ProQR(PRQR) - 2025 Q1 - Quarterly Report

Unaudited Condensed Consolidated Financial Statements Unaudited Condensed Consolidated Statement of Financial Position As of March 31, 2025, ProQR Therapeutics reported total assets of €151.7 million, a decrease from €168.0 million at year-end 2024, primarily due to a reduction in cash and cash equivalents Consolidated Statement of Financial Position (€ in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | €151,689 | €167,958 | | Cash and cash equivalents | €132,414 | €149,408 | | Non-current assets | €13,608 | €14,113 | | Total Liabilities | €72,754 | €79,398 | | Deferred income (Non-current) | €28,299 | €29,429 | | Deferred income (Current) | €19,250 | €21,942 | | Total Equity | €78,935 | €88,560 | Unaudited Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the three months ended March 31, 2025, the company reported a net loss of €10.1 million, an increase from the €7.7 million loss in the same period of 2024, driven by a significant rise in research and development costs to €12.3 million, while revenue remained relatively stable at €4.5 million Statement of Profit or Loss Highlights (€ in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenue | €4,519 | €4,450 | | Research and development costs | (€12,323) | (€9,283) | | Operating result | (€10,816) | (€8,075) | | Result for the period (Net Loss) | (€10,079) | (€7,658) | | Basic and Diluted loss per share | (€0.10) | (€0.09) | Unaudited Condensed Consolidated Statement of Changes in Equity Total equity decreased from €88.6 million at the start of 2025 to €78.9 million at March 31, 2025, primarily due to the net loss of €10.1 million for the period, slightly offset by €0.8 million recognized for share-based payments Changes in Equity for Q1 2025 (€ in thousands) | Description | Amount | | :--- | :--- | | Balance at January 1, 2025 | €88,560 | | Result for the period (Net Loss) | (€10,079) | | Other comprehensive income | (€371) | | Recognition of share-based payments | €758 | | Other minor changes | €67 | | Balance at March 31, 2025 | €78,935 | Unaudited Condensed Consolidated Statement of Cash Flows The company experienced a net decrease in cash and cash equivalents of €16.5 million during the first quarter of 2025, driven by €15.8 million used in operating activities, €0.2 million in investing activities, and €0.5 million in financing activities, with cash and cash equivalents at €132.4 million at period-end Cash Flow Summary for Q1 2025 vs Q1 2024 (€ in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | (€15,798) | (€15,132) | | Net cash used in investing activities | (€224) | (€17,732) | | Net cash used in financing activities | (€500) | (€419) | | Net decrease in cash and cash equivalents | (€16,522) | (€33,283) | | Cash and cash equivalents at end of period | €132,414 | €85,713 | Notes to Unaudited Condensed Consolidated Financial Statements This section provides detailed explanations of accounting policies, critical judgments, and specific financial items supporting the consolidated statements Note 1: General Information ProQR Therapeutics N.V. is a Netherlands-based biotechnology company focused on discovering and developing novel therapeutic medicines, with its ordinary shares listed on the Nasdaq Capital Market under the ticker symbol PRQR - The company is a biotechnology firm domiciled in Leiden, the Netherlands, focusing on the discovery and development of novel therapeutic medicines[9][10] - The company's shares have been listed on Nasdaq since September 18, 2014, and currently trade on the Nasdaq Capital Market under the ticker PRQR[9] Note 2: Significant Accounting Policies The interim financial statements are prepared in accordance with IAS 34 and use accounting policies consistent with the 2024 annual financial statements, with management concluding that the going concern basis is appropriate based on existing funding and business plans - The interim financial statements are prepared according to IAS 34 and should be read with the annual statements for the year ended December 31, 2024[13] - Management confirms the adoption of the going concern basis of accounting, expecting the company to fund its operations for at least one year from the signing date based on its current cash position and business plan[16] Note 3: Adoption of New and Revised International Financial Reporting Standards The adoption of new and revised International Financial Reporting Standards effective January 1, 2025, did not have a material impact on the company's condensed consolidated financial statements - New standards and interpretations effective January 1, 2025, had no material impact on the financial statements[18] Note 4: Critical Accounting Estimates and Judgements Significant management judgment is applied to revenue recognition for the Eli Lilly collaboration and to research and development expenditures, with the Lilly agreement's license and R&D services treated as a single performance obligation and R&D expenses expensed as incurred - A key judgment in the Eli Lilly collaboration is treating the license and associated R&D services as a single combined performance obligation, as the license lacks stand-alone value without ProQR's R&D involvement[24][25] - Revenue from the Lilly agreement is recognized over time using an input method based on the percentage of labor hours incurred versus total estimated hours, with the total deferred revenue balance for this obligation at €47.3 million at March 31, 2025[26] - Research and development expenditures are expensed in the income statement as they are incurred because the criteria for capitalization have not been met[30] Note 5: Cash and Cash Equivalents The company's cash and cash equivalents decreased to €132.4 million at March 31, 2025, from €149.4 million at December 31, 2024, with these balances held at banks with investment-grade credit ratings Cash and Cash Equivalents (€ in thousands) | Date | Amount | | :--- | :--- | | March 31, 2025 | €132,414 | | December 31, 2024 | €149,408 | Note 6: Prepayments and Other Receivables Prepayments and other receivables increased to €5.1 million as of March 31, 2025, from €3.7 million at the end of 2024, primarily consisting of prepayments for vendor services, accrued grant income, and other receivables Prepayments and Other Receivables Breakdown (€ in thousands) | Category | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Prepayments | 2,910 | 2,410 | | Other receivables | 1,725 | 835 | | Accrued income from RSRT | 502 | 502 | | Total | 5,137 | 3,747 | Note 7: Property, Plant and Equipment Property, plant, and equipment primarily consists of buildings, leasehold improvements, and laboratory equipment, with the right-of-use asset for the leased Leiden office and laboratory space having a carrying amount of €11.1 million at March 31, 2025 - The right-of-use asset for the leased Leiden office and laboratory space had a carrying amount of €11,122,000 at March 31, 2025, down from €11,433,000 at December 31, 2024[35] Note 8: Other Current Liabilities Other current liabilities decreased to €7.3 million at March 31, 2025, from €8.8 million at year-end 2024, mainly composed of accruals for services from vendors, payroll-related accruals, and other miscellaneous items - Other current liabilities were €7,271,000 at March 31, 2025, compared to €8,849,000 at December 31, 2024, consisting mainly of accruals for vendor services and payroll[36] Note 9: Borrowings Borrowings relate to an Innovation credit for the sepofarsen program, with a remaining balance of €4.7 million (including accrued interest) classified as current, for which the company received a waiver extended until December 31, 2025, while warrants from previously extinguished debt remain outstanding - The remaining Innovation credit of €2,899,000 is recognized under current borrowings[37] - In January 2025, a waiver for the total balance of the Innovation credit, including interest (€4,582,000), was extended until December 31, 2025[38] - Warrants related to extinguished debt with Pontifax and Kreos remain outstanding until 2025 and 2026 and are accounted for as derivative financial liabilities[39] Note 10: Lease Liabilities Lease liabilities primarily relate to the company's headquarters and laboratory facilities in Leiden, the Netherlands, with the current lease agreement for these facilities terminating on June 30, 2031 - The company leases 4,818 square meters of office and laboratory facilities in Leiden, Netherlands, with the current lease agreement ending on June 30, 2031[41] Note 11: Deferred Income Total deferred income was €47.5 million at March 31, 2025, down from €51.4 million at year-end 2024, with the vast majority of this balance relating to payments from the Eli Lilly and Company collaboration Deferred Income Breakdown (€ in thousands) | Source | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Payments from Eli Lilly and Company | 47,329 | 50,930 | | Payments from Rett Syndrome Research Trust | 220 | 441 | | Total Deferred Income | 47,549 | 51,371 | Note 12: Shareholders' Equity As of March 31, 2025, the company had 107.7 million ordinary shares issued, having raised approximately $82.1 million in combined gross proceeds from an underwritten public offering and a concurrent private placement with Eli Lilly in late 2024, with share-based compensation expense for Q1 2025 at €758,000 - In October 2024, the company raised gross proceeds of $69.8 million (€64.6 million) from an underwritten public offering and an additional $12.3 million (€11.4 million) from a concurrent private placement with Lilly[48][51] - Share-based compensation expense for the three months ended March 31, 2025, was €758,000, compared to €736,000 for the same period in 2024[53] Note 13: Revenue Revenue is generated from the global licensing and research collaboration with Eli Lilly, focused on ProQR's Axiomer® RNA editing platform, with the company achieving milestones worth $1.0 million in Q1 2025, which was added to the transaction price and partially recognized as revenue - The collaboration with Lilly, initiated in September 2021 and expanded in December 2022, utilizes ProQR's Axiomer® RNA editing platform for genetic disorders in the liver and nervous system[54][56] - The agreement is accounted for as a single performance obligation (license plus R&D), with revenue recognized over time using a labor-hours input method[59] - In Q1 2025, the company reached milestones of $1,000,000 (€918,000) under the Lilly agreement, which was added to the transaction price[58] Note 14: Other Income Other income for Q1 2025 was €222,000, consisting entirely of grant income from an agreement with the Rett Syndrome Research Trust (RSRT), which focuses on developing editing oligonucleotides (EONs) for MECP2 mutations - Other income of €222,000 for Q1 2025 (Q1 2024: €210,000) was grant income recognized from the RSRT agreement[62] - The RSRT partnership was expanded in December 2024 to include an additional $8.15 million in funding to advance candidates into clinical trials, though no amounts have been received under this expansion as of March 31, 2025[62] Note 15: Research and Development Costs Research and development costs increased to €12.3 million for the first quarter of 2025, up from €9.3 million in the same period of 2024, primarily driven by higher outsourced R&D activities and an increase in full-time employee equivalents (FTEs) Research and Development Costs (€ in thousands) | Period | Amount | | :--- | :--- | | Q1 2025 | €12,323 | | Q1 2024 | €9,283 | - The year-over-year increase in R&D costs was mainly due to increased outsourced research and development activities and higher FTE count[64] Note 16: General and Administrative Costs General and administrative costs were €3.2 million for the three months ended March 31, 2025, a slight decrease from €3.5 million in the corresponding period of 2024 General and Administrative Costs (€ in thousands) | Period | Amount | | :--- | :--- | | Q1 2025 | €3,234 | | Q1 2024 | €3,452 | Note 17: Investments in Financial Assets The company's investments in financial assets, including interests in Phoenicis Therapeutics Inc. and Yarrow Biotechnology Inc., were valued at nil as of March 31, 2025, following Phoenicis' discontinuation of operations in the third quarter of 2024 - The company holds a 3.9% interest in Phoenicis and a 5.1% interest in Yarrow, with both investments valued at € nil as of March 31, 2025[66][67] - Phoenicis Therapeutics Inc. discontinued its operations during the quarter ended September 30, 2024[66] Note 18: Income Taxes The company had no current income tax liability as of March 31, 2025, and has not recognized any deferred tax assets related to its operating losses due to uncertainty about the timing and amount of future earnings, despite these losses being carried forward indefinitely - No deferred tax asset has been recognized for operating losses due to uncertainty of future earnings[69] - Tax losses can be carried forward indefinitely in the Netherlands, but their offset against future profits is subject to certain limitations[70] Note 19: Related-Party Transactions The company's only related-party transactions consist of compensation to its Board members - The company has no related-party transactions other than compensation paid to its Board members[71] Note 20: Events After Balance Sheet Date There were no significant events that occurred after the balance sheet date of March 31, 2025 - None[72]