PROQR THERAPEUTICS ANNUAL REPORT 2021
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Table of Contents
Table of Contents
Table of Contents _____________________________________________________ 1
Message from the CEO ________________________________________________ 2
Key Figures ____________________________________________________________ 4
Management Board ___________________________________________________ 5
Supervisory Board ____________________________________________________ 6
Management Board Report ___________________________________________ 8
Supervisory Board Report ___________________________________________ 29
Corporate Governance ______________________________________________ 33
Risk Management ___________________________________________________ 44
Financial Statements 2021 __________________________________________ 47
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Message from the CEO
PROQR THERAPEUTICS ANNUAL REPORT 2021
Message from the CEO
Dear fellow shareholders,
As we emerged from the early days of the pandemic and adjusted to our “new normal”, the
past year brought significant milestones and challenges for ProQR and the communities we
serve.
In February 2022, we reported that the Phase 2/3 Illuminate trial of sepofarsen for LCA10
did not meet the study’s primary endpoint. Following these results, we performed a
comprehensive post-hoc analysis of the trial and moved decisively to complete a strategic
review of our business to prioritize our pipeline, restructure the business, and extend the
Company’s runway, as we stay focused on our commitment to advance RNA therapies for
diseases with high unmet need.
Based on this, we identified two core strategic objectives for the business moving forward –
the prioritization of select genetic eye disease programs and the development of our
Axiomer® RNA base-editing technology platform across multiple therapeutic areas.
Post-hoc analyses of the data from the Illuminate trial showed an encouraging efficacy
signal when comparing the active treatment and sham eyes to their corresponding
contralateral eyes across multiple endpoints, where the contralateral eye was used as the
control. These results were more consistent with data we have seen from earlier clinical
testing of sepofarsen. We plan to meet with both EMA and FDA in Q3 2022 to discuss these
data and currently plan to continue Illuminate, the Brighten pediatric study, and Insight.
Our unique Axiomer® platform technology, which is designed to enable the editing of single
nucleotides in RNA in a highly targeted and specific manner, holds great potential to target
a wide range of diseases. In September 2021, we entered a global licensing and research
collaboration with Eli Lilly and Company (Lilly) focused on the discovery, development, and
commercialization of potential new medicines for genetic disorders of up to five targets
relating to the liver and nervous system. Under the terms of the agreement, we received
$50 million upfront from Lilly, and we are eligible to receive up to approximately $1.25
billion in milestones, as well as royalties on potential product sales. Axiomer® will continue
to be a priority for the Company going forward – we intend to announce our internal
development targets in H2 2022, and the platform holds significant further potential for
strategic transactions.
We dosed the first patient in the Phase 2/3 Sirius trial of our investigational RNA therapy
ultevursen (QR-421a) for people with USH2A-mediated retinitis pigmentosa (RP) and Usher
syndrome. As part of our strategic pipeline prioritization, we plan to focus on a single Phase
2/3 Sirius trial of ultevursen with the potential addition of an interim/futility analysis in 2023.
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Message from the CEO
PROQR THERAPEUTICS ANNUAL REPORT 2021
Over the past year, we also strengthened our leadership team and scientific advisory board
with the appointment of several renowned experts in RNA therapeutics and rare disease.
This included Theresa Heggie joining ProQR as Chief Operating Officer and John
Maraganore, PhD, being appointed as a Strategic Advisor to the Supervisory Board.
The unexpected results from the Phase 2/3 Illuminate trial of sepofarsen required us to
make extremely difficult decisions to position the business to drive long-term growth and
value. We strongly believe that our recent strategic shift is the right next step to create long-
term value for all our stakeholders. We remain committed to developing RNA therapies for
patients with high unmet need and I look forward to continued progress with the business
in the year ahead.
I want to offer a special thanks to our employees, our scientific and clinical collaborators,
and our shareholders for their support over the course of another unpredictable year. We
remain steadfast in our belief in the promise of RNA therapies and will continue to work to
make a meaningful impact on the lives of the communities that we serve.
Daniel A. de Boer
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Key Figures
PROQR THERAPEUTICS ANNUAL REPORT 2021
Key Figures
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
2021
2020
1,354
1,043
(42,220)
(17,368)
(57,191)
(61,680)
18,096
191,483
209,579
113,229
68,754
27,596
(26,012)
(425)
136,832
--
9,452
(38,135)
(13,685)
(42,368)
(46,614)
18,708
80,021
98,729
56,546
31,882
10,301
(47,060)
(924)
14,500
6.9
54.0
7.8
57.3
64,182,492
50,060,565
(0.96)
1.72
(0.93)
(0,67)
163.0
156.3
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Management Board
PROQR THERAPEUTICS ANNUAL REPORT 2021
Management Board
We have a two-tier board structure consisting of our Management Board (raad van bestuur) and a separate
Supervisory Board (raad van commissarissen). The Management Board operates under the chairmanship of
the Chief Executive Officer and shares responsibility for the deployment of ProQR’s strategy and policies, and
the achievement of its objectives and results.
Under Dutch Law, the Management Board has ultimate responsibility for the management and external
reporting of the Company and is answerable to shareholders at the General Meeting of Shareholders.
Pursuant to the two-tier corporate structure, the Management Board is accountable for its performance to a
separate and independent Supervisory Board.
The following table sets out information with respect to our Management Board member, his 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 Founder and has been our Chief Executive Officer since our incorporation in 2012. Daniel
is a serial entrepreneur and passionate advocate for rare disease patients. After one of his children was
diagnosed with a rare disease, he started ProQR to develop RNA therapies for rare diseases. Under Daniel’s
leadership, ProQR developed a platform that yielded a diversified pipeline of potential treatments for rare
diseases. Before founding ProQR, Daniel was founder and Chief Executive Officer of several technology
companies. Daniel is also strategic advisor at Hybridize Therapeutics, Frame Therapeutics, Meatable,
Algramo, Xinvento, Avanzanite and a member of the advisory board at the Termeer Foundation. In 2018
Daniel was named "Emerging Entrepreneur of the Year" by EY. In 2019 Daniel was selected for the Young
Global Leader program at the World Economic Forum.
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Supervisory Board
PROQR THERAPEUTICS ANNUAL REPORT 2021
Supervisory Board
The Supervisory Board oversees 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. All of our Supervisory Board members are
independent under applicable NASDAQ standards and all of whom, with the exception of Mr. Dinko Valerio,
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
Bart Filius
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
July 5, 1970 Member
June 21, 2016
May 21, 2019
2024
2022
2025
2024
2023
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 which he
joined in 2014. As a scientist and an experienced biotech entrepreneur Dinko is founder and former CEO of
Crucell, and one of the founders of its spinout, Galapagos Genomics. He was founder and former general
partner of Aescap Venture, a life sciences venture capital firm, co-founder and current board member of
Leyden Laboratories and board member of Amylon Therapeutics. He served as professor of gene therapy at
the University of Leiden, received his Master’s degree in Biology from the University of Amsterdam and
completed his Ph.D. in Molecular Genetics with Honors at the University of Leiden. Dinko was a visiting
scientific specialist at Genentech, and a postdoctoral fellow at the Salk Institute. 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 2014. Alison is an executive leader with more than
30 years of experience in biopharma. Most recently, she served as President and CEO of Kaleido Biosciences
Inc. Alison previously served as Chief Operating Officer of Aura Biosciences, OvaScience and X4
Pharmaceuticals. She worked at various positions of increasing responsibility at Genzyme, and subsequently
at Sanofi-Aventis, including as head of Genzyme Biosurgery and Global Market Access. Alison currently serves
on the board of directors of public biopharmaceutical companies Aeglea Biotherapeutics, X4
Pharmaceuticals, and Magenta Therapeutics, and the private companies AgBiome and SwanBio. She
previously served on the boards of of Verastem, CoLucid until its acquisition by Eli Lilly and Cubist
Pharmaceuticals until its acquisition by Merck & Co. She is past President and Chair of the Board of the
Regulatory Affairs Professional Society and a 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 2014. He is Chairman and Managing Partner at
Sofinnova Partners, which he joined in 1997. Antoine has been an initial investor and active board member in
public companies, including Actelion, Shockwave Medical, NovusPharma (sold to CTI), Movetis (sold to Shire),
and Pixium Vision. Trade sale success stories include CoreValve (sold to Medtronic), Fovea (sold to Sanofi
PROQR THERAPEUTICS ANNUAL REPORT 2021
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Supervisory Board
Aventis), Ethical Oncology Science (sold to Clovis Oncology) and Recor Medical (sold to Otsuka). He has also
invested in and is a board member of private companies Reflexion Medical, Tissium, Pi-Cardia, SafeHeal,
Noema Therapeutics, Ablacare, Highlife and Inspirna (formerly Rgenix). Antoine has an MBA from the
Wharton School of Business, University of Pennsylvania. He has been selected twice for the Forbes Midas List,
an annual ranking recognizing the world’s top venture capital investors. Antoine is one of the few European
and life science investors to have appeared on the prestigious list.
James Shannon has served on our Supervisory Board since June 2016 and has been Chair of our Scientific
Advisory Board since 2020. James has had an extensive career in drug development and pharma. From 2012
until his retirement in 2015, he 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 has previously held board positions at companies including Biotie, Circassia,
Crucell, Endocyte and Cerimon Pharmaceuticals. James currently is Chairman of the Board at Mannkind Corp,
myTomorrows and Kyowa Kirin NA and holds board positions at Horizon Pharma and Leyden Labs. He
received his undergraduate and postgraduate degrees at Queen’s University of Belfast and is a member of
the Royal College of Physicians.
Bart Filius has served on our Supervisory Board since 2019. He joined Galapagos in 2014 as Chief Financial
Officer and added the role of Chief Operating Officer in 2017. He was promoted to President and Chief
Operating Officer in 2021. Prior to joining Galapagos, Bart held a variety of executive positions at Sanofi,
where he was Vice President, Chief Financial Officer Europe, Country manager for The Netherlands and Vice
President for Mergers & Acquisitions. Prior to joining Sanofi, Mr. Filius was a strategy consultant at Arthur D.
Little. Bart has an MBA degree from INSEAD and a bachelor’s degree in business from Nyenrode University.
Additionally, John Maraganore, PhD joined as a strategic advisor to our Supervisory Board in March 2022. He
served as the founding CEO and a Director of Alnylam from 2002 to 2021, where he built the company from
early platform research on RNA interference through global approval and commercialization of the first four
RNAi therapeutic medicines, ONPATTRO®, GIVLAARI®, OXLUMO®, and Leqvio®. At Alnylam, he also led the
company’s value creation strategy, building $25B in market capitalization, and forming over 20 major
pharmaceutical alliances. He continues to serve on the Alnylam Scientific Advisory Board. Prior to Alnylam, he
served as an officer and a member of the management team for Millennium Pharmaceuticals, Inc., where he
was responsible for the company’s product franchises in oncology, and cardiovascular, inflammatory and
metabolic diseases, in addition to leadership of M&A, strategy, and biotherapeutics functions. Before
Millennium, he served as Director of Molecular Biology and Director of Market and Business Development at
Biogen, Inc. where he invented and led the discovery and development of ANGIOMAX® (bivalirudin) for
injection. Previously, he was a scientist at ZymoGenetics, Inc. and the Upjohn Company. Dr. Maraganore
received his M.S. and Ph.D. in biochemistry and molecular biology at the University of Chicago. He is currently
a Venture Partner at ARCH Venture Partners, a Venture Advisor at Atlas Ventures, and an Executive Partner at
RTW Investments. He is also Chair of the Board of Directors of Hemab Therapeutics and a member of the
Board of Directors of Agios Pharmaceuticals, Beam Therapeutics, Kymera Therapeutics, and the
Biotechnology Industry Organization, where he was Chair from 2017-2019. In addition, he serves on the
Board of the Termeer Foundation, as Chair of the n-Lorem Foundation Advisory Council, on the Advisory
Board of Ariadne Labs, and as a strategic advisor to several innovative companies.
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Management Board Report
PROQR THERAPEUTICS ANNUAL REPORT 2021
Management Board Report
The Company
ProQR Therapeutics N.V., or “ProQR” or the “Company”, is dedicated to changing lives through the creation of
transformative RNA therapies for the treatment of severe genetic rare diseases with a focus on inherited
retinal 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 2012 by Daniel de Boer, Gerard Platenburg, the late Henri Termeer and Dinko Valerio.
Since September 18, 2014, our ordinary shares have been listed on the NASDAQ Global Market under the
ticker symbol “PRQR”. As of December 31, 2021, we had raised € 420 million in gross proceeds from our
public offerings of shares and private placements of equity securities, as well as € 40 million in convertible
debt. In addition, we have received grants, loans and other funding from patient organizations and
government institutions supporting our programs, including from Foundation Fighting Blindness and the
Dutch government under the innovation credit program.
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. Our US office is located at 245 Main Street, Cambridge, MA 02142, USA. The name and
address of our agent for service in the United States is Smital Shah, 245 Main Street, Cambridge, MA 02142,
USA.
We use various trademarks and tradenames, including without limitation “ProQR”, “Axiomer”, “Trident” and
our corporate logo, that we use in connection with the operation of our business. Other trademarks or trade
names of third parties referred to or incorporated by reference in this Annual Report are the property of their
respective owners. Solely for convenience, the trademarks and trade names in this Annual Report may be
referred to without the ®, ™ or SM symbols, but such references should not be construed as any indicator
that their respective owners will not assert, to the fullest extent permissible under applicable law, their rights
thereto. We do not intend to use or display other companies’ trademarks and trade names to imply a
relationship with, or endorsement or sponsorship of us, any other companies.
Operations
Our strategy focuses on two key pillars: genetic eye disease and our Axiomer RNA base-editing technology
platform.
Genetic eye disease
Inherited retinal diseases, a group of debilitating eye diseases, affecting over five million people in the world,
is an area of high unmet medical need for which there is only one approved treatment available for only a
few thousand patients. We believe our RNA platform based on intravitreal delivery may be suitable to repair
defective RNA in the eye and stop progression or even reverse vision loss associated with the diseases. Our
clinical pipeline includes sepofarsen, for CEP290-mediated Leber congenital amaurosis 10, or LCA10, and
ultevursen, for USH2A-mediated Usher syndrome and retinitis pigmentosa.
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PROQR THERAPEUTICS ANNUAL REPORT 2021
RNA editing platform technologies
Beyond our clinical portfolio, we discovered and developed two novel proprietary RNA editing platform
technologies, Axiomer and Trident. Since discovering the Axiomer RNA editing technology in 2014, we have
established a leading IP estate in the ADAR editing space, a first industry partnership, and with its broad
applicability, we believe the platform has significant further potential.
In 2021, we entered into a global licensing and research collaboration with Eli Lilly and Company where our
Axiomer RNA editing platform will be used to progress new drug targets for genetic disorders in the liver and
nervous system toward clinical development and commercialization.
We continuously evaluate further opportunities for beneficial collaborations or strategic partnerships to
efficiently bring our medicines to patients.
We are also accelerating the development of Axiomer and expanding into areas beyond the eye, including
initially liver and central nervous system (CNS), which have strong alignment with our RNA oligonucleotide
delivery approaches.
Corresponding to these strategic priorities, in April 2022 we suspended our QR-1123 and QR-504a
development programs, suspended our IRD research, and had a workforce reduction.
Our RNA Therapies
Our investigational RNA therapies aim to repair defective RNA to stop or reverse genetic diseases. Genetic
diseases are caused by mutations in genes in the DNA. The mutation is copied into the RNA that serves as a
blueprint for protein production. By designing our RNA therapies to repair the specific mutation in the RNA,
the function of the protein can be restored. This approach allows us to take away the underlying cause of the
disease without having to make permanent changes to a patient’s DNA.
Our investigational RNA therapies are single-stranded RNA oligonucleotides chemically modified to enhance
stability and cellular uptake. Each of our investigational RNA therapies is designed to repair a specific RNA
mutation and we believe this targeted approach may offer several advantages compared to other therapeutic
approaches in the treatment of the rare genetic diseases we target.
Sepofarsen for Leber Congenital Amaurosis 10
Leber congenital amaurosis (LCA) is the most common genetic cause of childhood blindness, with LCA Type
10 (LCA10) being one of the most severe forms. People with LCA10 typically become blind within the first few
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PROQR THERAPEUTICS ANNUAL REPORT 2021
years of life and currently there are no approved therapies. The most common mutation is c.2991+1655A>G
(also known as p.Cys998X) in the CEP290 gene. We estimate this mutation occurs in approximately 2,000
patients in the Western world.
Sepofarsen (formerly named QR-110) is in development as a potential treatment 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 allows the production of a normal (wild-type) CEP290 protein which can
restore vision in patients with LCA10. Sepofarsen is administered through intravitreal injections in the eye.
A Phase 1/2 clinical trial of sepofarsen in adults and children with LCA10 due to the p.Cys998X mutation has
been completed. We presented final data from this trial at the Association for Research in Vision and
Ophthalmology (ARVO) Annual Meeting in 2020, where sepofarsen demonstrated clinical proof-of-concept in
LCA10 patients as shown by a significant, rapid and sustained improvement in vision in majority of the
patients.
In February 2022 we announced that Illuminate, our pivotal Phase 2/3 trial of sepofarsen in CEP290-mediated
LCA10, did not meet the primary endpoint of Best Corrected Visual Acuity (BCVA) at Month 12 compared to a
sham procedure control group. Post-hoc analyses showed that the efficacy signal seen with sepofarsen when
comparing active treatment and sham eyes to their corresponding contralateral eyes across BCVA, full field
stimulus testing (FST), and other endpoints, including patient reported outcomes (PROs), was more consistent
with the results seen in earlier findings, where the contralateral eye was used as the control. We plan to meet
with the EMA and FDA to discuss these data in Q3 2022.
Data from the Illuminate trial will be presented at the Seventh Annual Retinal Cell and Gene Therapy
Innovation Summit, April 29, 2022, and the Association for Research in Vision and Ophthalmology (ARVO)
Annual Meeting, May 1-4, 2022.
Sepofarsen has been granted orphan drug designation by the FDA and EMA for LCA and received fast track
designation by the FDA for LCA10. In 2019, we also received PRIME designation from the EMA for LCA due to
the CEP290 p.Cys998X mutation as well as rare pediatric disease designation from the FDA for LCA10.
Ultevursen for USH2A-mediated Retinitis Pigmentosa and Usher Syndrome
Usher syndrome is the leading cause of combined hearing loss and blindness. Patients are usually born with
moderate to severe hearing loss that may worsen over time. The retinal phenotype, known as retinitis
pigmentosa, or RP, starts with night blindness followed by progressive loss of peripheral visual fields (tunnel
vision) until no vision is left. The retinal phenotype can exist without the hearing loss, this disease is called RP.
Both Usher syndrome and RP can be caused by mutations in the USH2A gene, which encodes a protein called
usherin. To date, there are no therapies approved or product candidates in clinical development that treat
the vision loss associated with USH2A mutations.
We are developing ultevursen (formerly named QR-421a) for patients with USH2A exon 13 mutations. In the
Western world, approximately 16,000 patients have vision loss due to mutations in exon 13 of the USH2A
gene.
Ultevursen is a first-in-class RNA therapy aimed at modulating the RNA that then results in the expression of
functional usherin protein in the eye to maintain vision. This candidate is intended to be administered by
intravitreal injections.
In March 2021, we presented data from a Phase 1/2 clinical trial of ultevursen, named Stellar, in adults with
Usher syndrome or nsRP due to exon 13 USH2A mutations. Results demonstrated that ultevursen given as a
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PROQR THERAPEUTICS ANNUAL REPORT 2021
single intravitreal injection was observed to be well tolerated with no serious adverse events noted.
Ultevursen-treated patients responded on endpoints consistent with their disease stage in both advanced
and early-moderate patient populations, including BCVA and static perimetry, respectively. Concordant
improvements were also measured in other endpoints assessing retinal structure and function. On the basis
of these findings, we advanced ultevursen into two sham-controlled Phase 2/3 clinical trials, which dosed the
first patients in December 2021. The results from the sepofarsen Illuminate trial indicated that in the enrolled
patient populations, the inter-patient variability was greater than the intra-patient variability. Therefore, we
believe the sham comparator is likely not the best control and the contralateral eye may be a better
comparison to reduce inter-patient variability. The ultevursen program will therefore be amended following
alignment with regulators to a single Phase 2/3 trial, with the potential addition of an interim/futility analysis
in 2023.
Ultevursen received orphan drug designation for the treatment of RP from the FDA and EMA. Ultevursen was
also granted fast track designation for Usher syndrome type 2 and rare pediatric disease designation for RP
caused by USH2A exon 13 mutations by the FDA.
Novel RNA Editing Technologies
Antisense oligonucleotides (AONs) have been used as therapeutics for the last few decades. ProQR has built
an extensive pipeline of investigational RNA therapies based on the technologies already available. But our
scientists have gone beyond that and invented entirely new ways of using oligonucleotides for the treatment
of genetic diseases. Both the Axiomer and Trident RNA editing platforms are novel, proprietary RNA
technologies invented at ProQR or with our academic collaborators. We have built a broad intellectual
property estate around these technologies and together with the leading academic experts in the RNA field,
we continue to advance these technologies.
Our Axiomer RNA editing technology is designed to enable the editing of specific single nucleotides in RNA.
The technology is based on editing oligonucleotides, or EONs, designed to recruit endogenous ADAR enzymes
(Adenosine Deaminases Acting on RNA) to make single adenosine-to-inosine (A-to-I) changes in the RNA in a
highly specific and targeted manner. This technology could reverse the more than 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. The technology is also designed to make de novo
changes to protein function and therefore has broad applicability to genetic and non-genetic diseases.
A global licensing and research collaboration with Eli Lilly and Company focuses on the discovery,
development, and commercialization of potential new medicines for genetic disorders in the liver and
nervous system. The companies will use the Axiomer RNA editing platform to progress up to five new drug
targets toward clinical development and commercialization. Under the terms of the agreement, ProQR
received $50 million upfront from Lilly, and is eligible to receive up to approximately $1.25 billion in
milestones, as well as royalties on potential product sales. We believe the platform holds significant further
potential for strategic transactions.
Our Trident RNA pseudouridylation platform is designed to enable the suppression of nonsense mutations
and premature stop codons (PTC) that cause 11% of all human genetic diseases. Since all premature stop
codons contain uridine, pseudouridylation of that uridine converts those nonsense codons into sense
codons. The Trident technology harnesses the endogenously expressed pseudouridylation machinery with
guide RNAs to inhibit nonsense mRNA-mediated decay (NMD) in a sequence-specific manner and promote
PTC readthrough. The Trident technology has the potential to be applied in genetic diseases caused by PTCs.
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Our Strategy
Key elements of our strategy include:
•
Develop RNA therapies for patients in need. Through our patient-focused 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
product candidates for patients suffering from rare diseases. Our focus on genetic eye disease will
include exploring the development path for selected ophthalmology programs based on comparing
active treatment and sham eyes to their corresponding contralateral eyes, subject to regulatory
feedback from EMA and the FDA, whom we intend to meet with in Q3 of 2022.
•
Accelerate our RNA-editing technology platform and pipeline. Our novel and proprietary RNA editing
platform technologies, Axiomer and Trident, are new ways to use oligonucleotides to edit single
nucleotides in the RNA. We believe the Axiomer technology may be applicable to more than 20,000
disease-causing mutations and is designed to make de novo changes to protein function and therefore
has broad applicability to genetic and non-genetic diseases. The Trident RNA editing platform
technology may be applicable to 11% of all genetic diseases. We intend to use these platforms to
develop novel therapies for the eye, and to expand into the liver, CNS, and beyond. We continue to
validate and create value for these platforms by pursuing additional licensing, partnering and other
strategic relationships outside this core therapeutic area, like our partnership with Lilly.
Patient Focused Approach
ProQR is dedicated to developing best-in-class RNA therapies to improve the lives of patients, families and
communities affected by rare and underserved conditions. 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 focused 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 at the heart of all the work we do here at ProQR.
A key initiative at driving this patient voice to the heart of the work we do at ProQR is the Global Patient &
Caregiver Steering Committee. Launched in January 2020, the Steering Committee is a forum for direct
patient input on a wide range of topics, to ensure ProQR is meeting the needs of individuals we are striving
for a solution for.
In 2020 ProQR partnered with Foundation Fighting Blindness in the My Retina Tracker Program, a
collaborative, open access program providing no-cost genetic testing and genetic counseling for individuals
living in the United States with a clinical diagnosis of an IRD. Genetic testing is crucial to receiving an accurate
diagnosis to then move forward with the best care.
Sepofarsen for Leber Congenital Amaurosis 10 (LCA10)
LCA Background
Leber congenital amaurosis (LCA) is the most common genetic cause of blindness in childhood. The
c.2991+1655A>G mutation (also known as p.Cys998X) 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
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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.
Approaches for the Treatment of LCA10
There are currently no 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 limit the free entry and exit
of cells and larger molecules in and out of the eye, therefore limiting the systemic exposure of locally
administered therapies.
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Sepofarsen for LCA10, splice correction for p.Cys998X CEP290 mRNA
Sepofarsen is designed to bind to pre-mRNA and silences the cryptic splice site leading to production of
normal mRNA.
Sepofarsen for the Treatment of LCA10
Sepofarsen 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 administered by intravitreal injection.
Sepofarsen received orphan drug designation from the FDA and EMA for the treatment of LCA. Sepofarsen
was also granted fast track designation for LCA10 and rare pediatric disease designation by the FDA for
LCA10 and PRIME designation by EMA for the treatment of LCA due to the CEP290 p.Cys998X mutation.
Clinical Development for Sepofarsen
In Phase 1/2 testing, sepofarsen was observed to significantly improve vision and the response was durable
for up to 12 months. Concordant improvements in key secondary outcome measures supported the
observed change in vision. In the target registration dose group (160µg/80µg) sepofarsen was well-tolerated
with a favorable benefit/risk profile. Available data from the Phase 1/2 study (PQ-110-001) confirm clinical
proof-of-concept as shown by the significant improvement in BCVA and is further supported by improvement
in performance on the mobility course and FST. Importantly, the three endpoints analyzed showed
concordant improvement, as summarized in 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.
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Table 1. Summary of Efficacy Endpoints from the Phase 1/2 study (PR 110-001) of sepofarsen
Endpoint
Units
Direction
Showing
Improvement
Responder
Threshold
Change from Baseline at Month 12
Mean (SEM)
Treated
Untreated
Overall
Best corrected visual acuity
-0.55 (0.26)
(ETDRS/BRVT) (n=11)
LogMAR
↓= improved
≥ -0.3
p<0.05 vs. CE
-0.122 (0.07)
Full field stimulus red (FST red)
-0.91 (0.18)
(n=10)
log cd/m2
↓= improved
-0.5
p<0.01 vs. CE
-0.16 (0.16)
Full field stimulus blue (FST blue)
-0.79 (0.23)
(n=10)
Mobility course
(n=10)
log cd/m2
↓= improved
-0.5
p<0.02 vs. CE
-0.02 (0.11)
2.5 (0.98)
Level
↑= improved
≥ 2
p=0.1 vs. CE
1.75 (0.75)
Abbreviations: BRVT=Berkeley Rudimentary Vision Test; cd/m2=logarithm of candelas/square meter; CE=contralateral eye;
ETDRS=Early Treatment Diabetic Retinopathy Study; LogMAR=Logarithm of the Minimum Angle of Resolution
Measurements of BCVA and functional vision (mobility) confirmed vision improvement in these subjects. In
addition, clear improvement in FST was seen at both red and blue wavelengths in the treated eye only.
Performance on a mobility course was also improved. Concordant improvement in the mechanistic and
functional outcome measures support the potential on-target benefits of sepofarsen.
Phase 1/2 Insight Extension Study
The ongoing Insight study, or PQ-110-002, is an open-label extension study to evaluate the safety, tolerability,
efficacy, and pharmacokinetics (PK) of sepofarsen in subjects who completed participation in study PQ-110-
001. Insight will provide continued access to the investigational product in the treated eye, as well as
treatment of the contralateral eye. In July 2020, preliminary data from the Insight study were presented, which
showed benefits consistent with the Phase 1/2 findings. We reported additional and updated data from the
Insight study in November 2021 showing that the vast majority of the treated eyes have demonstrated
improvement on multiple endpoints.
Mobility Course Validation Study
This study is designed to evaluated whether a mobility course using multiple light levels simulating real world
conditions can detect changes in vision in subjects with a phenotype representative of LCA10. The study was
conducted at 17 sites across 9 countries, and will include 48 patients in the final analysis that is underway.
Once finalized, we intend to discuss with Regulators potential validation of this mobility course as an
endpoint in future studies in IRDs.
Phase 1/2 Brighten Study
Brighten is a Phase 2/3 trial of sepofarsen in pediatric patients less than 8 years old. The study started in 2021
and the primary objectives of the study are safety and tolerability.
Phase 2/3 Illuminate Pivotal Trial
Illuminate (PQ-110-003) is a Phase 2/3 pivotal trial that aims at defining safety and quantifying the treatment
effect, relative to masked, sham-treated control subjects, at more than one dose level (160μg/80µg target
registration dose level and 80μg/40µg). This study randomized 36 patients aged 8 years or older to receive
sepofarsen at the target registration dose, a low dose, or sham treatment. Enrollment was completed in
January 2021. In February 2022, we reported that Illuminate did not meet the primary endpoint of BCVA at
Month 12 compared to a sham procedure control group.
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Phase 2/3 Illuminate post-hoc analyses
In April 2022 we reported post-hoc analyses of the trial, which showed that the efficacy seen with sepofarsen
when comparing active treatment and sham eyes to their corresponding contralateral eyes across BCVA, FST,
and other endpoints, including PROs, is more consistent with the results seen in earlier trials, where the
contralateral eye was used as the control. The overall safety profile of sepofarsen was consistent with earlier
trials.
In figure 1, when the effect in the treatment eye (TE) was compared to the untreated contralateral eye (CE) in
the same patient, at Month 12, a benefit in vision was observed as a mean change from baseline in BCVA of -
0.12 logMAR (n=23) in the sepofarsen treated groups. This effect was not observed in the sham treated group
(n=12) with the same comparison (treated vs. contralateral eye).
Figure 1. Sepofarsen BCVA at Month 12 post-hoc analysis – no change in sham when TE is compared to
sham CE
BCVA - CFB at Month 12
ANCOVA
BCVA (TE-CE) – CFB at Month 12
ANCOVA – post-hoc analysis
)
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n=23
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vs sham TE minus CE
Other endpoints showed similar effect when comparing treatment to contralateral eye, including FST, as
shown in figure 2.
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Figure 2. Sepofarsen FST – comparing sham and contralateral eye as control
Change from baseline at Month 12
FST Blue
ANCOVA – Efficacy set
FST Red
ANCOVA – Efficacy set
FST White
ANCOVA – Efficacy set
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sepofarsen n=22
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sepofarsen n=21
Sham n=11
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Pooled
sepofarsen n=23
Sham n=12
Pooled
sepofarsen n=22
Sham - n=12
Pooled
sepofarsen n=20
Sham n=11
These findings were supported by the PRO analyses, based on the Patient Global Impressions-Change (PGI-C)
that demonstrated that 61% of patients in the treatment groups reported an improvement in vision, as well
as by Visual Function Questionnaire 25 (VFQ-25).
Figure 3 shows a post-hoc meta-analysis, combining all available data from the sepofarsen treated patients
across the Phase 1/2 trial and the Illuminate Ph 2/3 trial.
Figure 3. Meta analysis combining sepofarsen Phase 1/2 and Phase 2/3 data – BCVA TE-CE shows
consistent and significant benefit compared to sham TE-CE
BCVA (TE-CE) - 110-003 & 110-001 All patients
MMRM – Post-hoc analysis
-0,40
-0,30
-0,20
-0,10
0,00
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Pooled sepofarsen n=29
Sham n=12
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vs sham TE minus CE
Given the meaningful responses observed in both trials in several patients, the clear unmet need and our
patient-centric approach, in the third quarter of 2022, we plan to meet with the EMA and FDA to discuss these
data from the Illuminate trial. Following this discussion, we intend to share an update in Q3 or early Q4 of
2022, depending on timing of regulatory meetings.
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Based on the recommendation of the DSMC, we plan to continue Illuminate, which is a 2 year study, the
Brighten pediatric study, and Insight, until further regulatory guidance is obtained, after which next steps will
be determined.
We plan to report data from the Illuminate trial at the upcoming Seventh Annual Retinal Cell and Gene
Therapy Innovation Summit, April 29, 2022, and the Association for Research in Vision and Ophthalmology
(ARVO) Annual Meeting, May 1-4, 2022.
Ultevursen for USH2A-mediated Retinitis Pigmentosa and Usher Syndrome
Usher Syndrome and RP Background
Usher syndrome is the leading cause of combined inherited deafness and blindness. Patients with this
syndrome generally progress to a stage in which they have very limited central and peripheral vision and are
divided in two subgroups: patients with Usher syndrome and patients that have retinitis pigmentosa (RP) due
to a mutation in the USH2A gene. Patients with Usher syndrome develop vision loss in time, and are usually
born with moderate to severe hearing loss that may worsen over time, whereas patients with RP develop
vision loss only. Each subgroup is about 50% of the total population.
The retinal phenotype known as 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 fields until only a residual central island of vision (tunnel vision) is left. As
the disease progresses further, cone photoreceptors degenerate which eventually results in complete
blindness.
Representation of USH2A Exon 13 Mutations Causing Retinitis Pigmentosa
Usher Syndrome and RP Genetics
Usher syndrome and RP can be caused by autosomal recessive 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. Exon 13 mutations represent the most common mutations in the USH2A gene.
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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. The number of patients with vision
loss due to USH2A exon 13 mutations is estimated to be around 16,000 in the Western world. Lack of access
to genotyping may result in significant underdiagnosis in many inherited retinal diseases.
Approaches for the Treatment of Usher Syndrome and RP
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. Disease management is supportive in nature. We believe that intravitreal RNA therapy ultevursen
is the only product candidate in pivotal Phase 2/3 development for the treatment of patients with RP caused
by exon 13 mutations in the USH2A gene. Due to the size of the USH2A gene, this type of RP is not amenable
to a gene therapy approach. Also, given the disease affects both the peripheral and central retina, current
gene replacement and gene editing approaches have fundamental limitations as these therapies must be
delivered with a surgical procedure to a limited subretinal area. The important deficit in peripheral vision of
USH2A patients is therefore not addressed.
Ultevursen for the Treatment of Usher Syndrome and RP
Ultevursen 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,
which is required for photoreceptor maintenance. Ultevursen 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 truncated (partial), however,
functional usherin protein. Because of the exon skipping approach, ultevursen is not specific to a single
mutation but targets any mutation present in exon 13 of the USH2A gene.
USH2A exon 13 exon skip
Ultevursen received orphan drug designation from the FDA and EMA for the treatment of RP. Ultevursen was
also granted fast track designation for Usher syndrome type 2 and rare pediatric disease designation for RP
caused by USH2A exon 13 mutations by the FDA.
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Clinical Development of Ultevursen
Stellar (PQ-421a-001) was a Phase 1/2 randomized, single ascending dose study designed to evaluate the
safety and tolerability of ultevursen in subjects with vision loss due to mutations in exon 13 of the USH2A
gene. The primary objective of the trial was to evaluate safety and tolerability. Secondary objectives included
evaluating visual acuity (as measured by BCVA), visual fields (as measured by static perimetry and
microperimetry), and changes in retinal structure (as measured by optical coherence tomography, or OCT).
The study was conducted at expert sites in North America and Europe.
The Stellar trial completed enrollment in late 2020. The study included a total of 20 patients, of which 14
received a single dose of ultevursen and six received a single sham procedure for masking. The 14 treatment
patients enrolled (mean age of 46 years) varied in their disease stage and were classified as advanced
patients (defined as patients with baseline visual acuity of <70 letters or equivalent to worse than 20/40 on a
Snellen chart) or early-moderate patients. Six patients met the criteria for advanced disease and eight
patients met the criteria for early-moderate disease. Three different dose levels were studied. The population
also varied in disease characteristics with both Usher syndrome (n=7) and nsRP (n=7) and genetic background
with both homozygous (n= 9) and heterozygous (n=5) subjects for USH2A exon 13 mutations. All patients were
followed for up to 48 weeks, with one patient followed up to 96 weeks.
In March 2021, results from the Stellar trial were reported.
Safety Data
Ultevursen was observed to be well tolerated with no serious adverse events reported. Two cases of pre-
existing cataracts were observed, one in the treated eye and one in the untreated eye of the same patient.
Both are considered not treatment related. Cataracts are known to occur as part of the background disease
in in over 30% of the patients. No new cataracts were reported in the study. Cystoid macular edema, or CME,
is frequently associated with the disease and is part of the natural history of the disease in over 30% of the
patients, and is usually managed adequately with topical eyedrops. One subject with pre-existing CME was
enrolled into the 200µg cohort. The CME progressed during the study but was classified as mild and managed
with standard of care therapy. No new cases of CME occurred during the study.
Efficacy Data
Due to the different rates of disease progression between patients, the patient’s untreated contralateral eye
was used as a control. In patients with advanced disease, the primary measure of efficacy is best corrected
visual acuity, or BCVA. In early-moderate disease patients, the primary measure of efficacy is measurement of
visual fields by static perimetry. Ultevursen-treated patients responded on endpoints consistent with their
disease stage in both advanced and early-moderate patient populations. Concordant improvements were
also measured in other endpoints assessing retinal structure and function.
As shown in Figure 4, the data established the dosing interval at 6 months with a sustained effect of
approximately 6 months across multiple endpoints. The 6-month durability of effect is in line with the half-life
of ultevursen and is the dosing regimen in the Phase 2/3 Sirius trial.
Figure 4. Sustained effect of approximately 6 months in OCT, BCVA and static perimetry
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There were no observed differences in responses at the different dose levels or responses between
homozygotes and heterozygotes as well as usher syndrome and RP patients.
As shown in figure 5, the advanced population demonstrated a mean benefit of 9.3 letters at the one year
time point after a single injection. At 72 week follow up, the treatment benefit had further extended to a
mean 13 letter benefit after a single injection. This served the basis for the Phase 2/3 Sirius study.
Figure 5. Ultevursen Phase 1/2 mean change from baseline in BCVA after single injection
Mean 9.3 letter benefit at week 48
Advanced population (n=6)
Mean 13 letter benefit at week 72
Advanced population (n=6)
Single
dose
6
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-4
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Weeks
Ultevursen treated eyes
Contralateraleyes
Weeks
Phase 2/3 trial of ultevursen
Regulatory input was obtained on the design of two potentially pivotal trials of ultevursen– Sirius and Celeste.
The first patients were dosed in these studies in December 2021.
In April 2022 following the results from the sepofarsen Illuminate trial, which indicated that in the enrolled
patient population, the inter-patient variability was greater than the intra-patient variability, and therefore the
sham comparator is likely not the best control and the contralateral eye may be a better comparison to
reduce variability, the program will be amended to focus on a single Phase 2/3 Sirius trial with the potential
addition of an interim/futility analysis in 2023. Updates on planned adjustments to the Sirius trial in light of
the findings related to sham control will be provided after alignment with regulatory authorities, which we
intend to seek in Q3 2022.
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Phase 1/2 Helia extension study
An open-label treatment extension study, Helia, has begun enrolling eligible participants who have completed
the Phase 1/2 Stellar trial. Patients will be offered multiple-dose treatments for both eyes.
Other Pipeline Programs
In April 2022 we announced a portfolio reprioritization and suspended the development of QR-1123 for
autosomal dominant retinitis pigmentosa, QR-504a for Fuchs endothelial corneal dystrophy, and our earlier
stage IRD research programs.
Axiomer RNA Base-Editing Platform Technology
With the Axiomer platform we discovered at the ProQR labs, we can harness the endogenous editing system
in our cells to repair RNA in an entirely new way, by editing oligonucleotides (EONs) that are designed to
recruit ADAR (Adenosine Deaminases Acting on RNA) enzymes to a selected target RNA where it then
performs an adenosine-to-iosine (A-to-I) edit. Because an ‘I’ is read by the translation machinery as a
guanosine (G) this innovative platform has the potential to reverse the 20,000 known disease-causing G-to-A
mutations. In addition to reversing mutations, the technology also has the ability to make de novo changes to
protein function by making edits to wild-type RNA, expanding the potential of the platform further to both
genetic and non-genetic diseases.
ADAR RNA Editing
ADAR is an RNA editing system that is present in all human cells which was first discovered in 1987. In the
human body, ADAR is responsible for editing RNA to, for example, to create different isoforms of proteins,
change the functionality of small RNA molecules and regulate splicing. A-to-I RNA editing is a very frequently
occurring natural process. Our platform evolved from the mechanism that nature developed.
Editing Oligonucleotides
We created synthetic editing oligonucleotides, or EONs, based on what we saw in nature. It mimics the double
stranded RNA target sequence that is recognized by endogenous ADAR, which then deaminates the targeted
‘A’ in the RNA to create an ‘I’. The EONs are short single stranded chemically modified oligonucleotides that
can be delivered without a vector. A range of chemical modifications at specific regions of the EONs help with
stability and editing efficiency. For example, backbone modifications of the ADAR-binding region enable ADAR
binding and improve stability of the EON. Specific modification of the dZ base in the editing enabling region
has shown to greatly improve editing efficiency.
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Lilly partnership
A global licensing and research collaboration with Eli Lilly and Company focuses on the discovery,
development, and commercialization of potential new medicines for genetic disorders in the liver and
nervous system. The companies will use the Axiomer RNA editing platform to progress up to five new drug
targets toward clinical development and commercialization. Under the terms of the agreement, ProQR
received $50 million upfront from Lilly, and is eligible to receive up to approximately $1.25 billion in
milestones, as well as royalties on potential product sales. We believe the platform holds significant further
potential for strategic transactions.
Axiomer Platform for the Treatment of Genetic Conditions
The Axiomer platform technology has broad applicability with the potential to address a wide range of
currently untreatable diseases. We have optimized our design rules and can now apply these across targets
which cause diseases in multiple different organs. Our focus will be on developing the platform for conditions
of the eye, liver and central nervous system. We have achieved editing efficiencies of approximately 60% in
cells and up to 20% editing in our human retinal organoid model. We are accelerating this work and will be
selecting our internal development candidates and provide further pipeline guidance during the second half
of 2022.
Intellectual property
With a portfolio of 11 patient families and one additional pending, the broad Axiomer® patent estate protects
key features of EON design and ADAR recruitment. The estate protects different designs of ADAR recruiting
editing oligonucleotides (EONs), recruitment of both ADAR1 and ADAR2, unmodified and chemically modified
EONs and stereopure EON designs. The patents date back to 2014, protecting the platform beyond 2040.
Human Resources
We believe in passion and commitment and have built a strong team of ProQRians from all walks of life and
approximately 35 different nationalities, who are up to the challenge and committed to make a difference for
the patients we serve. We actively create a caring atmosphere, 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.
As an employer, we are a true believer in the value of a workforce in which people from diverse backgrounds
are encouraged to develop themselves both personally and professionally. This is reflected in our equal
gender balanced leadership team and broader workforce. We believe that happy and energized people,
working well together in an environment in which they thrive, will do phenomenal and awesome things.
We are committed to ensure that no employee, candidate, or job applicant receives less favorable treatment
on the grounds of race, age, disability, pregnancy, religion, gender identity and expression, sexual orientation,
marriage or civil partnership status. At ProQR we want to create an inclusive culture where everyone can be
valued for who they are and in which individual differences and the contributions in all forms are recognized
and valued.
Animal Welfare
It is required by regulatory authorities to demonstrate the safety and, if possible, efficacy of a new drug in
animals before it can be tested in humans. The welfare of animals in our preclinical studies is of great
importance to ProQR for reasons of ethics, quality, reliability, and applicability of scientific studies. To assure
high quality (scientific) research, animal welfare is essential. 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.
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Animal experiments will be performed only if there are no alternatives such as performing in silico, in-vitro or
ex-vivo studies. Study designs will be evaluated with the aim to identify opportunities to reduce the number
of animals needed to achieve the objectives of the study. By conducting small pilot (tolerability) studies and
by using innovative new technologies and modeling approaches, ProQR further pursues the ambition 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, also known as contract
research organizations (CROs), are selected based on their expertise, quality and accreditations for laboratory
animal care and welfare. CRO facilities are audited by ProQR prior to contracting to ensure that the housing,
husbandry and welfare of animals complies with the highest international standards. Personnel responsible
for housing, husbandry and the care of animals must have received adequate and relevant documented
education.
Manufacturing and Supply
We do not currently own or operate manufacturing facilities to produce 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 and ultevursen solution for intravitreal injection, and we expect
to continue to do so to meet the planned clinical requirements of our product candidates.
Currently, each of the 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 have a commercial supply
agreement in place for the manufacturing of the active ingredient in sepofarsen. This agreement took effect
in July 2019 to cover the process qualification activities, and will remain effective until ten years after the date
of first commercial sale of sepofarsen. The agreement may be terminated earlier by either party in case of a
material breach of the agreement, or by us in case (i) the product or the development thereof is discontinued,
(ii) of insufficient supplies of the product, or (iii) of a refusal to implement changes required by regulatory
authorities. During the first five years after the first commercial sale, we shall be required to exclusively order
our demand of sepofarsen under this agreement, and thereafter only half the demand. Every half year, we
shall submit 36 months forecasts of which the first 12 months are a binding take or pay commitment.
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
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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, gene editing, and other approaches.
Main financial developments
Financial position
In 2021, our operating costs increased compared to last year while our liquidity improved and our solvency
slightly decreased. At December 31, 2021, ProQR’s cash and cash equivalents amounted to € 187,254,000
compared to € 75,838,000 at December 31, 2020. During the year 2021, cash used in operating activities
amounted to € 26,012,000, compared to € 47,060,000 in 2020. Total equity increased to € 113,229,000.
As at December 31, 2021, we had borrowings of € 44,090,000, which consisted of convertible loans and
borrowings from a government body. 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, 2021 and
2020, we incurred net losses of € 61,680,000 and € 46,614,000, respectively. As at December 31, 2021, we had
an accumulated deficit of € 317,770,000. 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 including sepofarsen, ultevursen, QR-1123 and QR-504a, 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.
In 2021, revenues amounted to € 1,354,000 (2020: nil), consisting principally of non-refundable upfront fees
and research and development service fees in connection with collaboration and license agreements. In 2021,
other income amounted to € 1,043,000 compared to € 9,452,000 in 2020. In 2020 ProQR received a final
waiver of the full amount of the Innovation credit for the Company’s cystic fibrosis program. Consequently,
other income included a gain of € 8,423,000 relating to this waiver. In 2021 and 2020, other income also
included grant income from the Foundation Fighting Blindness (FFB) for the purpose of developing QR-421a.
FFB grant income amounted to € 977,000 in 2021 compared to € 624,000 in 2020.
Research and development costs increased to € 42,220,000 in 2021 compared to € 38,135,000 in 2020.
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, costs related to our preclinical and clinical activities and trials, license
and intellectual property costs and other costs. These costs were primarily related to our product candidates
sepofarsen and ultevursen, and our innovation unit, which includes the Axiomer platform. Our research and
development expenses are highly dependent on the development phases of our product candidates and are
expected to stay at the same level, although they may fluctuate significantly from period to period.
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The increase in research and development costs in the year ended December 31, 2021 compared to the year
ended December 31, 2020 is mainly due to:
•
•
•
•
costs we incurred for the Phase 2/3 clinical trials for ultevursen, which commenced in 2021;
costs we incurred for the Phase 2/3 clinical trial for sepofarsen, which increased in 2021 compared to
2020, when the related costs were lower due to delays caused by the COVID-19 pandemic;
higher employee benefits (excluding share-based compensation) resulting from an increase in the
average number of research and development staff in 2021 compared to 2020;
the above effects are partly offset by decreased share-based compensation, reflecting grants of share
options to research and development staff.
General and administrative costs amount to € 17,368,000 in 2021 compared € 13,685,000 in 2020. These
general and administrative costs comprise employee costs including share-based payments, office & IT costs,
general consultancy costs and other costs. As a public company, we face increased legal, accounting,
administrative and other costs and expenses.
The increase in general and administrative costs in the year ended December 31, 2021 compared to the year
ended December 31, 2020 is mainly due to:
•
•
•
•
higher employee benefits (excluding share-based compensation) resulting from an increase in the
average number of general and administrative staff in 2021 compared to 2020;
the above effects are partly offset by decreased share-based compensation, reflecting grants of share
options to general and administrative staff;
costs we incurred for preparing for potential future commercialization of our product candidates.
increased costs for our Directors & Officers (D&O) insurance.
In 2021 share-based compensation amounted to € 6,216,000, compared to € 7,838,000 in 2020. Net financial
expenses amounted to € 2,789,000, compared to € 3,716,000 in 2020. Financial expenses consist principally
of fixed-rate interest expenses on convertible loans. Financial income and expenses also include foreign
exchange differences on cash and loan balances 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
We expect to continue to spend substantial amounts of cash to conduct further research and development
and preclinical testing and clinical trials of our product candidates and to seek regulatory approvals for our
product candidates. Based on our current operating plans announced as part of our strategy update in April
2022, we believe that the existing cash and cash equivalents will be sufficient to fund our anticipated level of
operations into 2025. Given the development stage of the Company, we do not anticipate revenues from
product sales in the foreseeable future.
Risks of fraud and non-compliance with laws and regulations
We are exposed to the risk of employee fraud or other misconduct. Misconduct by employees could include
intentional failures to comply with FDA or EMA regulations or similar regulations of other foreign regulatory
authorities, to provide accurate information to the FDA, the EMA or other foreign regulatory authorities, to
comply with certain manufacturing standards, to comply with U.S. federal and state healthcare fraud and
abuse laws and regulations and similar laws and regulations established and enforced by comparable foreign
regulatory authorities, to report financial information or data accurately or to disclose unauthorized activities
to us. In particular, sales, marketing and business arrangements in the healthcare industry are subject to
extensive laws and regulations intended to prevent fraud, kickbacks, self-dealing and other abusive practices.
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These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and
promotion, sales commission, customer incentive programs and other business arrangements. Employee
misconduct could also involve the improper use of information obtained in the course of clinical trials, which
could result in regulatory sanctions and serious harm to our reputation. We have adopted and implemented
a Code of Business Conduct and Ethics, but it is not always possible to identify and deter employee
misconduct, and the precautions we take to detect and prevent this activity, such as employee training on
enforcement of the Code of Business Conduct and Ethics, may not be effective in controlling unknown or
unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits
stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted
against us, and we are not successful in defending ourselves or asserting our rights, those actions and any
imposition of significant fines or other sanctions could have a significant impact on our business and results
of operations.
We monitor and assess applicable Dutch and U.S. federal and state corporate governance codes, rules, and
regulations. We apply the 2016 Dutch Corporate Governance Code (the “Code”). We also are required to
comply with all applicable U.S. securities laws and regulations, including the rules and regulations
promulgated by the SEC pursuant to the U.S. Exchange Act of 1934 and the U.S. Sarbanes-Oxley Act of 2002,
as well as the U.S. Nasdaq Global Select Market (“Nasdaq”) listing rules.
Our corporate governance structure is based on the requirements of the Dutch Civil Code, the company’s
Articles of Association and the rules and regulations applicable to companies listed on the Nasdaq. These
procedures include a risk management and control system, as well as a system of assurance of compliance
with laws and regulations.
The effects of the ongoing COVID-19 pandemic materially and adversely affect our business and our
financial results
The continued effects of the COVID-19 pandemic could adversely impact our clinical trials or preclinical
studies, including our ability to recruit and retain patients and principal investigators and site staff who, as
healthcare providers, have heightened exposure to COVID-19. For instance, the COVID-19 pandemic has
resulted in the delays of all of our ongoing and scheduled trials, including our ongoing pivotal trial of
sepofarsen for LCA10 and the ongoing pivotal trials of ultevursen for Usher syndrome. While we have
implemented mitigation procedures designed to enable us to continueresume our development activities
when the disruption resolves, there can be no assurance that these procedures will continue to be successful
or that we can avoid a material and adverse disruption to our business in case a further spikes in the number
of infections would occur in countries where patients are expected to be enrolled or where they are located.
As the pandemic continues, we have experienced the prioritization of hospital resources toward the
treatment of COVID-19 patients and restrictions in travel. Furthermore, persons living with indications that
are targeted by ProQR’s product candidates may be unwilling to enroll in our trials or be unable to comply
with clinical trial protocols if quarantines or travel restrictions continue to impede patient movement or
interrupt healthcare services. COVID-19 also negatively affects the operations of third-party contract research
organizations (CROs) that we rely upon to carry out our clinical trials. Moreover, COVID-19 might impact the
operations of our third-party manufacturers, which could result in delays or disruptions in the supply of our
product candidates. Three Since the beginning of the COVID-19 pandemic, three vaccines for COVID-19 were
grantedhave received Emergency Use Authorization by the FDA in late 2020 and early 2021and two of these
later received marketing approval., and more are likely to be Additional vaccines may be authorized or
approved in the coming monthsfuture. The resultant demand for vaccines and potential for manufacturing
facilities and materials to be commandeered under the Defense Production Act of 1950, or equivalent foreign
legislation, may make it more difficult to obtain materials or manufacturing slots for the products needed for
our clinical trials, which could lead to delays in these trials. While we do not currently believe our supply chain
has been affected, there can be no assurances that we will not experience supply disruptions in the future.
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The negative impact COVID-19 has had and may continue to have to patient enrollment or treatment or the
timing and execution of our clinical trials could cause costly delays to our clinical trial activities, which could
adversely affect our ability to obtain regulatory approval for and to commercialize our product candidates,
increase our operating expenses and have a material adverse effect on our business and financial results.
In addition, COVID-19 has resulted in significant governmental measures being implemented to control the
spread of the virus, including quarantines, travel restrictions and business shutdowns. We have taken and
may continue to take temporary precautionary measures intended to help minimize the risk of the virus to
our employees, including requiring most of our employees to work remotely, suspending all non-essential
travel worldwide for our employees and attending industry events and in-person work-related meetings
remotely. These measures could negatively affect our business. For instance, requiring employees to work
remotely may result in decreased efficiency and effectiveness of our operations and increases the risk of a
cybersecurity incident. COVID-19 has also caused volatility in the global financial markets and threatened a
slowdown in the global economy, which may negatively affect our ability to raise additional capital on
attractive terms or at all.
The extent to which COVID-19 continues to impact our business, results of operations and financial condition
will depend on future developments, which are highly uncertain and cannot be predicted with confidence,
such as the duration of any ongoing governmental measures and local lockdowns across the world, the
potential occurrence of future spikes in the spreadthe outbreak, new information that may emerge
concerning the severity of COVID-19, new strains of the virus, including the Delta and Omicron variants and
any future variants, or thethat may emerge, which may impact rates of infection and vaccination efforts,
developments or perceptions regarding the safety of vaccines, or the extent and effectiveness of actions to
contain and treat for COVID-19 and treat its impact, including vaccination campaigns and lockdown
measures, among others. In addition, recurrences or additional waves of COVID-19 cases could cause other
widespread or more severe impacts depending on where infection rates are highestincluding the speed and
effectiveness of vaccine development and vaccination programs globally. We cannot presently predict the
scope and severity of any potential business shutdowns or disruptions, but if in case of potential future
waves of increased infections, if any. If we or any of the third parties with whom we engage, however, were to
experience prolonged business shutdowns or other business disruptions, our ability to conduct our business
in the manner and on the timelines presently planned could be materially and negatively affected, which
could have a material adverse impact on our business, and our results of operation and financial condition.
Leiden, April 29, 2022
On behalf of the Management Board,
Daniel de Boer
CEO
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Supervisory Board Report
ProQR Therapeutics has chosen a so-called two-tier system for its governance structure. In such a structure,
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 the Company.
During the 2021 financial year, the Supervisory Board and its sub-committees held frequent and productive
interactions with the Management Board. Where required by ProQR’s articles of association, shareholder
approvals or Dutch law, Management Board decision making was approved or 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 2021 and other relevant information on its functioning.
Activities of the Supervisory Board
The Supervisory Board and the Management Board held four video conference meetings in 2021. 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. The meetings were well attended with all meetings having
an attendance rate of 100%. In addition, there were various informal meetings between the Supervisory
Board and the Management Board during the course of 2021. In addition, the committees reported back on
their activities to the full Supervisory Board on a regular basis.
Committees of the Supervisory Board
During 2021, the Supervisory Board had an audit committee, a compensation, nominating and corporate
governance committee and a research and development committee, each of which has an adopted charter.
Compensation, Nominating and Corporate Governance Committee
The Compensation, Nominating and Corporate Governance Committee (the “Compensation Committee”) met
five times in 2021. The meetings had an attendance rate of 100%.
Compensation matters
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 in the form of a fixed annual salary
combined with variable, performance related, short- and long-term incentive elements. The Compensation
Policy is designed based on the following principles:
•
Three compensation pillars consisting of:
•
•
•
Annual Base Salary;
Short Term Incentive (annual cash bonus); and
Long Term Incentive (share-based compensation 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;
The Compensation Policy should drive the right kind of management behavior, discourage unjustified
risk taking and minimize any gaming opportunity;
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•
•
•
•
•
The 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;
The 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.
Compensation report 2021
In line with the practice of regularly reviewing the Compensation Policy, the Compensation Committee
evaluated and reviewed the Compensation Policy in 2021. Based on the outcomes of the review no changes
were made to the Compensation Policy for the Management Board.
The following summarizes the decisions made with respect to the Management Board’s 2021 compensation:
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 level for 2021 has been set at € 436,000 for the CEO, Daniel de Boer.
Short Term Incentive
The Compensation Committee reviewed the performance of the Company during 2021 in comparison to the
objectives and reviewed the achievements of the Management Board versus the corporate goals. Based on
the recommendation of the Compensation Committee, the Supervisory Board decided in late 2021 that the
Company has achieved 130% of the objectives that had been set to determine the bonus awards for the year
2021. For 2021 the individual bonus has been set at € 284,000 for Daniel de Boer. This bonus was paid in cash
in the first quarter of 2022.
Long Term Incentive
Based on the recommendation of the Compensation Committee, the Supervisory Board decided to grant
stock options to Daniel de Boer. Based on this decision, in 2021 stock options with an exercise price of € 3.42
have been granted to Daniel de Boer with respect to 442,279 shares.
Pensions
The pension contributions for Daniel de Boer paid during 2021 amount to € 10,000.
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 15:1 for
2021 (2020: 19:1).
Supervisory Board remuneration
For 2021, members of our Supervisory Board received board fees of USD 35,000 per year and the
chairperson received a fee of USD 70,000 per year. In addition, audit committee members received a fee of
USD 7,500 and the audit committee chairperson received a fee of USD 15,000 per year; compensation,
nominating and corporate governance committee members received a fee of USD 5,000 and the chairperson
of this committee received a fee of USD 10,000 per year, and; research and development committee
members received a fee of USD 5,000 and the chairperson of the research and development committee
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received a fee of USD 10,000 per year. Further, Supervisory Board members were granted options or
USD 77,500 in cash, as set out in Note 27 to the financial statements.
Nominating and Corporate Governance Matters
With respect to nominating and corporate governance matters, the Compensation Committee assists our
Supervisory Board in selecting individuals qualified to become our Supervisory Board members and
management board members, in determining the composition of the management board, supervisory board
and its committees and our officers in developing and recommending a set of corporate governance
guidelines applicable to ProQR. In furtherance of this, the Compensation Commiteee is responsible for
recommending to the Supervisory Board persons to be nominated for election or re-election to the
Supervisory Board and the management board at any meeting of the shareholders; overseeing the
Supervisory Board’s annual review of its own performance and the performance of its committees; and
considering, preparing and recommending to the Supervisory Board a set of corporate governance
guidelines.
Research and Development Committee
The research and development committee met twice in 2021. The meetings had an attendance rate of 100%.
The research and development committee assists the supervisory board in overseeing our product pipeline
and research and development strategy. The research and development committee is responsible for, among
other things, reviewing ProQR’s research and development strategy, including the long-term strategy goals
and objectives; reviewing and assessing quality of the research and development programs; reviewing the
progress of the product pipeline, including a review and analysis of the progress and results of pre-clinical
studies and clinical trials; reviewing and advising the management board about strategic opportunities to
enhance innovation and development; reviewing and assessing scientific activities critical to the success of
ProQR’s research and development strategy; and organizing and chairing meetings with ProQR’s scientific
advisory board for supporting its review and assessment ProQR’s research and development strategy.
Audit Committee
The audit committee met five times in 2021. The meetings had an attendance rate of 93%. The main topics
that were addressed include the quarterly results, financial risk management, compliance (including SOx) ,
the audit plan and management letter of the current external auditor, the transition to a new 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. The financial statements for 2021 have been audited and provided with an
unqualified opinion by our external auditor, KPMG Accountants N.V. (KPMG), and were extensively discussed
with the auditors in the meetings of the Supervisory Board, Audit Committee and Management Board on
April 29, 2022. The Supervisory Board is of the opinion that the 2021 Financial Statements meet all the
applicable requirements and recommends that the Annual General Meeting of Shareholders adopt 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 KPMG 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 Management Board present, both its own functioning and that of the individual
members, and the functioning of the Management Board. The Supervisory Board discussed its functioning
and competencies and concluded that its functioning and competencies are appropriate for the current
phase of the company. The Supervisory Board continues to assess its composition and functioning on an
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ongoing basis with the aim to ensure and maintain the requisite expertise, experience and diversity. 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 Management
Board, senior management and all other employees for their contribution and performance during the year.
We thank our shareholders for their continued support.
Leiden, April 29, 2022
On behalf of the Supervisory Board,
Dinko Valerio
Chairman
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Corporate Governance
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Corporate Governance
ProQR values the importance of complying with Corporate Governance regulations. At the same time, the
Board of Directors is of the opinion that certain deviations from the provisions of the 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 patients and their loved ones through the development of RNA
therapies for severe genetic rare diseases. ProQR has a focus on patients with inherited retinal diseases. 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 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.
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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:
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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.
Our management board currently consists of the CEO, Daniel de Boer. The CEO is supported by a
management team consisting of the Chief Innovation Officer, the Chief Business and Financial Officer, the
Chief Medical Officer, the Chief Scientific Officer and the Chief Operating Officer. The supervisory board
monitors the composition of the management board and management team on an ongoing basis to ensure
the requisite expertise, experience and diversity is maintained.
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
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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, 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. He is therefore not independent within the meaning of best practice provision 2.1.8 of
the Code. We feel his membership of the supervisory board is justified by his specific knowledge and
experience of our business. Moreover, we do comply with best practice provision 2.1.7 of the DCGC, as only
one out of 6 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
In 2021, the Supervisory Board had an audit committee, a compensation, nominating and corporate
governance committee and a research and development committee. We adopted a charter for each of these
committees.
Audit Committee
Our audit committee consists of Bart Filius (chairman), Alison Lawton and Antoine Papiernik. 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. Bart Filius qualifies as an “audit committee financial expert,” as defined by the SEC in Item 16A: “Audit
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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:
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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;
the applications of information and communication technology, including risks relating to cyber
security; and
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, Nominating and Corporate Governance Committee
Our compensation, nominating and corporate governance committee consists of James Shannon (chairman),
Dinko Valerio and Alison Lawton. Each member satisfies the independence requirements of the NASDAQ
listing standards. In addition, each member meets the criteria for independence set forth in best practice
provision 2.1.8 of the DCGC, with the exception of Mr. Dinko Valerio. With respect to compensation matters,
the compensation, nominating and corporate governance 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. With respect to nominating and corporate governance matters, the
compensation, nominating and corporate governance committee assists our supervisory board in selecting
individuals qualified to become our supervisory board members and management board members, in
determining the composition of the management board, supervisory board and its committees and our
officers and in developing and recommending a set of corporate governance guidelines applicable to the
company. 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, nominating and
corporate governance committee is responsible for, among other things:
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reviewing and making recommendations to the supervisory board with respect to compensation of our
management board and supervisory board members;
reviewing and approving the compensation, including equity compensation, change-of-control benefits
and severance arrangements, of our officers (not part of our management board or supervisory board)
as it deems appropriate;
overseeing the evaluation of our management board members and our officers;
reviewing periodically and making recommendations to our supervisory board with respect to any
incentive compensation and equity plans, programs or similar arrangements;
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exercising the rights of our supervisory board under any equity plans, except for the right to amend any
such plans unless otherwise expressly authorized to do so;
attending to such other matters as are specifically delegated to our compensation committee by our
supervisory board from time to time;
approving the compensation package for the officers;
periodically reviewing, in consultation with our CEO, our management board and our officers succession
planning;
recommending to the supervisory board persons to be nominated for election or re-election to the
supervisory board and the management board at any meeting of the shareholders;
overseeing the supervisory board’s annual review of its own performance and the performance of its
committees; and
considering, preparing and recommending to the supervisory board a set of corporate governance
guidelines.
Our Supervisory Board may also delegate certain tasks and powers under our share-based compensation
plan to the compensation, nominating and corporate governance committee.
Research and Development Committee
Our research & development committee consists of James Shannon (chairman), Dinko Valerio and Alison
Lawton. Each member satisfies the independence requirements of the NASDAQ listing standards. In addition,
each member meets the criteria for independence set forth in best practice provision 2.1.8 of the DCGC, with
the exception of Mr. Dinko Valerio. The research & development committee assists the supervisory board in
overseeing our product pipeline and research and development strategy. The research & development
committee is responsible for, among other things:
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reviewing the company’s research and development strategy, including the long-term strategy goals and
objectives;
reviewing and assessing quality of the research and development programs;
reviewing the progress of the product pipeline, including a review and analysis of the progress and
results of pre-clinical studies and clinical trials;
reviewing and advising the management board about strategic opportunities to enhance innovation and
development;
reviewing and assessing scientific activities critical to the success of the company’s research and
development strategy; an
organizing and chairing meetings with the Company’s scientific advisory board for supporting its review
and assessment the company’s research and development strategy.
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
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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 Supervisory Board has four male members and one female member. Our management board and the
management team is comprised of six people, two female and four male members. 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 or employees.
General Meeting of Shareholders
General meetings of shareholders can be held in Leiden, Amsterdam, Rotterdam, Schiphol Airport
(municipality Haarlemmermeer), The Hague, Oegstgeest, Leidschendam, Katwijk, Noordwijk or Wassenaar,
the Netherlands, or via video conference. 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
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Management Board for their management, discharge of the members of the Supervisory Board for their
supervision on the management and proposals relating to the composition and filling of any vacancies of the
Management Board or Supervisory Board. In addition, the agenda for a general meeting of shareholders
includes such items as have been included therein by our Management Board or our Supervisory Board.
Pursuant to Dutch law, one or more shareholders and/or others entitled to attend general meetings of
shareholders, alone or jointly representing at least 3% of the issued share capital have the right to request
the inclusion of additional items on the agenda of shareholders’ meetings. Such requests must be made in
writing, substantiated, or by a proposal for a resolution and received by us no later than the sixtieth day
before the day the relevant general meeting is held. No resolutions will be adopted on items other than those
which have been included in the agenda.
We will give notice of each general meeting of shareholders by publication on our website and, to the extent
required by applicable law, in a Dutch daily newspaper with national distribution, and in any other manner
that we may be required to follow in order to comply with Dutch law, applicable stock exchange and SEC
requirements. We will observe the statutory minimum convening notice period for a general meeting of
shareholders.
Pursuant to our articles of association, our Management Board may determine a record date
(“registratiedatum”) of 28 calendar days prior to a general meeting of shareholders to establish which
shareholders and others with meeting rights are entitled to attend and, if applicable, vote in the general
meeting of shareholders. The record date, if any, and the manner in which shareholders can register and
exercise their rights will be set out in the convocation notice of the general meeting. Our articles of
association provide that a shareholder must notify the Company in writing of his identity and his intention to
attend (or be represented at) the general meeting of shareholders, such notice to be received by us ultimately
on the seventh day prior to the general meeting. If this requirement is not complied with or if upon direction
of the Company to that effect no proper identification is provided by any person wishing to enter the general
meeting of shareholders, the chairman of the general meeting of shareholders may, in his sole discretion,
refuse entry to the shareholder or his proxy holder.
Pursuant to our articles of association, our general meeting of shareholders is chaired by the chairman of our
Supervisory Board. If the chairman of our Supervisory Board is absent and has not charged another person
to chair the meeting in his place, the Supervisory Board members present at the meeting shall appoint one of
them to be chairman. If no Supervisory Board members are present at the general meeting of shareholders,
the general meeting of shareholders will be chaired by our CEO or, if our CEO is absent, another Managing
Board member present at the meeting and, if none of them is present, the general meeting shall appoint its
own chairman. The person who should chair the meeting may appoint another person in his stead.
The chairman of the general meeting may decide at his discretion to admit other persons to the meeting. The
chairman of the general meeting shall appoint another person present at the shareholders’ meeting to act as
secretary and to minute the proceedings at the meeting. The chairman of the general meeting may instruct a
civil law notary to draw up a notarial report of the proceedings at the Company’s expense, in which case no
minutes need to be taken. The chairman of the general meeting is authorized to eject any person from the
general meeting of shareholders if the chairman considers that person to disrupt the orderly proceedings.
The general meeting of shareholders shall be conducted in the English language.
Voting Rights and Quorum Requirements
In accordance with Dutch law and our articles of association, each issued ordinary share and preferred share
confers the right on the holder thereof to cast one vote at the general meeting of shareholders. The voting
rights attached to any shares held by us or our direct or indirect subsidiaries are suspended as long as they
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are held in treasury. Dutch law does not permit cumulative voting for the election of Management Board
members or Supervisory Board members.
Voting rights may be exercised by shareholders or by a duly appointed proxy holder (the written proxy being
acceptable to the chairman of the general meeting of shareholders) of a shareholder, which proxy holder
need not be a shareholder. Our articles of association do not limit the number of shares that may be voted by
a single shareholder.
Under our articles of association, blank votes, abstentions and invalid votes shall not be counted as votes
cast. Further, shares in respect of which a blank or invalid vote has been cast and shares in respect of which
the person with meeting rights who is present or represented at the meeting has abstained from voting are
counted when determining the part of the issued share capital that is present or represented at a general
meeting of shareholders. The chairman of the general meeting shall determine the manner of voting and
whether voting may take place by acclamation.
In accordance with Dutch law and generally accepted business practices, our articles of association do not
provide quorum requirements generally applicable to general meetings of shareholders. To this extent, our
practice varies from the requirement of NASDAQ Listing Rule 5620(c), which requires an issuer to provide in
its bylaws for a generally applicable quorum, and that such quorum may not be less than one-third of the
outstanding voting shares.
Resolutions of the general meeting of shareholders are adopted by a simple majority of votes cast without
quorum requirement, except where Dutch law or our articles of association provide for a special majority
and/or quorum in relation to specified resolutions.
Anti-takeover provisions
We have adopted several provisions that may have the effect of making a takeover of our Company more
difficult or less attractive, including:
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granting a perpetual and repeatedly exercisable call option to a protection foundation, which confers
upon the protection foundation the right to acquire, under certain conditions, the number of preferred
shares in the capital of the Company. The issuance of such preferred shares will occur upon the
protection foundation’s exercise of the call option and will not require shareholder consent;
the staggered four-year terms of our Supervisory Board members, as a result of which only
approximately one-fourth of our Supervisory Board members will be subject to election in any one year;
a provision that our Management Board members and Supervisory Board members may only be
appointed upon a binding nomination by our Supervisory Board, which can be set aside by a two-thirds
majority of our shareholders representing more than half of our issued share capital;
a provision that our Management Board members and Supervisory Board members may only be
removed by our general meeting of shareholders by a two-thirds majority of votes cast representing
more than 50% of our issued share capital (unless the removal was proposed by the Supervisory Board);
and
a requirement that certain matters, including an amendment of our articles of association, may only be
brought to our shareholders for a vote upon a proposal by our Management Board that has been
approved by our Supervisory Board.
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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.
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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
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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.
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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,
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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.
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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 2021, and in
accordance with provision 1.4.3, the Management Board considers that:
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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:
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the financial statements for 2021 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, 2021, and of the
2021 consolidated income statement of ProQR Therapeutics N.V.;
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•
the annual report provides a true and fair view of the situation as at December 31, 2021, and the state
of affairs during the financial year 2021, together with a description of the principal risks faced by the
Company.
Diversity
We value diversity as a way of recognizing and valuing the differences between individuals to come to the
most efficient and effective way to achieve our strategic objectives. For our supervisory directors, this means
that when making recommendations to the general meeting for the (re-)appointment of directors, the board
will aim for a diverse composition in terms of such factors as gender and age, in accordance with our diversity
policy as may be in force from time to time. Under Dutch law reporting rules, we will be required to address
diversity of our supervisory directors in our Annual Report or in the report of the board of directors
(bestuursverslag): (i) composition of the board of directors by gender; (ii) objectives of the diversity policy; (iii)
description of how the diversity policy is being implemented and the results thereof and (iv) if there is no
diversity policy, this should be explained.
On January 1, 2022, new legislation entered into force, requiring “large Dutch companies” to set an
‘appropriate and ambitious’ target for their management board, supervisory board and senior executives (the
latter as determined by the company). If a company has adopted a one-tier board structure, the appropriate
and ambitious target applies to both the executive and non-executive directors. The legislation is based on a
“comply or explain” principle. Accordingly, we will be required to disclose in our report of the board of
directors whether or not we are in compliance with the self-imposed target. In addition, within ten months of
the end of the financial year, we will need to report to the Sociaal-Economische Raad (SER) whether or not we
have complied with the self-imposed target.
Our policy is that we will balance our board of directors in terms of gender, age, background and nationality
as much as reasonably possible while still having our board composed of the best possible candidates
overall. It has been and will remain our priority to have the best available specialists on our board of
directors, irrespective of age, background, nationality and gender, who make a balanced panel of directors
able to advise and guide ProQR to further growth and success for all its stakeholders. This means we require
a number of specialties and character traits to be present. Taking into account the aforementioned and the
specialist nature of our business, we will actively seek to further improve diversity on our board if and when
proposing new appointments to our board of directors, whilst acknowledging that age, gender and
nationality are important, but not the only factors relevant for the ultimate decision to select a board
member. We have set ourselves the target to over time achieve an equal gender balance in our board of
directors, and we will report on our progress annually in our corporate governance report.
PAGE 44 / 111
Risk Management
PROQR THERAPEUTICS ANNUAL REPORT 2021
Risk Management
Our business is subject to numerous risks and uncertainties. In the table below, we focus on the key risks and
uncertainties the Company currently faces. For the avoidance of doubt, this does not mean that the risks
which were previously signaled and not described here are no longer relevant. For a complete understanding
of the risks that we face you should also read the full list of risks and uncertainties as disclosed in item 3.D
Risk Factors of the annual report on Form 20-F. Some of these risks and uncertainties are outside the control
of the Company, others may be influenced or mitigated. In 2015, we have implemented a Risk & Control
framework, based on the COSO 2013 internal control framework, for enhancing our control environment as
well as compliance with the U.S. SEC’s Sarbanes Oxley (SOx) Act of 2002, which we are required to do as a
company listed on the NASDAQ. As part of the SOx implementation program, our Risk & Control framework
was further enhanced in 2021, focusing on business process, 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;
High turnover of staff;
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
Development and
Regulatory
Approval of our
Product
Candidates
Our products might not be
able to demonstrate safety
and efficacy in the preclinical
studies and clinical trials that
are needed to obtain product
approval.
Expected impact upon
materialization
The Company would be unable to
commercialize the products and
therefore generate revenues.
Risk appetite /
risk-mitigating actions
This is an inherent risk with
drug development as the
safety and efficacy of
products can only be
assessed when these
studies are conducted.
However, the Company has
multiple products in the
pipeline and therefore is
diversified. The Company
also monitors the progress
of the programs and aims to
make decisions that
mitigate safety and efficacy
related risks.
Risk related to
Risk area
The regulatory approval
process is lengthy, time-
consuming and unpredictable
and products developed may
ultimately not lead to
regulatory approval of the
product.
We may not able to maintain
orphan product status for
sepofarsen and ultevursen or
maintain / obtain such status
for any other product
canditates.
We may be precluded from
obtaining marketing
authorization for our
products when our
competitors have obtained
market exclusivity before we
do.
The Company depends
largely on equity financing
and financing through
convertible debt, third party
collaboration agreements
and government subsidies.
The Company relies upon
third-party contractors and
service providers for the
execution of several aspects
of its preclinical and clinical
development programs,
which include CRO’s, third
party manufacturers and
other service providers.
The Company is highly
dependent on its portfolio of
patents and other intellectual
property, proprietary
information and knowhow
and its ability to protect and
enforce these assets.
The Company is subject to
the risk of infringing third
party intellectual property
rights.
Capital Needs and
Financial Position
Dependence on
Third Parties
Intellectual
Property
PROQR THERAPEUTICS ANNUAL REPORT 2021
PAGE 45 / 111
Risk Management
Expected impact upon
materialization
Failure to comply with the
requirements in the regulatory
process could result in delays,
suspension, refusals and
withdrawal of approvals as well as
fines.
We may not benefit from rewards
including fee reduc-tions and
market exclusivity. Sales could be
impacted if other products are
granted authorization for the
same indications as sepofarsen or
ultevursen.
We may encounter delays in
marketing our products for a
significant period of time.
Volatility of the Company’s share
price, failure to deliver under loan
or collaboration agreements
and/or the reevaluation or
withdrawal of government
subsidies may have a negative
impact on the Company's ability to
obtain future financing.
Failure of third parties to provide
services of a suitable quality and
within acceptable timeframes may
cause delay or failure of the
Company's development
programs.
Inadequate intellectual property
protection or enforcement may
impede the Company’s ability to
compete effectively. If the
Company is not able to protect its
trade secrets, know-how or other
proprietary information, the value
of its technology and product
candidates could be significantly
diminished. Intellectual property
rights 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-mitigating actions
Although the Company
monitors the regulatory
landscape and engages with
the authorities when it
deems that necessary, this
is an inherent risk in biotech
drug development and
therefore has limited
mitigation abilities.
We take orphan drug
requirements into
consideration in the design
of our clinical development
plans.
We take orphan drug
requirements into
consideration in the design
of our clinical development
plans.
The ability of third-party
financing is dependent on
external factors and is
therefore not entirely in the
Company’s control. The
Company monitors the
market conditions for
opportunities to add
additional capital.
The Company reviews and
monitors the activities of
the third parties. These
include setting contractual
deliverables, quality
assurance audits and
performance reports,
among other activities.
The Company files and
prosecutes patent
applications to protect its
products and technologies
to the best of its knowledge
and with assistance from
internal and external
counsel. Prior to disclosing
any confidential information
to third parties, the
Company maintains strict
confidentiality standards
and agreements for
collaborating parties.
PAGE 46 / 111
Risk Management
PROQR THERAPEUTICS ANNUAL REPORT 2021
Risk related to
Risk area
Commercialization
of Our Product
Candidates
We face competition from
entities that have developed
or may develop product
candidates for our target
indications.
Reimbursement
from third-party
payors
The availability of
reimbursement by
governmental and private
payors is essential for most
patients to be able to afford
expensive treatments. Sales
of any of our product
candidates, if approved, will
depend substantially on the
extent to which the costs of
these product candidates will
be paid by health
maintenance, managed care,
pharmacy benefit and similar
healthcare management
organizations, or reimbursed
by government health
administration authorities,
private health coverage
insurers and other third-party
payors.
Expected impact upon
materialization
If our competitors develop
technologies or product
candidates more rapidly than we
do or their technologies, including
delivery technologies, are more
effective, our ability to develop
and successfully commercialize
our product candidates may be
adversely affected.
If reimbursement is not available,
or is available only to limited
levels, we may not be able to
successfully commercialize any
product candidate. Even if
coverage is provided, the
approved reimbursement amount
may not be high enough to allow
us to establish or maintain pricing
sufficient to realize a sufficient
return on our investment.
Risk-mitigating actions
Competition is an inherent
risk for any industry
including drug
development. Through our
IP strategy and orphan drug
designation application, we
attempt to have data
exclusivity for our products.
Development in other
companies is essentially out
of our control but we
monitor the competitive
landscape and incorporate
that into our business
strategy.
The ability of third-party
financing is dependent on
external factors and is
therefore not entirely in the
Company’s control. The
Company monitors the
market conditions for
opportunities to seek
reimbursement.
As to the materialization of the above risks, in February 2022 the Company announced the top-line results
from the phase 2/3 Illuminate trial of sepofarsen in CEP290-mediated LCA10. The study did not meet its
primary endpoint nor any notable secondary endpoints. No benefit was observed in either treatment arm
versus the sham arm.
In addition to the above key risks, the Company’s activities expose it to a variety of financial risks: market risk
(including currency risk, interest rate risk and price risk), credit risk and liquidity risk. Unfavorable exchange
rate developments and historically low interest rates may impact the financial income of the Company. The
Company has a cash management policy in place to minimize potential adverse effects resulting from
unpredictability of financial markets on the Company’s financial performance.
PAGE 47 / 111
Financial Statements 2021
PROQR THERAPEUTICS ANNUAL REPORT 2021
Financial Statements 2021
Consolidated statement of financial position at December 31, 2021
ASSETS
Non-current assets
Property, plant and equipment
Investments in associates
Investments in financial asset
Current assets
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
Lease liabilities
Deferred income
Current liabilities
Borrowings
Lease liabilities
Derivative financial liabilities
Trade payables
Social securities and other taxes
Pension premiums
Deferred income
Other current liabilities
TOTAL LIABILITIES
TOTAL EQUITY AND LIABILITIES
Note
7
8
9
10
11
12
13
14
25
15
14
25
14
15
16
The accompanying notes are an integral part of these financial statements.
2021
€ 1,000
17,467
8
621
18,096
555
3,404
187,524
191,483
209,579
2,995
398,309
30,299
(317,770)
113,833
(604)
113,229
39,319
14,478
14,687
68,754
4,771
1,534
3,995
191
1,230
--
5,115
10,760
27,596
96,350
209,579
2020
€ 1,000
18,601
107
--
18,708
421
3,762
75,838
80,021
98,729
2,165
288,757
23,916
(257,747)
57,091
(545)
56,546
16,189
15,693
--
31,882
1,135
1,260
839
221
22
6
700
6,118
10,301
42,183
98,729
PAGE 48 / 111
Financial Statements 2021
PROQR THERAPEUTICS ANNUAL REPORT 2021
Consolidated statement of profit or loss and comprehensive income for the
year ended December 31, 2021
Note
2021
2020
€ 1,000
€ 1,000
Revenue
Other income
Research and development costs
General and administrative costs
Total operating costs
Operating result
Financial income
Financial expense
Results related to financial liabilities measured at FVTPL
Results related to associates
Gain on disposal of associates
Result before corporate income taxes
Corporate income taxes
17
18
19
21
21
22
8
9
23
1,354
1,043
(42,220)
(17,368)
(59,588)
(57,191)
616
(3,405)
(1,880)
(217)
514
(61,563)
(117)
--
9,452
(38,135)
(13,685)
(51,820)
(42,368)
313
(4,029)
(84)
(322)
--
(46,490)
(124)
Result for the year
(61,680)
(46,614)
Other comprehensive income
(attributable to equity holders of the Company)
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
--
619
--
(340)
Total comprehensive loss for the year
(61,061)
(46,954)
Result attributable to
Owners of the Company
Non-controlling interests
(61,621)
(59)
(61,680)
(46,565)
(49)
(46,614)
Share information
24
Weighted average number of shares outstanding1
64,182,492
50,060,565
Earnings per share attributable to the equity holders
of the Company (expressed in Euro per share)
Basic earnings per share1
Diluted earnings per share1
The accompanying notes are an integral part of these financial statements.
(0.96)
(0.96)
(0.93)
(0.93)
1 Basic and diluted earnings are equal due to the anti-dilutive nature of the options outstanding since the Company is loss-
making.
PAGE 49 / 111
Financial Statements 2021
PROQR THERAPEUTICS ANNUAL REPORT 2021
Consolidated statement of changes in equity for the year ended December 31, 2021
Attributable to owners of the Company
Share
Capital
Share
Premium
Equity settled
employee
Benefit
reserve
Option
premium on
convertible
loan
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
€ 1,000
Balance at January 1, 2020
2,159
287,214
16,551
Result for the year
Other comprehensive income
Recognition of share-based payments
Issue of ordinary shares
Equity component of convertible loan
Share options lapsed
Share options exercised
--
--
4
2
--
--
--
--
--
538
270
--
--
735
--
--
7,838
--
--
(91)
(473)
--
--
--
--
--
280
--
--
--
151
(211,746)
94,329
(496)
93,833
--
(340)
--
--
--
--
--
(46,565)
(46,565)
(49)
(46,614)
--
--
--
--
91
473
(340)
8,380
272
280
--
735
--
--
--
--
--
--
(340)
8,380
272
280
--
735
Balance at December 31, 2020
2,165
288,757
23,825
280
(189)
(257,747)
57,091
(545)
56,546
Result for the year
Other comprehensive income
Recognition of share-based payments
--
--
5
--
--
382
Issue of ordinary shares
820
107,657
Equity component of convertible loan
Share options lapsed
Share options exercised
--
--
5
--
--
1,513
--
--
6,216
--
--
(522)
(1,076)
--
--
--
--
1,146
--
--
--
619
--
--
--
--
--
--
(61,621)
(61,621)
(59)
(61,680)
--
--
--
--
522
1,076
619
6,603
108,477
1,146
--
1,518
--
--
--
--
--
--
619
6,603
108,477
1,146
--
1,518
Balance at December 31, 2021
2,995
398,309
28,443
1,426
430
(317,770)
113,833
(604)
113,229
The accompanying notes are an integral part of these financial statements. Specific reference is made to note 12.
PAGE 50 / 111
Financial Statements 2021
PROQR THERAPEUTICS ANNUAL REPORT 2021
Consolidated statement of cash flows for the year ended December 31, 2021
Cash flow from operating activities
Result for the year
Adjustments for:
— Depreciation
— Other income
— Share-based compensation
— Financial income and expense
— Results related to associates
— Gain on disposal of associate
— Results related to financial liabilities measured at FVTPL
— Income tax expenses
Changes in working capital
Cash used in operations
Corporate income tax paid
Interest received
Interest paid
Note
2021
€ 1,000
2020
€ 1,000
(61,680)
(46,614)
7
18
13
21
8
9
22
23
2,329
--
6,216
2,789
217
(514)
1,880
117
24,995
(23,651)
(117)
5
(2,249)
2,355
(8,423)
7,838
3,716
322
--
84
124
(5,134)
(46,072)
(188)
313
(1,113)
Net cash used in operating activities
(26,012)
(47,060)
Cash flow from investing activities
Purchases of property, plant and equipment
Disposals of property, plant and equipment
(484)
59
(924)
--
Net cash used in investing activities
(425)
(924)
Cash flow from financing activities
Proceeds from issuance of shares, net of transaction costs
Proceeds from exercise of share options
Proceeds from borrowings
Proceeds from convertible loans
Repayment of lease liability
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
14
14
14
12
12
108,477
1,518
1,137
26,520
(820)
--
735
579
13,791
(605)
136,832
14,500
110,395
(33,484)
1,291
75,838
(2,628)
111,950
187,524
75,838
PAGE 51 / 111
Financial Statements 2021
PROQR THERAPEUTICS ANNUAL REPORT 2021
Notes to the consolidated financial statements for the year ended December
31, 2021
1. General Information
ProQR Therapeutics N.V., or “ProQR” or the “Company”, is a development stage company domiciled in the
Netherlands that primarily focuses on the development and commercialization of novel therapeutic
medicines.
Since September 18, 2014, the Company’s ordinary shares are listed on the NASDAQ Global Market under
ticker symbol PRQR.
The Company was incorporated in the Netherlands, on February 21, 2012 (Chamber of Commerce no.
54600790) and was reorganized from a private company with limited liability to a public company with limited
liability on September 23, 2014. The Company has its statutory seat in Leiden, the Netherlands and is
registered in the Trade Register at the Chamber of Commerce under number 54600790. The address of its
headquarters and registered office is Zernikedreef 9, 2333 CK Leiden, the Netherlands.
At December 31, 2021, 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 V 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%);
ProQR Therapeutics N.V. is also statutory director of Stichting Bewaarneming Aandelen ProQR (“ESOP
Foundation”) and has full control over this entity. At December 31, 2021, ProQR Therapeutics Holding B.V.
held a 4.9% minority shareholding in Yarrow Biotechnology, Inc.
As used in these consolidated financial statements, unless the context indicates otherwise, all references to
“ProQR”, the “Company” or the “Group” refer to ProQR Therapeutics N.V. including its subsidiaries and the
ESOP Foundation.
2. Basis of preparation
(a) Statement of compliance
These consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards, or IFRS, as adopted by the European Union (“EU”).
With reference to the income statement of the Company, use has been made of the exemption pursuant to
Section 402 of Book 2 of the Netherlands Civil Code.
PAGE 52 / 111
Financial Statements 2021
PROQR THERAPEUTICS ANNUAL REPORT 2021
These financial statements were authorized for issue by the Company’s Management Board and its Senior
Management on April 29, 2022.
(b) Basis of measurement
The financial statements have been prepared on the historical cost basis except for financial instruments and
share-based payment obligations which have been based on fair value. Historical cost is generally based on
the fair value of the consideration given in exchange for assets.
(c) Functional and presentation currency
These consolidated financial statements are presented in euro, which is the Company’s functional currency.
All amounts have been rounded to the nearest thousand, unless otherwise indicated.
(d) Going Concern
The Management Board of ProQR has, upon preparing and finalizing the 2021 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. Management has not identified significant going concern risks.
The financial statements of the Company have been prepared on the basis of the going concern assumption
based on its existing funding, taking into account the Company’s current cash position and the projected cash
flows based on the activities under execution on the basis of ProQR’s business plan and budget.
(e) Use of estimates and judgements
In preparing these consolidated financial statements, management has made judgements, estimates and
assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities,
income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognized in the period in which the estimate is revised if the revision affects only that period or in the
period of the revision and future periods if the revision affects both current and future periods.
Information about assumptions and estimation uncertainties that may have a significant risk of resulting in a
material adjustment is included below.
(i) Revenue recognition for the Eli Lilly collaboration and license agreement
a. Identification of the performance obligation
Note 17 describes the Company’s collaboration and license agreement with Eli Lilly. Under this agreement,
ProQR provides Eli Lilly with a license (with a right to sub-license) to exploit compounds resulting from the
collaboration. A significant amount of judgement is required to determine whether the license is distinct from
the other promises in the contract. The license was concluded not to be distinct from the other promises in
the contract based on the following considerations:
•
•
the license has no stand-alone value to Eli Lilly without the Company being involved in the research and
development collaboration, and;
there are significant interdependencies between the license and the research and development services
to be provided by the Company.
b. Determining the timing of satisfaction of performance obligations
For the Eli Lilly collaboration, the Company recognizes revenue over time, using an input method that
estimates the satisfaction of the performance obligation as the percentage of labor hours incurred compared
to the total estimated labor hours required to complete the promised services. As our estimate of the total
PAGE 53 / 111
Financial Statements 2021
PROQR THERAPEUTICS ANNUAL REPORT 2021
labor hours required is dependent on the evolution of the research and development activities, it may be
subject to change. If the progression and/or outcome of certain research and development activities would
be different from the assumptions that were made during the preparation of these financial statements, this
could lead to material adjustments to the total estimated labor hours, which might result in a reallocation of
revenue between current and future periods. Our total deferred revenue balance related to this Eli Lilly
performance obligation amounts to € 19,143,000 at December 31, 2021.
c. Determining the transaction price
The Company applied judgement to determine whether the equity investment made by Eli Lilly in ProQR is
part of the transaction price for the collaboration and license agreement. The Company concluded that the
premium that Eli Lilly paid above the closing price on the day of entering into the equity investment
agreement was paid because of the Company’s existing obligations to deliver research and development
services to Eli Lilly under the terms of the collaboration and license agreement. Therefore, the equity
investment is considered to be part of the transaction price. The contract also includes variable
consideration, but no variable consideration was included in the transaction price, as it is not highly probable
that a significant reversal in the amount of cumulative revenue recognized will not occur when the
uncertainty associated with the variable consideration is subsequently resolved.
(ii) Research and development expenditures
Research expenditures are reflected in the income statement. Development expenses are currently also
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.
(iii) Convertible debt
The terms of our convertible debt agreements are evaluated to determine whether the convertible debt
instruments contain both liability and equity components, in which case the instrument is a compound
financial instrument. Convertible debt agreements are also evaluated to determine whether they contain
embedded derivatives, in which case the instrument is a hybrid financial instrument. Judgement is required
to determine the classification of such financial instruments based on the terms and conditions of the
convertible debt agreements, the currencies in which the debt instruments are denominated and the
Company’s functional currency.
Estimation methods are used to determine the fair values of the liability and equity components of
compound financial instruments and to determine the fair value of embedded derivatives included in hybrid
financial instruments. The determination of the effective interest used for the host contracts of hybrid
financial instruments and the liability components of compound financial instruments is dependent on the
outcome of such estimations. Evaluating the reasonableness of these estimations and the assumptions and
inputs used in the valuation methods requires a significant amount of judgement and is therefore subject to
an inherent risk of error.
(f) Changes in accounting policies
The following Standards and Interpretations became effective for annual reporting periods beginning on or
after January 1, 2021:
PAGE 54 / 111
Financial Statements 2021
PROQR THERAPEUTICS ANNUAL REPORT 2021
•
•
IBOR reform Phase 2 amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16;
Covid-19-Related Rent Concessions Amendment to IFRS 16;
None of these new Standards and Interpretations had a material impact on our financial statements. No
changes in accounting policies occurred in 2021
3. Significant Accounting Policies
The Company has consistently applied the following accounting policies to all periods presented in these
consolidated financial statements.
(a) Basis of consolidation
(i) Subsidiaries
Subsidiaries are entities controlled by the Company. The Company 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 Company 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 Company '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 Company 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 Company’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.
(v) Associates
Associates are entities over which the Company has significant influence. Significant influence is the power to
participate in the financial and operating policy decisions of the investee but is not control or joint control
over those policies.
Investments in associates are accounted for in the consolidated financial statements using the equity method
of accounting. Equity accounting involves recording the investment in associates initially at cost, and
recognizing the Company’s share of the post-acquisition results of associates in the consolidated income
statement and the Company’s share of post-acquisition other comprehensive income in consolidated other
comprehensive income. The cumulative post-acquisition movements are adjusted against the carrying
amount of the investments in associates in the consolidated statement of financial position.
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When the Company’s share of losses in an associate equals or exceeds its interest in the associate, the
Company does not recognize further losses unless it has incurred or guaranteed obligations in respect of the
associate.
(b) Classes of financial instruments
Financial instruments are both primary financial instruments, such as receivables and payables, and financial
derivatives. For the Company’s 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. Changes in the fair value of derivatives are generally
recognized in profit or loss. If the Company is involved with hybrid contracts, the Company applies the
following with regard to the embedded derivatives in the hybrid contract. Embedded derivatives are
separated from the host contract and accounted for separately if the host contract is not a financial asset and
the following criteria are met:
•
•
•
the economic characteristics and risk of the embedded derivative are not closely related to the
economic characteristics and risks of the host contract;
a separate instrument with the same terms as the embedded derivative would meet the definition of a
derivate; and
the hybrid contract is not measured at fair value with changes in fair value recognized in profit or loss.
If an embedded derivative is separated from the hybrid contract, the host contract is accounted for in
accordance with the determined policies for such a contract. The embedded derivative is accounted for in
accordance with the Company’s principles for the applicable derivatives.
(c) Foreign currencies
(i) Foreign currency transactions
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing
at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency
at the exchange rate at the reporting date. Non-monetary assets and liabilities denominated in foreign
currencies that are measured at fair value are translated into the functional currency at the exchange rate
when the fair value was determined. Foreign currency differences are generally recognized in profit or loss.
Non-monetary items that are measured based on historical cost in a foreign currency are translated at the
exchange rate prevailing at the date of the transaction.
(ii) Foreign operations
The assets and liabilities of foreign operations are translated into euro at exchange rates at the reporting
date. The income and expenses of foreign operations are translated into euros at the exchange rates at the
dates of the transactions. Foreign currency differences are recognized in OCI and accumulated in the
translation reserve, except to the extent that the translation difference is allocated to NCI.
(d) Revenue
Revenues to date have consisted principally of non-refundable upfront fees and research and development
service fees in connection with collaboration and license agreements. The Company recognizes revenue
when its customers obtain control of promised goods or services, in an amount that reflects the
consideration that the Company expects to receive in exchange for those goods and services. Revenue is
recognized for agreements that are in scope of IFRS 15 Revenue, based on the following five steps:
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(i) Identify the contract
The Company entered into collaboration and license agreements in which the Company licenses its
intellectual property and/or provides research and development services. These arrangements include
upfront payments, milestone payments based on clinical and regulatory criteria, research and development
service fees and future sales-based milestones and sales-based royalties. In some cases, concurrently with
the collaboration and license agreements, the Company enters into share purchase agreements with the
customer. If this is the case, the Company analyzes whether the criteria to combine contracts, as set out by
IFRS 15, are met.
(ii) Identify performance obligations
Contracts with customers can have one or more distinct performance obligations under IFRS 15. Identifying
the performance obligations is based on an assessment of whether the promises in an agreement are
capable of being distinct and are distinct from the other promises to transfer goods and/or services in the
context of the contract. The Company assessed that there is one single performance obligation in our
material ongoing collaboration and license agreements, being the transfer of a license combined with
performance of research and development services.
This is because the Company considers the performance obligations cannot be distinct in the context of the
contract as the licenses have no stand-alone value without the Company being involved in the research and
development collaboration and that there is interdependence between the license and the research and
development services to be provided.
(iii) Determine the transaction price
Our collaboration and license agreements include non-refundable upfront payments; equity components;
milestone payments, the receipt of which is dependent upon the achievement of certain clinical, regulatory or
commercial milestones; royalties on sales and research and development service fees.
a. Non-refundable upfront payments or license fees
If the license to the Company’s intellectual property is determined to be distinct from the other performance
obligations identified in the arrangement, the Company recognizes revenue from non-refundable upfront
fees allocated to this license at the point in time the license is transferred to the customer and the customer
has the right to use the license.
For all our material ongoing collaboration and license agreements, the Company considers the performance
obligations related to the transfer of the license as not distinct from the other promises to transfer goods
and/or services; the Company uses judgement to assess the nature of the combined performance obligation
to determine whether the combined performance obligation is satisfied over time or at a point in time. If over
time, revenue is then recognized based on a pattern that best reflects the transfer of control of the service to
the customer.
b. Milestone payments other than sales-based milestones
A milestone payment, being a variable consideration, is only included in the transaction price to the extent it
is highly probable that a significant reversal in the amount of cumulative revenue recognition will not occur
when the uncertainty associated with the variable consideration is subsequently resolved. The Company
estimates the amount to be included in the transaction price upon achievement of the milestone event. The
transaction price is then allocated to each performance obligation on a stand-alone selling price basis, for
which the Company recognizes revenue as or when the performance obligations under the contract are
satisfied. At the end of each reporting period, the Company re-evaluates the probability of achievement of
such milestones and any related constraint, and, if necessary, adjusts the estimate of the overall transaction
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price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenue and
earnings in the period of adjustment.
c. Research and development service fees
Our collaboration and license agreements may include reimbursement for research and development
services. R&D services are performed and satisfied over time because the customer simultaneously receives
and consumes the benefits provided by us. Revenue associated with such R&D service fees is then recognized
based on a pattern that best reflects the transfer of control of the service to the customer.
d. Sales based milestone payments and royalties
Our material collaboration and license agreements include sales-based royalties, including commercial
milestone payments based on the level of sales. The Company concluded that the licenses are not the
predominant items to which the royalties and commercial milestone payments relate. Related revenue will be
recognized as the subsequent underlying sales occur.
(iv) Allocate the transaction price
An entity shall allocate the transaction price to each performance obligation identified in a contract on a
relative stand-alone selling price basis. As our collaboration and license agreements only contain one single
performance obligation, the transaction price is entirely allocated to this single performance obligation.
(v) Recognize revenue
Revenue is recognized when the customer obtains control of the goods and/or services as provided in the
collaboration and license agreements. Control can be transferred over time or at a point in time, which
results in the recognition of revenue either over time or at a point in time.
Our license and collaboration agreements only contain one single performance obligation, in which the
Company’s performance creates and subsequently enhances assets (e.g. exploitable compounds) that the
customers control as the assets are created and/or enhanced. As such, the Company recognizes revenue
over time.
The recognition of revenue over time is based on a pattern that best reflects the satisfaction of the related
performance obligation, applying the input method. The input method estimates the satisfaction of the
performance obligation as the percentage of labor hours incurred compared to the total estimated labor
hours required to complete the promised services.
(e) Other income
Other income includes amounts earned from third parties and are recognized when earned in accordance
with the substance and under the terms of the related agreements and when it is probable that the economic
benefits associated with the transaction will flow to the Company 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.
(f) Government grants —WBSO
The WBSO (“afdrachtvermindering speur- en ontwikkelingswerk”) is a Dutch fiscal facility that provides
subsidies to companies, knowledge centers and self-employed people who perform research and
development activities (as defined in the WBSO Act). Under this Act, a contribution is paid towards the labor
costs of employees directly involved in research and development. The contribution is in the form of a
reduction of payroll taxes and social security contributions recognized on a net basis within the labor costs.
This reduction of payroll taxes and social security contributions is classified under research and
developments costs.
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(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 intended to compensate.
(g) Employee benefits
(i) Short-term employee benefits
Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the
amount expected to be paid if the Company 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.
(h) Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax. It is recognized in
profit or loss except to the extent that it relates to a business combination, or items recognized directly in
equity or in OCI.
(i) Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported
in the income statement because of items of income or expense that are taxable or deductible in other years
and items that are never taxable or deductible. The Company’s liability for current tax is calculated using tax
rates that have been enacted or substantively enacted by the end of the reporting period.
(ii) Deferred tax
Deferred tax is recognized on differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation of taxable profit.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to
the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the
asset to be recovered. Since the Company does not expect to be profitable in the foreseeable future, its
deferred tax assets are valued at nil.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in
which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or
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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) Property, plant and equipment
(i) Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and any
accumulated impairment losses. If significant parts of an item of property, plant and equipment have
different useful lives, then they are accounted for as separate items (major components) of property, plant
and equipment. Any gain or loss on disposal of an item of property, plant and equipment is recognized in
profit or loss.
(ii) Depreciation
Depreciation is calculated to write off the cost of items of property, plant and equipment less their estimated
residual values using the straight-line method over their estimated useful lives, and is recognized in profit or
loss. Right-of-use 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:
•
•
•
Buildings and 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.
(j) Intangible assets
Expenditure on research activities is recognized as an expense in the period in which it is incurred. An
internally-generated intangible asset arising from development (or from the development phase of an
internal project) is recognized if, and only if, all of the following have been demonstrated:
•
•
•
•
•
•
•
the technical feasibility of completing the intangible asset so that it will be available for use or sale;
the intention to complete the intangible asset and use or sell it;
the ability to use or sell the intangible asset;
how the intangible asset will generate probable future economic benefits;
the availability of adequate technical, financial and other resources to complete the development and to
use
or sell the intangible asset; and
the ability to measure reliably the expenditure attributable to the intangible asset during its
development.
The amount initially recognized for internally-generated intangible assets is the sum of the expenditure
incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no
internally generated intangible asset can be recognized, development expenditures are recognized in the
consolidated statements of profit and loss and other comprehensive income in the period in which they are
incurred.
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Due to uncertainties inherent to the development and registration with the relevant healthcare authorities of
its products, the Company estimates that the conditions for capitalization are not met until the regulatory
procedures required by such healthcare authorities have been finalized. The Company currently does not
own products that have been approved by the relevant healthcare authorities and this has resulted in all
development costs being recognized as an expense in the period in which they are incurred
(k) Impairment of assets
At the end of each reporting period, the Company reviews the carrying amounts of its non-current assets,
including right-of-use 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.
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.
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.
(l) Financial assets
All financial assets are recognized and derecognized on the trade date where the purchase or sale of a
financial asset is under a contract whose terms require delivery of the financial asset within the timeframe
established by the market concerned, and are initially measured at fair value 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 amortized cost, and
all other debt investments and equity investments are measured subsequently at fair value through
profit or loss (FVTPL).
The Company 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
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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 Company, 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.
The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset
expire, or the Company transfers the right to receive the contractual cash flows on the financial asset in a
transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred.
(m) Cash and cash equivalents
Cash and cash equivalents include cash on hand and all highly liquid investments with original maturities of
three months or less that are readily convertible to a known amount of cash and bear an insignificant risk of
change in value.
(n) Financial liabilities and equity instruments
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the
substance of the contractual arrangement.
(i) Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after
deducting all of its liabilities. Equity instruments issued by the Company are recognized at the proceeds
received, net of direct issue costs.
(ii) Compound financial instruments
Compound financial instruments issued by the Company 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 component parts of convertible loan notes issued by the Group are classified separately as financial
liabilities and equity in accordance with the substance of the contractual arrangements and the definitions of
a financial liability and an equity instrument. A conversion option that will be settled by the exchange of a
fixed amount of cash or another financial asset for a fixed number of the Company’s own equity instruments
is an equity instrument. At the date of issue, the fair value of the liability component is estimated using the
prevailing market interest rate for a similar non-convertible instrument. This amount is recorded as a liability
on an amortized cost basis using the effective interest method until extinguished upon conversion or at the
instrument’s maturity date.
The conversion option classified as equity is determined by deducting the amount of the liability component
from the fair value of the compound instrument as a whole. This is recognized and included in equity, net of
income tax effects, and is not subsequently remeasured. In addition, the conversion option classified as
equity will remain in equity until the conversion option is exercised, in which case, the balance recognized in
equity will be transferred to share premium. Where the conversion option remains unexercised at the
maturity date of the convertible loan note, the balance recognized in equity will be transferred to
accumulated losses. No gain or loss is recognized in profit or loss upon conversion or expiration of the
conversion option.
Transaction costs that relate to the issue of the convertible loan notes are allocated to the liability and equity
components in proportion to the allocation of the gross proceeds. Transaction costs relating to the equity
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component are recognized directly in equity. Transaction costs relating to the liability component are
included in the carrying amount of the liability component and are amortized over the lives of the convertible
loan notes using the effective interest method.
Interest related to the financial liability is recognized in profit or loss.
(iii) Financial liabilities at fair value through profit or loss
Financial liabilities held for trading are classified as at fair value through profit or loss (FVTPL). A financial
liability is classified as held for trading if it is a derivative (except for a derivative that is a financial guarantee
contract or a designated and effective hedging instrument).
Financial liabilities at FVTPL are measured at fair value, with any gains or losses arising on changes in fair
value recognized in profit or loss. The net gain or loss recognized is included in the ‘results related to financial
liabilities measured at fair value through profit or loss’ line item in profit or loss.
Fair value is determined in the manner described in note 5.
(iv) 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.
(v) Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the statement of financial
position when, and only when, the Company currently has a legally enforceable right to set off the amounts
and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.
(n) Leases
The Company assesses whether a contract is or contains a lease when it obtains the right to control the use
of an identified asset for a period of time, in exchange for consideration. The Company recognizes a right-of-
use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee,
except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value
assets (such as tablets and personal computers, small items of office furniture and telephones). For these
leases, the Company recognizes the lease payments as operating costs on a straight-line basis over the term
of the lease unless another systematic basis is more representative of the time pattern in which economic
benefits from the leased assets are consumed.
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The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted by using the interest rate implicit in the lease. When the interest rate
implicit in the lease cannot be readily determined, the Company uses its incremental borrowing rate.
Lease payments included in the measurement of the lease liability comprise:
•
•
•
•
•
Fixed lease payments (including in-substance fixed payments), less any lease incentives receivable;
Variable lease payments that depend on an index or rate, initially measured using the index or rate at
the commencement date;
The amount expected to be payable by the Company under residual value guarantees;
The exercise price of purchase options, if the Company is reasonably certain to exercise the options;
and
Payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to
terminate the lease.
The lease liability is presented as a separate line in the consolidated statement of financial position. In the
cash flow statement, repayments of the principal portion of the lease liability are included in financing
activities. Payments relating to the interest component of the lease liability are included in operating
activities. Short-term lease payments and payments for leases of low-value assets are included in operating
activities.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease
liability (using the effective interest method) and by reducing the carrying amount to reflect the lease
payments made.
The Company remeasures the lease liability (and makes a corresponding adjustment to the related right-of-
use asset) whenever:
•
•
•
The lease term has changed or there is a significant event or change in circumstances resulting in a
change in the assessment of exercise of a purchase option, in which case the lease liability is
remeasured by discounting the revised lease payments using a revised discount rate.
The lease payments change due to changes in an index or rate or a change in expected payment under
a guaranteed residual value, in which cases the lease liability is remeasured by discounting the revised
lease payments using an unchanged discount rate (unless the lease payments change is due to a
change in a floating interest rate, in which case a revised discount rate is used).
A lease contract is modified and the lease modification is not accounted for as a separate lease, in which
case the lease liability is remeasured based on the lease term of the modified lease by discounting the
revised lease payments using a revised discount rate at the effective date of the modification.
The right-of-use asset comprises the initial measurement of the corresponding lease liability, lease payments
made at or before the commencement day, less any lease incentives received and any initial direct costs. It is
subsequently measured at cost less accumulated depreciation and impairment losses.
Whenever the Company incurs an obligation for costs to dismantle and remove a leased asset, restore the
site on which it is located or restore the underlying asset to the condition required by the terms and
conditions of the lease, a provision is recognized and measured under IAS 37. To the extent that the costs
relate to a right-of-use asset, the costs are included in the related right-of-use asset, unless those costs are
incurred to produce inventories.
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Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying
asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that
the Company expects to exercise a purchase option, the related right-of-use asset is depreciated over the
useful life of the underlying asset. The depreciation starts at the commencement date of the lease.
The right-of-use asset is presented under Property, Plant and Equipment in the consolidated statement of
financial position, in the category Buildings and leasehold improvements.
As a practical expedient, IFRS 16 permits a lessee not to separate non-lease components, and instead account
for any lease and associated non-lease components as a single arrangement. The Company has used this
practical expedient.
4. New standards and interpretations not yet adopted
A number of new standards, amendments to standards and interpretations are effective for annual periods
beginning after January 1, 2022 and have not been applied in preparing these consolidated financial
statements. There are no standards that are not yet effective and that would be expected to have a material
impact on the Company in the current or future reporting periods and on foreseeable future transactions.
The Company does not plan to adopt these standards early.
5. Financial Risk Management
5.1. Financial risk factors
The Company’s activities expose it to a variety of financial risks: market risk (including currency risk, interest
rate risk and price risk), credit risk and liquidity risk. The Company’s overall financial risk management seeks
to minimize potential adverse effects resulting from unpredictability of financial markets on the Company’s
financial performance.
Financial risk management is carried out by the finance department. The finance department identifies and
evaluates financial risks and proposes mitigating actions if deemed appropriate.
(a) Market risk
Market risk is the risk that changes in market prices – such as foreign exchange rates, interest rates and
equity prices – will affect the Company’s income or the value of its holdings of financial instruments. The
objective of market risk management is to manage and control market risk exposures within acceptable
parameters, while optimizing the return.
Foreign exchange risk
Foreign exchange risk arises from future commercial transactions and recognized assets and liabilities in
foreign currencies, primarily with respect to the U.S. Dollar. The Company has an exposure associated with
the time delay between entering into a contract, budget or forecast and the realization thereof. The Company
operates a foreign exchange policy to manage the foreign exchange risk against the functional currency
based on the Company’s cash balances and the projected future spend per major currency.
At 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.
At December 31, 2021 there was a net position of assets and liabilities denominated in U.S. dollars of
€ 32,213,000 (2020: € 22,237,000). Foreign currency denominated receivables and trade payables are short
term in nature (generally 30 to 45 days). As a result, the foreign exchange results recognized in 2021 and
2020 are mainly caused by the cash balance denominated in U.S. dollars.
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A reasonably possible weakening of the U.S. dollar by 10% against the functional currency of the Company at
December 31, 2021 would have increased our net loss by € 3,221,000 (2020: € 2,224,000). A 10%
strengthening of the U.S. dollar against the functional current of the Company would have an equal but
opposite effect on our net loss. 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 € 44,090,000 at December 31, 2021 (2020: €
17,324,000). Details on the interest rates and maturities of these loans are provided in Note 14.
(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, 2021 and December 31, 2020, 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:
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Financial Statements 2021
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Less than
1 year
Between
1 and 2 years
Between
2 and 5 years
€ 1,000
€ 1,000
€ 1,000
At December 31, 2021
Borrowings
Lease liabilities
Deferred income
Trade payables and other payables
7,520
2,378
5,115
12,181
27,194
10,343
2,147
8,581
--
41,129
6,394
6,106
--
21,071
53,629
9,590
Over
5 years
€ 1,000
--
9,590
--
--
At December 31, 2020
Borrowings
Lease liabilities
Trade payables and other payables
Less than
1 year
Between
1 and 2 years
Between
2 and 5 years
€ 1,000
€ 1,000
€ 1,000
2,391
2,079
7,067
11,537
6,674
2,079
--
8,753
13,808
6,235
--
20,043
Over
5 years
€ 1,000
--
11,432
--
11,432
Based on our current operating plan, we believe that the existing cash and cash equivalents will be sufficient
to fund our anticipated level of operations into 2025. However, our future capital requirements and the
period for which our existing resources will support our operations may vary significantly from what we
expect. Our monthly spending levels will vary based on new and ongoing development and corporate
activities. Because the length of time and activities associated with successful development of our product
candidates is highly uncertain, we are unable to estimate the actual funds we will require for development of
our product candidates.
5.2. Capital risk management
The Company's objectives when managing capital are to safeguard the Company's ability to continue as a
going concern in order to provide returns for shareholders, benefits for other stakeholders and to maintain
an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to
shareholders (although at this time the Company does not have retained earnings and is therefore currently
unable to pay dividends), return capital to shareholders, issue new shares or sell assets to reduce debt.
The total amount of equity as recorded on the balance sheet is managed as capital by the Company.
5.3. Fair value measurement
For financial instruments that are measured on the balance sheet at fair value, IFRS 13 requires disclosure of
fair value measurements by level of the following fair value measurement hierarchy:
•
•
•
quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
inputs other than quoted prices included within level 1 that are observable for the asset or liability,
either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2); and
inputs for the asset or liability that are not based on observable market data (that is, unobservable
inputs) (level 3).
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Fair value of financial liabilities that are measured at fair value on a recurring basis
Some of the Company’s financial liabilities are measured at fair value at the end of each reporting period. The
following table gives information about how the fair values of these financial liabilities are determined (in
particular, the valuation technique and inputs used).
Financial
liabilities
Investment
in Phoenicis
Therapeutics,
Inc.
Warrants
and
conversion
options
Valuation technique and key inputs
Market comparison technique: The valuation model is
based on market multiples derived from quoted prices
of companies comparable to the investee, adjusted for
the effect of the non-marketability of the equity
securities, and the result of the investee. The estimate is
adjusted for the net debt of the investee.
Black-Scholes model. The following variables were
taken into consideration: current underlying price of the
Company's shares, options strike price, expected life,
historical volatility of ProQR share returns over a period
equal to the expected life, risk-free rate: based on the
US Treasury yield curve rates per the valuation date
(interpolated) for the expected life.
Significant
unobservable
inputs
Adjusted market
multiple
Relationship and
sensitivity of significant
unobservable inputs to
fair value
The estimated fair value
would increase (decrease) if
the adjusted market
multiple were higher (lower).
None
Not applicable
The investment in in Phoenicis Therapeutics, Inc is measured using valuation methods based on so-called
Level 3 inputs. Level 3 inputs are unobservable inputs. Changing one or more of the unobservable inputs to
reflect reasonably possible alternative assumptions would not significantly change the fair value determined
for Phoenicis Therapeutics, Inc.
Warrants and conversion options are measured using valuation methods based on so-called Level 2 inputs.
Level 2 inputs are inputs other than quoted prices that are observable for the liability, either directly or
indirectly.
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.
Share options and restricted stock units (RSUs) granted to employees and consultants are measured at the
fair value of the equity instruments granted. The fair value of options 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.
6. Segment Information
The Company operates in one reportable segment, which comprises the discovery and development of
innovative, RNA based therapeutics. The management board is identified as the chief operating decision
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Financial Statements 2021
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maker. The management board reviews the operating results regularly to make decisions about resources
and to assess overall performance.
Revenues are generated from external customers whose main registered offices are all geographically
located in the United States. Substantially all non-current assets of the Company are located in the
Netherlands. The amounts provided to the management board with respect to total assets and liabilities are
measured in a manner consistent with that of the financial statements.
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Financial Statements 2021
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7. Property, Plant and Equipment (‘PP&E’)
Balance at January 1, 2020
Cost
Accumulated depreciation
Carrying amount
Additions
Depreciation
Recognition of right-of-use asset (note 25)
Effect of lease modification (note 25)
Disposals
Movement for the period
Balance at December 31, 2020
Cost
Accumulated depreciation
Carrying amount
Additions
Depreciation
Recognition of right-of-use asset (note 25)
Adjustment of right-of-use asset (note 25)
Transfer
Disposals
Movement for the period
Balance at December 31, 2021
Cost
Accumulated depreciation
Carrying amount
Buildings and
Leasehold
improvements
Laboratory
equipment
Other
Total
€ 1,000
€ 1,000
€ 1,000
€ 1,000
3,808
(2,583)
1,225
244
(1,750)
16,332
1,260
--
16,086
21,644
(4,333)
17,311
70
(1,884)
121
415
(19)
—
(1,297)
22,231
(6,217)
16,014
2,979
(1,921)
1,058
655
(498)
--
--
--
157
3,634
(2,419)
1,215
643
(394)
—
—
27
(59)
217
4,245
(2,813)
1,432
1,322
(1,165)
157
25
(107)
--
--
--
8,109
(5,669)
2,440
924
(2,355)
16,332
1,260
--
(82)
16,161
1,347
(1,272)
75
5
(51)
—
—
(8)
—
26,625
(8,024)
18,601
718
(2,329)
121
415
—
(59)
(54)
(1,134)
1,344
(1,323)
21
27,820
(10,353)
17,467
The depreciation charge for 2021 is included in the research and development costs for an amount of
€ 1,692,000 (2020: €1,789,000) and in the general and administrative costs for an amount of € 637,000 (2019:
€ 566,000).
Buildings and leasehold improvements include a right-of-use asset relating to the lease of our Leiden office
and laboratory space, with a carrying amount of € 15,568,000 at December 31, 2021 (2020: € 16,775,000).
8. Investments in Associates
In May 2019, the Company acquired a non-controlling interest in Wings Therapeutics Inc. as part of the
strategic spin out of the Dystrophic Epidermolysis Bullosa (DEB) activities. Wings Therapeutics Inc. was
formed and financed by EB Research Partnership (EBRP), the largest global non-profit dedicating to treating
and curing EB. Wings Therapeutics focuses on developing therapies for DEB and continues to conduct the
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Financial Statements 2021
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ongoing clinical trial with QR-313 targeting exon 73 as well as progress other RNA molecules that are
designed for other mutations that cause DEB.
In January 2021, Wings Therapeutics Inc. merged into Phoenicis Therapeutics Inc. Consequently, Wings
Therapeutics Inc. ceased to exist and the related investment was derecognized. ProQR does not have
significant influence in Phoenicis Therapeutics Inc. Our interest in Phoenicis is recognized as a financial asset,
as disclosed in note 9.
In May 2021, the Company obtained an 8% share in the common stock of Yarrow Biotechnology, Inc. ProQR’s
share in Yarrow was subsequently diluted to 4.9% in the fourth quarter of 2021, due to Yarrow’s execution of
a second seed financing round. Although ProQR only owns 4.9% of Yarrow’s shares, the Company has
significant influence over Yarrow by virtue of its right to appoint one of Yarrow’s three board members, as
well as its participation in Yarrow’s policy-making process, amongst other factors. As such, our interest in
Yarrow amounting to € 8,000 at December 31, 2021 is recognized as an investment in associate.
In 2021, the results related to associates amounting to € 217,000 consist of ProQR's share in the loss of
Yarrow. In 2020, the results related to associates amount to a loss of € 322,000 and consist of our share of
the net losses of Wings Therapeutics Inc.
Balance at January 1, 2020
Share of loss from continuing operations
Balance at December 31, 2020
Derecognition of investment in associate (Wings Therapeutics Inc.)
Recognition of investment in associate (Yarrow Biotechnology, Inc.)
Share of loss from continuing operations
Balance at December 31, 2021
9. Investments in Financial Assets
Investment in
associate
€ 1,000
429
(322)
107
(107)
225
(217)
8
In January 2021, Wings Therapeutics Inc. merged into Phoenicis Therapeutics Inc. by means of a non-cash
transaction. ProQR holds a 3.9% interest in Phoenicis Therapeutics Inc. In 2021, a gain on disposal of
associate was recognized amounting to € 514,000, which consists of the fair value of the equity instruments
received of Phoenicis Therapeutics Inc. of EUR 621,000, partly off-set by the derecognition of the carrying
value of our investment in Wings Therapeutics, Inc of EUR 107,000.
The Company elected to recognize subsequent changes in the fair value of our investment in Phoenicis in
Other Comprehensive Income. There have been no changes in the fair value of our investment in Phoenicis
since the initial recognition.
Balance at January 1, 2021
Investment in Phoenicis Therapeutics, Inc.
Balance at December 31, 2021
10. Other Taxes
Value added tax
All receivables are considered short-term and due within one year.
11. Prepayments and Other Receivables
Prepayments
Other receivables
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Financial Statements 2021
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Investment in
financial asset
€ 1,000
--
621
621
December 31,
2021
December 31,
2020
€ 1,000
€ 1,000
555
555
421
421
December 31,
2021
December 31,
2020
€ 1,000
€ 1,000
3,136
268
3,404
3,383
379
3,762
All receivables are considered short-term and due within one year. At December 31, 2021 and 2020,
prepayments consisted principally of payments made by the Company for services not yet provided by
vendors.
12. Cash and Cash Equivalents
Cash at banks
The cash at banks is at full disposal of the Company.
December 31,
2021
December 31,
2020
€ 1,000
€ 1,000
187,524
187,524
75,838
75,838
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Financial Statements 2021
PROQR THERAPEUTICS ANNUAL REPORT 2021
13. Shareholders’ Equity
(a) Share capital
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
2021
2020
54,131,553
53,975,838
20,498,451
112,657
474,887
53,708
102,007
303,408
(352,167)
(303,408)
74,865,381
54,131,553
The authorized share capital of the Company amounting to € 13,600,000 consists of 170,000,000 ordinary
shares and 170,000,000 preference shares with a par value of € 0.04 per share. At December 31, 2021,
74,865,381 ordinary shares were issued. 71,290,805 ordinary shares were fully paid, and 3,574,576 ordinary
shares were held by the Company as treasury shares (2020: 3,926,743).
In October 2019, the Company consummated an underwritten public offering of 10,454,545 ordinary shares
at an issue price of $ 5.50 per share. The gross proceeds from this offering amounted to € 51,597,000 while
the transaction costs amounted to € 3,047,000, resulting in net proceeds of € 48,550,000.
In December 2019, the Company issued 371,306 shares in the aggregate amount of $ 3,501,000, at $ 9.43 (€
8.51) per share to Ionis Pharmaceuticals, Inc. Under the terms of the agreement, the second installment of
the upfront payment in ordinary shares to the Company’s common stock was made to Ionis upon the dosing
of the first patient in the phase 1/2 Aurora clinical trial for QR-1123.
In March 2020, the Company entered into a sales agreement that permitted the offering, issuance and sale by
the Company of up to a maximum aggregate offering price of $ 75,000,000 of its ordinary shares that may be
issued and sold in one or more at-the-market offerings with Citigroup Global Markets, Inc. and Cantor
Fitzgerald & Co. In January 2021, the Company issued 585,398 ordinary shares under this sales agreement.
The gross proceeds from this sale amounted to € 2,767,000, with transaction costs amounting to € 114,000,
resulting in net proceeds of € 2,653,000. In 2020, no shares were issued pursuant to this ATM facility.
In April 2021, the Company consummated an underwritten public offering of 15,923,077 ordinary shares at
an issue price of $ 6.50 per share. The gross proceeds from this offering amounted to € 88,115,000 while the
transaction costs amounted to € 5,499,000, resulting in net proceeds of € 82,616,000.
In September 2021, the Company issued 3,989,976 shares to Eli Lilly and Company (‘Lilly”) pursuant to the
global licensing and research collaboration between the Company and Lilly, resulting in gross proceeds of €
23,223,000, with no significant transaction costs. This amount excludes a premium paid by Eli Lilly that is
considered to be part of the transaction price of the licensing and research collaboration agreement (refer to
note 17).
In November, 2021, 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
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Financial Statements 2021
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sold under a sales agreement with Cantor Fitzgerald & Co in one or more at-the-market offerings. In 2021, no
shares were issued pursuant to this ATM facility.
(b) Equity settled employee benefit reserve
The costs of share options and RSUs for employees, members of the Supervisory Board and members of the
Management Board are recognized in the income statement, together with a corresponding increase in
equity during the vesting period, taking into account (deferral of) corporate income taxes. The accumulated
expense of share options recognized in the income statement is shown separately in the equity category
‘equity settled employee benefit reserve’ in the ‘statement of changes in equity’. On September 25, 2017, we
established a Dutch foundation named Stichting Bewaarneming Aandelen ProQR for holding shares in trust
for employees, members of the Management Board and members of the Supervisory Board of the Company
and its group companies who from time to time will exercise options under the Company’s equity incentive
plans.
(c) Translation reserve
The translation reserve comprises all foreign currency differences arising from the translation of the financial
statements of foreign operations.
(d) Share options and restricted stock units
The Company operates an equity-settled share-based compensation plan which was introduced in 2013.
Options and RSUs 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 € 6,216,000 in 2021 (2020: € 7,838,000), of which € 3,636,000 (2020: € 4,423,000) was recorded in
general and administrative costs and € 2,580,000 (2020: € 3,415,000) 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 and restricted stock units (RSUs), 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 either the face value or the fair value of the
ordinary shares of the Company at the date of the grant.
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:
Risk-free interest rate
Expected dividend yield
Expected volatility
Expected life in years
Options
granted in 2021
Options
granted in 2020
0.510%
0%
79.0%
5 years
1.432%
0%
78.7%
5 years
The resulting weighted average grant date fair value of the options amounted to € 2.58 in 2021 (2020: € 5.01).
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.
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Financial Statements 2021
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The fair value of RSUs is determined at the grant date by using the Company’s share price at the grant date.
The resulting weighted average grant date fair value of the RSUs amounted to € 4.27 in 2021. No RSUs were
granted in 2020 and 2019.
Movements in the number of options outstanding and their related weighted average exercise prices are as
follows:
Balance at January 1
Granted
Forfeited
Exercised
Expired
Balance at December 31
2021
2020
Number of
options
Average
exercise price
Number of
options
Average
exercise price
7,021,235
1,492,034
(341,448)
(474,887)
(53,791)
7,643,143
€ 6.47
€ 4.34
€ 8.68
€ 3.35
€ 9.53
€ 6.13
5,575,454
1,851,056
(85,584)
(303,408)
(16,283)
7,021,235
€ 5.80
€ 7.88
€ 7.14
€ 2.34
€ 8.26
€ 6.47
Exercisable
4,221,503
3,401,449
The options outstanding at December 31, 2021 had an exercise price in the range of € 1.11 to € 19.32 (2020:
€ 1.11 to € 20.34) and a weighted-average contractual life of 6.6 years (2020: 7.0 years).
The weighted-average share price at the date of exercise for share options exercised in 2021 was € 5.81
(2020: € 7.11).
Movements in the number of RSUs outstanding are as follows:
Balance at January 1
Granted
Forfeited
Released
Balance at December 31
Please refer to note 27 for the options granted to key management personnel.
Number of
RSUs in 2021
Number of
RSUs in 2020
--
545,613
(9,495)
--
536,118
--
--
--
--
--
14. Non-current liabilities
(a) Borrowings
Innovation credit
Accrued interest on innovation credit
Convertible loans
Accrued interest on convertible loans
Total borrowings
Current portion
Non-current borrowings
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Financial Statements 2021
PROQR THERAPEUTICS ANNUAL REPORT 2021
December 31,
2021
December 31,
2020
€ 1,000
€ 1,000
3,907
645
38,925
613
44,090
(4,771)
39,319
2,770
307
13,812
435
17,324
(1,135)
16,189
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 € 5,000,000. The credit was interest-bearing at a rate of 10% per annum. In June
2020, ProQR received a final waiver of the full amount of the Innovation credit, including accumulated
interest. Consequently, the carrying amount of € 8,423,000, including accumulated interest, was recognized in
other income (under grant income) in 2020.
On December 10, 2018 ProQR was awarded an Innovation credit for the sepofarsen program. Amounts will
be drawn under this facility from 2018 through 2022. The credit of € 4,755,000 will be used to conduct the
Phase 2/3 clinical study and efforts to obtain regulatory and ethical market approval (NDA/MAA) of
sepofarsen for LCA10, of which € 3,907,000 had been received at December 31, 2021. The credit, including
accrued interest of 10% per annum, is repayable depending on obtaining market approval.
The assets which are co-financed with the granted innovation credit are subject to a right of pledge for the
benefit of RVO.
Convertible loans
In July 2020, the Company entered into a convertible debt financing agreement with Pontifax Medison Debt
Financing. Under the agreement, the Company had access to up to $ 30 million in convertible debt financing
in three tranches of $ 10 million each that will mature over a 54-month period and have an interest-only
period of 24 months. One tranche of $ 10 million (€ 8.8 million) had been drawn down as at December 31,
2021. A second close of the convertible debt financing agreement was completed in August 2020 with Kreos
Capital. Under the second agreement, the Company had access to up to € 15 million in convertible debt
financing in three tranches of € 5 million each that will mature over a 54-month period and have an interest-
only period of 24 months. One tranche of € 5 million had been drawn down as at December 31, 2021.
Pontifax and/or Kreos (the ‘Lenders’) may elect to convert the outstanding loans into ProQR ordinary shares
at any time prior to repayment at a fixed conversion price of $ 7.88 per share. ProQR also has the ability to
convert the loans into its ordinary shares, at the same conversion price, if the Company’s stock price reaches
a pre-determined threshold. In connection with the loan agreement, the Company issued to the Lenders
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Financial Statements 2021
PROQR THERAPEUTICS ANNUAL REPORT 2021
warrants to purchase up to an aggregate of 302,676 shares of its common stock at a fixed exercise price of
$ 7.88.
On December 29, 2021, the Company amended its convertible debt financing agreement with the Lenders.
Under the amended agreement, at December 31, 2021, the Company had drawn down an additional $ 30
million (€ 26.5 million) that matures over a 54-month period and has an interest-only period of 33 months.
The amendment replaces the two undrawn tranches under the original convertible debt financing
agreements.
The convertible loans from Pontifax and Kreos bear interest of 8.2% per annum.
The Lenders may elect to convert the outstanding loans into ProQR ordinary shares at any time prior to
repayment at a fixed conversion price of $ 11.94 per share. ProQR also has the ability to convert the loans
into its ordinary shares, at the same conversion price, if the Company’s stock price reaches a pre-determined
threshold. In connection with the amended loan agreement, the Company issued to the Lenders warrants to
purchase up to an aggregate of 376,952 shares of its common stock at a fixed exercise price of $ 11.94.
Pontifax’ conversion option and warrants are accounted for as embedded derivatives and are recognized
separately from the host contract as financial liabilities at fair value through profit or loss. The host contract is
recognized at amortized cost.
The Kreos loan is accounted for as a compound financial instrument. The liability component is recognized at
amortized cost. The equity component is initially recognized at fair value as option premium on convertible
loan and will not be subsequently remeasured. Kreos’ warrants are accounted for as embedded derivatives
and are recognized as financial liabilities at fair value through profit or loss.
As security for the Pontifax and Kreos convertible loans, the Company has pledged the following items, with
their respective carrying amounts as at December 31, 2021: cash at banks with a carrying amount of
€ 187,524,000, other receivables with a carrying amount of € 268,000, investments in associates with a
carrying amount of € 8,000, leasehold improvements with a carrying amount of € 372,000 and equipment
with a carrying amount of € 1,432,000.
Convertible loans amounting to € 2.3 million were issued to Amylon Therapeutics B.V. in 2018 and 2019 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.
Reconciliation of movements of liabilities to cash flows arising from financing activities:
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Financial Statements 2021
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Balance on January 1, 2020
Changes from financing cash flows
Proceeds from borrowings
Proceeds from convertible loans
Repayment of lease liability
The effect of changes in foreign exchange rates
Other changes
Interest expense
Interest paid
Waiver of innovation credit
Conversion into equity
Transaction costs
Derivative financial liabilities
Option premium on convertible loans
Share-based repayment of lease liability
New leases
Effect of lease modifications
Balance on January 1, 2021
Changes from financing cash flows
Proceeds from borrowings
Proceeds from convertible loans
Repayment of lease liability
The effect of changes in foreign exchange rates
Other changes
Interest expense
Interest paid
Transaction costs
Derivative financial liabilities
Option premium on convertible loans
Share-based repayment of lease liability
New leases
Effect of lease amendments
Innovation
credit
Convertible
loans
Lease liabilities
€ 1,000
10,315
579
—
—
—
606
—
(8,423)
—
—
—
—
—
—
—
€ 1,000
2,737
—
13,791
—
(580)
1,054
(716)
—
(272)
(670)
(817)
(280)
—
—
—
€ 1,000
508
—
—
(605)
—
—
—
—
—
—
—
—
—
(542)
16,332
1,260
3,077
14,247
16,953
1,137
--
--
--
338
--
--
--
--
--
--
--
--
26,520
--
590
1,877
(1,216)
(148)
(1,186)
(1,146)
--
--
--
--
--
(820)
--
--
--
--
--
--
(387)
121
415
Balance on December 31, 2021
4,552
39,538
16,282
PAGE 78 / 111
Financial Statements 2021
PROQR THERAPEUTICS ANNUAL REPORT 2021
15. Deferred Income
The following table summarizes details of deferred income at December 31, 2021 and December 31, 2020.
The nature of the deferred income relating to Eli Lilly and Yarrow is described in Note 17.
Eli Lilly up-front payment and premium on equity consideration
Yarrow up-front payment and premium on equity consideration
Foundation for Fighting Blindness grant
Horizon 2020 grant
Total deferred income
Current portion
Total non-current deferred income
16. Current Liabilities
Borrowings
Lease liabilities
Derivative financial instruments
Trade payables
Social securities and other taxes
Pension premiums
Deferred income
Accrued expenses and other liabilities
December 31,
2021
December 31,
2020
€ 1,000
€ 1,000
19,143
73
561
25
19,802
(5,115)
14,687
--
--
623
77
700
(700)
--
December 31,
2021
December 31,
2020
€ 1,000
€ 1,000
4,771
1,534
3,995
191
1,230
--
5,115
10,760
27,596
1,135
1,260
839
221
22
6
700
6,118
10,301
At December 31, 2021 and 2020, current liabilities included derivative financial instruments consisting of
conversion options and warrants issued in connection with our convertible loans, which are described in
Note 14.
At December 31, 2021 and 2020, current liabilities also included deferred income resulting from funds
received for our research and innovation programs. Accrued expenses and other liabilities consisted
principally of accruals for services provided by vendors not yet billed, payroll-related accruals and other
miscellaneous liabilities.
17. Revenue
The following table summarizes details of revenue recognized in the years ended December 31, 2021 and
2020 by collaboration agreement and by category of revenue: upfront payments, research and development
service fees and equity consideration.
Up-front payments
Eli Lilly
Yarrow
R&D services
Eli Lilly
Yarrow
Equity consideration
Eli Lilly
Yarrow
PAGE 79 / 111
Financial Statements 2021
PROQR THERAPEUTICS ANNUAL REPORT 2021
2021
€ 1,000
2020
€ 1,000
581
252
--
282
71
168
1,354
--
--
--
--
--
--
--
The table below summarizes the changes in current and non-current deferred revenue for the years ended
December 31, 2021 and 2020.
Balance on January 1, 2021
Received
Upfront payment
R&D services
Equity consideration
Revenue recognition
Upfront payment
R&D services
Equity consideration
Foreign currency translation effects
Balance on December 31, 2021
Eli Lilly
€ 1,000
--
17,651
--
2,144
(581)
--
(71)
--
19,143
Yarrow
€ 1,000
--
419
178
225
(252)
(282)
(168)
(47)
73
Eli Lilly
In September 2021, the Company entered into a global licensing and research collaboration with Eli Lilly and
Company (‘Eli Lilly’) focused on the discovery, development, and commercialization of potential new
medicines for genetic disorders in the liver and nervous system. ProQR and Eli Lilly will use ProQR’s
proprietary Axiomer® RNA editing platform to progress new drug targets toward clinical development and
commercialization.
Under the terms of the agreement, ProQR received an upfront payment and equity consideration, and is
eligible to receive milestone payments and royalties on the net sales of any resulting products. In September
2021, the Company issued 3,989,976 shares to Eli Lilly, resulting in net proceeds of € 23,223,000. This amount
included a price premium of € 2,144,000, which was determined to be part of the transaction price and as
such was initially recognized as deferred revenue. An up-front payment of € 17,651,000 was received in
October 2021.
PAGE 80 / 111
Financial Statements 2021
PROQR THERAPEUTICS ANNUAL REPORT 2021
With regard to its collaboration with Eli Lilly, the Company concluded as follows:
•
•
•
There is one single performance obligation under IFRS 15, which is the transfer of a license combined
with the performance of research and development activities. The Company concluded that the license
is not capable of being distinct and is not distinct in the context of the contract.
The transaction price of this agreement currently only includes fixed parts, consisting of an up-front fee
and an equity component. The agreement also contains variable parts, but those are not yet included in
the transaction price. Milestone payments will only be included to the extent that it is highly probable
that a significant reversal in the amount of cumulative revenue recognized will not occur when the
uncertainty associated with the milestones is subsequently resolved. Sales-based milestones and sales-
based royalties will be included as the underlying sales occur.
The Company recognizes revenue over time, using an input method that estimates the satisfaction of
the performance obligation as the percentage of labor hours incurred compared to the total estimated
labor hours required to complete the promised services.
Yarrow Biotechnology
In May 2021, the Company entered into an exclusive worldwide license and discovery collaboration for an
undisclosed target with Yarrow Biotechnology, Inc. (“Yarrow”). Under the terms of the agreement, ProQR
received an upfront payment, equity consideration and reimbursement for ongoing R&D services. ProQR is
also eligible to receive milestone payments and royalties on the net sales of any resulting products. In May
2021, ProQR received an up-front payment of € 419,000 and 8% of the shares of Yarrow’s common stock (see
Note 8). In 2021, ProQR also received reimbursements for R&D services performed amounting to € 178,000.
With regard to its collaboration with Yarrow, the Company concluded as follows:
•
•
There is one single performance obligation under IFRS 15, which is the transfer of a license combined
with the performance of research and development activities. The Company concluded that the license
is not capable of being distinct and is not distinct in the context of the contract.
The transaction price of this agreement currently includes both fixed and variable parts. The fixed part
consists of an up-front fee and an equity component. The variable part consists of a cost
reimbursement for research and development activities. The agreement also contains other variable
parts, but those are not yet included in the transaction price. Milestone payments will only be included
to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue
recognized will not occur when the uncertainty associated with the milestones is subsequently resolved.
Sales-based milestones and sales-based royalties will be included as the underlying sales occur.
•
The Company recognizes revenue over time, using an input method that estimates the satisfaction of
the performance obligation as the percentage of labor hours incurred compared to the total estimated
labor hours required to complete the promised services.
18. Other income
Grant income
Other income
PAGE 81 / 111
Financial Statements 2021
PROQR THERAPEUTICS ANNUAL REPORT 2021
2021
€ 1,000
1,012
31
1,043
2020
€ 1,000
9,307
145
9,452
In June 2020, ProQR received a final waiver of the full amount of the Innovation credit for the Company’s
cystic fibrosis program. Consequently, the carrying amount of € 8,423,000, including accumulated interest,
was recognized in grant income in 2020.
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 $ 7,500,000 for the preclinical and clinical
development of ultevursen for Usher syndrome type 2A targeting mutations in exon 13. FFB grant income
amounted to € 977,000 in 2021 compared to € 624,000 in 2020.
19. Operating Costs
Total operating costs include the following expenses by nature.
Employee benefits
External R&D costs
Laboratory costs and other consumables
Consultancy costs
Insurance costs
Depreciation
Patent and license expenses
Other
20. Employee Benefits
Wages and salaries
Social security costs
Pension costs – defined contribution plans
Equity-settled share based payments
2021
€ 1,000
26,320
15,580
2,709
4,447
1,979
2,329
95
6,129
59,588
2021
€ 1,000
16,838
2,124
1,142
6,216
2020
€ 1,000
23,836
12,860
2,840
2,620
1,450
2,355
736
5,123
51,820
2020
€ 1,000
13,251
1,710
1,037
7,838
Average number of employees for the period
163.0
156.3
26,320
23,836
PAGE 82 / 111
Financial Statements 2021
PROQR THERAPEUTICS ANNUAL REPORT 2021
Employees per activity at December 31 (converted to FTE):
Research and Development
General and Administrative
December 31,
2021
December 31,
2020
140.7
40.9
181.6
113.8
36.6
150.4
Of all employees 149.6 FTE are employed in the Netherlands (2020: 135.3 FTE).
Included in the wages and salaries for 2021 is a credit of € 695,000 (2020: € 1,379,000, 2019: € 714,000) with
respect to WBSO subsidies.
21. Financial Income and Financial Expense
Interest income
Current accounts and deposits
Interest costs
Current accounts and deposits
Lease liability
Interest on loans and borrowings
Foreign exchange result
Net foreign exchange benefit/(loss)
2021
€ 1,000
2020
€ 1,000
5
313
(355)
(835)
(2,215)
(129)
(409)
(1,502)
611
(1,989)
(2,789)
(3,716)
Financial income amounting to € 616,000 (2020: € 313,000) consists of interest income of € 5,000 (2020:
€ 313,000) and a net foreign exchange benefit of € 611,000 (2020: nil). Financial expenses amounting to
€ 3,405,000 (2020: € 4,029,000) consist of interest costs of € 3,405,000 (2020: € 2,040,000). In 2020, financial
expenses also included a net foreign exchange loss of € 1,989,000.
22. Results related to financial liabilities measured at fair value through profit or
loss
In 2021 and 2020, results related to financial liabilities measured at fair value through profit or loss represent
changes in the fair value of derivative financial instruments since their initial recognition. These derivative
financial instruments consist of conversion options and warrants issued in connection with our convertible
loans, which are described in note 14.
23. Income Taxes
The calculation of the tax charge is as follows:
Consolidated result before corporate income taxes
Exclude: results related to associates
PAGE 83 / 111
Financial Statements 2021
PROQR THERAPEUTICS ANNUAL REPORT 2021
2021
€ 1,000
(61,563)
(217)
(61,346)
2020
€ 1,000
(46,490)
(322)
(46,168)
Income tax provision based on domestic rate (25%)
15,337
11,542
Tax effect of:
Different tax rates in foreign jurisdictions
Non-deductible expenses
Share- and loan issue expenditures that are deductible
Current year losses for which no deferred tax asset was recognized
Change in unrecognized deductible temporary differences
True-up for prior year
Income tax charge
Effective tax rate
18
(2,176)
1,423
(14,606)
(89)
(24)
(117)
16
(2,742)
174
(9,029)
(44)
(41)
(124)
0%
0%
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. Consequently, the Company has not recognized a deferred tax asset related to operating losses.
As per December 31, 2021, the Company has a total amount of € 312.6 million (2020: € 254.2 million, 2019: €
218.1 million) tax loss carry-forwards available for offset against future taxable profits, which may be carried
forward indefinitely. However, the offset of losses will be limited in a given year against the first € 1 million of
taxable profit. For taxable profit in excess of this amount, losses may only be offset up to 50% of this excess.
PAGE 84 / 111
Financial Statements 2021
PROQR THERAPEUTICS ANNUAL REPORT 2021
24. Earnings Per Share
(a) Basic and diluted earnings per share
Basic earnings per share are calculated by dividing the result attributable to equity holders of the Company
by the weighted average number of shares outstanding during the year.
Result attributable to equity holders of the Company (€ 1,000)
Weighted average number of shares outstanding
Basic (and diluted) earnings per share (€ per share)
2021
2020
(61,621)
(46,565)
64,182,492
50,060,565
(0.96)
(0.93)
(b) Diluted earnings per share
For the periods included in these financial statements, the share options are not included in the diluted
earnings per share calculation as the Company was loss-making in all periods. Due to the anti-dilutive nature
of the outstanding options, basic and diluted earnings per share are equal.
(c) Dividends per share
The Company did not declare dividends for any of the years presented in these financial statements.
25. Leases
The Company leases office and laboratory facilities of 4,818 square meters at Zernikedreef in Leiden, the
Netherlands, where our headquarters and our laboratories are located. The current lease agreement for
these facilities terminates on June 30, 2031. The lease agreement contains no significant dismantling
requirements.
The initial 10-year lease agreement for the Leiden office and laboratory facilities was accounted for as of
commencement date July 1, 2020. This 10-year period was extended by 1 year to an 11-year period in
December 2020. The lease contract may be extended for subsequent 5-year periods. As the Company is not
reasonably certain to exercise these extension options, these are not included in the lease term.
The lease liability and the corresponding right-of-use asset for this lease contract, initially recognized on July
1, 2020, amounted to € 16,203,000 and € 16,332,000, respectively. A modification to reflect the additional 1
year lease period resulted in an increase in the carrying amounts of the lease liability and the right-of-use
asset of € 1,260,000. In June 2021, the lease price was amended to reflect an indexation. The lease liability
was remeasured, resulting in an increase in the carrying amounts of the lease liability and the right-of-use
asset of € 415,000.
In 2021, the Company entered into an agreement to rent research space in London, UK, for a period of two
years. The lease liability and the corresponding right-of-use asset for this lease contract, initially recognized
on April 1, 2021, amounted to € 121,000 each.
The following table summarizes the relevant disclosures in relation to our leases in 2021 and 2020:
Depreciation charge for right-of-use asset
Interest expense on lease liability
Expense relating to short-term leases
Total cash outflow for leases
Additions to right-of-use assets during the period
PAGE 85 / 111
Financial Statements 2021
PROQR THERAPEUTICS ANNUAL REPORT 2021
2021
€ 1,000
1,672
835
70
1,657
536
2020
€ 1,000
1,422
409
141
1,014
17,591
The carrying amount of the right-of-use asset at the end of the reporting period is disclosed in note 7
Property, Plant & Equipment.
A maturity analysis of our lease liability is included in note 5 Financial Risk Management under (c) Liquidity
risk. The total undiscounted commitment for lease agreements to which the Company had committed at
December 31, 2021 amounts to € 20,509,000. This amount does not include potential commitments that may
arise from contractual extension options, as the Company is not reasonably certain that any extension
options will be exercised.
26. Commitments and Contingencies
(a) Claims
There are no claims known to management related to the activities of the Company.
(b) Patent license agreements
On October 26, 2018, the Company 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 low 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
PAGE 86 / 111
Financial Statements 2021
PROQR THERAPEUTICS ANNUAL REPORT 2021
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
(Radboud) in the field of antisense oligonucleotide-based therapy for Leber’s Congenital Amaurosis (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 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 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
contained in the license agreement, the amount of which depends 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 of the relevant 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 is subject to other analogous proceedings. Radboud may also terminate
the license 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, the Company 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 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 contained in the
license agreement, the amount of which depends 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 of the relevant
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 is subject to other analogous proceedings. Radboud may also terminate the license 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.
PAGE 87 / 111
Financial Statements 2021
PROQR THERAPEUTICS ANNUAL REPORT 2021
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 not conflicting with the public
order or ethical obligations of Inserm Transfert SA or any co-owner and not tarnishing the image of Inserm
Transfert SA or any co-owner. In January 2020, the license agreement with Inserm Transfert SA and
Assistance-Publique-Hôpiteaux de Paris was amended so as to include a world-wide, non-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 for us in a method for antisense oligonucleotide-mediated exon skipping in the retina. In partial
consideration of the rights and licenses granted by the license agreement, the Company is required to pay a
lumpsum payment and an annual license maintenance fee, as well as 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 other 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 (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 interest.
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 February 2019, the Company entered into an agreement with the University of Rochester, New York, which
gives us a world-wide, exclusive, royalty-bearing, sublicensable license in the field of antisense
oligonucleotides for use in nucleotide specific RNA editing through pseudouridylation, under certain patent
PAGE 88 / 111
Financial Statements 2021
PROQR THERAPEUTICS ANNUAL REPORT 2021
rights of University of Rochester. This license agreement contains certain diligence obligations for the
Company coupled to milestone payments and complements the Company’s intellectual property relating to
the Axiomer/pseudouridylation program.
In September 2020, the Company entered into an agreement with Vico Therapeutics B.V., which gives us a
world-wide, exclusive, royalty-bearing, sublicensable license in the field of the prophylactic and therapeutic
use of antisense oligonucleotide for the treatment of Fuch’s Endothelial Corneal Dystrophy (FECD) caused by
a trinucleotide repeat, under certain patent rights of Vico Therapeutics B.V. In partial consideration of the
rights and licenses granted by the license agreement, the Company is required to make annual maintenance
payments. Unless terminated earlier in accordance with this the license agreement, the agreement will stay in
effect until the expiration of all of the licensed patent rights. The license agreement may be terminated by
either party in the event of an uncured breach by the breaching party. Vico Therapeutics B.V. may terminate
the license agreement if the Company applies for an order or an order is made declaring the Company
bankrupt or granting the Company suspension of payments, or a liquidator is appointed for the Company, or
the Company is dissolved, liquidated, or ceases to carry on all or a substantial part of its business or a
decision is taken to that effect, or in the event uncured payment defaults.
(c) Clinical support agreements
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 (€ 6.1 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 $ 37.5 million (€ 30.6 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 $ 15 million (€ 12.2 million) if it transfers, sells
or licenses QR 421a other than for certain clinical or development purposes, or if the Company enters into a
change of control transaction. However, the payment in the previous sentence may be set-off against the $
37.5 million milestone payment. Either FFB or the Company may terminate the agreement for cause, which
includes the Company’s material failure to achieve certain commercialization and development milestones.
The Company’s payment obligations survive the termination of the agreement.
(d) Research and development commitments
The Company has research and development commitments, mainly with CRO’s, amounting to € 27,884,000 at
December 31, 2021 (2020: € 12,003,000). Of these obligations an amount of € 13,024,000 is due in 2022, the
remainder is due in 1 to 5 years.
PAGE 89 / 111
Financial Statements 2021
PROQR THERAPEUTICS ANNUAL REPORT 2021
27. Related-Party Transactions
Details of transactions between the Company and related parties are disclosed below.
(a) Compensation of the Supervisory Board
The remuneration of the Supervisory Board members in 2021 is set out in the table below:
2021
Short term
employee
benefits
Post
employment
benefits
Share-based
payment
Total
€ 1,000
€ 1,000
€ 1,000
€ 1,000
70
--
47
50
44
29
240
--
--
--
--
--
--
--
86
--
86
86
80
77
415
156
--
133
136
124
106
655
Mr. Dinko Valerio
Mr. Antoine Papiernik
Ms. Alison Lawton
Mr. James Shannon
Mr. Bart Filius
Ms. Theresa Heggie*
* Ms. Heggie stepped down from the supervisory board on October 1, 2021, in connection with her
appointment as Chief Commercial Officer of the Company. The remuneration set forth for Ms. Heggie in the
table above covers the period from January 1, 2021 to October 1, 2021.
In 2021, Mr. Papiernik waived his compensation.
The remuneration of the Supervisory Board members in 2020 is set out in the table below:
2020
Short term
employee
benefits
Post
employment
benefits
Share-based
payment
Total
€ 1,000
€ 1,000
€ 1,000
€ 1,000
--
--
34
45
41
36
156
--
--
--
--
--
--
--
123
—
123
125
104
99
574
123
—
157
170
145
135
730
Mr. Dinko Valerio
Mr. Antoine Papiernik
Ms. Alison Lawton
Mr. James Shannon
Mr. Bart Filius
Ms. Theresa Heggie
In 2020, Mr. Valerio and Mr. Papiernik waived their short-term benefits in support to the Company during the
COVID-19 pandemic.
PAGE 90 / 111
Financial Statements 2021
PROQR THERAPEUTICS ANNUAL REPORT 2021
As at December 31, 2021:
• Mr. Dinko Valerio holds 725,692 ordinary shares in the Company, as well as 146,425 options. These
options vest in four annual equal tranches of 25% starting for the first time as of the first anniversary of
the date of grant. In 2021, Mr. Valerio was granted 23,239 options under the Option Plan to acquire
depositary receipts issued for ordinary shares at an exercise price of € 3.42 per option. In 2020, Mr.
Valerio was granted 24,615 options under the Option Plan to acquire depositary receipts issued for
ordinary shares at an exercise price of € 8.82 per option. In 2019, Mr. Valerio was granted 14,918
options at an average exercise price of € 13.78 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 at the option of the holder or the
Company in case financing criteria are met. The unconverted loan became payable on demand after 24
months in equal quarterly terms. In 2021, Mr. Valerio exercised options to acquire 32,272 ordinary
shares.
• Mr. Antoine Papiernik does not hold any shares or options in the Company. As a managing partner of
Sofinnova Partners SAS, the management company of Sofinnova Capital VII FCPR, holder of 2,764,194
ordinary shares, Mr. Papiernik may be deemed to have share voting and investment power with respect
to such shares.
• Ms. Alison Lawton holds 159,245 options. In 2021, Ms. Lawton was granted 23,239 options under the
Option Plan to acquire depositary receipts issued for ordinary shares at with an exercise price of € 3.42
per option. In 2020, Ms. Lawton was granted 24,615 options under the Option Plan to acquire
depositary receipts issued for ordinary shares at with an exercise price of € 8.82 per option. In 2019, Ms.
Lawton was granted 14,918 options with an average exercise price of € 13.78 per option. Under these
option grants, options vest in four equal annual tranches of 25%, commencing at the first anniversary of
the date of grant.
• Mr. James Shannon holds 61,538 ordinary shares in the Company and 155,505 options. In 2021, Mr.
Shannon was granted 23.239 options under the Option Plan to acquire depositary receipts issued for
ordinary shares at an exercise price of € 3.42 per option. In 2020, Mr. Shannon was granted 24,615
options under the Option Plan to acquire depositary receipts issued for ordinary shares at an exercise
price of € 8.82 per option. In 2019, Mr. Shannon was granted 14,918 options at an exercise price of €
13.78 per option. Under these option grants, options vest in four equal annual tranches of 25%,
commencing at the first anniversary of the date of grant.
• Mr. Bart Filius holds 60,609 options. In 2021, Mr. Filius was granted 23,239 options under the Option
Plan to acquire depositary receipts issued for ordinary shares at with an exercise price of € 3.42 per
option. In 2020, Mr. Filius was granted 24,615 options under the Option Plan to acquire depositary
receipts issued for ordinary shares at with an exercise price of € 8.82 per option. In 2019, Mr. Filius was
granted 12,755 options at an exercise price of € 10.47 per option. Under these option grants, options
vest in four equal annual tranches of 25%, commencing at the first anniversary of the date of grant.
PAGE 91 / 111
Financial Statements 2021
PROQR THERAPEUTICS ANNUAL REPORT 2021
(b) Compensation of key management
Our management board is supported by our officers, or senior management. Mr. D.A. de Boer is the sole
statutory director of the Company. The total remuneration of the management board and senior
management in 2021 amounted to € 8,128,000 with the details set out in the table below:
2021
Short term
employee
benefits
Post
employment
benefits
Share-based
payment
Total
€ 1,000
€ 1,000
€ 1,000
€ 1,000
733
733
2,938
3,671
10
10
57
67
1,472
1,472
2,918
4,390
2,215
2,215
5,913
8,128
Mr. D.A. de Boer1
Management Board
Senior Management
1
Short term employee benefits includes a bonus for Mr. Daniel de Boer of € 284,000 based on goals realized in 2021.
The total remuneration of the Management Board and senior management in 2020 amounted to € 7,693,000
with the details set out in the table below:
2020
Short term
employee
benefits
Post
employment
benefits
Share-based
payment
Total
€ 1,000
€ 1,000
€ 1,000
€ 1,000
689
689
1,620
2,309
10
10
55
65
1,925
1,925
3,394
5,319
2,624
2,624
5,069
7,693
Mr. D.A. de Boer1
Management Board
Senior Management
1
Short term employee benefits includes a bonus for Mr. Daniel de Boer of € 240,000 based on goals realized in 2020.
As at December 31, 2021:
• Mr. Daniel de Boer holds 705,309 ordinary shares in the Company as well as 1,919,655 options. In 2021,
Mr. de Boer was awarded 442,279 options to acquire ordinary shares at an exercise price of € 3.42 per
option. In 2020, Mr. de Boer was awarded 395,561 options at an exercise price of € 8.82 per option. In
2019, Mr. de Boer was awarded 253,192 options at an exercise price of € 13.78 per option. These
options vest over four years in equal annual installments and had a remaining weighted-average
contractual life of 6.9 years as at December 31, 2021. At December 31, 2021, Mr. de Boer had not
exercised any of the options that were awarded to him.
ProQR does not grant any loans, advanced payments and guarantees to members of the Management and
Supervisory Board.
(c) Transactions with Yarrow Biotechnology, Inc.
The Company’s transactions with its associate company Yarrow Biotechnology, Inc. are described in note 17.
PAGE 92 / 111
Financial Statements 2021
PROQR THERAPEUTICS ANNUAL REPORT 2021
28. Subsequent events
On February 11, 2022, the Company announced the top-line results from the phase 2/3 Illuminate trial of
sepofarsen in CEP290-mediated LCA10. The study did not meet its primary endpoint nor any notable
secondary endpoints. No benefit was observed in either treatment arm versus the sham arm. These
announced results do not affect the amounts recognized in these financial statements. The potential
consequences of this event had already been taken into account in determining the liquidity projections
disclosed in these financial statements.
On April 13, 2022, the Company announced that it will refocus or suspend certain clinical studies and
suspend all other inherited retinal disease-related research activities. The Company also announced that it
will reduce its workforce by approximately 30%. In addition, the Company will accelerate the development of
the Axiomer RNA base-editing technology platform across multiple therapeutic areas. These developments
do not affect the financial figures included in these financial statements.
PAGE 93 / 111
Financial Statements 2021
PROQR THERAPEUTICS ANNUAL REPORT 2021
Company balance sheet at December 31, 2021
(Before appropriation of result)
ASSETS
Non-current assets
Participating interests
Receivables from group companies
Other investments in financial assets
Current assets
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
Option premium on convertible loan
Translation reserve
Accumulated deficit
Unappropriated result
LIABILITIES
Provisions
Non-current liabilities
Borrowings
Current liabilities
Borrowings
Derivative financial instruments at fair value through profit or loss
Payables to group companies
Trade payables
Social securities and other taxes
Other current liabilities
TOTAL LIABILITIES
TOTAL EQUITY AND LIABILITIES
The accompanying notes are an integral part of these financial statements.
* Includes a retrospective adjustment as explained in note 29 on page 94.
Note
December 31,
2021
December 31,
2020
€ 1,000
€ 1,000
31
32
33
34
35
36
37
--
31,927
621
32,548
554
893
176,043
177,490
107
31,867*
--
31,974
420
495*
69,410
70,325
210,038
102,299
2,995
398,309
28,443
1,426
430
2,165
288,757
23,825
280
(189)
(253,739)
(209,195)
(61,618)
116,246
(46,142)
59,501
35,569
29,824
38
33,947
11,606
38
38
39
2,766
3,995
16,529
12
145
829
--
839
--
1
19
509
24,276
1,368
93,792
210,038
42,798
102,299
PAGE 94 / 111
Financial Statements 2021
PROQR THERAPEUTICS ANNUAL REPORT 2021
Company income statement for the year ended December 31, 2021
Note
Share in results of participating interests, after taxation
31
Other result after taxation
Net result for the year
The accompanying notes are an integral part of these financial statements.
2021
€ 1,000
(53,740)
(7,878)
2020
€ 1,000
(45,491)
(651)
(61,618)
(46,142)
PAGE 95 / 111
Financial Statements 2021
PROQR THERAPEUTICS ANNUAL REPORT 2021
Notes to the Company financial statements for the year ended December 31,
2021
29. General
The company financial statements are part of the 2021 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 information on risk exposure and risk management, see note 5 to the consolidated financial statements.
Retrospective correction
After adoption of the FY 2020 annual report, the Company has concluded that a material amount of
receivables from group companies should be classified as non-current assets based on their nature, instead
of as current assets under Prepayments and other receivables. The comparative figures for 2020 have been
restated to reflect this correction. The retrospective correction does not affect the Company’s net result and
equity. The following table shows the impact on the company balance sheet for 2020:
As previously
reported
Correction
As restated
€ 1,000
€ 1,000
€ 1,000
2020
Prepayments and other receivables (current)
Receivables from group companies (non-current)
32,362
--
(31,867)
31,867
495
31,867
30. Principles for the measurement of assets and liabilities and the determination
of the result
For setting the principles for the recognition and measurement of assets and liabilities and determination of
the result for its company financial statements, the Company makes use of the option provided in section
2:362(8) of the Netherlands Civil Code. This means that the principles for the recognition and measurement
of assets and liabilities and determination of the result (hereinafter referred to as principles for recognition
and measurement) of the company financial statements of the Company are the same as those applied for
the consolidated IFRS financial statements. See page 54 for a description of these principles.
Participating interests in group companies
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 Company, 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.
Result of participating interests
The share in the result of participating interests consists of the share of the Company in the result of these
participating interests. Insofar 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 unrealized, they have not been recognised.
PAGE 96 / 111
Financial Statements 2021
PROQR THERAPEUTICS ANNUAL REPORT 2021
Provisions
Participating interests with a negative net asset value are valued at nil. This measurement also covers any
receivables provided to the participating interests that are, in substance, an extension of the net investment.
In particular, this relates to loans for which settlement is neither planned nor likely to occur in the
foreseeable future. A share in the profits of the participating interest in subsequent years will only be
recognised if and to the extent that the cumulative unrecognised share of loss has been absorbed. If the
Company fully or partially guarantees the debts of the relevant participating interest, or if has the
constructive obligation to enable the participating interest to pay its debts (for its share therein), then a
provision is recognised accordingly to the amount of the estimated payments by the Company on behalf of
the participating interest.
Corporate income taxes
ProQR Therapeutics N.V. is the head of the Dutch fiscal unity for corporate income taxes. The Company
recognizes the portion of corporate income tax that it would owe as an independent taxpayer, taking into
account the allocation of the advantages of the fiscal unity.
31. Participating interests
Participating interests
December 31,
2021
December 31,
2020
€ 1,000
€ 1,000
--
--
107
107
At December 31, 2021, 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 V 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.
Location
Share in issued capital
Leiden, the Netherlands
Leiden, the Netherlands
Leiden, the Netherlands
Leiden, the Netherlands
Leiden, the Netherlands
Leiden, the Netherlands
Leiden, the Netherlands
Leiden, the Netherlands
Leiden, the Netherlands
Leiden, the Netherlands
Delaware, United States
Leiden, the Netherlands
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
80%
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”). On December 31, 2021, the Company held a 4.9% minority shareholding in Yarrow
Biotechnology, Inc. For details on accounts receivable from group companies and other receivables,
reference is made to notes 32 and 34.
32. Receivables from group companies
Non-current receivables from group companies
33. Other Taxes
Value added tax
All receivables are considered short-term and due within one year.
34. Prepayments and Other Receivables
Prepayments
Other receivables
All receivables are considered short-term and due within one year.
35. Cash and Cash Equivalents
Cash at banks
The cash at banks is at full disposal of the Company.
PAGE 97 / 111
Financial Statements 2021
PROQR THERAPEUTICS ANNUAL REPORT 2021
December 31,
2021
December 31,
2020
€ 1,000
€ 1,000
31,927
31,927
31,867
31,867
December 31,
2021
December 31,
2020
€ 1,000
€ 1,000
554
554
420
420
December 31,
2021
December 31,
2020
€ 1,000
€ 1,000
839
54
893
492
3
495
December 31,
2021
December 31,
2020
€ 1,000
€ 1,000
176,043
176,043
69,410
69,410
PAGE 98 / 111
Financial Statements 2021
PROQR THERAPEUTICS ANNUAL REPORT 2021
36. Shareholders’ equity
Share
Capital
Share
Premium
Equity
Settled
Employee
Benefit
Reserve
Option
premium
on
convertible
loan
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
€ 1,000
2,159
287,214
16,551
--
--
4
2
--
--
--
--
--
--
--
--
538
7,838
270
--
--
735
--
--
--
(91)
(473)
--
--
--
--
--
--
280
--
--
--
151
(154,345)
(55,414)
96,316
--
(55,414)
55,414
--
(340)
--
--
--
--
--
--
--
--
--
--
91
473
--
--
--
--
--
--
(304)
8,380
272
280
--
735
--
(46,142)
(46,142)
2,165
288,757
23,825
280
(189)
(209,195)
(46,142)
59,501
--
--
5
--
--
--
--
382
6,216
820
107,657
--
--
(522)
--
--
1,513
(1,076)
--
--
--
--
5
--
--
--
--
--
1,146
--
--
--
--
(46,142)
46,142
--
619
--
--
--
--
--
--
--
--
--
--
522
1,076
--
--
619
6,603
--
108,477
--
--
--
1,146
--
1,518
--
(61,618)
(61,618)
2,995
398,309
28,443
1,426
430
(253,739)
(61,618)
116,246
Balance at
January 1, 2020
Retained result
Foreign exchange
differences
Recognition of share-
based payments
Issue of ordinary
shares
Equity component
convertible loan
Share options lapsed
Share options
exercised
Result for the year
Balance at
December 31, 2020
Retained result
Foreign exchange
differences
Recognition of share-
based payments
Issue of ordinary
shares
Equity component
convertible loan
Share options lapsed
Share options
exercised
Result for the year
Balance at
December 31, 2021
The 2020 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 2021 result to the accumulated deficit. For more details we refer to note 13 to the
consolidated financial statements.
PAGE 99 / 111
Financial Statements 2021
PROQR THERAPEUTICS ANNUAL REPORT 2021
Reconciliation of shareholders’ equity and net result per the consolidated financial
statements with shareholders’ equity and net result per the company financial
statements
Shareholders’ equity according to the consolidated balance sheet
Share in results of participating interests with negative equity for which no
provision is recognized
December 31,
2021
December 31,
2020
€ 1,000
€ 1,000
113,229
3,017
56,546
2,955
Shareholders’ equity according to the company balance sheet
116,246
59,501
December 31,
2021
December 31,
2020
€ 1,000
€ 1,000
Net result according to the consolidated profit and loss account
(61,680)
(46,614)
Share in results of participating interests with negative equity for which no
provision is recognized
62
472
Net result according to the company profit and loss account
(61,618)
(46,142)
37. Provisions
Provision for negative equity group company
Balance at January 1
Provisions made (released) during the year
Balance at December 31
38. Borrowings
Convertible loans
Total borrowings
Current portion
Non-current borrowings
December 31,
2021
December 31,
2020
€ 1,000
€ 1,000
29,824
5,745
35,569
39,753
(9,929)
29,824
December 31,
2021
December 31,
2020
€ 1,000
€ 1,000
36,713
36,713
(2,766)
33,947
11,606
11,606
--
11,606
PAGE 100 / 111
Financial Statements 2021
PROQR THERAPEUTICS ANNUAL REPORT 2021
Convertible loans
In July 2020, the Company entered into a convertible debt financing agreement with Pontifax Medison Debt
Financing. Under the agreement, the Company had access to up to $ 30 million in convertible debt financing
in three tranches of $ 10 million each that will mature over a 54-month period and have an interest-only
period of 24 months. One tranche of $ 10 million had been drawn down as at December 31, 2021. A second
close of the convertible debt financing agreement was completed in August 2020 with Kreos Capital. Under
the second agreement, the Company had access to up to € 15 million in convertible debt financing in three
tranches of € 5 million each that will mature over a 54-month period and have an interest-only period of 24
months. One tranche of € 5 million had been drawn down as at December 31, 2021.
Pontifax and/or Kreos (the ‘Lenders’) may elect to convert the outstanding loans into ProQR ordinary shares
at any time prior to repayment at a fixed conversion price of $ 7.88 per share. ProQR also has the ability to
convert the loans into its ordinary shares, at the same conversion price, if the Company’s stock price reaches
a pre-determined threshold. In connection with the loan agreement, the Company issued to the Lenders
warrants to purchase up to an aggregate of 302,676 shares of its common stock at a fixed exercise price of
$ 7.88.
On December 29, 2021, the Company amended its convertible debt financing agreement with the Lenders.
Under the amended agreement, the Company has drawn down an additional $ 30 million (€ 26.5 million) that
will mature over a 54-month period and has an interest-only period of 33 months. The amendment replaces
the two undrawn tranches under the original convertible debt financing agreements.
The convertible loans from Pontifax and Kreos bear interest of 8.2% per annum.
The Lenders may elect to convert the outstanding loans into ProQR ordinary shares at any time prior to
repayment at a fixed conversion price of $ 11.94 per share. ProQR also has the ability to convert the loans
into its ordinary shares, at the same conversion price, if the Company’s stock price reaches a pre-determined
threshold. In connection with the amended loan agreement, the Company issued to the Lenders warrants to
purchase up to an aggregate of 376,952 shares of its common stock at a fixed exercise price of $ 11.94.
Pontifax’ conversion option and warrants are accounted for as embedded derivatives and are recognized
separately from the host contract as financial liabilities at fair value through profit or loss. The host contract is
recognized at amortized cost.
The Kreos loan is accounted for as a compound financial instrument. The liability component is recognized at
amortized cost. The equity component is initially recognized at fair value as option premium on convertible
loan and will not be subsequently remeasured. Kreos’ warrants are accounted for as embedded derivatives
and are recognized as financial liabilities at fair value through profit or loss.
As security for the Pontifax and Kreos convertible loans, the Company has pledged the following items, with
their respective carrying amounts as at December 31, 2021: cash at banks with a carrying amount of
€ 187,524,000, other receivables with a carrying amount of € 268,000, investments in associates with a
carrying amount of € 8,000, leasehold improvements with a carrying amount of € 372,000 and equipment
with a carrying amount of € 1,432,000.
39. Payables to group companies
Payables to group companies
40. Employee benefits
PAGE 101 / 111
Financial Statements 2021
PROQR THERAPEUTICS ANNUAL REPORT 2021
December 31,
2021
December 31,
2020
€ 1,000
€ 1,000
16,529
16,529
--
--
ProQR Therapeutics N.V. has one employee: Daniel de Boer. The disclosure of his remuneration is included in
Note 27 to the consolidated financial statements.
41. Commitments and Contingencies
(a) Claims
There are no claims known to management related to the activities of the Company.
(b) Several liability and guarantees
The Company has issued declarations of joint and several liabilities for debts arising from the actions of
Dutch consolidated participating interests, as meant in article 2:403 of the Netherlands Civil Code.
The Company constitutes a tax entity with its Dutch subsidiaries for corporate income tax purposes; the
standard conditions prescribe that all companies of the tax entity are jointly and severally liable for the
corporate income tax payable.
42. Auditor fees
The fees for services provided by our external auditor, KPMG Accountants N.V. for the year ended December
31, 2021 and Deloitte Accountants B.V. for the year ended December 31, 2020, are specified below for each of
the financial years indicated:
Audit fees
Audit-related fees
Tax fees
All other fees
2021
€ 1,000
2020
€ 1,000
419
64
--
--
483
487
24
--
--
511
Audit fees 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. Audit-related fees consist of procedures relating to share offerings, such
as comfort letters, as well as consents and review of documents filed with the SEC.
PAGE 102 / 111
Financial Statements 2021
PROQR THERAPEUTICS ANNUAL REPORT 2021
Signing of the Annual Report
Leiden, April 29, 2022,
D.A. de Boer
D. Valerio
A.B. Papiernik
A.F. Lawton
J.S.S. Shannon
B. Filius
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Other information
Independent auditor’s report
Reference is made to the independent auditor’s report as included hereinafter.
Statutory arrangement concerning the appropriation of the result
In the Company’s articles of association 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.
6.
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.
The Company may make interim distributions, only if the requirements in paragraph 2 are met.
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Independent auditor’s report
To the general meeting of shareholders and the Supervisory Board of ProQR Therapeutics N.V.
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS 2021 INCLUDED IN THE ANNUAL
REPORT
Our opinion
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, 2021 and of its result and its cash flows for the year then
ended, 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, 2021 and of its result for the year then ended in
accordance with Part 9 of Book 2 of the Dutch Civil Code.
What we have audited
We have audited the financial statements 2021 of ProQR Therapeutics N.V. (the Company) based in Leiden,
the Netherlands. The financial statements include the consolidated financial statements and the company
financial statements.
The consolidated financial statements comprise:
1.
2.
3.
4.
the consolidated statement of financial position as at December 31, 2021;
the following consolidated statements for 2021: the statement of profit or loss, the statements of
comprehensive income, changes in equity and cash flows; and
the consolidated statement of financial position as at December 31, 2021;
the notes comprising a summary of the significant accounting policies and other explanatory
information.
The company financial statements comprise:
1.
2.
3.
the company balance sheet as December 31, 2021;
the company income statement for 2021; and
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 ‘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).
Our audit procedures were determined in the context of our audit of the financial statements as a whole. Our
observations in respect of going concern, fraud and non-compliance with laws and regulations and the key
audit matters should be viewed in that context and not as separate opinions or conclusions.
We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
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Audit approach
Summary
Materiality
• Materiality of EUR 2 million
•
2.9% of result before corporate income taxes
Group audit
•
•
Audit coverage of 100% of result before corporate income taxes
Audit coverage of 100% of total expenses
Going concern and Fraud/Noclar
•
•
Going concern: no significant going concern risks identified
Fraud & Non-compliance with laws and regulations (Noclar): presumed risk of fraud identified with
respect to management override of controls
Key audit matters
•
Identification of distinct performance obligations and determining the over-time revenue recognition
method for a collaboration and license agreement
Opinion
•
Unqualified
Materiality
Based on our professional judgement we determined the materiality for the financial statements as a whole
at EUR 2 million. The materiality is determined with reference to result before corporate income taxes (2.9%).
We consider the result before corporate income taxes as the most appropriate benchmark because this best
reflects the nature of the entity being in the pre-clinical and clinical development phase, including both
operational expenses as well as revenue from collaboration agreements. 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 identified during our audit in excess of
EUR 100,000 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 components. The financial information of this group is
included in the financial statements of ProQR Therapeutics N.V.
The financial administration for all group entities is centralized in the Netherlands. Consequently, we have
centralized our audit approach and we performed audit procedures ourselves to obtain sufficient and
appropriate audit evidence about the group’s financial information to provide an opinion about the financial
statements.
Audit response to going concern – no significant going concern risks identified
As explained in Note 2(d) of the financial statements, the management board has performed its going
concern assessment and has not identified any significant going concern risks. To assess the management
board’s assessment, we have performed, inter alia, the following procedures:
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•
•
•
we considered whether the management board’s assessment of the going concern risks includes all
relevant information of which we are aware as a result of our audit;
we analysed the company’s financial and liquidity position as at year-end and compared it to the
previous financial year as well as expected research and development cash outflows in terms of
indicators that could identify significant going concern risks;
we compared the current financial year’s operating loss and the related cash outflows with the expected
current financial year’s operating loss and cash outflows.
The outcome of our risk assessment procedures did not give reason to perform additional audit procedures
on management’s going concern assessment.
Audit response to the risk of fraud and non-compliance with laws and regulations
In chapter “Risks of fraud and non-compliance with laws and regulations” of the financial statements, the
management board describes its procedures in respect of the risk of fraud and non-compliance with laws
and regulations.
As part of our audit, we have gained insights into the Company and its business environment, and assessed
the design and implementation and, where considered appropriate, tested the operating effectiveness of the
Company’s risk assessment in relation to fraud and non-compliance. Our procedures included, among other
things, assessing the Company’s code of conduct, whistleblowing procedures, incidents register and its
procedures to investigate indications of possible fraud and non-compliance. Furthermore, we performed
relevant inquiries with management, those charged with governance and other relevant functions, such as
Legal Counsel. As part of our audit procedures, we:
•
•
inspected and verified the availability to employees of the Company’s code of conduct;
evaluated correspondence, if any, with supervisory authorities and regulators as well as legal
confirmation letters;
In addition, we performed procedures to obtain an understanding of the legal and regulatory frameworks
that are applicable to the Company and identified the following areas as those most likely to have a material
effect on the financial statements:
•
•
Pharmaceutical, intellectual property, and information protection laws and regulations (reflecting the
Company's significant number of patents and research and development expenditures); and
financial reporting laws and regulations (reflecting the public environment in which the Company is
operating).
We, together with our forensics specialists, evaluated the fraud and non-compliance risk factors to consider
whether those factors indicate a risk of material misstatement in the financial statements.
We assessed the presumed fraud risk on revenue recognition as irrelevant, because the revenue transactions
are related to collaboration agreements and are not resulting from commercialization of products. As such,
the recurring entries related to amortization of deferred upfront payments, milestone payments and
reimbursement of expenses are limited and non-complex.
Based on the above and on the relevant presumed risks laid down in the auditing standards, we identified a
fraud risk with respect to management override of controls relevant to our audit, and responded as follows:
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— Management override of controls (a presumed risk)
Risk:
• Management is in a unique position to manipulate accounting records and prepare fraudulent financial
statements by overriding controls that otherwise appear to be operating effectively such as the
estimates relating to determining the fair value attributable to the employee share-based
compensation.
Responses:
• We evaluated the design and the implementation and, where considered appropriate, tested the
operating effectiveness of internal controls that mitigate fraud and non-compliance risks, such as
processes related to journal entries and the allocation of costs between R&D and other categories
expenses and estimates for share-based compensation.
• We paid particular attention to the allocation of various costs between R&D and other categories of
expenses from the basis that the external users of the Company’s financial statements focus on its
research and development (R&D). R&D costs consist principally of the costs associated with research
and development activities, conducting pre-clinical studies and clinical trials and activities related to
regulatory filings.
• We performed a data analysis of high-risk journal entries, such as journal entries that impact the
general and administrative costs and research and development costs classification, and evaluated key
estimates and judgments for bias by the Company’s management. Where we identified instances of
unexpected journal entries or other risks through our data analytics, we performed additional audit
procedures to address each identified risk, including testing of transactions back to source information.
• We incorporated elements of unpredictability in our audit, including varying our selections of samples
used in control testing.
Our procedures to address the identified risks of fraud did not result in a key audit matter. We
communicated our risk assessment, audit responses and results to the Board of Directors and the
Supervisory Board.
Our audit procedures did not reveal indications and/or reasonable suspicion of fraud and non-compliance
that are considered material for our audit.
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.
Identification of distinct performance obligations and determining the over-time revenue recognition
method for a collaboration and license agreement
Description
As disclosed in Note 17 to the consolidated financial statements, the Company primarily generates
collaboration revenue. In September 2021, the Company entered into a global licensing and research
collaboration with Eli Lilly and Company. As part of the transaction price, ProQR received EUR 17.6M in an
upfront payment and EUR 2.1M equity premium in connection on the shares issued. ProQR recognizes
revenue over time based on a pattern that best reflects the satisfaction of the performance obligation.
We identified the evaluation of the distinct performance obligations identified by the Company and the
determination of the appropriate method for measuring progress as a key audit matter. Challenging auditor
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judgment was required in evaluating the terms and conditions in the agreement to assess the identification
of distinct performance obligations and to assess the most appropriate method to measure progress towards
complete satisfaction of the identified performance obligations.
Our response
The following are the primary procedures we performed to address this key audit matter:
• We evaluated the design, implementation and operating effectiveness of the company’s internal control
on the identification of distinct performance obligations and the determination of the appropriate
method to measure progress.
• We obtained and read the Lilly agreement and evaluated the terms and conditions of the agreement as
well as performed inquiries with R&D personnel to assess that the performance obligations within the
agreement were completely and accurately identified in accordance with the relevant accounting
guidance, and an appropriate measure of progress has been selected that best depicts the transfer of
control to the customer.
Our observation
Overall, the results of our procedures performed on management’s identification of distinct performance
obligations and determining the over-time revenue recognition method for the collaboration and license
agreement with Lilly, and the related disclosures as included in Note 17 to the consolidated financial
statements, are satisfactory.
REPORT ON THE OTHER INFORMATION INCLUDED IN THE ANNUAL REPORT
In addition to the financial statements and our auditor’s report thereon, the annual report contains other
information.
Based on the following procedures performed, we conclude that the other information:
•
•
is consistent with the financial statements and does not contain material misstatements; and
contains the information as required by Part 9 of Book 2 of the Dutch Civil Code for the management
report and other information.
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 less than the scope of those
performed in our audit of the financial statements.
Management Board is responsible for the preparation of the other information, including the information as
required by Part 9 of Book 2 of the Dutch Civil Code.
REPORT ON LEGAL AND OTHER REGULATORY REQUIREMENTS
Engagement
We were engaged by the General Meeting of Shareholders as auditor of ProQR Therapeutics N.V. on June 23
2020, as of the audit for the year 2021.
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DESCRIPTION OF RESPONSIBILITIES REGARDING THE FINANCIAL STATEMENTS
Responsibilities of Management Board and the Supervisory Board for the financial statements
Management Board 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 Board 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. In that
respect Management Board, under supervision of the Supervisory Board, is responsible for the prevention
and detection of fraud and non-compliance with laws and regulations, including determining measures to
resolve the consequences of it and to prevent recurrence.
As part of the preparation of the financial statements, Management Board is responsible for assessing the
Company’s ability to continue as a going concern. Based on the financial reporting frameworks mentioned,
Management Board should prepare the financial statements using the going concern basis of accounting
unless Management Board either intends to liquidate the Company or to cease operations, or has no realistic
alternative but to do so. Management Board 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 engagement 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.
A further description of our responsibilities for the audit of the financial statements is included in the
appendix of this auditor's report. This description forms part of our auditor’s report.
Amstelveen, April 29, 2022
KPMG Accountants N.V.
F. Croiset van Uchelen
Appendix: Description of our responsibilities for the audit of the financial statements
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APPENDIX
Description of our responsibilities for the audit of the financial statements
We have exercised professional judgement and have maintained professional scepticism throughout the
audit, in accordance with Dutch Standards on Auditing, ethical requirements and independence
requirements. Our audit included among others:
•
•
•
•
•
•
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 the risk 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 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 a company to cease to continue as a going
concern;
evaluating the overall presentation, structure and content of the financial statements, including the
disclosures; and
evaluating whether the financial statements represent the underlying transactions and events in a
manner that achieves fair presentation.
In case of a group audit we are, given our ultimate responsibility for the opinion, also responsible for
directing, supervising and performing the group audit. In this respect we determine the nature and extent of
the audit procedures to be carried out for group entities. Decisive are the size and/or the risk profile of the
group entities or operations. On this basis, we select group entities for which an audit or review has to be
carried out on the complete set of financial information or specific items.
We are solely responsible for the opinion and therefore responsible to obtain sufficient appropriate audit
evidence regarding the financial information of the entities or business activities within the group to express
an opinion on the financial statements. In this respect we are also responsible for directing, supervising and
performing the group audit.
We communicate with the Supervisory Board regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant findings in internal control that we identify
during our audit.
We provide the Supervisory Board with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters
that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
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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.