
--
2,466
1,607
3,312
--
4,919
The Company leased out a part of its office in the U.S. and the Netherlands during 2017 and early 2018. In
2018, total sublease income amounted to € 174,000 (2017: € 625,000), 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,
2018
December 31,
2017
€ 1,000
--
--
--
--
€ 1,000
174
--
--
174
There are no claims known to management related to the activities of the Company.
On October 26, 2018, we and Ionis Pharmaceuticals, Inc. entered into a License Agreement, pursuant to
which Ionis granted an exclusive, worldwide, royalty-bearing license to us to develop and commercialize
certain pharmaceutical products, including the product designated by Ionis as IONIS-RHO-2.5Rx, which has
been re-designated by us as QR-1123, for the prevention or treatment of retinitis pigmentosa in humans,
including patient screening. Ionis also granted to the Company certain sub-license rights. Under the License
Agreement, we are required to make an upfront payment of an aggregate of up to $ 6.0 million in
installments, and certain payments up to an aggregate of $ 20.0 million upon the satisfaction of certain
development and sales milestones. In addition, Ionis is entitled to royalty payments in the double digits of
aggregate annual net sales, subject to minimum sales in certain circumstances, and subject to reduced rates
in certain circumstances. The royalty term lasts on a product-by-product and country-by-country basis, until
the later of the expiration of the patent rights licensed to us and the expiration of regulatory-based exclusivity
for such product in such country. The License Agreement may also be terminated by either party based upon
certain uncured material breach by, or insolvency of, the other party, or by us at any time with advanced
notice. In connection with the upfront payments and development milestone payments, we also
simultaneously entered into a Stock Purchase Agreement with Ionis, pursuant to which we agreed to issue an
aggregate of $ 2.5 million of ordinary shares to satisfy the first installment upfront payment, and the
remaining installment of the upfront payment in ordinary shares determined upon the due date of such
installment. In addition, the Stock Purchase Agreement provides for the ability for us, at our discretion, to
pay the development milestone payments in ordinary shares when such payments are due. We may not
issue ordinary shares to Ionis to the extent that such issuance would result in Ionis owning in excess of 18.5%
of our issued and outstanding shares, nor may we issue ordinary shares if such issuance, together with
previous issuances under the Stock Purchase Agreement, would exceed 19.9% of our outstanding ordinary
shares as of the date of the execution of the Stock Purchase Agreement. Under these circumstances, we are
required to pay the remainder of the upfront and/or development milestone payments in cash. In addition, in
connection with the Stock Purchase Agreement, we also entered into an Investor Agreement with Ionis,
pursuant to which we agreed to register for resale the ordinary shares issued by us under the Stock Purchase
Agreement, under the circumstances described in the Investor Agreement. The Investor Agreement also
contains customary covenants related to our registration of such shares, preparation of filings in connection
therewith and indemnification of Ionis. The Investor Agreement also contains lockup provisions prohibiting
the disposition of our ordinary shares issued under the Stock Purchase Agreement for a period of 12 months
from the applicable issuance date, as well as voting provisions requiring Ionis to vote its ordinary shares in
accordance with the recommendations of our board of directors, in each case subject to certain exceptions
In April 2014 the Company entered into a Patent License Agreement with Radboud University Medical Center,
or Radboud in the field of antisense oligonucleotide-based therapy for Leber’s Congenital Amaurosis, or LCA.
Under the terms of this license agreement, the Company has an exclusive, sublicensable, world-wide royalty-
bearing license under certain Radboud patent rights to develop, make, have made, use, sell offer for sale and
import of certain licensed products of Radboud for use in all prophylactic and therapeutic uses in the field of
LCA. Pursuant to the terms of the license agreement, the Company is obligated to pay Radboud net-sales-
related royalties which shall be determined on a product-by-product and country-by-country basis. If the
Company required to pay any third party royalties, it may deduct that amount from that which is owed to
Radboud. Radboud shall provide human resources, materials, facilities and equipment that are necessary for
preclinical and clinical trials and if the Company does not purchase such trial facilities from Radboud, it is
required to pay an increased net-sales-related royalty. In the Company’s sole discretion, it may elect to
convert the obligation to pay net-sales-related royalties into one of the two lump-sum royalty options
depending on whether the Company elects to convert prior to or after regulatory approval has been filed.
The license agreement will remain in effect until the date on which all patent applications and all granted
patents ensuing from such applications have expired or is terminated earlier in accordance with the
agreement. Either party may terminate the agreement if the other party is in default of a material obligation
under the agreement which has not been cured within 30 days of notice of such default. Either party may
also terminate the agreement if the other party declares bankruptcy, dissolves, liquidates or the like.
Radboud may also terminate the agreement if the Company does not pay any amount owed under the
agreement and such payment remains overdue for at least 30 days after receiving notice from Radboud of
the amount due.
In June 2015, we entered into another license agreement with Radboud. Under the terms of this license
agreement, the Company has an exclusive, sublicensable, world-wide royalty-bearing license under certain
Radboud patent rights to develop, make, have made, use, sell offer for sale and import of certain licensed
products of Radboud for use in all prophylactic and therapeutic uses in the field of Usher syndrome.
Pursuant to the terms of the license agreement, the Company is obligated to pay Radboud net-sales-related
royalties which shall be determined on a product-by-product and country-by-country basis. If the Company is
required to pay any third party royalties, it may deduct that amount from that which is owed to Radboud.
Radboud shall provide human resources, materials, facilities and equipment that are necessary for preclinical
and clinical trials and if the Company does not purchase such trial facilities from Radboud, it is required to
pay an increased net-sales-related royalty. In the Company’s sole discretion, it may elect to convert the
obligation to pay net-sales-related royalties into one of the two lump-sum royalty options depending on
whether it elects to convert prior to or after regulatory approval has been filed. The license agreement will
remain in effect until the date on which all patent applications and all granted patents ensuing from such
applications have expired or is terminated earlier in accordance with the agreement. Either party may
terminate the agreement if the other party is in default of a material obligation under the agreement which
has not been cured within 30 days of notice of such default. Either party may also terminate the agreement if
the other party declares bankruptcy, dissolves, liquidates or the like. Radboud may also terminate the
agreement if the Company does not pay any amount owed under the agreement and such payment remains
overdue for at least 30 days after receiving notice from Radboud of the amount due.
In January 2018, the Company entered into a license agreement with Inserm Transfert SA and Assistance-
Publique-Hôpiteaux de Paris. Under the terms of the agreement, the Company has a world-wide, exclusive,
royalty-bearing license under patent rights belonging to Inserm Transfert SA and other co-owners to develop,
have developed, make, have made, use, have used and sell, have sold or otherwise distribute certain licensed
products related to antisense oligonucleotides for treating LCA and method of treatment claims relating to
modulation of the splicing of the CEP290 gene product. The Company has the right to grant sublicenses to
third parties subject to certain limitations such as the sublicensee’s activities do not conflict with the public
order or ethical obligations of Inserm Transfert SA or any co-owner and do not tarnish the image of Inserm
Transfert SA or any co-owner. In partial consideration of the rights and licenses granted by the license
agreement, the Company is required to make payments upon the completion of certain milestones:
completion of a clinical trial more advanced than First in Man, such as a phase IIb; and the first marketing
authorization or any foreign equivalent for a first product. In further consideration of the rights and license
granted under the agreement, the Company shall pay to Inserm Transfert SA a running royalty on net sales of
products sold by us or our sublicensee. Unless terminated earlier pursuant to termination provisions of
Agreement, the license agreement will remain in effect on a country-by-country basis, until the later to occur
of the following events (i) the invalidation or expiration of the last to expire or to be invalidated patent rights
which covers the manufacture, use or sale of the product in said country or until the expiration of the
exclusive commercialization right granted by a regulatory agency to a product as an orphan drug or (ii) five
years after the first commercial sale of a product in the country in which the product is sold. The agreement
may be terminated by either party in the event of an uncured breach by the non-breaching party. Inserm
Transfert SA may terminate the agreement if we become the subject of voluntary or involuntary winding-up
proceedings or judicial recovery, if the Company or its sublicensees interrupt development activities for at
least one year, if the Company or its sublicensees interrupt commercialization for more than twelve months
after the first commercialization in a country, if the Company does not commercialize a product within two
years following our obtaining of marketing approval in a country, or if the Company or our sublicensees do
not put a product into commercial use and do not keep products reasonably available to the public within
twelve years of the effective date of the agreement.
In January 2016, the Company entered into an agreement with Leiden University Medical Center, or LUMC,
which gives us a world-wide, exclusive, royalty-bearing license in the field of amyloid beta related diseases,
notably Alzheimer’s disease and HCHWA-D, under certain patent rights of LUMC regarding antisense
oligonucleotide based therapies. This license agreement contains certain diligence obligations for the
Company coupled to milestone payments and complements the Company’s intellectual property relating to
its CNS program. On September 12, 2017, this program was transferred to Amylon Therapeutics B.V., in which
the Company maintains a majority ownership.
In January 2017, the Company entered into an agreement with LUMC, which gives us a world-wide, exclusive,
royalty-bearing license in the field of Huntington’s disease, under certain patent rights of LUMC regarding
antisense oligonucleotide based therapies. This license agreement contains certain diligence obligations for
the Company coupled to milestone payments and complements the Company’s intellectual property relating
to the HD program.
In 2012, the Company and the General Hospital Corporation (MGH) have entered into a Patent License
Agreement for the Company’s CF program pursuant to which the Company may have certain royalty and
milestone obligations. The Company is also obligated to pay MGH up to $ 700,000 (€ 611,000) 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 (€ 9,000) 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.
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 (€ 2.6 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 (€ 14 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 (€ 2.6
million) if net sales of eluforsen exceed $ 500 million (€ 437 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.
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 (€ 6.6 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 (€ 32.8 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 (€ 13.1
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.
On June 5, 2018, the Company entered into a partnership agreement with EB Research Partnership (EBRP)
and EB Medical Research Foundation (EBMRF) under which EBRP and EBMRF have agreed to provide funding
of $ 5.0 million for the clinical development of QR-313 for Dystrophic Epidermolysis Bullosa targeting
mutations in exon 73.
Pursuant to the terms of the agreement, the Company shall, during the period starting upon completing a
Successful Clinical Study, pay EBRP the total Actual Award in 12 equal semi-annual installments of the Actual
Award made by EBRP. ProQR shall have the option, at its discretion, to pay the amount for each installment in
ProQR Therapeutics N.V. shares at the price of market close on the payment due date. In addition to the
payment in subparagraph (a) above, ProQR shall pay a return on investment to EBRP in an amount equal of
1.36 times the Actual Award at the first anniversary of First Commercial Sale; 1.36 times the Actual Award at
the second anniversary of First Commercial Sale; 1.36 times the Actual Award at the third anniversary of First
Commercial Sale; and 1.0 times the Actual Award when aggregate Net Sales of the Product exceed $ 100
million.
In the event of a License Transaction by ProQR or a Change of Control Transaction (collectively a “Disposition
Transaction”): (i) ProQR shall pay to EBRP 33.3 percent of any consideration received by ProQR in connection
with such transaction (whether up front or in subsequent milestone or other payments and whether in cash
or other property) not to exceed four (4) times the amount of the Actual Award (the “Disposition Payment”),
provided that (i) the amount of the actual total payment previously made by ProQR under Section 2(a) shall
be deducted from the amount of the “Disposition Payment”.
The Company has research and development commitments, mainly with CRO's, amounting to € 8,114,000
at December 31, 2018 (2017: € 7,704,000). Of these obligations an amount of € 5,807,000 is due in 2019,
the remainder is due in 1 to 5 years.
Details of transactions between the Company and related parties are disclosed below.
The remuneration of the Supervisory Board members in 2018 is set out in the table below:
dsssds
2018
Mr. Dinko Valerio
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
72
31
80
33
252
--
--
--
--
--
--
69
--
75
--
73
217
105
72
106
80
106
469
The remuneration of the Supervisory Board members in 2017 is set out in the table below:
dsssds
2017
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
Mr. Dinko Valerio
Mr. Henri Termeer
Mr. Antoine Papiernik
Ms. Alison Lawton
Mr. Paul Baart
Mr. James Shannon
As at December 31, 2018:
Mr. Dinko Valerio holds 1,043,420 ordinary shares in the Company, as well as 115,925 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 2017, Mr. Valerio was granted 32,164 options under the Option Plan to acquire
depositary receipts issued for ordinary shares at an average exercise price of € 4.65 per option. In 2018,
Mr. Valerio was granted 27,500 options at an average exercise price of € 2.74 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. Antoine Papiernik does not hold any shares or options in the Company. As a managing partner of
Sofinnova Partners SAS, the management company of Sofinnova Capital VII FCPR, holder of 2,764,194
ordinary shares, Mr. Papiernik may be deemed to have share voting and investment power with respect
to such shares.
Ms. Alison Lawton holds 96,473 options. In 2017, Ms. Lawton was granted 32,164 options under the
Option Plan to acquire depositary receipts issued for ordinary shares with an average exercise price of
€ 4.65 per option. In 2018, Ms. Lawton was granted 27,500 options with an average exercise price of
€ 2.74 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 92,733 options. In 2017, Mr.
Shannon was granted 32,164 options under the Option Plan to acquire depositary receipts issued for
ordinary shares at an exercise price of € 4.65 per option. In 2018, Mr. Shannon was granted 27,500
options at an exercise price of € 2.74 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.
Our Management Board is supported by our officers, or senior management. The total remuneration of the
Management Board and senior management in 2018 amounted to € 5,481,000.
The details are set out in the table below:
dsssds
2018
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
726
809
1,535
1,726
3,261
9
16
25
64
89
668
464
1,132
999
2,131
1,403
1,289
2,692
2,789
5,481
1
2
Short term employee benefits includes a bonus for Mr. Daniel de Boer of € 281,000 based on goals realised in 2018.
Short term employee benefits includes a bonus for Mr. René Beukema of € 134,000 based on goals realised in 2018
and a severance payment of € 324,000
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
2017
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
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.
As at December 31, 2018:
Mr. Daniel de Boer holds 705,309 ordinary shares in the Company as well as 828,623 options. In 2017,
Mr. de Boer was awarded 239,717 options to acquire ordinary shares at an exercise price of € 4.65 per
option. In 2018, he was awarded 379,285 options at an exercise price of € 2.74 per option. These options
vest over four years in equal annual installments and had a remaining weighted-average contractual life
of 8.1 years at December 31, 2018.
Mr. René Beukema holds 346,239 ordinary shares in the Company as well as 440,013 options. In 2017,
Mr. Beukema was awarded 101,408 options to acquire ordinary shares at an exercise price of € 4.65 per
option. In 2018, he was awarded 140,932 options at an exercise price of € 2.74 per option. These options
vest over four years in equal annual installments and had a remaining weighted-average contractual life
of 7.2 years at December 31, 2018. Mr. Beukema left the Company January 1, 2019.
ProQR does not grant any loans, advanced payments and guarantees to members of the Management and
Supervisory Board.
On March 26, 2019, the Company announced the strategic spin out of the Dystrophic Epidermolysis Bullosa
(DEB) activities into the newly formed company, Wings Therapeutics. This company is formed and financed by
EB Research Partnership (EBRP), the largest global non-profit dedicating to treating and curing EB. Wings
Therapeutics will focus on developing therapies for DEB and continue to conduct clinical trials with QR-313 in
exon 73 as well as progress other RNA molecules that are designed for other mutations that cause DEB.
ProQR has a minority stake in Wings Therapeutics and will be eligible for milestone and royalty rights to
commercial products. The financial impact on the Company is estimated to be immaterial.
(Before appropriation of result)
dsssds
ASSETS
Non-current assets
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,
2018
December 31,
2017
€ 1,000
€ 1,000
27
28
29
30
31
32
33
70
70
291
31,885
100,560
132,736
0
0
379
20,615
47,029
68,023
132,806
68,023
1,726
235,744
10,780
108
(118,396)
(36,126)
93,836
1,457
148,763
8,377
136
(75,733)
(43,484)
39,516
30,214
20,710
7,351
7,351
79
--
6
--
1,320
1,405
6,582
6,582
184
214
--
347
470
1,215
TOTAL LIABILITIES
38,970
28,507
TOTAL EQUITY AND LIABILITIES
132,806
68,023
The accompanying notes are an integral part of these financial statements.
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.
2018
€ 1,000
(31,932)
(4,194)
2017
€ 1,000
(34,123)
(9,361)
(36,126)
(43,484)
The company financial statements are part of the 2018 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.
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 55 for a description of these principles.
Participating interests in group companies are valued using the equity method, applying the IFRS accounting
policies endorsed by the European Union. Following the adoption of IFRS 9 by the group, and our
interpretation of the Dutch Accounting Standard 100.107A, the company shall, upon identification of a credit
loss on an intercompany loan and/or receivable, eliminate the carrying amount of the intercompany loan
and/or receivable for the value of the identified credit loss.
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.
dsssds
Participating interests in group companies
December 31,
2018
December 31,
2017
€ 1,000
€ 1,000
70
70
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
Participating
interests
in group
companies
Total
€ 1,000
€ 1,000
0
(31,932)
(28)
32,030
70
0
(31,932)
(28)
32,030
70
At December 31, 2018, 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.
ProQR Therapeutics I Inc.
Amylon Therapeutics B.V.
Amylon Therapeutics 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
Delaware, United States
Leiden, the Netherlands
Delaware, Unites States
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
80%
80% (100% held by Amylon
Therapeutics B.V.
ProQR Therapeutics Holding B.V. is an intermediate holding company and the only subsidiary owned directly
by ProQR Therapeutics N.V..
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.
dsssds
Value added tax
All receivables are considered short-term and due within one year.
dsssds
Accounts receivable from group companies
Prepayments
Other receivables
All receivables are considered short-term and due within one year.
dsssds
Cash at banks
Bank deposits
The cash at banks is at full disposal of the Company.
December 31,
2018
December 31,
2017
€ 1,000
€ 1,000
291
291
379
379
December 31,
2018
December 31,
2017
€ 1,000
€ 1,000
31,719
20,400
166
--
210
5
31,885
20,615
December 31,
2018
December 31,
2017
€ 1,000
€ 1,000
100,560
--
100,560
47,029
--
47,029
Balance at January 1,
2017
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
Retained result
Foreign exchange
differences
Recognition of share-
based payments
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
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)
--
151
4,024
25,685
--
4
--
(28)
5,413
84,191
--
870
--
--
--
--
--
--
--
--
--
1,457
148,763
8,377
136
(75,733)
(43,484)
39,516
--
--
4
--
--
--
--
2,185
3,224
Issue of ordinary shares
265
83,926
Share options lapsed
Share options exercised
Result for the year
--
--
--
--
870
--
(97)
(724)
--
--
(43,484)
43,484
(28)
--
--
--
--
--
--
--
--
97
724
--
(36,126)
(36,126)
Balance at
December 31, 2018
1,726
235,744
10,780
108
(118,396)
(36,126)
93,836
The 2017 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 2018 result to the accumulated deficit. For more details we refer to note 12 to the
consolidated financial statements.
dsssds
December 31,
2018
December 31,
2017
€ 1,000
€ 1,000
Shareholders’ equity according to the consolidated balance sheet
Share in results of participating interests with negative equity
Shareholders’ equity according to the company balance sheet
92,685
1,151
93,836
39,325
191
39,516
dsssds
December 31,
2018
December 31,
2017
€ 1,000
€ 1,000
Net result according to the consolidated profit and loss account
(37,086)
(43,675)
Share in results of participating interests with negative equity
Net result according to the company profit and loss account
960
191
(36,126)
(43,484)
dsssds
December 31,
2018
December 31,
2017
Provision for negative equity group companies
€ 1,000
€ 1,000
Balance at January 1
Provisions made during the year
Balance at December 31
20,710
9,504
30,214
12,175
8,535
20,710
dsssds
Innovation credit
Accrued interest
Total borrowings
December 31,
2018
December 31,
2017
€ 1,000
€ 1,000
5,000
2,351
7,351
4,899
1,683
6,582
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 € 5.0 million.
The credit is interest-bearing at a rate of 10% per annum. Early October 2018 ProQR received a conditional
waiver of the € 5 million Innovation credit. The total loan of € 7.4 million including interest will be waived after
3 years if certain conditions are met. The conditions are reviewed by RVO on an annual basis.
The assets which are co-financed with the granted innovation credits are subject to a right of pledge for the
benefit of RVO.
There are no claims known to management related to the activities of the Company.
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 (€ 2.6 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 (€ 14 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 (€ 2.6
million) if net sales of eluforsen exceed $ 500 million (€ 437 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.
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.
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
2018
€ 1,000
2017
€ 1,000
181
261
--
--
442
175
140
--
--
315
Consist of aggregate fees for professional services provided in connection with the annual audit of our
financial statements, procedures on 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.
Leiden, March 28, 2019,
D.A. de Boer
D. Valerio
A.B. Papiernik
A. Lawton
P.R. Baart
J.S.S. Shannon
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.
To the Shareholders and the Supervisory Board of ProQR Therapeutics N.V.
Our opinion
We have audited the accompanying financial statements 2018 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 accompanying consolidated financial statements give a true and fair view of the financial position of
ProQR Therapeutics N.V. as at December 31, 2018, and of its result and its cash flows for 2018 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 accompanying company financial statements give a true and fair view of the financial position of
ProQR Therapeutics N.V. as at December 31, 2018, and of its result for 2018 in accordance with Part 9 of
Book 2 of the Dutch Civil Code.
The consolidated financial statements comprise:
1. The consolidated statement of financial position as at December 31, 2018.
2. The following statements for 2018: the consolidated statement of profit or loss and comprehensive
income, consolidated statement of changes in equity and consolidated statement of cash flows.
3. The notes comprising a summary of the significant accounting policies and other explanatory
information.
The company financial statements comprise:
1. The company balance sheet as at December 31, 2018.
2. The company income statement for the year ended December 31, 2018.
3. The notes comprising a summary of the accounting policies and other explanatory information.
Basis for our opinion
We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. Our
responsibilities under those standards are further described in the "Our responsibilities for the audit of the
financial statements" section of our report.
We are independent of ProQR Therapeutics N.V. in accordance with the 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.
Materiality
Based on our professional judgement we determined the materiality for the consolidated financial statements
as a whole at € 2.000.000. The materiality is based on 5% of total operating costs which is consistent with
prior year. 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 € 95.000, 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 consolidated 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 statements.
Our key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial statements. We have communicated the key audit matters to the Supervisory Board.
The key audit matters are not a comprehensive reflection of all matters discussed.
These matters were addressed in the context of our audit of the financial statements as a whole and in
forming our opinion thereon, and we do not provide a separate opinion on these matters. Our key audit
matters of 2018 are consistent with those identified during prior year’s audit.
Research and development expenses
Description
How the key audit matter was addressed in
The total research and development expenses for
the audit
the year 2018 amount to € 29.5 million. These
We tested the key control for design and
research and development expenses consist of
implementation. We decided not to rely on controls
payroll costs of employees as well as outsourced
and tested the R&D expenses substantively. Our
research and development activities with third party
audit procedures included, amongst others, the
suppliers. The research and development activities
review of the agreements with suppliers and the
with these suppliers are concluded in master service
related accounting evaluation as well as the timing
agreements and statements of work. These
of expenses recognized. In addition, we tested the
outsourced research and development activities are
progress of projects based on confirmations sent to
typically performed over a period of time and as a
significant vendors, we performed inquiries of
consequence the allocation of expenses to the
project managers and inspected purchase orders
reporting period is based on the progress of the
and work orders in order to determine the correct
work which involves (significant) judgement.
cut-off of R&D expenses and accruals.
The R&D expenses are disclosed in note 16 of the
financial statements.
Observation
The scope and nature of the procedures performed
were sufficient and appropriate to address the risks
of material misstatement in R&D expenses.
Significant contracts
Description
How the key audit matter was addressed in
ProQR Therapeutics N.V. concluded several
the audit
significant contracts, such as the above mentioned
We tested the key controls for design and
research and development agreements. These
implementation. We decided not to rely on controls
contracts contain terms and conditions that may
and tested the significant contracts substantively.
require complex accounting and/or significant long-
Our audit procedures included, amongst others, the
term commitments that require disclosure in the
review of the contract register, obtaining external
financial statements.
confirmations on significant R&D contracts and the
The commitments and contingencies are disclosed
review of the contract terms and related accounting
in note 22 of the financial statements.
evaluation of the impact on the financial statements
including disclosures of the commitments.
Observation
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
How the key audit matter was addressed in
The total cash and cash equivalents as per
the audit
December 31, 2018 amount to € 105.6 million. We
We tested the key controls for design and
focused on this area as the cash and cash
implementation. We decided not to rely on control
equivalents are significant to the financial
and tested the cash and cash equivalents
statements. In addition, the availability of sufficient
substantively. Our procedures included detailed
cash and cash equivalents is also important as it
reconciliations of all bank balances to bank
provides information of the company’s ability to
confirmations, recalculating foreign exchange
continue as a going concern and fund its planned
results on these balances and a review of the
R&D activities.
statements, confirmations and underlying
Cash and cash equivalents are disclosed in note 11
agreements for deposit balances to assess the
of the financial statements.
presentation and disclosure in the financial
statements.
Observation
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 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.
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 Book 2 of the Dutch Civil Code, and the other information as required by
Part 9 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 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
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.
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 28, 2019
I.A. Buitendijk
Want to learn more?
Read on about ProQR
and our programs
proqr.com
Check out our video “How do
ProQR’s RNA therapies work?”
proqr.com/rna-video
Follow the latest
developments in our pipeline
proqr.com/pipeline
View our complete
Annual Report online
proqr.com/ar2018
Download the
Thru My Eyes app
thrumyeyes.app
ProQR Therapeutics N.V.
T : +31 88 166 7000
W : www.proqr.com
E : info@proqr.com
Headquarters Leiden
Zernikedreef 9
2333 CK Leiden,
the Netherlands
Office Cambridge
245 Main Street (2nd Floor)
Cambridge, MA 02142
USA