uniQure N.V. - Quarter Report: 2021 March (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

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FORM 10-Q

(Mark One)

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uniQure N.V.

(Exact name of Registrant as specified in its charter)

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Paasheuvelweg 25

1105 BP Amsterdam, The Netherlands

(Address of principal executive offices) (Zip Code)

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+31-20-240-6000

(Registrant’s telephone number, including area code)

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Securities registered pursuant to Section 12(b) of the Act:

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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes ⌧ No ◻.  

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Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes ⌧ No ◻.  

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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer” “accelerated filer” and “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act  ◻

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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)    Yes ☐ No ⌧

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As of May 6, 2021, the registrant had 46,017,621 ordinary shares, par value €0.05, outstanding.

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Table of Contents

TABLE OF CONTENTS

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Table of Contents

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SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

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This Quarterly Report on Form 10-Q contains “forward-looking statements” as defined under federal securities laws. Forward-looking statements are based on our current expectations of future events and many of these statements can be identified using terminology such as “believes,” “expects,” “anticipates,” “plans,” “may,” “will,” “projects,” “continues,” “estimates,” “potential,” “opportunity” and similar expressions. These forward-looking statements, include, but are not limited to, statements related to the COVID-19 coronavirus pandemic, our collaboration and license agreement with CSL Behring LLC, our cash runway, the advancement of our clinical trials, and the impact of regulatory actions on our regulatory submission timelines.

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Forward-looking statements are only predictions based on management’s current views and assumptions and involve risks and uncertainties, and actual results could differ materially from those projected or implied. The most significant factors known to us that could materially adversely affect our business, operations, industry, financial position or future financial performance include those discussed in Part II, Item 1A “Risk Factors,” as well as those discussed in Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report on Form 10-Q, as well as other factors which may be identified from time to time in our other filings with the Securities and Exchange Commission (“SEC”), including our most recent Annual Report on Form 10-K filed with the SEC on March 1, 2021, or in the documents where such forward-looking statements appear. You should carefully consider that information before you make an investment decision.

You should not place undue reliance on these forward-looking statements, which speak only as of the date that they were made. Our actual results or experience could differ significantly from those anticipated in the forward-looking statements and from historical results, due to the risks and uncertainties described in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, and in our Annual Report on Form 10-K for the year ended December 31, 2020, including in “Part I, Item 1A. Risk Factors,” as well as others that we may consider immaterial or do not anticipate at this time. These cautionary statements should be considered in connection with any written or oral forward-looking statements that we may make in the future or may file or furnish with the SEC. We do not undertake any obligation to release publicly any revisions to these forward-looking statements after completion of the filing of this Quarterly Report on Form 10-Q to reflect later events or circumstances or to reflect the occurrence of unanticipated events. All forward-looking statements attributable to us are expressly qualified in their entirety by these cautionary statements.

In addition, with respect to all of our forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

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Part I – FINANCIAL INFORMATION

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Item 1.Financial Statements

uniQure N.V.

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UNAUDITED CONSOLIDATED BALANCE SHEETS

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The accompanying notes are an integral part of these unaudited consolidated financial statements.

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uniQure N.V.

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UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE LOSS

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The accompanying notes are an integral part of these unaudited consolidated financial statements.

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uniQure N.V.

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UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

FOR THE THREE-MONTH PERIOD ENDED MARCH 31

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The accompanying notes are an integral part of these unaudited consolidated financial statements.

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uniQure N.V.

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UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

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The accompanying notes are an integral part of these unaudited consolidated financial statements.

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1General business information

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uniQure (the “Company”) was incorporated on January 9, 2012 as a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) under the laws of the Netherlands. The Company is a leader in the field of gene therapy and seeks to deliver to patients suffering from rare and other devastating diseases single treatments with potentially curative results. The Company’s business was founded in 1998 and was initially operated through its predecessor company, Amsterdam Molecular Therapeutics (AMT) Holding N.V (“AMT”). In 2012, AMT undertook a corporate reorganization, pursuant to which uniQure B.V. acquired the entire business and assets of AMT and completed a share-for-share exchange with the shareholders of AMT. Effective February 10, 2014, in connection with its initial public offering, the Company converted into a public company with limited liability (naamloze vennootschap) and changed its legal name from uniQure B.V. to uniQure N.V.

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The Company is registered in the trade register of the Chamber of Commerce (Kamer van Koophandel) in Amsterdam, the Netherlands under number 54385229. The Company’s headquarters are in Amsterdam, the Netherlands, and its registered office is located at Paasheuvelweg 25, Amsterdam 1105 BP, the Netherlands and its telephone number is +31 20 240 6000.

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The Company’s ordinary shares are listed on the Nasdaq Global Select Market and trade under the symbol “QURE”.

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2Summary of significant accounting policies

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2.1Basis of preparation

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The Company prepared these unaudited consolidated financial statements in compliance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Any reference in these notes to applicable guidance is meant to refer to authoritative U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”).

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The unaudited consolidated financial statements are presented in U.S. dollars, except where otherwise indicated. Transactions denominated in currencies other than U.S. dollars are presented in the transaction currency with the U.S. dollar amount included in parenthesis, converted at the foreign exchange rate as of the transaction date.

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2.2Unaudited interim financial information

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The interim financial statements and related disclosures are unaudited, have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for a fair statement of the financial position, results of operations and changes in financial position for the period presented.

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Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been omitted. The results of operations for the three months ended March 31, 2021, are not necessarily indicative of the results to be expected for the full year ending December 31, 2021 or for any other future year or interim period. The accompanying financial statements should be read in conjunction with the audited financial statements and the related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 1, 2021.

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2.3Use of estimates

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The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

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2.4Accounting policies

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The principal accounting policies applied in the preparation of these unaudited consolidated financial statements are described in the Company’s audited financial statements as of and for the year ended December 31, 2020, and the notes thereto, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 1, 2021. There have been no material changes in the Company’s significant accounting policies during the three months ended March 31, 2021.

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2.5Recent accounting pronouncements

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There have been no new accounting pronouncements or changes to accounting pronouncements during the three months ended March 31, 2021, as compared to the recent accounting pronouncements described in Note 2.3.22 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, which could be expected to materially impact the Company’s unaudited consolidated financial statements.

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CSL Behring collaboration

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On June 24, 2020, uniQure biopharma B.V., a wholly-owned subsidiary of uniQure N.V., entered into a commercialization and license agreement (the “CSL Behring Agreement”) with CSL Behring LLC, (“CSL Behring”), pursuant to which CSL Behring will receive exclusive global rights to etranacogene dezaparvovec, the Company’s investigational gene therapy for patients with hemophilia B, (the “Product”).

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Under the terms of the CSL Behring Agreement, the Company is entitled to receive a $450.0 million upfront cash payment upon the closing of the transaction contemplated by the CSL Behring Agreement and will be eligible to receive up to $1.6 billion in additional payments based on regulatory and commercial milestones. The CSL Behring Agreement also provides that the Company will be eligible to receive tiered double-digit royalties in a range of up to a low-twenties percent of net sales of the Product based on sales thresholds.

 Pursuant to the CSL Behring Agreement, the Company will be responsible for the completion of the HOPE-B clinical trial, manufacturing process validation, and the manufacturing supply of the Product until such time that these capabilities may be transferred to CSL Behring or its designated contract manufacturing organization. Concurrently with the execution of the CSL Behring Agreement, the Company and CSL Behring entered into a development and commercial supply agreement, pursuant to which, among other things, the Company will supply the Product to CSL Behring at an agreed-upon price. Clinical development and regulatory activities performed by the Company pursuant to the CSL Behring Agreement will be reimbursed by CSL Behring. CSL Behring will be responsible for global regulatory submissions and commercialization requirements for the Product.

The effectiveness of the transaction contemplated by the CSL Behring Agreement was contingent on completion of review under antitrust laws in the United States, Australia, and the United Kingdom. As of March 31, 2021, such regulatory approvals had not been received in the United States. On May 5, 2021 the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”) expired, and as such the CSL Behring Agreement became fully effective on May 6, 2021.

As of March 31, 2021, the Company concluded it has no enforceable right to the upfront payment, the regulatory and sale milestone payments, or the royalties (together “CSL Behring License Revenue”) that the Company will receive in accordance with the CSL Behring Agreement, as all payments were contingent upon the successful completion of reviews, or the expiration of the waiting period, under the HSR Act, which had not occurred as of March 31, 2021. Therefore, the Company determined to not recognize any revenue in relation to the CSL Behring License Revenue, in accordance with ASC 606 during the three-month period ended March 31, 2021.

In accordance with its existing license and other agreements, the Company is contractually required to pay in total a low to high single digit percentage of any upfront payment to its licensors and financial advisor (“License Fees”) following the closing of the transaction. The Company did not record any License Fees for the three-month period ended March 31, 2021, as the Company had not recognized the upfront payment as of this date.

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The Company incurred $5.0 million of expenses related to the obligations related to the CSL Behring Agreement that had not been satisfied as of March 31, 2021. The Company capitalized these expenses as contract fulfillment costs (presented within Other current assets). As of March 31, 2021, the Company also recognized a $5.0 million receivable (presented within Accounts receivable) from CSL Behring for expenses for which the Company has a right of reimbursement. A contract liability was also recognized for the entire amount of expenses for which the Company has a right to reimbursement (presented within Accrued expenses and other current liabilities).  In accordance with ASC 606 it cannot recognize any CSL Behring License Revenue as of this date.

Bristol-Myers Squibb collaboration

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In May 2015, the Company and Bristol-Myers Squibb (“BMS”) entered into a collaboration and license agreement and various related agreements with BMS (“BMS CLA”).

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The initial four-year research term under the collaboration terminated on May 21, 2019. On December 1, 2020, the Company and BMS amended the BMS CLA (“amended BMS CLA”). Under the amended BMS CLA, BMS is limited to four Collaboration Targets. BMS may until November 30, 2021 replace up to two of these four Collaboration Targets with up to two new targets in the field of cardiovascular disease. The Company continues to be eligible to receive research, development, and regulatory milestone payments of up to $217.0 million for each Collaboration Target, if defined milestones are achieved.

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For as long as any of the four Collaboration Targets are being advanced, BMS may place a purchase order to be supplied with research, clinical and commercial supplies. Subject to the terms of the amended BMS CLA, BMS has the right to terminate the research, clinical and commercial supply relationships, and has certain remedies for failures of supply, up to and including technology transfer for any such failure that otherwise cannot be reasonably resolved. Both BMS and the Company may agree to a technology transfer of manufacturing capabilities pursuant to the terms of the amended BMS CLA.

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The amended BMS CLA does not extend the initial four-year research term. BMS may place purchase orders to provide limited services primarily related to analytical and development efforts in respect of the four Collaboration Targets. BMS may request such services for a period not to exceed the earlier of (i) the completion of all activities under a Research Plan and (ii) either (A) three years after the last replacement target has been designated by BMS during the one-year replacement period ending on November 30, 2021, or (B) November 30, 2023 if no replacement targets are designated. BMS continues to reimburse the Company for these services.

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The Company evaluated the impact of the amended BMS CLA in relation to its performance obligation to provide access to BMS to its technology and know-how in the field of gene therapy and to participate in joint steering committee and other governing bodies (“License Revenue”).

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The Company determined that its remaining performance obligation under the amended BMS CLA was immaterial and recognized the remaining balance of unrecognized License Revenue as of November 30, 2020. The Company includes variable consideration related to any research, development, and regulatory milestone payments, in the transaction price once it is considered probable that including these payments in the transaction price would not result in the reversal of cumulative revenue recognized. Due to the significant uncertainty surrounding the development of gene-therapy product candidates and the dependence on BMS’s performance and decisions, the Company does not generally consider this probable and did not record any License Revenue during the three months ended March 31, 2021.

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The Company measures certain financial assets and liabilities at fair value, either upon initial recognition or for subsequent accounting or reporting. U.S. GAAP requires disclosure of methodologies used in determining the reported fair values, and establishes a hierarchy of inputs used when available. The three levels of the fair value hierarchy are described below:

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To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized as Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

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The carrying amount of cash and cash equivalents, accounts receivable, prepaid expenses, other assets, accounts payable, accrued expenses and other current liabilities reflected in the Consolidated balance sheets approximate their fair values due to their short-term maturities.

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The following table sets forth the Company’s assets and liabilities that are required to be measured at fair value on a recurring basis as of March 31, 2021, and December 31, 2020:

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Changes in Level 3 items during the three months ended March 31, 2021, are as follows:

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Derivative financial instruments

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The Company issued derivative financial instruments related to its collaboration with BMS.

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In 2015, the Company granted BMS two warrants that were subsequently terminated in connection with the amendment to the BMS CLA on December 1, 2020.

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On December 1, 2020, the Company and BMS agreed that upon the consummation of a change of control transaction of uniQure that occurs prior to December 1, 2026 or BMS’ delivery of a target cessation notice for all four Collaboration Targets, the Company (or its third party acquirer) shall pay to BMS a one-time, non-refundable, non-creditable cash payment of $70.0 million, provided that (x) if $70.0 million is greater than five percent (5.0%) of the net proceeds (as contractually defined) from such change of control transaction, the payment shall be an amount equal to five percent of such net proceeds, and (y) if $70.0 million is less than one percent of such net proceeds, the change of control payment shall be an amount equal to one percent of such net proceeds (“CoC-payment”). The Company has not consummated any change of control transaction as of March 31, 2021 that would obligate it to make a CoC-payment.

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The Company determined that the CoC-payment should be recorded as a derivative financial liability as of December 1, 2020 and that subsequent changes in the fair market value of this derivative financial liability should be recorded in profit and loss. The fair market value of the derivative financial liability is materially impacted by probability that market participants assign to the likelihood of the occurrence of a change of control transaction that would give rise to a CoC-payment. This probability represents an unobservable input. The Company determined the fair market value of the derivative financial liability by using a present value model based on expected cash flow. The expected cash flows are materially impacted by the probability that market participants assign to the likelihood of the occurrence of a change of control transaction within the biotechnology industry. The Company estimated this unobservable input using the best information available as of March 31, 2021 and December 31, 2020. The Company obtained reasonably available market information that it believed market participants would use in determining the likelihood of the occurrence of a change-of control transaction within the biotechnology industry. Selecting and evaluating market information involves considerable judgement and uncertainty. Based on all such information and its judgment the Company estimated that the fair market value of the derivative financial liability (presented within “Other non-current liabilities”) as of March 31, 2021 and December 31, 2020 was $2.6 million.

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Accrued expenses and other current liabilities include the following items:

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6 Long-term debt

On June 14, 2013, the Company entered into a venture debt loan facility with Hercules Capital, Inc. (formerly known as Hercules Technology Growth Capital, Inc.) (“Hercules”), which was amended and restated on June 26, 2014, and again on May 6, 2016 (“2016 Amended Facility”). On December 6, 2018, the Company signed an amendment that both refinanced the then-existing $20.0 million 2016 Amended Facility and allowed the Company to draw down an additional $15.0 million (“2018 Amended Facility”). The 2018 Amended Facility extended the loan’s maturity date from May 1, 2020 until June 1, 2023. The interest-only period was initially extended from November 2018 to January 1, 2021 and was further extended to January 1, 2022 as a result of raising more than $90.0 million in equity financing in September 2019. The interest only period was again further extended to June 1, 2023 as a result of the January 2021 amendment (see below).  The interest rate is adjustable and is the greater of (i) 8.85% and (ii) 8.85% plus the prime rate less 5.50% per annum. Under the 2018 Amended Facility, the Company owes a back-end fee of 4.95% of the outstanding debt. In addition, in May 2020 the Company paid a back-end fee of $1.0 million in relation to the 2016 Amended Facility.

On January 29, 2021, the Company and Hercules amended the 2018 Amended Facility (“2021 Amended Facility”). Pursuant to the 2021 Amended Facility, Hercules agreed to an additional Facility of $100.0 million (“Tranche B”), increasing the aggregate principal amount of the term loan facilities from $35.0 million to up to $135.0 million. On January 29, 2021, the Company drew down $35.0 million of the Tranche B. The Company may draw down the remaining $65.0 million under the Tranche B in a series of one or more advances of not less than $20.0 million each until December 15, 2021. Advances under Tranche B bear interest at a rate equal to the greater of (i) 8.25% or (ii) 8.25% plus the prime rate, less 3.25% per annum. The principal balance and all accrued but unpaid interest on advances under Tranche B is due on June 1, 2023, which date may be extended by the Company by up to two twelve-month periods. Advances under Tranche B may not be prepaid prior to July 29, 2021, following which the Company may prepay all such advances without charge. The Company owes a back-end fee of 4.85% of amounts outstanding under Tranche B. The back-end fee is reduced if prepayment occurs at an earlier date.

The amortized cost (including interest due presented as part of accrued expenses and other current liabilities) of the 2018 Amended Facility and 2021 Amended Facility was $71.0 million as of March 31, 2021, compared to $35.9 million amortized cost for the 2018 Amended Facility as of December 31, 2020, and is recorded net of discount and debt issuance costs. The foreign currency loss on the facilities in the three months ended March 31, 2021, was $3.2 million compared to a foreign currency loss of $0.7 million during the same period in 2020 for the 2018 Amended Facility.

Interest expense associated with the 2018 Amended Facility and 2021 Amended Facility during the three months ended March 31, 2021 was $1.5 million, compared to $0.9 million during the same periods in 2020 for the 2018 Amended Facility.

As a covenant in the 2018 Amended Facility and 2021 Amended Facility, the Company has periodic reporting requirements and is required to keep a minimum cash balance deposited in bank accounts in the United States, equivalent to the lesser of (i) 65% of the outstanding balance of principal due or (ii) 100% of worldwide cash and cash equivalents. This restriction on cash and cash equivalents only relates to the location of the cash and cash equivalents, and such cash and cash equivalents can be used at the discretion of the Company. In combination with other covenants, the 2018 Amended Facility and 2021 Amended Facility restricts the Company’s ability to, among other things, incur future indebtedness and obtain additional debt financing, to make investments in securities or in other companies, to transfer assets, to perform certain corporate changes, to make loans to employees, officers, and directors, and to make dividend payments and other distributions to its shareholders. The Company secured the facilities by directly or indirectly pledging its total assets of $363.9 million with the exception of $97.6 million of cash and cash equivalents and other current assets held by uniQure N.V.

The 2018 Amended Facility and 2021 Amended Facility contain provisions that include the occurrence of a material adverse effect, as defined therein, which would entitle Hercules to declare all principal, interest and other amounts owed by the Company immediately due and payable. As of March 31, 2021, the Company was in material compliance with all covenants and provisions.

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7Shareholders’ Equity

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On March 1, 2021, the Company entered into a Sales Agreement with SVB Leerink LLC (“SVB Leerink”) with respect to an at-the-market (“ATM”) offering program, under which the Company may, from time to time in its sole discretion, offer and sell through SVB Leerink, acting as agent, its ordinary shares, up to an aggregate offering price of $200.0 million. The Company will pay SVB Leerink a commission equal to 3% of the gross proceeds of the sales price of all ordinary shares sold through it as sales agent under the Sales Agreement. Through March 31, 2021 the Company issued 859,885 ordinary shares at a weighted average price of $33.42 per share, with net proceeds of $27.6 million, after deducting underwriting discounts and net of offering expenses. The Company defers direct, incremental costs associated to this offering, except for the commission costs to SVB Leerink, which are a reduction to additional paid-in capital, and will deduct these costs from additional paid-in capital in the consolidated balance sheets proportionately to the amount of proceeds raised. As of March 31, 2021, $1.0 million of direct, incremental costs were deducted from additional paid-in capital.

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8Share-based compensation

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The Company’s share-based compensation plans include the 2014 Amended and Restated Share Option Plan (the “2014 Plan”) and inducement grants under Rule 5653(c)(4) of the Nasdaq Global Select Market with terms similar to the 2014 Plan (together the “2014 Plans”). At the annual general meeting of shareholders in June 2018, the Company’s shareholders approved amendments of the 2014 Plan, increasing the shares authorized for issuance by 3,000,000 to a total of 8,601,471.

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Share-based compensation expense recognized by classification included in the Consolidated statements of operations and comprehensive loss in relation to the 2014 Plans for the periods indicated below was as follows:

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Share-based compensation expense recognized by award type was as follows:

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As of March 31, 2021, the unrecognized share-based compensation expense related to unvested awards under the 2014 Plans were:

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The Company satisfies the exercise of share options and vesting of Restricted Share Units (“RSUs”) and Performance Share Units (“PSUs”) through newly issued ordinary shares.

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Share options

Share options are priced on the date of grant and, except for certain grants made to non-executive directors, vest over a period of four years. The first 25% vests after one year from the initial grant date and the remainder vests in equal quarterly installments over years two, three and four. Certain grants to non-executive directors vest in full after one year. Any options that vest must be exercised by the tenth anniversary of the initial grant date.

The following tables summarize option activity under the Company’s 2014 Plans for the three months ended

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The fair value of each option issued is estimated at the respective grant date using the Hull & White option pricing model with the following weighted-average assumptions:

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Restricted share units (“RSUs”)

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The following table summarizes the RSUs activity for the three months ended March 31, 2021:

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RSUs vest over one to three years. RSUs granted to non-executive directors vest one year from the date of grant.

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Performance share units (“PSUs”)

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The following table summarizes the PSUs activity for the three months ended March 31, 2021:

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The PSUs will vest on the third anniversary of the grant, subject to the grantee’s continued employment.

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In June 2018, the Company’s shareholders adopted and approved an ESPP allowing the Company to issue up to 150,000 ordinary shares. The ESPP is intended to qualify under Section 423 of the Internal Revenue Code of 1986. Under the ESPP, employees are eligible to purchase ordinary shares through payroll deductions, subject to any plan limitations. The purchase price of the ordinary shares on each purchase date is equal to 85% of the lower of the closing market price on the offering date and the closing market price on the purchase date of each three-month offering period. During the three months ended March 31, 2021, 1,174 ordinary shares were issued under the ESPP compared to 1,801 during the same period in 2020. As of March 31, 2021, a total of 130,852 ordinary shares remain available for issuance under the ESPP plan compared to a total of 136,406 as of March 31, 2020.

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The Company released its valuation allowance against the Company’s deferred tax assets in the United States as of December 31, 2020. The Company recorded $0.2 million deferred tax expense in relation to its operations in the United States during the three month period ended March 31, 2021. The Company recorded a nil net deferred tax expense in the prior year as it had recorded a valuation allowance against its net deferred tax assets in the United States as of March 31, 2020.

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The effective income tax rate of 0.5% during the three months ended March 31, 2021 is substantially lower than the enacted rated of 25% in the Netherlands as the Company recorded a valuation allowance against its net deferred tax assets in the Netherlands. Refer to Note 3 “Collaboration arrangements and concentration of credit risk” for discussion on the effectiveness of the CSL Behring Agreement. The effective income tax rate during the three months ended March 31, 2020 was 0% as the Company had recorded a valuation allowance against all its net deferred tax assets.

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The closing of the transaction contemplated by the CSL Behring agreement on May 6, 2021 is expected to materially impact the Company’s operating result as well as the taxable income for the year ended December 31, 2021 as well as in future periods. The Company expects to utilize a material portion of its net operating loss carryforwards in the Netherlands during 2021 as a result of closing the transaction. As of March 31, 2021 the Company expects to continue incurring tax losses in the years thereafter and expects to record a valuation allowance against all its Dutch net deferred tax assets as of December 31, 2021. The Company determined the impact which recognition of CSL Behring License Revenue is estimated to have, with regards to the expected effective tax rate of 0% that was applied with respect to the Company’s Dutch operations as of March 31, 2021, is immaterial.

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10Basic and diluted earnings per share

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Diluted earnings per share are calculated by adjusting the weighted average number of ordinary shares outstanding, assuming conversion of all potentially dilutive ordinary shares. As the Company has incurred a loss, all potentially dilutive ordinary shares would have an antidilutive effect, if converted, and thus have been excluded from the computation of loss per share. The shares are presented without giving effect to the application of the treasury method or exercise prices that would be above the share price as of March 31, 2021 and March 31, 2020, respectively. In addition, the BMS warrants were not exercisable as of March 31, 2020 since this would have required the prior designation of Collaboration Targets by BMS. This would generally result in a lower number of potentially dilutive ordinary shares as some stock option grants as well as the BMS warrants would have been excluded.

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The potentially dilutive ordinary shares are summarized below:

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11Subsequent events

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Appointment of Chief Operating Officer

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Effective May 17, 2021, Pierre Caloz will be appointed as Chief Operating Officer and will be based out of the Amsterdam facility. Mr. Caloz will be responsible for all Manufacturing Operations, Global Chemistry, Manufacturing and Controls development and innovation, and Supply Chain and Facilities. As a result, Alex Kuta, Ph.D., will transition from Executive Vice President, Operations to Executive Vice President, Quality and Regulatory.

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Closing of Collaboration and Licensing transaction with CSL Behring (see also note 3)

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On May 5, 2021, the waiting period under the HSR Act expired, and on May 6, 2021 the CSL Behring Agreement became fully effective. Under the CSL Behring Agreement, the upfront payment of $450.0 million was paid to the Company on May 7, 2021. Additionally, the Company is eligible to receive more than $300 million in regulatory and first commercial sale milestones, up to an additional $1.3 billion in commercial milestones, and tiered double-digit royalties of up to a low-twenties percentage of net sales of the Product arising from the collaboration. The Company contractually owes a single-digit percentage of revenue from the collaboration to its licensors. The Company expects to utilize a material portion of its net operating loss carryforwards in the Netherlands during 2021 as a result of closing the transaction contemplated by the CSL Behring Agreement.

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 The Company will be responsible for the completion of the HOPE-B clinical trial, manufacturing process validation, and the manufacturing supply of the Product until such time that these capabilities may be transferred to CSL Behring or its designated contract manufacturing organization. Clinical development and regulatory activities performed by the Company pursuant to the CSL Behring Agreement will be reimbursed by CSL Behring. CSL Behring will be responsible for global regulatory submissions and commercialization requirements for the Product.

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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

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The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand our results of operations and financial condition. This MD&A is provided as a supplement to, and should be read in conjunction with, our unaudited consolidated financial statements and the accompanying notes thereto and other disclosures included in this Quarterly Report on Form 10-Q, including the disclosures under Part II, Item 1A “Risk Factors,” and our audited financial information and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the Securities and Exchange Commission ( the “SEC”) on March 1, 2021. Our unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the U.S. (“U.S. GAAP”) and unless otherwise indicated are presented in U.S. dollars.

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Overview

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We are a leader in the field of gene therapy and seek to deliver to patients suffering from rare and other devastating diseases single treatments with potentially curative results. We are advancing a focused pipeline of innovative gene therapies, including product candidates for the treatment of hemophilia B, which effective May 6, 2021, we licensed to CSL Behring pursuant to the CSL Behring Agreement (as defined below), and Huntington’s disease. We believe our validated technology platform and manufacturing capabilities provide us distinct competitive advantages, including the potential to reduce development risk, cost, and time to market. We produce our Adeno-associated virus (“AAV”) -based gene therapies in our own facilities with a proprietary, commercial-scale, current good manufacturing practices (“cGMP”)-compliant, manufacturing process. We believe our Lexington, Massachusetts-based facility is one of the world’s most versatile gene therapy manufacturing facilities.

Business Developments

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Below is a summary of our recent significant business developments:

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Financing

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As of December 31, 2020, a $35.0 million term loan was outstanding in accordance with the Second Amended and Restated Loan and Security Agreement (the “2018 Amended Facility”) between us and Hercules.

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On January 29, 2021, we and Hercules amended the 2018 Amended Facility (“2021 Amended Facility”). Pursuant to the 2021 Amended Facility, Hercules agreed to an additional Facility of $100.0 million (“Tranche B”) increasing the aggregate principal amount of the term loan facilities from $35.0 million to up to $135.0 million. On January 29, 2021, we drew down $35.0 million of the Tranche B. We may draw down the remaining $65.0 million under the Tranche B in a series of one or more advances of not less than $20.0 million each until December 15, 2021. Advances under Tranche B bear interest at a rate equal to the greater of (i) 8.25% or (ii) 8.25% plus the prime rate, less 3.25% per annum. The principal balance and all accrued but unpaid interest on advances under Tranche B is due on June 1, 2023, which date may be extended by us by up to two twelve-month periods. Advances under the 2021 Amended Facility may not be prepaid until July 29, 2021, following which we may prepay all such advances without charge.

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In addition to Tranche B, the 2021 Amended Facility also extends the interest only payment period of the previously funded $35.0 million term loan from January 1, 2022 to June l, 2023. End of term charges in respect of advances under the 2021 Amended Facility range from 1.65% to 6.85%, depending on the maturity date.

The 2021 Amended Facility extended the funding of our operations until the second half of 2022.

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On March 1, 2021, we entered into a Sales Agreement with SVB Leerink LLC (“SVB Leerink”) with respect to an at-the-market (“ATM”) offering program, under which we may, from time to time in our sole discretion, offer and sell through SVB Leerink, acting as agent, our ordinary shares, up to an aggregate offering price of $200.0 million. We will pay SVB Leerink a commission equal to 3% of the gross proceeds of the sales price of all ordinary shares sold through it as a sales agent under the Sales Agreement.

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In March 2021, we issued 0.9 million ordinary shares at a weighted average price of $33.42 per share, with net proceeds of $27.6 million, after deducting underwriting discounts and net of offering expenses.  This further extended the funding of our operations until the end of 2022.

CSL Behring commercialization and license agreement

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On June 24, 2020, uniQure biopharma B.V., a wholly-owned subsidiary of uniQure N.V., entered into a commercialization and license agreement (as amended, the “CSL Behring Agreement”) with CSL Behring LLC (“CSL Behring”) pursuant to which CSL Behring will receive exclusive global rights to etranacogene dezaparvovec, our investigational gene therapy for patients with hemophilia B (the “Product”).

Under the terms of the CSL Behring Agreement, we are entitled to receive a $450.0 million upfront cash payment upon the closing of the CSL Behring Agreement and will be eligible to receive up to $1.6 billion in additional payments based on regulatory and commercial milestones. The CSL Behring agreement also provides that we will be eligible to receive tiered double-digit royalties in a range of up to a low-twenties percent of net sales of the Product based on sales thresholds.

Pursuant to the CSL Behring Agreement, we will be responsible for the completion of the HOPE-B clinical trial, manufacturing process validation, and the manufacturing supply of the Product until such time that these capabilities may be transferred to CSL Behring or its designated contract manufacturing organization. Concurrently with the execution of the CSL Behring Agreement, we and CSL Behring entered into a development and commercial supply agreement, pursuant to which, among other things, we will supply the Product to CSL Behring at an agreed-upon price. Clinical development and regulatory activities performed by us pursuant to the CSL Behring Agreement will be reimbursed by CSL Behring. CSL Behring will be responsible for global regulatory submissions and commercialization requirements for the Product.

The effectiveness of the transaction contemplated by the CSL Behring Agreement was contingent on completion of review under antitrust laws in the United States, Australia, and the United Kingdom. As of March 31, 2021, the transaction had been cleared by the Australian and United Kingdom antitrust authorities and on May 6, 2021, the CSL Behring Agreement became fully effective after the expiration of the waiting period under the HSR Act on May 5, 2021.

Under the CSL Behring Agreement, the upfront payment of $450.0 million was paid to us on May 7, 2021. We are also eligible to receive up to more than $300 million in regulatory and first commercial sale milestones, $1.3 billion in additional commercial milestones, and tiered double-digit royalties of up to a low-twenties percentage of net product sales arising from the collaboration. We contractually owe a single-digit percentage of revenue from the collaboration to our licensors. We expect to utilize a material portion of our net operating loss carryforwards in the Netherlands during 2021 as a result of closing the transaction. The upfront payment, net of payments owed to licensors and other parties, is expected to extend the funding of our operations into the second half of 2024 (assuming a full repayment of funds borrowed from Hercules Growth Capital, Inc. under our term loan facilities by 2023). The receipt of the near-term milestones would further expand the funding of our operations. However, we expect to continue to incur losses and to generate negative cash flows beyond 2021, the fiscal year in which we closed the transaction.

Hemophilia B program – Etranacogene dezaparvovec (AMT-061)

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Etranacogene dezaparvovec is our lead gene therapy candidate and includes an AAV serotype 5 (together “AAV-5”) vector incorporating the functional human Factor IX (“FIX”) Padua variant. We are currently conducting a pivotal study in patients with severe and moderately-severe hemophilia B.

In December 2020, we announced top-line data from the HOPE-B trial. The 26-week follow-up date from the trial showed that FIX activity in the 54 patients increased after dosing from ≤ 2% to a mean of 37.2% at 26 weeks, meeting a first primary endpoint of the HOPE-B trial. No correlation between pre-existing neutralizing antibodies and FIX activity was found in patients with neutralizing antibody titers up to 678.2, a range expected to include more than 95% of the general population; one patient with a neutralizing antibody titer of 3,212.3 did not show an increase in FIX activity. Less than 1% of the general population is expected to have neutralizing antibody titers of greater than 3,000.

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During the 26-week period after dosing, 15 patients (28%) reported a total of 21 bleeding events, representing a reduction of 83% compared to the 123 bleeding events reported by 38 patients (70%) during the observational lead-in phase of the trial. Total bleeds include any bleeding event reported after the treatment of etranacogene dezaparvovec, including spontaneous, traumatic, and those associated with unrelated medical procedures, whether or not FIX treatment was required. Of the total bleeding events reported during the 26-week period after dosing, only three were classified as spontaneous bleeds requiring treatment, representing a reduction of 92% compared to the 37 such bleeding events reported during the observational lead-in phase. Mean annualized usage of FIX replacement therapy, a secondary endpoint in the clinical trial, declined by 96% during the 26-week period after dosing compared to the observational lead-in phase. Etranacogene dezaparvovec was generally well-tolerated. As of the November 2020 cut-off date, most adverse events were classified as mild (81.5%). The most common events included transaminase elevation treated with steroids per protocol (9 patients; 17%), infusion-related reactions (7 patients; 13%), headache (7 patients; 13%) and influenza-like symptoms (7 patients; 13%). Liver enzyme elevations resolved with a tapering course of corticosteroids and FIX activity remained in the mild range in the steroid treated patients. No relationship between safety and neutralizing antibody titers was observed. Based on interactions with the U.S. Food and Drug Administration (“FDA”) and the European Medicines Agency (“EMA”), we plan to incorporate FIX activity and bleeding rates at 52 weeks as additional co-primary endpoints in the study.

On December 21, 2020, our clinical trials of etranacogene dezaparvovec, including our HOPE-B trial were placed on clinical hold by the FDA. The clinical hold was initiated following the submission of a safety report in mid-December relating to a possibly related serious adverse event associated with a preliminary diagnosis of hepatocellular carcinoma (“HCC”), a form of liver cancer, in one patient in the HOPE-B trial that was treated with etranacogene dezaparvovec in October 2019. The patient has multiple risk factors associated with HCC, including a twenty-five-year history of hepatitis C, hepatitis B, evidence of non-alcoholic fatty liver disease and advanced age. Chronic infections with hepatitis B and C have been associated with approximately 80% of HCC cases. No other cases of HCC have been reported in our clinical trials conducted in more than 67 patients in hemophilia B, with some patients dosed more than 5 years ago.

On March 26, 2021, we submitted the results of a comprehensive investigation into the case of HCC to the FDA. The investigation found that it is highly unlikely the HCC was caused by etranacogene dezaparvovec. Multiple analyses conducted by an independent laboratory and reviewed by leading external experts in the field show that AAV vector integration in the patient’s tissue sample was extremely rare and accounted for 0.027% of the cells in the sample. The integration events were distributed randomly across the genome, and there was no evidence of clonal expansion or any dominant integration event. Additionally, whole genome sequencing of the tumor confirmed that the patient had several genetic mutations that are characteristic of HCC and are independent of vector integration. Finally, gene expression analysis of the tumor and adjacent tissue suggested a precancerous state in the liver consistent with several risk factors that predispose this patient to HCC. On April 23, 2021, the FDA informed us that the clinical hold on our hemophilia B gene therapy program is removed after determining that we had satisfactorily addressed all issues identified.

Etranacogene dezaparvovec has been granted Breakthrough Therapy Designation by the FDA and access to the current priority medicines (“PRIME”) initiative by the EMA.

Huntington’s disease program (AMT-130)

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AMT-130 is our novel gene therapy candidate for the treatment of Huntington’s disease. AMT-130 utilizes our proprietary, gene-silencing miQURE platform and incorporates an AAV vector carrying a miRNA specifically designed to silence the huntingtin gene and the potentially highly toxic exon 1 protein fragment. AMT-130 has received orphan drug and Fast Track designations from the FDA and Orphan Medicinal Product Designation from the EMA.

In June 2020, we announced the completion of the first two patient procedures in the Phase I/II clinical trial of AMT-130 for the treatment of Huntington’s disease. In October 2020 we completed the third and fourth patients’ procedures. In February 2021, the independent Data Safety Monitoring Board (“DSMB”) overseeing the Phase I/II clinical trial of AMT-130 for the treatment of Huntington’s disease met. No significant safety concerns were noted to prevent further dosing. On April 5, 2021 we announced that we completed the procedures for the fifth to tenth patients completing the treatment of the first cohort.

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On April 5, 2021 we also announced the initiation of a Phase 1b/II clinical trial in Europe. The planned Phase Ib/II study is expected to begin enrolling patients in the second half of 2021. This open-label study will enroll 15 patients with early manifest Huntington’s disease across two dose cohorts. Together with the U.S. study, the European study is intended to establish safety, proof of concept, and the optimal dose of AMT-130 to take forward into Phase III development or into a confirmatory study should an accelerated registration pathway be feasible.

COVID-19 measures

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The coronavirus disease (“COVID-19) caused by the severe acute respiratory syndrome coronavirus 2 (“Sars-CoV 2 virus”) was characterized as a pandemic by the World Health Organization (“WHO”) on March 11, 2020. During late 2020 various, potentially more infectious, variants of the Sars-CoV 2 virus causing COVID-19 were identified.

Starting March 2020, we implemented measures to address the impact of COVID-19 on our business. We mandated a work-from-home policy for all non-essential employees at our Amsterdam and Lexington facilities when the pandemic began. We implemented a series of protocols governing the operations of our Lexington facility to comply with the requirements of the various orders and guidance from the Commonwealth of Massachusetts and other related orders, guidance, laws, and regulations. We continue to monitor local government rules and recommendations and office protocols will be aligned with these rules and recommendations.

To align with the Dutch government’s measures, we implemented a mandatory work-from-home policy in Amsterdam. Employees based in Amsterdam who cannot perform their duties outside of our Amsterdam facility will continue to work at our Amsterdam facility. We adapted to operate our laboratories at our Amsterdam site to comply with social distancing rules and to ensure the health and wellbeing of our employees under the current circumstances. All other employees in Amsterdam will work from home through at least the end of August 2021, partly in conjunction with the ongoing expansion of our laboratory space.

As a biopharma research and development company, we were deemed to provide essential services under the “stay at home” advisory that was issued by the Governor of Massachusetts on March 23, 2020 and we therefore have maintained our manufacturing operations at our Lexington site. To ensure adequate social distancing in our Lexington facility, our COVID-19 protocols generally have limited occupancy to numbers below those allowed by the Massachusetts COVID-19 guidelines. In our Lexington facility, we currently have implemented an occupancy limitation of approximately 25%. Our employees that cannot perform their duties outside of our Lexington facility continue to work at our Lexington facility. All other employees are required to work remotely to the extent possible through at least the end of the second quarter of 2021. Our actual occupancy at the Lexington facility has been less than approximately 25% of our permitted occupancy during all phases of the Massachusetts reopening plan. We have also implemented a mandatory COVID-19 PCR testing protocol effective February 11, 2021 that requires employees to have tested negative for COVID-19 prior to entering the Lexington facility.

We have adapted our ongoing clinical research activities based on the directions and flexibility provided by the “FDA Guidance on Conduct of Clinical Trials of Medical Products during COVID-19 Pandemic” issued on March 18, 2020 and updated throughout the pandemic to minimize any risk, disruption, or delay in either patient dosing or follow-up visits. These procedures occurred after a postponement that resulted from the COVID-19 pandemic and the associated states of emergency declarations in the United States.

The broader implications of COVID-19 on our results of operations and overall financial performance remain uncertain. The COVID-19 pandemic and its adverse effects have become more prevalent in the locations where we, and our third-party business partners conduct business. While we have experienced disruptions in our operations as a result of COVID-19, we are adapting to the current environment to minimize the effect to our business. However, we may experience more pronounced disruptions in our operations in the future.

Facility

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In February 2021 we commenced the expansion of our Amsterdam site to build additional laboratories to support the expansions of our research and development activities as well the construction of a cleanroom designed to be capable of manufacturing cGMP materials at a 500-liter scale. In May 2021 we entered into a sublease agreement to let an additional approximately 1,080 square meters of office space to accommodate the hiring of additional full-time employees. The lease expires in October 2028 and includes a break option until October 2023.

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Financial Overview

Key components of our results of operations include the following:

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As of March 31, 2021, and December 31, 2020, we had cash and cash equivalents of $260.8 million and $244.9 million, respectively. We had a net loss of $41.6 million in the three months ended March 31, 2021, compared to $28.0 million for the same period in 2020. As of March 31, 2021, and December 31, 2020, we had accumulated deficits of $826.3 million and $784.7 million, respectively. Our losses will be materially impacted by the amount of license revenue that we will recognize in accordance with ASC 606 as a result of the closing of the transaction contemplated under the CSL Behring Agreement, which became fully effective on May 6, 2021.

We anticipate that our expenses will increase substantially as we:

See “Results of Operations” below for a discussion of the detailed components and analysis of the amounts above.

Critical Accounting Policies and Estimates

In preparing our consolidated financial statements in accordance with U.S. GAAP and pursuant to the rules and regulations promulgated by the SEC we make assumptions, judgments and estimates that can have a significant impact on our net income/loss and affect the reported amounts of certain assets, liabilities, revenue and expenses, and related disclosures. On an ongoing basis, we evaluate our estimates and judgments, including those related to the treatment of the CSL Behring Agreement, our arrangements with Bristol-Myers Squibb (“BMS”), including the amended collaboration and license agreement that we entered into with BMS in December 2020 (the “amended BMS CLA”), share-based payments, corporate income taxes related to valuation allowance and accounting for operating leases under ASC 842. We base our assumptions, judgments and estimates on historical experience and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not clear from other sources. Actual results may differ from these estimates under different assumptions or conditions. In making estimates and judgments, management employs critical accounting policies. During the three months ended March 31, 2021, there were no material changes to our critical accounting policies as reported in our Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the SEC on March 1, 2021.

We believe that the assumptions, judgments, and estimates related to the treatment of the CSL Behring Agreement, the amended BMS CLA, share-based payments, corporate income taxes related to valuation allowance and accounting for operating leases under ASC 842 to be our critical accounting policies.

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The preparation of our consolidated financial statements for the three-month period ended March 31, 2021, required us to analyze the accounting treatment of the CSL Behring Agreement.

The effectiveness of the transaction contemplated by the CSL Behring Agreement was contingent on completion of review under antitrust laws in the United States, Australia, and the United Kingdom. The review processes in Australia and the United Kingdom were completed prior to January 6, 2021. As of March 31, 2021, regulatory approval in the United Sates had not occurred. On May 5, 2021, the waiting period under the HSR Act expired and the transaction became fully effective on May 6, 2021.    

As of March 31, 2021, we concluded that we had no enforceable right to receive the $450.0 million upfront payment, in accordance with the CSL Behring Agreement as payment was contingent upon the successful completion of reviews under the HSR Act and the reviews were not completed by March 31, 2021. Therefore, we determined we would not recognize any revenue in relation to the upfront payment, the regulatory and sale milestone payments, or the royalties (together “CSL Behring License Revenue”) in accordance with ASC 606 during the three-month period ended March 31, 2021.

We recognize deferred tax assets to the extent that we determine that these assets are more likely than not to be realized. We determined that recognition of the CSL Behring License Revenue in 2021 will consume a material portion of our net operating loss carryforwards in the Netherlands. However, we expect to continue to record operating losses in the years thereafter. Accordingly, we expect to continue to record a full valuation allowance in relation to our net operating loss carryforwards in the Netherlands as of the end of the current fiscal year. We determined the impact which recognition of CSL Behring License Revenue is estimated to have, with regards to the expected effective tax rate of 0% that was applied with respect to our Dutch operations as of March 31, 2021, is immaterial. Accordingly, we continued to record a full valuation allowance as of March 31, 2021, in relation to our net operating loss carryforwards in the Netherlands.

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Revenues

We recognize collaboration revenues associated with Collaboration Target-specific pre-clinical analytical development and process development activities that are reimbursable by BMS under the BMS CLA (as defined below) and the amended BMS CLA as well as other related agreements. Collaboration Revenue related to these contracted services is recognized when performance obligations are satisfied.

We recognized license revenues associated with the amortization of the non-refundable upfront payment and target designation fees we received from BMS in 2015. We evaluated our outstanding performance obligation following the amendment of the BMS CLA on December 1, 2020 and determined that our remaining performance obligation is immaterial. We updated our measure of progress accordingly and amortized the remaining balance of unrecognized revenue as of December 1, 2020. In accordance with the amended BMS CLA, we continue to be eligible to receive research, development, and regulatory milestone payments as well as sales milestone payments and royalties for each of the four active Collaboration Targets if defined milestones are achieved in relation to the license to our technology and know-how. We will recognize revenue from these payments when earned or as sales occur.

Research and development expenses

We expense research and development (“R&D”) expenses as incurred. Our R&D expenses generally consist of costs incurred for the development of our target candidates, which include:

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Our research and development expenses may vary substantially from period to period based on the timing of our research and development activities, including manufacturing campaigns, regulatory submissions and enrollment of patients in clinical trials. The successful development of our product candidates is highly uncertain. Estimating the nature, timing or cost of the development of any of our product candidates involves considerable judgement due to numerous risks and uncertainties associated with developing gene therapies, including the uncertainty of:

A change in the outcome of any of these variables with respect to our product candidates that we may develop, including as a result of the COVID-19 pandemic, could mean a significant change in the expenses and timing associated with the development of such product candidate.

Selling, general and administrative expenses

Our general and administrative expenses consist principally of employee, office, consulting, legal and other professional and administrative expenses. We incur expenses associated with operating as a public company, including expenses for personnel, legal, accounting and audit fees, board of directors’ costs, directors' and officers' liability insurance premiums, Nasdaq listing fees, expenses related to investor relations and fees related to business development and maintaining our patent and license portfolio. Our selling costs include employee expenses as well as professional fees related to the preparation of a commercial launch of etranacogene dezaparvovec.

Other items, net

Our other income primarily consists of payments to subsidize our research and development efforts as well as income from the subleasing of our Amsterdam facility.

Our other expense primarily consists of expenses we incur in relation to our subleasing income.

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Results of Operations

Comparison of the three months ended March 31, 2021 and 2020

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The following table presents a comparison of our results of operations for the three months ended March 31, 2021 and 2020.

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