Exhibit 99.1
I. | BUSINESS REPORT |
1.1 COMPANYOVERVIEW
Erytech is a clinical-stage biopharmaceutical company developing innovative therapies for severe forms of cancer and orphan diseases. Leveraging its proprietary ERYCAPS® platform, which uses a novel technology to encapsulate therapeutic drug substances inside erythrocytes, or red blood cells, or RBCs, Erytech is developing a pipeline of product candidates for patients with high unmet medical needs. Erytech’s lead product candidate eryaspase, which is also referred to as GRASPA, targets the metabolism of cancer cells by depriving the cells of asparagine, an amino acid necessary for their survival and critical in maintaining the cells’ rapid growth rate. Erytech is currently developing eryaspase for the treatment of severe forms of cancer, including pancreatic cancer and triple-negative breast cancer, or TNBC.
In 2018, Erytech initiated a pivotal Phase 3 clinical trial of eryaspase for the treatment of second-line pancreatic cancer patients. Patient enrollment in this trial, referred to as theTRYbeCA-1 trial, began in September 2018 in Europe and Erytech received approval from the U.S. Food and Drug Administration, of its Investigational New Drug, or IND, application to extend the trial to the United States in May 2019. The first U.S. clinical sites were activated at the end of 2019 and the Company is now able to enroll the first U.S. patients in theTRYbeCA-1 trial. As of December 31, 2019, more than half of the targeted enrollment were enrolled in the trial. The Company expects to report interim data from theTRYbeCA-1 trial in the third quarter of 2020 and final data in the first half of 2021.
In 2018, the Company also launched aproof-of-concept Phase 2 clinical trial in TNBC in Europe, referred to as theTRYbeCA-2 trial. The first clinical sites were activated in 2019 and the trial is currently enrolling patients at sites in four European countries. The Company expects to report final data from theTRYbeCA-2 trial in 2021.
The Company is also supporting a Phase 2 clinical trial initiated and sponsored by investigators of the Nordic Society of Pediatric Hematology and Oncology (NOPHO). The trial is evaluating eryaspase in patients with acute lymphoblastic leukemia, or ALL, who experienced hypersensitivity reactions to pegylatedL-asparaginase. The Company expects interim data to become available in the first half of 2020 and final results in the second half of 2020.
In addition to the encapsulation ofL-asparaginase, Erytech believes that its ERYCAPS® platform has broad potential application and can be used to encapsulate a wide range of therapeutic agents for which long-circulating therapeutic activity or rapid and specific targeting is desired. For example, Erytech developed erymethionase, a preclinical product candidate which encapsulatesmethionine-g-lyase in red blood cells and is designed to target the amino acid metabolism of cancer cells and induce tumor starvation. The Company intends to continue to work on the development of erymethionase as well as potential other therapeutic strategies based on methionine depletion, depending on financial resources and business strategy. Erytech has also developed two preclinical programs aimed at maximizing the value creation potential of its ERYCAPS program: enzyme replacement (Eryzyme) and immune modulation (Erymmune). As part of its value creation strategy, in June 2019, Erytech entered into a collaboration with SQZ Biotechnologies, a cell therapy company developing novel treatments in multiple therapeutic areas, to focus on the development of novel red blood cell-based therapeutics for the treatment of immuno-oncology and tolerance induction and advance its Erymmune program.
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1.2RESULTS
Operating income
To date, Erytech has not generated any revenue from the sale of its products.
(Amounts in thousands of euros) | 09/30/2018 | 09/30/2019 | ||||||
Research Tax Credit | 2,672 | 2,853 | ||||||
Revenues from licenses or other contracts | (6 | ) | 1,028 | |||||
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Total operating income | 2,666 | 3,881 | ||||||
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Revenues from licenses or other contracts during the nine months ended September 30, 2019 was mainly comprised of revenues linked to the upfront payment of €880 thousand ($1 million) that Erytech received in connection with entry into a license agreement with SQZ Biotechnologies in June 2019.
Operating expenses
The research and development expenses are broken down as follows:
(Amounts in thousands of euros) | 09/30/2018 | 09/30/2019 | ||||||
ERYASPASE | 9,350 | 16,364 | ||||||
ERYMETHIONASE / ERYMINASE | 1,730 | 1,547 | ||||||
ERYMMUNE | 327 | 272 | ||||||
ERYZYME | 246 | — | ||||||
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Total direct research and development expenses | 11,652 | 18,183 | ||||||
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Consumables | 1,709 | 2,005 | ||||||
Rental and maintenance | 588 | 1,034 | ||||||
Services, subcontracting and consulting fees | 3,632 | 3,262 | ||||||
Personnel expenses | 7,938 | 11,052 | ||||||
Depreciation and amortization expense | 168 | 1,393 | ||||||
Other | 40 | 48 | ||||||
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Total indirect research and development expenses | 14,074 | 18,794 | ||||||
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Total research and development expenses | 25,726 | 36,977 | ||||||
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The increase in research and development expenses was mainly due to:
• | An increase in costs related to eryaspase due to the launch of the Phase 3 clinical trial of second-line treatment of patients with metastatic pancreatic cancer, orTRYbeCA-1, in September 2018. |
• | An increase in research and development personnel expenses of €3,114 thousand, mainly related to the increased headcount of the research and development workforce, particularly in the pharmaceutical operations and manufacturing departments. This increase is mainly due to the launch of theTRYbeCA-1 trial in September 2018. The weighted average full-time employees allocated to research and development was 148 during the nine months ended September 30, 2019 and 92 during the nine months ended September 30, 2018. |
The general and administrative expenses are broken down as follows:
(Amounts in thousands of euros) | 09/30/2018 | 09/30/2019 | ||||||
Consumables | 130 | 421 | ||||||
Rental and maintenance | 1,017 | 876 | ||||||
Services, subcontracting and consulting fees | 3,970 | 6,638 | ||||||
Personnel expenses | 4,317 | 4,796 | ||||||
Depreciation and amortization expense | 438 | 590 | ||||||
Other | 695 | 422 | ||||||
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Total general and administrative expenses | 10,566 | 13,743 | ||||||
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The increase in general and administrative expenses was mainly due to a €2,668 thousand increase in services and subcontracting, primarily due to costs related to the establishment of Erytech’s manufacturing facility in Princeton, New Jersey.
Financial income (loss)
(Amounts in thousands of euros) | 09/30/2018 | 09/30/2019 | ||||||
Financial income | 3,994 | 3,975 | ||||||
Financial expenses | (15 | ) | (392 | ) | ||||
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Financial income (loss) | 3,979 | 3,582 | ||||||
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The financial income (loss) was mainly comprised of:
• | A foreign currency gain of €3,021 thousand generated by the conversion into euros of Erytech’s U.S. dollar bank account during each of the nine months ended September 30, 2019 and 2018. |
• | A gain on investment currency transactions on swaps of €947 thousand during the nine months ended September 30, 2019 (€847 thousand during the nine months ended September 30, 2018). |
• | Financial expenses related to lease liability as a result of IFRS16 in the amount of €251 thousand during the nine months ended September 30, 2019 (no corresponding charge during the nine months ended September 30, 2018). |
Cash position and cash flows
Erytech’s cash and cash equivalents were €81.9 million as of September 30, 2019 as compared to €134.4 million as of December 31, 2018, representing a cash utilization of €52.5 million.
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Operating activities
(Amounts in thousands of euros) | 09/30/2018 | 09/30/2019 | ||||||
Operating cash flow before change in working capital | (30,228 | ) | (42,704 | ) | ||||
Change in working capital | (8,040 | ) | 6,028 | |||||
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Net cash flow used in operating activities | (38,268 | ) | (36,676 | ) | ||||
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Net cash flows used in operating activities were €38,268 thousand during the nine months ended September 30, 2018 and €36,676 thousand during the nine months ended September 30, 2019. The decrease of the cash used by operating activities is related to a positive impact of the working capital requirement.
Investing activities
(Amounts in thousands of euros) | 09/30/2018 | 09/30/2019 | ||||||
Acquisition of property, plant and equipment | (2,254 | ) | (19,591 | ) | ||||
Acquisition of intangible assets | (3 | ) | (2 | ) | ||||
Increase (net of decrease) innon-current & current financial assets | (677 | ) | 270 | |||||
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Net cash flow used in investing activities | (2,934 | ) | (19,323 | ) | ||||
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Net cash flows used in investing activities were €2,934 thousand during the nine months ended September 30, 2018 and €19,323 thousand during the nine months ended September 30, 2019. The increase is mainly related to the payment of the suppliers involved in the construction of Erytech’s new manufacturing facility in Princeton, New Jersey.
Financing activities
(Amounts in thousands of euros) | 09/30/2018 | 09/30/2019 | ||||||
Proceeds from borrowings, net of repayment | (610 | ) | (553 | ) | ||||
Repayment of lease debt, net of allowance received | — | 1,111 | ||||||
Interest received (paid) | 113 | (176 | ) | |||||
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Net cash flow from (used in) financing activities | (497 | ) | 381 | |||||
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Net cash flows from (used in) financing activities were €(497) thousand during the nine months ended September 30, 2018 and €381 thousand during the nine months ended September 30, 2019. The cash flow from financing activities during the nine months ended September 30, 2019 is primarily due to the allowance for the Erytech’s manufacturing facility in Princeton, New Jersey (€1,859 thousand).
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II. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2019
CONSOLIDATED STATEMENT OF INCOME (LOSS)
(Amounts in thousands of euros, except loss per share) | Notes | 09/30/2018 (9 months) Unaudited | 09/30/2019 (9 months) Unaudited | 09/30/2018 (3 months) Unaudited | 09/30/2019 (3 months) Unaudited | |||||||||||||||
€ | € | € | € | |||||||||||||||||
Revenues | — | — | — | — | ||||||||||||||||
Other income | 4.1 | 2,666 | 3,881 | 401 | 916 | |||||||||||||||
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Operating income | 2,666 | 3,881 | 401 | 916 | ||||||||||||||||
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Research and development | 4.2 , 4.3 | (25,726 | ) | (36,977 | ) | (8,974 | ) | (14,259 | ) | |||||||||||
General and administrative | 4.2 , 4.3 | (10,566 | ) | (13,743 | ) | (3,173 | ) | (3,250 | ) | |||||||||||
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Operating expenses | (36,292 | ) | (50,720 | ) | (12,147 | ) | (17,509 | ) | ||||||||||||
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Operating loss | (33,627 | ) | (46,839 | ) | (11,747 | ) | (16,593 | ) | ||||||||||||
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Financial income | 4.5 | 3,994 | 3,975 | 1,028 | 2,709 | |||||||||||||||
Financial expenses | 4.5 | (15 | ) | (392 | ) | 27 | (87 | ) | ||||||||||||
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Financial income (loss) | 3,979 | 3,582 | 1,055 | 2,622 | ||||||||||||||||
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Income tax | (1 | ) | 1 | 13 | 2 | |||||||||||||||
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Net loss | (29,649 | ) | (43,256 | ) | (10,679 | ) | (13,970 | ) | ||||||||||||
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Basic / Diluted loss per share (€/share) | 4.6 | (1.65 | ) | (2.41 | ) | (0.60 | ) | (0.78 | ) |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)
(Amounts in thousands of euros) | 09/30/2018 (9 months) Unaudited | 09/30/2019 (9 months) Unaudited | 09/30/2018 (3 months) Unaudited | 09/30/2019 (3 months) Unaudited | ||||||||||||
€ | € | € | € | |||||||||||||
Net loss | (29,649 | ) | (43,256 | ) | (10,679 | ) | (13,970 | ) | ||||||||
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Elements that may be reclassified subsequently to income (loss) | — | — | ||||||||||||||
Currency translation adjustment | 30 | 835 | 16 | 866 | ||||||||||||
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Elements that may not be reclassified subsequently to income (loss) | ||||||||||||||||
Remeasurement of defined benefit liabilities | (71 | ) | (96 | ) | (25 | ) | (30 | ) | ||||||||
Tax effect | 3 | — | (13 | ) | — | |||||||||||
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Other comprehensive income (loss) | (38 | ) | 740 | (21 | ) | 836 | ||||||||||
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Total comprehensive income (loss) | (29,688 | ) | (42,516 | ) | (10,701 | ) | (13,134 | ) | ||||||||
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The Company applied IFRS 16 standard for the first time as of January 1, 2019, using the modified retrospective approach. Under this approach, the comparative information is not restated.
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As of | ||||||||||||
(Amounts in thousands of euros) | Notes | December 31, 2018 | September 30, 2019 Unaudited | |||||||||
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ASSETS | ||||||||||||
Non-current assets | ||||||||||||
Intangible assets | 1,613 | 1,630 | ||||||||||
Property, plant and equipment | 5.1 | 15,274 | 27,011 | |||||||||
Right of use | 5.2 | — | 10,530 | |||||||||
Othernon-current financial assets | 5.3 | 1,046 | 736 | |||||||||
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Totalnon-current assets | 17,933 | 39,908 | ||||||||||
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Current assets | ||||||||||||
Other current financial assets | 5.3 | — | 57 | |||||||||
Inventories | 1,396 | 170 | ||||||||||
Trade and other receivables | 30 | 58 | ||||||||||
Other current assets | 5.4 | 14,111 | 14,585 | |||||||||
Cash and cash equivalents | 5.5 | 134,371 | 81,927 | |||||||||
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Total current assets | 149,907 | 96,798 | ||||||||||
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TOTAL ASSETS | 167,840 | 136,706 | ||||||||||
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(Amounts in thousands of euros) | Notes | December 31, 2018 | September 30, 2019 Unaudited | |||||||||
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LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
Shareholders’ equity | ||||||||||||
Share capital | 1,794 | 1,794 | ||||||||||
Premiums related to share capital | 281,745 | 281,685 | ||||||||||
Reserves | (99,524 | ) | (137,016 | ) | ||||||||
Translation reserve | (188 | ) | 943 | |||||||||
Net loss for the period | (38,224 | ) | (43,256 | ) | ||||||||
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Total shareholders’ equity | 5.6 | 145,602 | 104,150 | |||||||||
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Non-current liabilities | ||||||||||||
Provisions—non-current portion | 5.7 | 347 | 533 | |||||||||
Financial liabilities –non-current portion | 5.8 | 1,243 | 1,312 | |||||||||
Leaseliabilities—non-current portion | 5.9 | — | 11,880 | |||||||||
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TotalNon-current liabilities | 1,590 | 13,725 | ||||||||||
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Current liabilities | ||||||||||||
Financial liabilities – current portion | 5.8 | 776 | 285 | |||||||||
Lease liabilities—current portion | 5.9 | — | 1,142 | |||||||||
Trade and other payables | 5.10 | 16,655 | 12,662 | |||||||||
Other current liabilities | 5.11 | 3,217 | 4,741 | |||||||||
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Total current liabilities | 20,648 | 18,831 | ||||||||||
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TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
| 167,840 | 136,706 | |||||||||
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The Company applied IFRS 16 standard for the first time as of January 1, 2019, using the modified retrospective approach. Under this approach, the comparative information is not restated.
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CONSOLIDATED STATEMENT OF CASH FLOW
(Amounts in thousands of euros) | Notes | 09/30/2018 (9 months) Unaudited | 09/30/2019 (9 months) Unaudited | |||||||||
€ | € | |||||||||||
Cash flows from operating activities | ||||||||||||
Net loss | (29,649 | ) | (43,256 | ) | ||||||||
Reconciliation of net loss and the cash used for operating activities | ||||||||||||
Gain or loss en exchange (calculated) | (3,022 | ) | (3,021 | ) | ||||||||
Amortization and depreciation | 4.4 | 626 | 2,003 | |||||||||
Provision | 4.4 | 59 | 91 | |||||||||
Net booked value of scrapped fixed assets | — | 21 | ||||||||||
Expenses related to share-based payments | 4.3 | 1,954 | 1,008 | |||||||||
Interest expense (income) | 4.5 | (113 | ) | 381 | ||||||||
Income tax expense (income) | 1 | (1 | ) | |||||||||
Change in trade and payables in foreign currency | (84 | ) | 71 | |||||||||
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Operating cash flow before change in working capital | (30,228 | ) | (42,704 | ) | ||||||||
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(Increase) decrease in inventories | (36 | ) | 1,225 | |||||||||
(Increase) decrease in trade and other receivables | 76 | (28 | ) | |||||||||
(Increase) decrease in other current assets | 5.4 | (8,238 | ) | (411 | ) | |||||||
Increase (decrease) in trade and other payables | 5.10 | 121 | 4,853 | |||||||||
Increase (decrease) in other current liabilities | 5.11 | 36 | 389 | |||||||||
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Change in working capital | (8,040 | ) | 6,028 | |||||||||
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Net cash flow used in operating activities | (38,268 | ) | (36,676 | ) | ||||||||
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Cash flows from investing activities | ||||||||||||
Acquisition of property, plant and equipment | (2,254 | ) | (19,591 | ) | ||||||||
Acquisition of intangible assets | (3 | ) | (2 | ) | ||||||||
Increase innon-current & current financial assets | 5.3 | (677 | ) | (119 | ) | |||||||
Decrease innon-current & current financial assets | 5.3 | — | 389 | |||||||||
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Net cash flow used in investing activities | (2,934 | ) | (19,323 | ) | ||||||||
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Cash flows from financing activities | ||||||||||||
Repayment of borrowings | 5.8 | (610 | ) | (553 | ) | |||||||
Allowance received from a lessor | 5.9 | — | 1,896 | |||||||||
Repayment of lease debt (IFRS 16) | 5.9 | — | (786 | ) | ||||||||
Interests received (paid) | 113 | (176 | ) | |||||||||
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Net cash flow from (used in) financing activities | (497 | ) | 381 | |||||||||
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Exchange rate effect on cash in foreign currency | 3,116 | 3,174 | ||||||||||
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Increase / Decrease in cash and cash equivalents | (38,583 | ) | (52,443 | ) | ||||||||
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Net cash and cash equivalents at the beginning of the period | 5.5 | 185,514 | 134,371 | |||||||||
Net cash and cash equivalents at the closing of the period | 5.5 | 146,931 | 81,927 | |||||||||
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Supplemental disclosure of cash flows information | ||||||||||||
Cash paid for interest | 8 | 176 | ||||||||||
Cash paid for income tax | — | — |
The Company applied IFRS 16 standard for the first time as of January 1, 2019, using the modified retrospective approach. Under this approach, the comparative information is not restated.
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CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
(Amount in thousands of euros, except number of shares) | Share capital | Premiums related to the share capital | Reserves | Translation reserve | Net (income) loss | Total shareholders’ equity | ||||||||||||||||||
As of December 31, 2017 | 1,794 | 281,745 | (68,386 | ) | (203 | ) | (33,530 | ) | 181,419 | |||||||||||||||
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Net loss for the period | (29,649 | ) | (29,649 | ) | ||||||||||||||||||||
Other comprehensive income | (69 | ) | 30 | (38 | ) | |||||||||||||||||||
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Total comprehensive income (loss) | — | — | (69 | ) | 30 | (29,649 | ) | (29,688 | ) | |||||||||||||||
Allocation of prior period loss | (33,530 | ) | 33,530 | — | ||||||||||||||||||||
Share-based payment | 1,954 | 1,954 | ||||||||||||||||||||||
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As of September 30, 2018 | 1,794 | 281,745 | (100,030 | ) | (173 | ) | (29,649 | ) | 153,686 | |||||||||||||||
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As of December 31, 2018 | 1,794 | 281,745 | (99,524 | ) | (188 | ) | (38,224 | ) | 145,602 | |||||||||||||||
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Net loss for the period | (43,256 | ) | (43,256 | ) | ||||||||||||||||||||
Other comprehensive income | (96 | ) | 835 | 739 | ||||||||||||||||||||
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Total comprehensive income (loss) | — | — | (96 | ) | 835 | (43,256 | ) | (42,516 | ) | |||||||||||||||
Allocation of prior period loss | (38,224 | ) | 38,224 | — | ||||||||||||||||||||
Issue of warrants | 55 | 55 | ||||||||||||||||||||||
Share-based payment | 1,008 | 1,008 | ||||||||||||||||||||||
Reclassification | 0 | (115 | ) | (180 | ) | 295 | — | |||||||||||||||||
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As of September 30, 2019 | 1,794 | 281,685 | (137,016 | ) | 943 | (43,256 | ) | 104,150 | ||||||||||||||||
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The Company applied IFRS 16 standard for the first time as of January 1, 2019, using the modified retrospective approach. Under this approach, the comparative information is not restated.
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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The notes are an integral part of the accompanying condensed consolidated financial statements. The condensed consolidated financial statements were approved and authorized for issuance by the Board of Directors of the Company on January 27, 2020.
1. DESCRIPTION OF THE BUSINESS
ERYTECH Pharma S.A. (“ERYTECH,” and together with its subsidiary the “Company”) is incorporated in Lyon, France, and was founded in 2004 to develop and market innovative red blood cell-based therapeutics for cancer and orphan diseases. The Company’s most advanced product candidates are being developed for the treatment of pancreatic cancer.
The Company completed its initial public offering on Euronext Paris in May 2013, raising €17.7 million and afollow-on offering of €30.0 million (on a gross basis before deducting offering expenses), in October 2014. The initial public offering triggered the conversion of the totality of the convertible bonds previously issued. Two private placements of respectively 940,000 ordinary and 793,877 ordinary shares for €25.4 million and €9.9 million (on a gross basis before deducting offering expenses) were completed in December 2015 and 2016 with institutional investors in the United States and in Europe. In April 2017, the Company completed afollow-on offering of €70.5 million (on a gross basis before deducting offering expenses). The Company completed an initial public offering on the Nasdaq Global Select Market raising €124 million ($144 million on a gross basis before deducting offering expenses).
The Company has incurred losses and negative cash flows from operations since its inception and had shareholders’ equity of €104,150 thousand as of September 30, 2019 as a result of several financing rounds, including an initial public offering. The Company anticipates incurring additional losses until such time, if ever, that it can generate significant revenue from its product candidates in development. Substantial additional financing will be needed by the Company to fund its operations and to commercially develop its product candidates.
The Company’s future operations are highly dependent on a combination of factors, including: (i) the success of its research and development; (ii) regulatory approval and market acceptance of the Company’s proposed future products; (iii) the timely and successful completion of additional financing; and (iv) the development of competitive therapies by other biotechnology and pharmaceutical companies. As a result, the Company is and should continue, in the short tomid-term, to be financed through partnership agreements for the development and commercialization of its drug candidates and through the issuance of new debt or equity instruments.
The accompanying condensed consolidated financial statements and related notes (the “Condensed Consolidated Financial Statements”) present the operations of ERYTECH Pharma S.A. and its subsidiary, ERYTECH Pharma, Inc.
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Major events of the nine months ended September 30, 2019
Business
May 2019:
• | Acceptance by the U.S. Food and Drug Administration (FDA) of the Company’s Investigational New Drug (IND) application for eryaspase, consisting of the enzymeL-asparaginase encapsulated inside donor derived red blood cells. The acceptance of the IND will enable ERYTECH to initiate enrollment at U.S. clinical trial sites for its ongoing pivotal Phase 3TRYbeCA-1 trial evaluating eryaspase in second-line pancreatic cancer. |
June 2019:
• | Opening of a new U.S.-based GMP manufacturing facility in Princeton, New Jersey, United States. The facility will support production capacity needs for eryaspase, the Company’s lead product candidate, for patients in the United States. The Princeton facility is targeted to begin manufacturing eryaspase in the fourth quarter of 2019 to ensure supply for U.S. participants in theTRYbeCA-1 trial. |
• | The Company signed an agreement with SQZ Biotechnologies (SQZ), a cell therapy company developing novel treatments in multiple therapeutic areas, to collaborate on the advancement of novel red blood cell-based therapeutics for immune modulation. The Company is eligible to receive up to $57 million in combined upfront and potential development, regulatory and commercial milestone payments for the first product successfully developed by SQZ under this agreement. The Company will also be eligible to receive sales royalties. |
• | Enrollment of first patient in the Phase 2 clinical trial, namedTRYbeCA-2, evaluating the Company’s lead product candidate, eryaspase, for the treatment of first line triple negative breast cancer (TNBC). |
Management
January 2019:
• | Grant of 36,150 free shares and 38,025 stock-options to employees. |
• | Eric Soyer is appointed as Deputy General Manager of the Company. |
April 2019:
• | Grant of 94,200 free shares (of which 36,000 to executive officers and 58,200 to employees), 76,905 stock-options (of which 44,200 to executive officers and 32,705 to employees) and 25,998 warrants to members of the board of directors. |
June 2019:
• | Dr. Jean-Paul Kress was appointed as Chairman of the Board of Directors by the Board of Directors following his appointment as board member at the Company’s Annual General Meeting of Shareholders held on June 21, 2019. Dr. Kress has over 25 years’ experience as a senior executive officer in international biotechnology and pharmaceutical groups. He was Chairman and Chief Executive Officer of Syntimmune (Cambridge, MA, US) until the end of 2018, when the company was acquired by Alexion Pharmaceuticals. |
July 2019:
• | Grant of 59,123 stock-options to executive officers. |
10 | Page |
2. STATEMENT OF COMPLIANCE
The Condensed Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standard Board (“IASB”) and were approved and authorized for issuance by the Board of Directors of the Company on January 27, 2020.
Due to the listing of ordinary shares of the Company on Euronext Paris and in accordance with the European Union’s regulation No. 1606/2002 of July 19, 2002, the Condensed Consolidated Financial Statements of the Company are also prepared in accordance with IFRS, as adopted by the European Union (EU).
As of September 30, 2019, all IFRS that the IASB had published and that are mandatory are the same as those adopted by the EU and mandatory in the EU. As a result, the Condensed Consolidated Financial Statements comply with International Financial Reporting Standards as published by the IASB and as adopted by the EU.
The Condensed Consolidated Financial Statements as of September 30, 2019 have been prepared in accordance with the standard IAS 34, “Interim financial reporting.” As condensed financial statements, they do not include all information that would be required by the full IFRS standards. They must be read in conjunction with the consolidated financial statements for the year ended December 31, 2018.
Except for the standards applicable as of January 1, 2019 described below, the standards applied in the preparation of the Condensed Consolidated Financial Statements are the same as those applied to prepare the financial statements as of December 31, 2018.
The Company adopted the following standards, amendments and interpretations that are mandatory as of January 1, 2019:
• | IFRS 16—Leases; |
• | IFRIC 23—Uncertainty over income tax treatments; |
• | Amendments to IFRS 9—Prepayment features with negative compensation; |
• | Amendments to IAS 28—Long term Interests in Associates and Joint Ventures; |
• | Amendments to IAS 19—Plan Amendment, Curtailment or Settlement; |
• | Annual Improvements to IFRS Standards 2015-2017 Cycle. |
These new texts did not have any significant impact on the Company’s results or financial position with the exception of IFRS 16 (refer to note 3.4). The standards and interpretations that are optionally applicable to the Company as of September 30, 2019 were not applied in advance.
Recently issued accounting pronouncements that may be relevant to the Company’s operations but have not yet been adopted are as follows:
• | Amendments to References to the Conceptual Framework in IFRS Standards |
• | Amendments to IFRS 3—Business Combinations |
• | Amendments to IAS 1 and IAS 8: Definition of Material |
11 | Page |
3. SIGNIFICANT ACCOUNTING POLICIES
3.1 Scope of consolidation
Details of the Company’s subsidiary as of September 30, 2019 are as follows:
Date of incorporation | Percent of ownership interest | Accounting method | ||||||||||
ERYTECH Pharma, Inc. Registered office: Cambridge, Massachusetts, United States | April 2014 | 100 | % | Fully consolidated |
3.2 Foreign currencies
Functional Currency and Translation of Financial Statements into Presentation Currency
The Condensed Consolidated Financial Statements are presented in euros, which is also the functional currency of the parent company, ERYTECH Pharma S.A.
The exchange rates used for the preparation for the translation of the financial statements of ERYTECH PHARMA, Inc. are as follows:
Exchange rate (USD per EUR) | September 30, 2018 | December 31, 2018 | September 30, 2019 | |||||||||
Weighted average rate | 1.1949 | 1.1815 | 1.1237 | |||||||||
Closing rate | 1.1576 | 1.1450 | 1.0889 |
3.3 Use of estimates and judgments
Preparation of the Condensed Consolidated Financial Statements in accordance with the rules prescribed by the IFRS requires the use of estimates and the formulation of assumptions having an impact on the financial statements. These estimates can be revised where the circumstances on which they are based change. The actual results may therefore differ from the estimates initially formulated. The main estimates are described in the annual consolidated financial statements, except new significant judgments linked to the accounting treatment of the leases in accordance with IFRS 16, as described in note 3.4.
3.4 Change in accounting policies
The Company applied IFRS 16—Leasesfor the first time as of January 1, 2019.
IFRS 16 eliminates the distinction between operating leases and finance leases and requires all leases to be recognized on the lessee’s balance sheet, in the form of an asset (representing the right to use the rented asset during the duration of the contract – see note 5.2) and of a liability (corresponding to the future lease payments – see note 5.9). The standard also impacts the presentation of the income statement (allocation of expense between operating loss and financial charges) and the cash flow statement (allocation of cash outflows between cash flow used in operating activities and cash flow used in financing activities).
The Company has applied the modified retrospective approach. Under this approach, the cumulative effect of initially applying IFRS 16 is recognized as an adjustment to equity at the transition date, i.e. January 1, 2019. Consequently, the comparative information disclosed for 2018 were not restated. There are disclosed as previously in accordance with IAS 17 standard and its interpretations. The consequence of this change in accounting policies are disclosed in detail below.
12 | Page |
Definition of a lease
Until the current period, the Company determined at the signing of the contract whether an agreement constituted or included a lease in accordance with the provisions of IFRIC 4, “Determining Whether anArrangement Contains a Lease.”As a lessee, the Company previously classified lease agreements as operating or finance leases by assessing whether the contract transferred substantially all the risks and benefits inherent in the ownership in accordance with IAS 17.
The Company now assesses whether a contract is or contains a lease in accordance with IFRS 16, i.e. whether it grants the right to control the use of an identified asset for a certain period in exchange for consideration.
At the transition date, the Company chose to apply the simplification measure of keeping past analyses for the identification of leases and applying IFRS 16 only to contracts previously classified as leases.
Significant accounting policies
In accordance with IFRS 16, the right of use and the lease liability are recognized on the lessee’s balance sheet when the asset linked to the lease agreement become available:
• | The right of use asset is measured at cost and comprises: |
o the amount of the initial measurement of the lease liability,
o lease incentives, payments at or prior to commencement date,
o incremental costs which would not have been incurred if the contract had not been concluded.
• | The lease liability is recognized for an amount equal to the present value of the lease payments over the lease term. |
The right of use is subsequently measured at cost less depreciation and any accumulated impairment loss. The amount can be adjusted based on certain revaluations of the lease liability.
The lease liability is then increased by the interest expense and decreased by the rents paid.
The lease liability may be remeasured in the following situations:
• | Modification related to the assessment of the exercise of an option to purchase or the extension or thenon-exercise of a termination option (which become reasonably certain); |
• | Rent adjustments based on rates and indices provided in the contracts. |
The duration corresponds to the firm period of the commitment and takes into account the optional periods that are reasonably certain to be exercised.
The Company has used its judgment in determining the term of the lease agreements providing for an extension option. The fact that the Company has determined that it is reasonably certain to exercise such options affects the lease term and has a significant impact on the amount of the right of use and the lease liability.
Transition information
At the transition date, the lease liability linked to contracts classified as operating leases in accordance with IAS 17 (mainly real estate) was measured at the value of the remaining lease payments discounted at the marginal borrowing rate as of January 1, 2019. The right of use is measured at an amount equal to the lease liability, corrected with lease payments prior to the commencement date or remaining due in the statement of financial position.
For contracts previously classified as finance leases, the value of the right of use and the lease liability as of January 1, 2019 were determined as those of the underlying asset and the lease debt that were calculated in accordance with IAS 17.
The Company has applied simplification measures set out in IFRS 16 regarding:
• | Contracts with a lease term of 12 months or less at the transition date. These contracts have resulted in an expense of approximately €220 thousand during the nine months ended September 30, 2019. |
• | Contracts for low value assets. These contracts have resulted in an expense of approximately €30 thousand during the nine months ended September 30, 2019. |
13 | Page |
As part of the transition to IFRS 16 as of January 1, 2019, the Company recognized in liabilities a lease liability of €7,734 thousand (refer to note 5.9) and in assets a right of use of €7,443 thousand (refer to note 5.2) taking into account a liability of €291 thousand recognized in the statement of financial position as of December 31, 2018.
The discount rates applied for contracts previously classified as operating leases are based on the Company’s marginal borrowing rate, to which is added a spread which takes into account the total duration of the contract. The average marginal borrowing rate selected as of January 1, 2019 is 1.4% in France and 3.8% in the United States.
The gap between theoff-balance sheet commitments disclosed in note 8 of the Consolidated financial statements as of December 31, 2018 and the lease liability recognized as of January 1, 2019 in accordance with IFRS 16 (see note 5.9) can be explained as follows:
(Amounts in thousands of euros) | ||||
Operating lease commitment as lessee (December 31, 2018) | 8,268 | |||
|
| |||
Unrecognized contracts in accordance with IFRS 16 exemptions | (142 | ) | ||
Differences in the durations used linked to termination and extension options that are reasonably certain to be exercised | 5,798 | |||
Leases signed in 2018 for an asset available after January 1, 2019 | (2,593 | ) | ||
Other (including the improvement allowance (Princeton lease)) | (2,045 | ) | ||
|
| |||
Estimatednon-discounted lease liability under IFRS 16 as of January 1, 2019 | 9,285 | |||
|
| |||
Discount effect | (1,551 | ) | ||
|
| |||
Estimated discounted lease liability under IFRS 16 as of January 1, 2019 | 7,734 | |||
|
|
Impact on the half-year financial statements
In accordance with IFRS 16, the Company recognized as of September 30, 2019:
• | A right of use (net value) of €10,530 thousand; |
• | A lease liability of €13,023 thousand; |
• | A depreciation expense of €973 thousand; |
• | A financial expense of €251 thousand. |
3.5 Presentation of the statement of income (loss)
The Company presents its statement of income (loss) by function. As of today, the main activity of the Company is research and development. Consequently, only research and development expenses and general administrative expenses functions are considered to be representative. This distinction reflects the analytical assignment of the personnel, external expenses and depreciation and amortization. The detail of the expenses by nature is disclosed in note 4.2.
3.6 Presentation of the statement of cash flow
For the financial year ended December 31, 2018, the line “acquisition of property, plant and equipment” in the consolidated statement of cash flow included an amount of fixed assets payables not yet paid of €8,587 thousand, which should not have been included in this line.
The net cash flows used in 2018 should have been as follows:
• | €6,450 thousand instead of €15,037 thousand presented for investing activities; |
• | €47,857 thousand instead of €39,270 thousand presented for operating activities. |
14 | Page |
From January 1, 2018 to September 30, 2019, the cumulative amount of cash flows used in the acquisition of property, plant and equipment amounted to €25.2 million and related mainly to the increase of the production capacity of the Company’s manufacturing facilities in Lyon and Princeton.
3.7 Segment reporting
In accordance with IFRS 8, “Operating Segments,” reporting by operating segment is derived from the internal organization of the Company’s activities; it reflects management’s viewpoint and is established based on internal reporting used by the chief operating decision maker (the Chief Executive Officer) to allocate resources and to assess performance.
The Company operates in a single operating segment: the conducting of research and development of innovative red blood cell-based therapeutics for cancer and orphan diseases in order to market them in the future.
3.8 Events after the close of the reporting period
October 2019:
• | Grant of 300,941 free shares, 347,250 stock-options and 75,000 warrants. |
• | Collection of the 2017 Research Tax Credit (€2,819 thousands). |
November 2019:
• | The Company achieves two important milestones for theTRYbeCA-1 Phase 3 clinical trial of eryaspase in second line metastatic pancreatic cancer.TRYbeCA-1 was opened for patient enrollment in the United States and the first site was activated. This marks an important step to expand the trial to approximately 100 sites across several European countries and the United States. The manufacturing of eryaspase for the patients to be treated in the United States will take place at the newly established manufacturing facility in Princeton, N.J. |
• | Publication of the full results from the Phase 2b trial evaluating eryaspase in metastatic pancreatic in theEuropean Journal of Cancer. |
15 | Page |
4. NOTES RELATED TO THE CONSOLIDATED STATEMENT OF INCOME (LOSS)
4.1 Operating income
The Company does not generate any revenue from the sale of its products considering its stage of development.
(amounts in thousands of euros) | 09/30/2018 (9 months) | 09/30/2019 (9 months) | 09/30/2018 (3 months) | 09/30/2019 (3 months) | ||||||||||||
Research Tax Credit | 2,672 | 2,853 | 425 | 837 | ||||||||||||
Other income | (6 | ) | 1,028 | (24 | ) | 79 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | 2,666 | 3,881 | 401 | 916 | ||||||||||||
|
|
|
|
|
|
|
|
Revenues from licenses or other contracts
Revenues from licenses or other contracts in 2019 mainly comprised revenues linked to the upfront payment of €880 thousand ($1 million) provided by the license agreement entered into with SQZ Biotechnologies in June 2019 (refer to notes 1 and 7). In accordance with IFRS 15, this agreement grants to SQZ Biotechnologies a right to use the underlying intellectual property (“static license”). Consequently, the income is recognized when SQZ Biotechnologies can begin to use the licensed intellectual property.
4.2 Operating expenses by nature
4.2.1 Research and development expenses
For the nine months ended September 30, 2018 (amounts in thousands of euros) | R&D | Clinical studies | Total | |||||||||
Consumables | 567 | 1,558 | 2,125 | |||||||||
Rental and maintenance | 220 | 378 | 598 | |||||||||
Services, subcontracting and fees | 3,697 | 11,123 | 14,820 | |||||||||
Personnel expenses | 2,203 | 5,735 | 7,938 | |||||||||
Depreciation, amortization & provision | 48 | 140 | 188 | |||||||||
Other | 21 | 37 | 58 | |||||||||
|
|
|
|
|
| |||||||
Total | 6,756 | 18,970 | 25,726 | |||||||||
|
|
|
|
|
|
For the nine months ended September 30, 2019 (amounts in thousands of euros) | R&D | Clinical studies | Total | |||||||||
Consumables | 871 | 5,552 | 6,423 | |||||||||
Rental and maintenance | 161 | 878 | 1,039 | |||||||||
Services, subcontracting and fees | 2,067 | 14,893 | 16,960 | |||||||||
Personnel expenses | 2,344 | 8,708 | 11,052 | |||||||||
Depreciation, amortization & provision | 147 | 1,266 | 1,413 | |||||||||
Other | 43 | 46 | 90 | |||||||||
|
|
|
|
|
| |||||||
Total | 5,633 | 31,344 | 36,977 | |||||||||
|
|
|
|
|
|
16 | Page |
For the three months ended September 30, 2018 (amounts in thousands of euros) | R&D | Clinical studies | Total | |||||||||
Consumables | 120 | 1,303 | 1,423 | |||||||||
Rental and maintenance | 60 | 114 | 174 | |||||||||
Services, subcontracting and fees | 1,195 | 3,698 | 4,893 | |||||||||
Personnel expenses | 657 | 1,756 | 2,413 | |||||||||
Depreciation, amortization & provision | 18 | 51 | 69 | |||||||||
Other | 0 | 1 | 2 | |||||||||
|
|
|
|
|
| |||||||
Total | 2,051 | 6,923 | 8,974 | |||||||||
|
|
|
|
|
|
For the three months ended September 30, 2019 (amounts in thousands of euros) | R&D | Clinical studies | Total | |||||||||
Consumables | 85 | 2,185 | 2,269 | |||||||||
Rental and maintenance | 54 | 656 | 710 | |||||||||
Services, subcontracting and fees | 457 | 5,891 | 6,348 | |||||||||
Personnel expenses | 721 | 3,051 | 3,772 | |||||||||
Depreciation, amortization & provision | 85 | 1,038 | 1,123 | |||||||||
Other | 13 | 22 | 36 | |||||||||
|
|
|
|
|
| |||||||
Total | 1,415 | 12,843 | 14,259 | |||||||||
|
|
|
|
|
|
The increase in research and development expenses is mainly due to:
• | The increase in consumables (in the amount of €4,298 thousand for the nine month period and €846 thousand for the three month period) and the increase in external services (in the amount of €2,140 thousand for the nine month period and €1,455 thousand for the three month period), mainly linked to the ongoing clinical trials of eryaspase for the treatment of solid tumors, particularly related to the commencement of the Phase 3 clinical trial for the treatment of pancreatic cancer in September 2018; |
• | The increase in research and development personnel expenses of €3,114 thousand for the nine month period and €1,359 thousand for the three month period (see note 4.3.1). |
4.2.2 General and administrative expenses
General and administrative expenses (amounts in thousands of euros) | 09/30/2018 (9 months) | 09/30/2019 (9 months) | 09/30/2018 (3 months) | 09/30/2019 (3 months) | ||||||||||||
Consumables | 130 | 421 | 60 | 119 | ||||||||||||
Rental and maintenance | 1,017 | 876 | 580 | 134 | ||||||||||||
Services, subcontracting and fees | 3,970 | 6,638 | 1,217 | 1,691 | ||||||||||||
Personnel expenses | 4,317 | 4,796 | 1,234 | 1,463 | ||||||||||||
Depreciation and amortization | 438 | 590 | 98 | (265 | ) | |||||||||||
Other | 695 | 422 | (15 | ) | 110 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | 10,566 | 13,743 | 3,173 | 3,250 | ||||||||||||
|
|
|
|
|
|
|
|
The increase in general and administrative expenses for the nine month period is mainly due to a €2,668 thousand increase in services and subcontracting, primarily related to costs related to the establishment of the Princeton manufacturing facility during the first half of 2019.
17 | Page |
4.3 Personnel expenses
4.3.1 Research and development expenses
Research and development expenses For the nine months ended September 30, 2018 (amounts in thousands of euros) | R&D | Clinical studies | Total | |||||||||
Wages and salaries | 1,346 | 3,844 | 5,190 | |||||||||
Share-based payments (employees and executives) | 282 | 667 | 949 | |||||||||
Social security expenses | 575 | 1,223 | 1,798 | |||||||||
|
|
|
|
|
| |||||||
Total personnel expenses | 2,203 | 5,735 | 7,938 | |||||||||
|
|
|
|
|
|
Research and development expenses For the nine months ended September 30, 2019 (amounts in thousands of euros) | R&D | Clinical studies | Total | |||||||||
Wages and salaries | 1,558 | 6,463 | 8,022 | |||||||||
Share-based payments (employees and executives) | 173 | 339 | 512 | |||||||||
Social security expenses | 613 | 1,905 | 2,518 | |||||||||
|
|
|
|
|
| |||||||
Total personnel expenses | 2,344 | 8,708 | 11,052 | |||||||||
|
|
|
|
|
|
Research and development expenses For the three months ended September 30, 2018 (amounts in thousands of euros) | R&D | Clinical studies | Total | |||||||||
Wages and salaries | 376 | 1,159 | 1,535 | |||||||||
Share-based payments (employees and executives) | 90 | 215 | 305 | |||||||||
Social security expenses | 191 | 382 | 572 | |||||||||
|
|
|
|
|
| |||||||
Total personnel expenses | 657 | 1,756 | 2,413 | |||||||||
|
|
|
|
|
|
Research and development expenses For the three months ended September 30, 2019 (amounts in thousands of euros) | R&D | Clinical studies | Total | |||||||||
Wages and salaries | 481 | 2,324 | 2,805 | |||||||||
Share-based payments (employees and executives) | 56 | 82 | 138 | |||||||||
Social security expenses | 184 | 645 | 828 | |||||||||
|
|
|
|
|
| |||||||
Total personnel expenses | 721 | 3,051 | 3,772 | |||||||||
|
|
|
|
|
|
The increase in personnel expenses is mainly due to an increase in research and development employee headcount. The weighted average full-time employees (FTE) was 148 during the nine months ended September 30, 2019 and 92 during the nine months ended September 30, 2018.
4.3.2 General and administrative expenses
General and administrative expenses (amounts in thousands of euros) | 09/30/2018 (9 months) | 09/30/2019 (9 months) | 09/30/2018 (3 months) | 09/30/2019 (3 months) | ||||||||||||
Wages and salaries | 2,567 | 3,310 | 842 | 978 | ||||||||||||
Share-based payments (employees and executive management) | 647 | 387 | 173 | 125 | ||||||||||||
Social security expenses | 1,104 | 1,099 | 221 | 360 | ||||||||||||
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|
|
|
|
|
|
| |||||||||
Total personnel expenses | 4,317 | 4,796 | 1,234 | 1,463 | ||||||||||||
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|
18 | Page |
The increase in personnel expenses is due to an increase in general and administrative employee headcount. The weighted average full-time employees (FTE) was 43 during the nine months ended September 30, 2019 and 36 during the nine months ended September 30, 2018.
4.3.3 Share-based payments (IFRS 2)
Share subscription warrants (“BSA”) plan
The main assumptions used to determine the fair value of the plans granted during the nine months ended September 30, 2019 are:
Grant in April 2019 | ||||
Number of warrants | 25,998 BSA2018 | |||
Exercise price | € | 6.82 | ||
Price of the underlying share | € | 7.20 | ||
Expected dividends | 0.00 | % | ||
Volatility (1) | 38.91 | % | ||
Expected term | | T1 : 3 years T2 : 3.5 years T3 : 4 years |
| |
Fair value of the plan (in thousands of euros) (2) | 56 |
(1) based on the historical volatility observed on the ERYP index on Euronext.
(2) BSA were granted at fair value (€2.15). Therefore, no expense was recognized under IFRS 2.
Stock-options (“SO”) plan
The main assumptions used to determine the fair value of the plans granted during the nine months ended September 30, 2019 are:
Grant in January 2019 | Grant in April 2019 | Grant in July 2019 | ||||||||||
Number of warrants | 38,025 SO2018 | 76,905 SO2018 | 59,123 SO2019 | |||||||||
Exercise price | € | 6.38 | € | 7.20 | € | 5.78 | ||||||
Price of the underlying share | € | 6.38 | € | 7.20 | € | 5.81 | ||||||
Expected dividends | 0.00 | % | 0.00 | % | 0.00 | % | ||||||
Volatility (1) | 41.88 | % | 41.65 | % | 41.00 | % | ||||||
Expected term | | T1 : 6 years T2 : 6,5 years |
| | T1 : 6 years T2 : 6,5 years |
| | T1 : 6 years T2 : 6,5 years |
| |||
Fair value of the plan (in thousands of euros) | 97 | 217 | 131 |
(1) based on the historical volatility observed on the ERYP index on Euronext.
19 | Page |
Free shares (“AGA”) plan
The main assumptions used to determine the fair value of the plans granted during the nine months ended September 30, 2019 are:
Grant in January 2019 | Grant in April 2019 | |||||||
Number of shares | 36,150 AGA2018 | 94,200 AGA2018 | ||||||
Price of the underlying share | € | 6.38 | € | 7.20 | ||||
Expected dividends | 0.00 | % | 0.00 | % | ||||
Volatility (1) | 38.22 | % | 36.32 | % | ||||
Repo margin | 5.00 | % | 5.00 | % | ||||
Maturity | 3 years | 3 years | ||||||
Performance criteria | (2 | ) | (2 | ) | ||||
Fair value of the plan (in thousands of euros) | 102 | 269 |
(1) | based on the historical volatility observed on the ERYP index on Euronext. |
(2) | performance criteria: progression of the quoted market share price between the grant date and the tranche acquisition date |
• | ERYP2018: average price of the40-quoted market share price days before the grant date (€6.54 for the plan granted in January 2019 and €7.52 for the plan granted in April 2019). |
• | ERYPi : average price of the40-quoted market share price days before the acquisition date, |
• | Tri : (ERYPi / ERYP2018) – 1 |
o If TRi <=0 % no shares granted are acquired
o If Tri>100% all the shares granted are acquired
o If 0%<TRi<100% shares granted are acquired following the TRi percentage
20 | Page |
Breakdown of expenses
Plan name | Amount in P&L in euros thousands as of September 30, 2018 | of which employees | of which executive officers and executive committee | of which board members | ||||||||||||
Grant in October 2016 | 194 | 91 | 103 | — | ||||||||||||
Grant in January 2017 | 24 | — | 24 | — | ||||||||||||
Grant in June 2017 | 411 | 189 | 223 | — | ||||||||||||
Grant in October 2017 | 86 | 86 | 0 | — | ||||||||||||
Grant in January 2018 | 400 | 225 | 175 | — | ||||||||||||
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| |||||||||
TOTAL AGA | 1,116 | 592 | 524 | — | ||||||||||||
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| |||||||||
Grant in October 2016 | 62 | — | — | 62 | ||||||||||||
Grant in January 2017 | 12 | — | — | 12 | ||||||||||||
Grant in June 2017 | 152 | — | — | 152 | ||||||||||||
Grant in January 2018 | 132 | — | — | 132 | ||||||||||||
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| |||||||||
TOTAL BSA | 358 | — | — | 358 | ||||||||||||
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| |||||||||
Grant in October 2016 | 67 | 34 | 33 | — | ||||||||||||
Grant in January 2017 | 4 | 4 | — | — | ||||||||||||
Grant in June 2017 | 102 | 72 | 30 | — | ||||||||||||
Grant in October 2017 | 69 | 69 | — | — | ||||||||||||
Grant in January 2018 | 236 | 138 | 98 | — | ||||||||||||
Grant in September 2018 | 2 | — | 2 | — | ||||||||||||
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| |||||||||
TOTAL SO | 480 | 316 | 164 | — | ||||||||||||
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|
| |||||||||
Total IFRS 2 expenses | 1,954 | 908 | 688 | 358 | ||||||||||||
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|
|
|
|
|
|
Plan name | Amount in P&L in euros thousands as of September 30, 2019 | of which employees | of which executive officers and executive committee | of which board members | ||||||||||||
Grant in October 2016 | 52 | 15 | 37 | — | ||||||||||||
Grant in January 2017 | 9 | — | 9 | — | ||||||||||||
Grant in June 2017 | 139 | 50 | 89 | — | ||||||||||||
Grant in October 2017 | 8 | 8 | — | — | ||||||||||||
Grant in January 2018 | 222 | 88 | 133 | — | ||||||||||||
Grant in January 2019 | 33 | 33 | — | — | ||||||||||||
Grant in April 2019 | 61 | 38 | 23 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
TOTAL AGA | 524 | 232 | 291 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Grant in October 2016 | 24 | — | — | 24 | ||||||||||||
Grant in January 2017 | (12 | ) | — | — | (12 | ) | ||||||||||
Grant in June 2017 | 47 | — | — | 47 | ||||||||||||
Grant in January 2018 | 41 | — | — | 41 | ||||||||||||
Grant in April 2019 | — | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
TOTAL BSA | 100 | — | — | 100 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Grant in October 2016 | 12 | 3 | 8 | — | ||||||||||||
Grant in January 2017 | — | — | — | — | ||||||||||||
Grant in June 2017 | 63 | 40 | 22 | — | ||||||||||||
Grant in October 2017 | 41 | 41 | — | — | ||||||||||||
Grant in January 2018 | 194 | 93 | 101 | — | ||||||||||||
Grant in September 2018 | (11 | ) | — | (11 | ) | — | ||||||||||
Grant in January 2019 | 31 | 31 | — | — | ||||||||||||
Grant in April 2019 | 44 | 18 | 26 | — | ||||||||||||
Grant in July 2019 | 10 | — | 10 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
TOTAL SO | 385 | 229 | 156 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total IFRS 2 expenses | 1,008 | 461 | 447 | 100 | ||||||||||||
|
|
|
|
|
|
|
|
21 | Page |
Summary of outstanding instruments
Number of outstanding warrants (BSA) and founder’s warrants (BSPCE) | Number of BSA and BSPCE | Weighted- average exercise price | ||||||
Outstanding as of December 31, 2018 | 40,804 | € | 97.34 | |||||
|
|
|
| |||||
Exercisable as of December 31, 2018 | 40,804 | € | 97.34 | |||||
|
|
|
| |||||
Granted | — | € | — | |||||
Forfeited | — | € | — | |||||
Exercised | — | € | — | |||||
|
|
|
| |||||
Outstanding as of September 30, 2019 | 40,804 | € | 97.34 | |||||
|
|
|
| |||||
Exercisable as of September 30, 2019 | 40,804 | € | 97.34 | |||||
|
|
|
|
Number of outstanding stock-options and warrants (BSA) with a ratio of 1 option = 1 | Number of stock-options and BSA | Weighted- average exercise price | ||||||
Outstanding as of December 31, 2018 | 340,063 | € | 19.87 | |||||
|
|
|
| |||||
Exercisable as of December 31, 2018 | 88,999 | € | 19.88 | |||||
|
|
|
| |||||
Granted | 200,051 | € | 6.58 | |||||
Forfeited | (24,195 | ) | € | 9.24 | ||||
Exercised | — | € | — | |||||
|
|
|
| |||||
Outstanding as of September 30, 2019 | 515,919 | € | 15.05 | |||||
|
|
|
| |||||
Exercisable as of September 30, 2019 | 151,566 | € | 21.54 | |||||
|
|
|
|
Number of oustanding free shares | ||||
Outstanding as of December 31, 2018 | 342,020 | |||
|
| |||
Granted | 130,350 | |||
Forfeited | (26,553 | ) | ||
Acquired | — | |||
|
| |||
Outstanding as of September 30, 2019 | 445,817 | |||
|
|
4.4 Depreciation, amortization and provisions
(amounts in thousands of euros) | 09/30/2018 (9 months) | 09/30/2019 (9 months) | 09/30/2018 (3 months) | 09/30/2019 (3 months) | ||||||||||||
Amortization of intangible assets | 30 | 12 | 10 | 4 | ||||||||||||
Depreciation of property, plant and equipment | 595 | 1,017 | 157 | 514 | ||||||||||||
Depreciation of the right of use | — | 973 | — | 389 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total amortization and depreciation | 626 | 2,003 | 167 | 907 | ||||||||||||
Provision | — | — | — | (50 | ) | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total amortization, depreciation & provisions | 626 | 2,003 | 167 | 857 | ||||||||||||
|
|
|
|
|
|
|
|
22 | Page |
4.5 Financial income (loss)
(amounts in thousands of euros) | 09/30/2018 (9 months) | 09/30/2019 (9 months) | 09/30/2018 (3 months) | 09/30/2019 (3 months) | ||||||||||||
Income from short term deposits | 121 | 5 | 42 | 3 | ||||||||||||
Other financial income | 3,873 | 3,970 | 986 | 2,707 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Financial income | 3,994 | 3,975 | 1,028 | 2,709 | ||||||||||||
Financial expenses on lease liability | — | (251 | ) | 3 | (93 | ) | ||||||||||
Interest expense related to borrowings | (8 | ) | (134 | ) | (5 | ) | (12 | ) | ||||||||
Other financial expenses | (7 | ) | (7 | ) | 29 | 17 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Financial expenses | (15 | ) | (392 | ) | 27 | (87 | ) | |||||||||
|
|
|
|
|
|
|
| |||||||||
Financial income (loss) | 3,979 | 3,582 | 1,055 | 2,622 | ||||||||||||
|
|
|
|
|
|
|
|
Other income and expenses is mainly comprised of:
• | A foreign currency gain generated by the conversion into euros of the Company’s U.S. dollar bank account of : |
• | €3,021 thousand during the nine months ended September 30, 2019 and September 30, 2018; |
• | €2,425 thousand during the third quarter of 2019 (€590 thousand during the third quarter of 2018). |
• | A gain on investment currency transactions on swaps of : |
• | €947 thousand during the nine months ended September 30, 2019 (€847 thousand during the nine months ended September 30, 2018). |
• | €281 thousand during the third quarter of 2019 (€427 thousand during the third quarter of 2018). |
• | Financial expenses related to lease liability as a result of IFRS16 in the amount of €251 thousand during during the nine months ended September 30, 2019 (no corresponding charge during the nine months ended September 30, 2018). |
4.6 Basic earnings per share and diluted earnings (loss) per share
09/30/2018 (9 months) | 09/30/2019 (9 months) | 09/30/2018 (3 months) | 09/30/2019 (3 months) | |||||||||||||
Net loss (in thousands of euros) | (29,649 | ) | (43,256 | ) | (10,679 | ) | (13,970 | ) | ||||||||
Weighted number of shares for the period (1) | 17,937,462 | 17,937,535 | 17,937,535 | 17,937,535 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Basic loss per share (€/share) | (1.65 | ) | (2.41 | ) | (0.60 | ) | (0.78 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Diluted loss per share (€/share) | (1.65 | ) | (2.41 | ) | (0.60 | ) | (0.78 | ) | ||||||||
|
|
|
|
|
|
|
|
(1) | after deduction of treasury shares (2,500 shares are held by the Company as treasury shares and recognized as a deduction of shareholders’ equity). |
23 | Page |
5. NOTES RELATED TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
5.1 Property, plant and equipment
(amounts in thousands of euros) | Assets under construction | Plant, equipment and tooling | General equipment, fixtures and fittings | Office equipment and computers | TOTAL | |||||||||||||||
GROSS VALUE | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
As of December 31, 2018 | 13,559 | 2,584 | 2,007 | 824 | 18,974 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Increase | 7,161 | 808 | 3,587 | 345 | 11,901 | |||||||||||||||
Decrease | (21 | ) | — | — | — | (21 | ) | |||||||||||||
FX rate impact | 498 | 20 | 433 | 17 | 967 | |||||||||||||||
Reclassification | (12,117 | ) | (178 | ) | 11,105 | 70 | (1,120 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
As of September 30, 2019 | 9,080 | 3,234 | 17,131 | 1,256 | 30,701 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
ACCUMULATED DEPRECIATION | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
As of December 31, 2018 | — | (1,824 | ) | (1,471 | ) | (405 | ) | (3,700 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Increase | — | (257 | ) | (637 | ) | (123 | ) | (1,017 | ) | |||||||||||
Decrease | — | — | — | — | — | |||||||||||||||
FX rate impact | — | (1 | ) | (20 | ) | (7 | ) | (29 | ) | |||||||||||
Reclassification | — | 974 | 74 | 8 | 1,056 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
As of September 30, 2019 | — | (1,108 | ) | (2,054 | ) | (528 | ) | (3,690 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
NET VALUE | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
As of December 31, 2018 | 13,559 | 760 | 536 | 419 | 15,274 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
As of September 30, 2019 | 9,080 | 2,125 | 15,078 | 728 | 27,011 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
Assets capitalized during the nine months ended September 30, 2019 in the amount of €12.1 million mainly relate to general equipment, fixtures and fittings of the Princeton manufacturing facility (€10.3 million).
24 | Page |
5.2 Right of use
(amounts in thousands of euros) | Buildings | Plant, equipment and tooling | Transport equipment | Office equipment and computers | TOTAL | |||||||||||||||
GROSS VALUE | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
As of December 31, 2018 | — | — | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
First application of IFRS 16 | 7,397 | — | 47 | — | 7,443 | |||||||||||||||
Increase | 4,057 | — | 34 | — | 4,091 | |||||||||||||||
Decrease | (355 | ) | — | — | — | (355 | ) | |||||||||||||
FX rate impact | 289 | — | — | — | 289 | |||||||||||||||
Reclassification | — | 974 | — | 118 | 1,092 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
As of September 30, 2019 | 11,388 | 974 | 80 | 118 | 12,560 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
ACCUMULATED DEPRECIATION | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
As of December 31, 2018 | — | — | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Increase | (928 | ) | — | (16 | ) | (30 | ) | (973 | ) | |||||||||||
Decrease | 16 | — | — | — | 16 | |||||||||||||||
FX rate impact | (20 | ) | — | — | — | (20 | ) | |||||||||||||
Reclassification | — | (974 | ) | — | (79 | ) | (1,053 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
As of September 30, 2019 | (931 | ) | (974 | ) | (16 | ) | (108 | ) | (2,030 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
NET VALUE | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
As of December 31, 2018 | — | — | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
As of September 30, 2019 | 10,457 | — | 64 | 10 | 10,530 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
Reclassifications correspond to assets financed by finance leases which have been reclassified in right of use with the application of IFRS 16 as of January 1, 2019. These assets were classified in property, plant and equipment until December 31, 2018.
The increase of €4,057 thousand is mainly linked to the partial relocation of the French team in new facilities in July (impact of €4,026 thousand).
The decrease in net value of €339 thousand corresponds to a decrease in the right of use following a decrease in the rental space of a building lease (linked to a partial relocation of the French team in new facilities).
5.3 Other financial assets
(amounts in thousands of euros) | 12/31/2018 | 09/30/2019 | ||||||
Deposits related to leased premises | 446 | 484 | ||||||
Advance payments to suppliers | 510 | 226 | ||||||
Other | 91 | 26 | ||||||
|
|
|
| |||||
Total othernon-current financial assets | 1,046 | 736 | ||||||
Deposits related to leased premises | — | 25 | ||||||
Advance payments to suppliers | — | 28 | ||||||
Other | — | 4 | ||||||
|
|
|
| |||||
Total other current financial assets | — | 57 |
Advance payments to suppliers is comprised of payments made to service providers, especially contract research organizations, involved with the conduct of the Company’s clinical trials in the solid tumor indication(TRYbeCA-1 andTRYbeCA-2 trials).
25 | Page |
5.4 Other current assets
(amounts in thousands of euros) | 12/31/2018 | 09/30/2019 | ||||||
Research Tax Credit | 7,701 | 10,554 | ||||||
Tax receivables (e.g., VAT), social receivables and other receivables | 1,949 | 1,202 | ||||||
Prepaid expenses | 4,461 | 2,829 | ||||||
|
|
|
| |||||
Total other current assets | 14,111 | 14,585 |
Research Tax Credit (Crédit d’Impôt Recherche or “CIR”)
The Company benefits from the provisions in Articles 244quater B and 49septies F of the French Tax Code related to the Research Tax Credit. The Research Tax Credit is recognized in the consolidated statement of income (loss) in “other income” during the year in which the eligible research expenditures are incurred.
As of September 30, 2019, the CIR receivable included the Research Tax Credit for the 2017 and 2018 financial years and the CIR estimate as of September 30, 2019.
Prepaid expenses
Prepaid expenses mainly related to advance payments made to suppliers of asparaginase (€3,180 thousand as of December 31, 2018 and €2,189 thousand as of September 30, 2019).
5.5 Cash and cash equivalents
(amounts in thousands of euros) | 12/31/2018 | 09/30/2019 | ||||||
Cash and cash equivalents | 134,371 | 81,927 | ||||||
|
|
|
| |||||
Total cash and cash equivalents as reported in statement of financial position | 134,371 | 81,927 | ||||||
Bank overdrafts | — | — | ||||||
|
|
|
| |||||
Total cash and cash equivalents as reported in statement of cash flow | 134,371 | 81,927 |
As of December 31, 2018, the cash position is composed of the following items: (i) €118.4 million in current accounts and (ii) €16.0 million in term deposits, with a maturity in January 2019.
As of September 30, 2019, the cash position is composed of the following items: (i) €76.8 million in current accounts, (ii) €5.0 million in term deposits, with aone-month maturity and (iii) €0.1 million in other cash equivalents.
5.6 Shareholders’ equity
As of September 30, 2019, the capital of the Company consisted of 17,940,035 shares, fully paid up, with a nominal value of 0.10 euro.
5.7 Provisions
(amounts in thousands of euros) | Provisions for retirement indemnities | TOTAL | ||||||
As of December 31, 2018 | 347 | 347 | ||||||
|
|
|
| |||||
Provisions | 91 | 91 | ||||||
Actuarial gains and losses | 96 | 96 | ||||||
|
|
|
| |||||
As of September 30, 2019 | 533 | 533 | ||||||
|
|
|
|
26 | Page |
Provision for retirement indemnities
The regime for retirement indemnities applicable at ERYTECH Pharma S.A., is defined by the collective agreement for the pharmaceutical industry in France.
As part of the estimate of the retirement commitments, the following assumptions were used for all categories of employees:
12/31/2018 | 09/30/2019 | |||||||
Discount rate | 1.57 | % | 0.47 | % | ||||
Wage increase | 2 | % | 2 | % | ||||
Social welfare contribution rate - non executive employees | 44 | % | 39 | % | ||||
- executive employees | 54 | % | 51 | % | ||||
- executive management | 55 | % | 52 | % | ||||
Expected staff turnover - non executive and executive employees | Medium - High | High | ||||||
- executive management | Low | Low | ||||||
Age of retirement | 65 - 67 years | 65 - 67 years | ||||||
Mortality table | INSEE 2014 | INSEE 2018 | ||||||
|
|
|
|
5.8 Financial liabilities
Financial liabilities by type
(amounts in thousands of euros) | 12/31/2018 | 09/30/2019 | ||||||
Financial liabilities related to finance leases | 39 | — | ||||||
Conditional advances | 1,181 | 1,312 | ||||||
Bank loans | 799 | 246 | ||||||
Other | — | 39 | ||||||
|
|
|
| |||||
Total financial liabilities | 2,019 | 1,597 |
The Company did not subscribe new loans during the nine months ended September 30, 2019.
Financial liabilities by maturity
Maturity dates of financial liabilities as of December 31, 2018 are as follows:
Less than one year | One to three years | Three to five years | More than five years | Total | ||||||||||||||||
Conditional advances | 1,181 | 1,181 | ||||||||||||||||||
Bank loans | 738 | 62 | 799 | |||||||||||||||||
Financial liabilities related to finance leases | 39 | 39 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total financial liabilities | 776 | 62 | — | 1 181 | 2,019 |
27 | Page |
Maturity dates of financial liabilities as of September 30, 2019 are as follows:
(amounts in thousands of euros) | Less than one year | One to three years | Three to five years | More than five years | Total | |||||||||||||||
Conditional advances | — | — | — | 1,312 | 1,312 | |||||||||||||||
Bank loans | 246 | — | — | — | 246 | |||||||||||||||
Other | — | — | 39 | — | 39 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total financial liabilities | 246 | — | 39 | 1,312 | 1,597 |
Conditional advances
(amounts in thousands of euros) | BPI France - TEDAC | TOTAL | ||||||
Financial liabilities as of December 31, 2018 | 1,181 | 1,181 | ||||||
|
|
|
| |||||
Capitalized interest | 131 | 131 | ||||||
|
|
|
| |||||
Financial liabilities as of September 30, 2019 | 1,312 | 1,312 | ||||||
|
|
|
|
5.9 Lease labilities
(amounts in thousands of euros) | Lease debt | |||
As of December 31, 2018 | — | |||
|
| |||
First application of IFRS 16 | 7,734 | |||
Increase | 5,949 | |||
Decrease | (1,125 | ) | ||
FX rate impact | 348 | |||
Capitalized interests | 75 | |||
Reclassification | 42 | |||
|
| |||
As of September 30, 2019 | 13,023 | |||
|
|
The increase of €5,949 thousand is mainly linked to the partial relocation of the French team in new facilities in July (impact of €4,026 thousand) and an improvement allowance received for the Princeton manufacturing facility (€1,859 thousand).
The decrease of €1,125 thousand reflects the impact of a decrease in the liability of €339 thousand following a decrease in the rental space of a building lease (linked to a partial relocation of the French team in new facilities).
Lease liabilities by maturity
Maturity dates of lease liabilities are as follows:
Less than one year | One to three years | Three to five years | More than five years | Total | ||||||||||||||||
As of December 31, 2018 | — | — | — | — | — | |||||||||||||||
As of September 30, 2019 | 1,142 | 3,432 | 2,728 | 5,721 | 13,023 |
28 | Page |
5.10 Trade and other payables
(amounts in thousands of euros) | 12/31/2018 | 09/30/2019 | ||||||
Vendors | 13,402 | 3,678 | ||||||
Vendors - accruals | 3,253 | 8,984 | ||||||
|
|
|
| |||||
Total trade and other payables | 16,655 | 12,662 |
5.11 Other current liabilities
(amounts in thousands of euros) | 12/31/2018 | 09/30/2019 | ||||||
Social liabilities, taxation and social security | 3,148 | 3,502 | ||||||
Fixed assets payables | — | 1,092 | ||||||
Deferred revenue | 16 | 61 | ||||||
Other payables | 53 | 86 | ||||||
|
|
|
| |||||
Total other current liabilities | 3,217 | 4,741 |
5.12 Financial instruments recognized in the consolidated statement of financial position and effect on net income (loss)
As of December 31, 2018 (amounts in thousands of euros) | Carrying amount on the statement of financial position (1) | Fair value through profit and loss | Fair value through other comprehensive income | Loans and receivables | Debt at amortized cost | Fair value | ||||||||||||||||||
Othernon-current financial assets | 1,046 | 1,046 | 1,046 | |||||||||||||||||||||
Trade and other receivables | 30 | 30 | 30 | |||||||||||||||||||||
Other current assets | 14,111 | 14,111 | 14,111 | |||||||||||||||||||||
Cash and cash equivalents | 134,371 | 134,371 | 134,371 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total financial assets | 149,557 | 134,371 | — | 15,187 | — | 149,557 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Financial liabilities - non current portion | 1,243 | 1,243 | 1,243 | |||||||||||||||||||||
Financial liabilities - current portion | 776 | 776 | 776 | |||||||||||||||||||||
Trade and other payables | 16,655 | 16,655 | 16,655 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total financial liabilities | 18,674 | — | — | — | 18,674 | 18,674 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
29 | Page |
As of September 30, 2019 (amounts in thousands of euros) | Carrying amount on the statement of financial position (1) | Fair value through profit and loss | Fair value through other comprehensive income | Loans and receivables | Debt at amortized cost | Fair value | ||||||||||||||||||
Othernon-current financial assets | 736 | 736 | 736 | |||||||||||||||||||||
Other current financial assets | 57 | 57 | 57 | |||||||||||||||||||||
Trade and other receivables | 58 | 58 | 58 | |||||||||||||||||||||
Other current assets | 11,755 | 11,755 | 11,755 | |||||||||||||||||||||
Cash and cash equivalents | 81,927 | 81,927 | 81,927 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total financial assets | 94,534 | 81,927 | — | 12,607 | — | 94,534 | ||||||||||||||||||
|
|
|
|
|
|
|
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Financial liabilities - non current portion | 1,312 | 1,312 | 1,312 | |||||||||||||||||||||
Lease liabilities - non current portion | 11,880 | 11,880 | 11,880 | |||||||||||||||||||||
Financial liabilities - current portion | 285 | 285 | 285 | |||||||||||||||||||||
Lease liabilities - current portion | 1,142 | 1,142 | 1,142 | |||||||||||||||||||||
Trade and other payables | 12,662 | 12,662 | 12,662 | |||||||||||||||||||||
Other current liabilities | 4,680 | 4,680 | 4,680 | |||||||||||||||||||||
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Total financial liabilities | 31,962 | — | — | — | 31,962 | 31,962 | ||||||||||||||||||
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(1) | The carrying amount of these assets and liabilities is a reasonable estimate of their fair value. |
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6. RELATED PARTIES
The Company’s related parties include the Chairman of the Board of Directors (Jean-Paul Kress), the Chief Executive Officer (Gil Beyen), the two Deputy General Managers (Jérôme Bailly and Eric Soyer), members of the Board of Directors (five Board members in addition to the Chairman and the Chief Executive Officer) and members of the executive committee (four members in addition to the Chief Executive Officer and the Deputy General Managers).
The remuneration of directors and other members of the executive committee was as set forth in the table below.
09/30/2018 | 09/30/2019 | |||||||||||||||||||||||
(amounts in thousands of euros) | Salary / fees | Retirement benefits | Share based payments | Salary / fees | Retirement benefits | Share based payments | ||||||||||||||||||
Executive officers / Deputy General Managers | 572 | 2 | 274 | 813 | 12 | 231 | ||||||||||||||||||
Executive committee | 1,077 | 11 | 414 | 1,018 | 7 | 216 | ||||||||||||||||||
Board of directors | 184 | — | 358 | 236 | — | 100 | ||||||||||||||||||
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Total | 1,832 | 13 | 1,046 | 2,067 | 19 | 547 |
The Company has no other related parties.
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7.OFF-BALANCE SHEET COMMITMENTS
Theoff-balance-sheet commitments as of December 31, 2018 have not changed significantly during the nine months ended September 30, 2019, except for:
• | the lease commitments that are now recognized in the financial statements in accordance with IFRS 16; |
• | the following commitments: |
Agreement with Orphan Europe
In November 2012, the Company entered into a marketing agreement with Orphan Europe, a subsidiary of Recordati Group, to market and distribute GRASPA® for the treatment of ALL and AML in 38 countries in Europe, including all of the countries in the European Union.
As a consequence of the Company’s withdrawal of the MAA for ALL and the Company’s strategicre-focus on solid tumors, this contract was terminated during the first half of 2019, without any financial consequence for the Company.
Agreement with SQZ Biotechnologies
On June 24, 2019, the Company entered into a collaboration agreement with SQZ Biotechnologies, a cell therapy company developing novel treatments in multiple therapeutic areas, to advance novel red blood cell-based therapeutics for immune modulation. Under the terms of the agreement, the Company has granted to SQZ Biotechnologies an exclusive worldwide license to develop antigen specific immune modulating therapies employing red blood cell-based approaches. Combining SQZ Biotechnologies’ proprietary and versatile cell engineering platform with the intellectual property of the Company related to red blood cell-based therapeutics is intended to allow for the rapid development of a broad pipeline of novel immunomodulatory products addressing multiple indications.
The agreement provides:
• | An upfront payment of $1 million (recognized in 2019); |
• | Potential development, regulatory and commercial milestone payments up to $56 million for the first product successfully developed by SQZ Biotechnologies under this agreement; |
• | The Company could also receive progressive royalties based on future sales. |
Sublease in the United-States
In July 2019, the Company signed an operating sublease agreement for a portion of its premises located in Cambridge.
(amounts in thousands of euros) | Sublease to be received | |||||||||||||||
As of September 30, 2019 | Total | Less than one year | One to five years | More than five years | ||||||||||||
Sublease in US | 578 | 171 | 407 | — | ||||||||||||
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Total sublease to be received | 578 | 171 | 407 | — | ||||||||||||
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