ProQR(PRQR) - 2025 Q2 - Quarterly Report

Unaudited Condensed Consolidated Financial Statements Unaudited Condensed Consolidated Statement of Financial Position The statement of financial position provides a snapshot of the company's assets, equity, and liabilities as of June 30, 2025, compared to December 31, 2024, showing a decrease in total assets and equity | Metric | June 30, 2025 (€ thousands) | December 31, 2024 (€ thousands) | Change (€ thousands) | Change (%) | | :-------------------------- | :----------------------- | :------------------------ | :-------------- | :--------- | | Total assets | 137,537 | 167,958 | (30,421) | -18.11% | | Cash and cash equivalents | 119,765 | 149,408 | (29,643) | -19.84% | | Total equity | 66,983 | 88,560 | (21,577) | -24.36% | | Total liabilities | 70,554 | 79,398 | (8,844) | -11.14% | Unaudited Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income The company reported a significant increase in net loss for both the three and six-month periods ended June 30, 2025, primarily driven by higher research and development costs and general and administrative costs, while revenue decreased | Metric | 3 Months Ended June 30, 2025 (€ thousands) | 3 Months Ended June 30, 2024 (€ thousands) | Change (€ thousands) | Change (%) | | :------------------------------------ | :------------------------------------ | :------------------------------------ | :-------------- | :--------- | | Revenue | 3,817 | 6,305 | (2,488) | -39.46% | | Research and development costs | (11,408) | (7,048) | (4,360) | 61.86% |\ | General and administrative costs | (4,816) | (3,013) | (1,803) | 59.84% | | Operating result | (12,249) | (3,600) | (8,649) | 240.25% | | Result for the period | (12,179) | (2,692) | (9,487) | 352.79% | | Basic loss per share (€) | (0.12) | (0.03) | (0.09) | 300.00% | | Metric | 6 Months Ended June 30, 2025 (€ thousands) | 6 Months Ended June 30, 2024 (€ thousands) | Change (€ thousands) | Change (%) | | :------------------------------------ | :------------------------------------ | :------------------------------------ | :-------------- | :--------- | | Revenue | 8,336 | 10,755 | (2,419) | -22.49% | | Research and development costs | (23,731) | (16,331) | (7,400) | 45.31% | | General and administrative costs | (8,050) | (6,465) | (1,585) | 24.52% | | Operating result | (23,065) | (11,675) | (11,390) | 97.56% | | Result for the period | (22,258) | (10,350) | (11,908) | 115.05% | | Basic loss per share (€) | (0.21) | (0.13) | (0.08) | 61.54% | - Basic and diluted loss per share are equal due to the anti-dilutive nature of outstanding options while the company is loss-making[5] Unaudited Condensed Consolidated Statement of Changes in Equity The statement of changes in equity reflects a decrease in total equity for the six-month period ended June 30, 2025, primarily due to the net loss for the period and negative other comprehensive income, partially offset by share-based payments | Metric | June 30, 2025 (€ thousands) | June 30, 2024 (€ thousands) | Change (€ thousands) | Change (%) | | :-------------------------- | :----------------------- | :----------------------- | :-------------- | :--------- | | Total Equity | 66,983 | 32,854 | 34,129 | 103.88% | | Accumulated Deficit | (447,773) | (410,553) | (37,220) | 9.07% | | Recognition of share-based payments | 1,667 | 1,364 | 303 | 22.21% | - The accumulated deficit increased significantly from (€410,553,000) at June 30, 2024, to (€447,773,000) at June 30, 2025, reflecting the net loss for the period[7] Unaudited Condensed Consolidated Statement of Cash Flows The company experienced a substantial net decrease in cash and cash equivalents for the six-month period ended June 30, 2025, primarily due to cash used in operating activities, which increased significantly compared to the prior year | Metric | 6 Months Ended June 30, 2025 (€ thousands) | 6 Months Ended June 30, 2024 (€ thousands) | Change (€ thousands) | Change (%) | | :------------------------------------ | :------------------------------------ | :------------------------------------ | :-------------- | :--------- | | Net cash used in operating activities | (27,199) | (21,388) | (5,811) | 27.17% | | Net cash used in investing activities | (325) | (17,999) | 17,674 | -98.20% | | Net cash used in financing activities | (793) | (701) | (92) | 13.12% | | Net decrease in cash and cash equivalents | (28,317) | (40,088) | 11,771 | -29.36% | | Cash and cash equivalents, at end of period | 119,765 | 78,970 | 40,795 | 51.66% | - The decrease in cash used in investing activities was largely due to no significant increase in financial assets in 2025, compared to a €17,000,000 increase in 2024[8] Notes to Unaudited Condensed Consolidated Financial Statements 1. General Information ProQR Therapeutics N.V. is a Netherlands-domiciled biotechnology company focused on discovering and developing novel therapeutic medicines, listed on Nasdaq under the ticker PRQR, and operates through several wholly-owned subsidiaries - ProQR Therapeutics N.V. is a biotechnology company focused on the discovery and development of novel therapeutic medicines[9] - The company's ordinary shares are listed on Nasdaq Capital Market under the ticker symbol PRQR since September 18, 2014[9] - ProQR Therapeutics N.V. is the ultimate parent company of ten wholly-owned subsidiaries and has full control over Stichting Bewaarneming Aandelen ProQR (ESOP Foundation)[10][11][12] 2. Significant Accounting Policies These interim condensed consolidated financial statements are prepared in accordance with IAS 34 and are consistent with the accounting policies from the December 31, 2024 annual statements. Management assesses the company's ability to continue as a going concern for at least one year based on existing funding and projected cash flows - Interim condensed consolidated financial statements are prepared in accordance with IAS 34 Interim Financial Statements[13] - The accounting policies are consistent with those applied in the annual financial statements for the year ended December 31, 2024[13] - Management expects the Company to continue as a going concern for at least one year, based on existing funding, current cash position, and projected cash flows[16] - The Company operates in one reportable segment: the discovery and development of innovative, RNA-based therapeutics[17] 3. Adoption of New and Revised International Financial Reporting Standards New International Financial Reporting Standards and Interpretations that became effective on 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, did not materially impact the condensed consolidated financial statements[18] 4. Critical Accounting Estimates and Judgements Management makes significant judgments and estimates, particularly concerning revenue recognition for the Eli Lilly collaboration and the expensing of research and development costs, which are consistent with those described in the 2024 annual financial statements - Significant judgments and estimates are made regarding carrying amounts of assets and liabilities, based on historical experience and other relevant factors[21] - The significant judgments and key sources of estimation uncertainty are consistent with those described in the Company's annual financial statements for the year ended December 31, 2024[23] (i) Revenue recognition for the Eli Lilly and Company research and collaboration agreement Revenue recognition for the Eli Lilly collaboration involves significant judgment in identifying a single combined performance obligation (license and R&D services), recognizing revenue over time based on labor hours, and including variable consideration (milestones) when highly probable - The license granted to Lilly is not distinct from associated R&D services, leading to a single combined performance obligation[25] - Revenue is recognized over time using an input method based on the percentage of labor hours incurred compared to total estimated labor hours[26] - Equity investments made by Lilly are considered part of the transaction price and initially allocated to deferred revenue[27] - Variable consideration, such as development milestones, is included in the transaction price when it is highly probable that a significant reversal of cumulative revenue recognized will not occur[28][29] (ii) Research and development expenditures Research and development expenditures are expensed as incurred, as the criteria for capitalization are not met, with estimates made for services performed by vendors - Research and development expenses are reflected in the income statement because capitalization criteria are not met[30] - Estimates are made for the level of service performed by vendors and associated costs, which may vary from actual incurred amounts[30][31] 5. Cash and Cash Equivalents Cash and cash equivalents decreased by approximately €29.6 million from December 31, 2024, to June 30, 2025, with balances held at investment-grade banks and including short-term deposits | Metric | June 30, 2025 (€ thousands) | December 31, 2024 (€ thousands) | Change (€ thousands) | Change (%) | | :-------------------------- | :----------------------- | :------------------------ | :-------------- | :--------- | | Cash and cash equivalents | 119,765 | 149,408 | (29,643) | -19.84% | - Cash balances are held at banks with investment grade credit ratings (A-1/P-1/F1 minimum)[32] - Included in cash and cash equivalents are deposits fixed for at most 3-month periods[32] 6. Prepayments and Other Receivables Prepayments and other receivables increased slightly to €3,931,000 at June 30, 2025, primarily consisting of payments for services not yet provided, accrued grant income, and deposits | Metric | June 30, 2025 (€ thousands) | December 31, 2024 (€ thousands) | Change (€ thousands) | Change (%) | | :-------------------------- | :----------------------- | :------------------------ | :-------------- | :--------- | | Prepayments | 2,088 | 2,410 | (322) | -13.36% | | Other receivables | 1,341 | 835 | 506 | 60.60% | | Accrued income from Rett Syndrome Research Trust | 502 | 502 | 0 | 0.00% | | Total | 3,931 | 3,747 | 184 | 4.91% | - All receivables are considered short-term and due within one year[33] 7. Property, Plant and Equipment Property, plant and equipment primarily consist of buildings, leasehold improvements, laboratory equipment, and a right-of-use asset for the Leiden office, which decreased slightly to €10,903,000 at June 30, 2025 - Property, plant and equipment include buildings and leasehold improvements, laboratory equipment, and other assets[35] - The right-of-use asset for the Leiden office and laboratory space had a carrying amount of €10,903,000 at June 30, 2025, down from €11,433,000 at December 31, 2024[35] 8. Other Current Liabilities Other current liabilities decreased to €7,403,000 at June 30, 2025, mainly comprising accruals for services provided by vendors not yet billed, payroll-related accruals, and other miscellaneous liabilities | Metric | June 30, 2025 (€ thousands) | December 31, 2024 (€ thousands) | Change (€ thousands) | Change (%) | | :-------------------------- | :----------------------- | :------------------------ | :-------------- | :--------- | | Other current liabilities | 7,403 | 8,849 | (1,446) | -16.34% | - These liabilities principally consist of accruals for services provided by vendors not yet billed, payroll related accruals and other miscellaneous liabilities[36] 9. Borrowings Total borrowings remained stable at €4,727,000 at June 30, 2025, primarily consisting of an Innovation credit for the sepofarsen program, for which a waiver for repayment was extended until December 31, 2025. The company also extinguished debt with Pontifax and Kreos in September 2022 | Metric | June 30, 2025 (€ thousands) | December 31, 2024 (€ thousands) | Change (€ thousands) | Change (%) | | :-------------------------- | :----------------------- | :------------------------ | :-------------- | :--------- | | Innovation credit | 2,899 | 2,899 | 0 | 0.00% | | Accrued interest | 1,828 | 1,683 | 145 | 8.61% | | Total borrowings | 4,727 | 4,582 | 145 | 3.16% | - The waiver for the remaining balance of the Innovation credit, including accrued interest, was extended until December 31, 2025[38] - Debt with Pontifax and Kreos was extinguished in September 2022, though their warrants remain in place until 2025 and 2026[39] 10. Lease Liabilities Lease liabilities primarily relate to the company's office and laboratory facilities in Leiden, with the current lease agreement terminating on June 30, 2031. Extension options are not included in the lease term as they are not reasonably certain to be exercised - Lease liabilities primarily consist of the lease for office and laboratory facilities at Zernikedreef in Leiden, Netherlands[40][41] - The current lease agreement for these facilities terminates on June 30, 2031, following a one-year extension in December 2020[41][42] - Subsequent 5-year extension options are not included in the lease term as the Company is not reasonably certain to exercise them[42] 11. Deferred Income Total deferred income decreased to €44,435,000 at June 30, 2025, primarily from payments related to the Eli Lilly and Company collaboration and, to a lesser extent, the Rett Syndrome Research Trust | Source | June 30, 2025 (€ thousands) | December 31, 2024 (€ thousands) | Change (€ thousands) | Change (%) | | :------------------------------------ | :----------------------- | :------------------------ | :-------------- | :--------- | | Payments from Eli Lilly and Company (Current) | 17,390 | 21,501 | (4,111) | -19.12% | | Payments from Rett Syndrome Research Trust (Current) | 60 | 441 | (381) | -86.40% | | Payments from Eli Lilly and Company (Non-current) | 26,985 | 29,429 | (2,444) | -8.30% | | Total deferred income | 44,435 | 51,371 | (6,936) | -13.50% | 12. Shareholders' Equity The company's authorized share capital consists of 170 million ordinary and 170 million preference shares. In October 2024, ProQR completed a public offering and a concurrent private placement with Eli Lilly, raising significant net proceeds. Share-based compensation expenses increased for the six-month period ended June 30, 2025 - Authorized share capital is €13,600,000, comprising 170,000,000 ordinary shares and 170,000,000 preference shares, each with a par value of €0.04[46] - In October 2024, the company completed a public offering of 18,000,000 ordinary shares and a partial exercise of underwriters' option, generating net proceeds of approximately €60,235,000[48] - Concurrently, Eli Lilly purchased 3,523,538 ordinary shares in a private placement for gross proceeds of approximately $12,300,000 (€11,400,000)[51] | Metric | 6 Months Ended June 30, 2025 (€ thousands) | 6 Months Ended June 30, 2024 (€ thousands) | Change (€ thousands) | Change (%) | | :-------------------------- | :------------------------------------ | :------------------------------------ | :-------------- | :--------- | | Share-based compensation expenses | 1,667 | 1,364 | 303 | 22.21% | 13. Revenue Revenue primarily stems from a global licensing and research collaboration with Eli Lilly, initiated in September 2021 and expanded in December 2022. The company recognizes revenue over time for R&D activities and at a point in time for certain milestones, with $2,000,000 (€1,781,000) in milestones recognized in the first half of 2025 - The company has a global licensing and research collaboration with Eli Lilly and Company, focused on RNA editing platform for genetic disorders[54] - The collaboration was expanded in December 2022 to include additional targets in the central and peripheral nervous systems[56] - During the six-month period ended June 30, 2025, the Company reached milestones amounting to $2,000,000 (€1,781,000) under the agreement, which was partially recognized as revenue[58] - Revenue is initially recognized over time using an input method based on estimated labor hours for R&D services, while variable consideration for development and commercial milestones is recognized at a point in time when achieved and uncertainty is resolved[59] 14. Other Income Other income primarily consists of grant income, totaling €380,000 for the six-month period ended June 30, 2025. This includes an agreement with the Rett Syndrome Research Trust (RSRT) for EONs development, with additional funding secured in December 2024 | Metric | 6 Months Ended June 30, 2025 (€ thousands) | 6 Months Ended June 30, 2024 (€ thousands) | Change (€ thousands) | Change (%) | | :-------------------------- | :------------------------------------ | :------------------------------------ | :-------------- | :--------- | | Grant income | 380 | 366 | 14 | 3.83% | - In January 2024, the Company entered an agreement with RSRT for EONs development, receiving an initial research grant of up to €1,015,000[60] - In December 2024, the partnership with RSRT expanded to include an additional $8,150,000 in funding to advance selected candidates into clinical trials, though no amounts have been received or work commenced as of June 30, 2025[60] 15. Research and Development Costs Research and development costs increased significantly to €23,731,000 for the six-month period ended June 30, 2025, primarily due to increased outsourced R&D activities and a rise in full-time employee equivalents (FTEs) | Metric | 6 Months Ended June 30, 2025 (€ thousands) | 6 Months Ended June 30, 2024 (€ thousands) | Change (€ thousands) | Change (%) | | :-------------------------- | :------------------------------------ | :------------------------------------ | :-------------- | :--------- | | Research and development costs | 23,731 | 16,331 | 7,400 | 45.31% | - The increase in R&D costs is mainly due to increased outsourced research and development activities and increased full-time employee equivalents (FTEs) in the first half of 2025[62] 16. General and Administrative Costs General and administrative costs increased to €8,050,000 for the six-month period ended June 30, 2025, compared to the same period in the prior year | Metric | 6 Months Ended June 30, 2025 (€ thousands) | 6 Months Ended June 30, 2024 (€ thousands) | Change (€ thousands) | Change (%) | | :-------------------------- | :------------------------------------ | :------------------------------------ | :-------------- | :--------- | | General and administrative costs | 8,050 | 6,465 | 1,585 | 24.52% | 17. Investments in Financial Assets The company's investments in Phoenicis Therapeutics Inc. and Yarrow Biotechnology Inc. were both valued at €nil as of June 30, 2025, as Phoenicis discontinued operations and Yarrow's fair value was nil - ProQR holds a 3.9% interest in Phoenicis Therapeutics Inc., which discontinued operations during Q3 2024, resulting in a €nil investment value at June 30, 2025[64] - ProQR holds a 5.1% interest in Yarrow Biotechnology Inc., with its financial asset valued at €nil at June 30, 2025[65] 18. Income Taxes The company reported no current income tax liability at June 30, 2025, and has not recognized any deferred tax assets due to the uncertainty of future earnings. Tax losses in the Netherlands can be carried forward indefinitely but are subject to annual offset limitations - The current income tax liability is €nil at June 30, 2025[67] - No deferred tax assets have been recognized due to the uncertainty of future earnings[67] - Tax losses in the Netherlands may be carried forward indefinitely, but their offset is limited to the first €1 million of taxable profit and 50% of the excess[68] 19. Related-Party Transactions The company has no related-party transactions other than compensation paid to its Board members - The Company does not have any transactions with related parties other than compensation to its Board members[69] 20. Events After Balance Sheet Date There were no events after the balance sheet date that require disclosure - No events after the balance sheet date were reported[70]