0001558370-21-003399 | 20-F | XBRL Viewer

Document and Entity Information	12 Months Ended
Document and Entity Information	Dec. 31, 2020 shares
Document and Entity Information [Abstract]
Entity Registrant Name	ProQR Therapeutics N.V.
Entity Central Index Key	0001612940
Document Type	20-F
Document Registration Statement	false
Document Annual Report	true
Document Transition Report	false
Document Shell Company Report	false
Document Period End Date	Dec. 31, 2020
Entity Incorporation, State or Country Code	P7
Title of 12(b) Security	Ordinary Shares, nominal value € 0.04 per share
Trading Symbol	PRQR
Security Exchange Name	NASDAQ
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding	54,131,553
Entity Emerging Growth Company	false
Icfr Auditor Attestation Flag	true
Entity Shell Company	false
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	FY

Consolidated Statement of Financial Position - EUR (€) € in Thousands	Dec. 31, 2020	Dec. 31, 2019
Assets
Property, plant and equipment	€ 18,601	€ 2,440
Investments in associates	107	429
Non-current assets	18,708	2,869
Social security and other taxes	421	850
Prepayments and other receivables	3,762	1,866
Cash and cash equivalents	75,838	111,950
Current assets	80,021	114,666
Total assets	98,729	117,535
Shareholders’ equity
Share capital	2,165	2,159
Share premium	288,757	287,214
Reserves	23,916	16,702
Accumulated deficit	(257,747)	(211,746)
Equity attributable to owners of the Company	57,091	94,329
Non-controlling interests.	(545)	(496)
Total equity	56,546	93,833
Liabilities
Borrowings	16,189	12,709
Lease liabilities	15,693
Non-current liabilities	31,882	12,709
Borrowings	1,135	343
Lease liabilities	1,260	508
Derivative financial instruments	839
Trade payables	221	445
Current income tax liability		64
Social security and other taxes	22	108
Pension premiums	6	2
Deferred income	700	711
Other current liabilities	6,118	8,812
Current liabilities	10,301	10,993
Total liabilities	42,183	23,702
Total equity and liabilities	€ 98,729	€ 117,535

Consolidated Statement of Profit or Loss and Comprehensive Income - EUR (€)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Consolidated Statement of Profit or Loss and Comprehensive Income
Other income	€ 9,452,000	€ 1,933,000	€ 5,761,000
Research and development costs	(38,135,000)	(46,491,000)	(29,514,000)
General and administrative costs	(13,685,000)	(12,887,000)	(12,540,000)
Total operating costs	(51,820,000)	(59,378,000)	(42,054,000)
Operating result	(42,368,000)	(57,445,000)	(36,293,000)
Financial (expense) and income	(3,716,000)	402,000	(792,000)
Results related to financial liabilities measured at fair value through profit or loss	(84,000)
Results related to associates	(322,000)	429,000
Result before corporate income taxes	(46,490,000)	(56,614,000)	(37,085,000)
Corporate income taxes	(124,000)	(132,000)	(1,000)
Result for the year	(46,614,000)	(56,746,000)	(37,086,000)
Other comprehensive income
Items that will never be reclassified to profit or loss
Items that are or may be reclassified to profit or loss
Foreign operations – foreign currency translation differences	(340,000)	43,000	(28,000)
Total comprehensive loss (attributable to equity holders of the Company)	(46,954,000)	(56,703,000)	(37,114,000)
Result attributable to
Owners of the Company	(46,565,000)	(56,480,000)	(36,894,000)
Non-controlling interests	(49,000)	(266,000)	(192,000)
Result for the year	€ (46,614,000)	€ (56,746,000)	€ (37,086,000)
Share information
Weighted average number of shares outstanding	50,060,565	41,037,244	34,052,520
Earnings per share for result attributable to the equity holders of the Company (expressed in Euro per share)
Basic and diluted loss per share	€ (0.93)	€ (1.38)	€ (1.08)

Consolidated Statement of Changes in Equity - EUR (€) € in Thousands	Share capital	Share Premium	Equity Settled Employee Benefit Reserve	Option premium on convertible loan	Translation Reserve	Accumulated Deficit	Total	Non-controlling Interests	Total
Balance at beginning of period at Dec. 31, 2017	€ 1,457	€ 148,763	€ 8,377		€ 136	€ (119,370)	€ 39,363	€ (38)	€ 39,325
Result for the year						(36,894)	(36,894)	(192)	(37,086)
Other comprehensive income					(28)		(28)		(28)
Recognition of share-based payments	4	2,185	3,224				5,413		5,413
Issue of ordinary shares	265	83,926					84,191		84,191
Shares options lapsed			(97)			97
Shares options exercised		870	(724)			724	870		870
Balance at end of period at Dec. 31, 2018	1,726	235,744	10,780		108	(155,443)	92,915	(230)	92,685
Result for the year						(56,480)	(56,480)	(266)	(56,746)
Other comprehensive income					43		43		43
Recognition of share-based payments	15	3,145	5,948				9,108		9,108
Issue of ordinary shares	418	48,132					48,550		48,550
Shares options lapsed			(44)			44
Shares options exercised		193	(133)			133	193		193
Balance at end of period at Dec. 31, 2019	2,159	287,214	16,551		151	(211,746)	94,329	(496)	93,833
Result for the year						(46,565)	(46,565)	(49)	(46,614)
Other comprehensive income					(340)		(340)		(340)
Recognition of share-based payments	4	538	7,838				8,380		8,380
Issue of ordinary shares	2	270					272		272
Recognition of equity component of convertible loan				€ 280			280		280
Shares options lapsed			(91)			91
Shares options exercised		735	(473)			473	735		735
Balance at end of period at Dec. 31, 2020	€ 2,165	€ 288,757	€ 23,825	€ 280	€ (189)	€ (257,747)	€ 57,091	€ (545)	€ 56,546

- Definition

The amount of residual interest in the assets of the entity after deducting all its liabilities.

+ References + Details

- Definition

The total of income less expenses from continuing and discontinued operations, excluding the components of other comprehensive income. [Refer: Other comprehensive income]

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Name IAS
-Number 7
-IssueDate 2019-01-01
-Paragraph 18
-Subparagraph b
-URI http://eifrs.ifrs.org/eifrs/xifrs-link?type=IAS&num=7&code=ifrs-tx-2019-en-r&anchor=para_18_b&doctype=Standard
-URIDate 2019-03-27

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Name IFRS
-Number 1
-IssueDate 2019-01-01
-Paragraph 24
-Subparagraph b
-URI http://eifrs.ifrs.org/eifrs/xifrs-link?type=IFRS&num=1&code=ifrs-tx-2019-en-r&anchor=para_24_b&doctype=Standard
-URIDate 2019-03-27

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Name IFRS
-Number 1
-IssueDate 2019-01-01
-Paragraph 32
-Subparagraph a
-Clause ii
-URI http://eifrs.ifrs.org/eifrs/xifrs-link?type=IFRS&num=1&code=ifrs-tx-2019-en-r&anchor=para_32_a_ii&doctype=Standard
-URIDate 2019-03-27

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Name IFRS
-Number 8
-IssueDate 2019-01-01
-Paragraph 28
-Subparagraph b
-URI http://eifrs.ifrs.org/eifrs/xifrs-link?type=IFRS&num=8&code=ifrs-tx-2019-en-r&anchor=para_28_b&doctype=Standard
-URIDate 2019-03-27

Reference 5: http://www.xbrl.org/2003/role/exampleRef
-Note Effective on first application of IFRS 9
-Name IFRS
-Number 4
-IssueDate 2019-01-01
-Paragraph 39L
-Subparagraph e
-URI http://eifrs.ifrs.org/eifrs/xifrs-link?type=IFRS&num=4&code=ifrs-tx-2019-en-b&anchor=para_39L_e&doctype=Standard
-URIDate 2019-03-27

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Name IFRS
-Number 8
-IssueDate 2019-01-01
-Paragraph 23
-URI http://eifrs.ifrs.org/eifrs/xifrs-link?type=IFRS&num=8&code=ifrs-tx-2019-en-r&anchor=para_23&doctype=Standard
-URIDate 2019-03-27

Reference 7: http://www.xbrl.org/2003/role/exampleRef
-Name IFRS
-Number 12
-IssueDate 2019-01-01
-Paragraph B10
-Subparagraph b
-URI http://eifrs.ifrs.org/eifrs/xifrs-link?type=IFRS&num=12&code=ifrs-tx-2019-en-r&anchor=para_B10_b&doctype=Appendix&subtype=B
-URIDate 2019-03-27

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Name IAS
-Number 1
-IssueDate 2019-01-01
-Paragraph 106
-Subparagraph d
-Clause i
-URI http://eifrs.ifrs.org/eifrs/xifrs-link?type=IAS&num=1&code=ifrs-tx-2019-en-r&anchor=para_106_d_i&doctype=Standard
-URIDate 2019-03-27

Reference 9: http://www.xbrl.org/2003/role/exampleRef
-Note Effective 2021-01-01
-Name IFRS
-Number 17
-IssueDate 2019-01-01
-Paragraph 113
-Subparagraph b
-URI http://eifrs.ifrs.org/eifrs/xifrs-link?type=IFRS&num=17&code=ifrs-tx-2019-en-r&anchor=para_113_b&doctype=Standard
-URIDate 2019-03-27

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Name IAS
-Number 1
-IssueDate 2019-01-01
-Paragraph 81A
-Subparagraph a
-URI http://eifrs.ifrs.org/eifrs/xifrs-link?type=IAS&num=1&code=ifrs-tx-2019-en-r&anchor=para_81A_a&doctype=Standard
-URIDate 2019-03-27

+ Details

Consolidated Statement of Cash Flows - EUR (€) € in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Cash flow from operating activities
Result for the year	€ (46,614)	€ (56,746)	€ (37,086)
Adjustments for:
Depreciation	2,355	2,052	992
Results related to associates	322	(429)
Share-based compensation	7,838	9,108	5,413
Other income	(8,423)
Financial income and expense	3,716	(402)	792
Results related to financial liabilities measured at fair value through profit or loss	84
Net foreign exchange gain / (loss)	(340)	43	(28)
Income tax expenses	124	132	1
Changes in working capital	(5,134)	1,651	1,294
Cash used in operations	(46,072)	(44,591)	(28,622)
Corporate income tax paid	(188)	(64)	(1)
Interest received	313	758	130
Interest paid	(1,113)	(73)
Net cash used in operating activities	(47,060)	(43,970)	(28,493)
Cash flow from investing activities
Purchases of property, plant and equipment	(924)	(580)	(312)
Net cash used in investing activities	(924)	(580)	(312)
Cash flow from financing activities
Proceeds from issuance of shares, net of transaction costs		48,550	84,191
Proceeds from exercise of share options	735	193	870
Proceeds from borrowings	579	2,027	264
Proceeds from convertible loans	13,791	690	1,132
Repayment of lease liability	(605)	(1,261)
Net cash generated by financing activities	14,500	50,199	86,457
Net increase/(decrease) in cash and cash equivalents	(33,484)	5,649	57,652
Currency effect cash and cash equivalents	(2,628)	721	(171)
Cash and cash equivalents at the beginning of the year	111,950	105,580	48,099
Cash and cash equivalents at the end of the year	€ 75,838	€ 111,950	€ 105,580

General Information

12 Months Ended

Dec. 31, 2020

General Information

General Information

1. General Information

ProQR Therapeutics N.V. (“ProQR” or “the Company”), is a development stage company domiciled in the Netherlands that primarily focuses on the development and commercialization of novel therapeutic medicines.

Since September 18, 2014, the Company’s ordinary shares are listed on the NASDAQ Global Market under ticker symbol PRQR.

The Company was incorporated in the Netherlands, on February 21, 2012 and was reorganized from a private company with limited liability to a public company with limited liability on September 23, 2014. The Company has its statutory seat in Leiden, the Netherlands. The address of its headquarters and registered office is Zernikedreef 9, 2333 CK Leiden, the Netherlands.

At December 31, 2020, ProQR Therapeutics N.V. is the ultimate parent company of the following entities:

ProQR Therapeutics Holding B.V. (the Netherlands, 100%);

ProQR Therapeutics I B.V. (the Netherlands, 100%);

ProQR Therapeutics II B.V. (the Netherlands, 100%);

ProQR Therapeutics III B.V. (the Netherlands, 100%);

ProQR Therapeutics IV B.V. (the Netherlands, 100%);

ProQR Therapeutics VI B.V. (the Netherlands, 100%);

ProQR Therapeutics VII B.V. (the Netherlands, 100%);

ProQR Therapeutics VIII B.V. (the Netherlands, 100%);

ProQR Therapeutics IX B.V. (the Netherlands, 100%);

ProQR Therapeutics I Inc. (United States, 100%);

Amylon Therapeutics B.V. (the Netherlands, 80%);

Amylon Therapeutics, Inc. (Unites States, a 100% subsidiary of Amylon Therapeutics B.V.)

ProQR Therapeutics N.V. is also statutory director of Stichting Bewaarneming Aandelen ProQR (ESOP Foundation) and has full control over this entity. At December 31, 2020, ProQR Therapeutics Holding B.V. holds a 20% minority shareholding in Wings Therapeutics Inc.

As used in these consolidated financial statements, unless the context indicates otherwise, all references to “ProQR”, the “Company” or the “Group” refer to ProQR Therapeutics N.V. including its subsidiaries and the ESOP Foundation.

Basis of Preparation

12 Months Ended

Dec. 31, 2020

Basis of Preparation

Basis of Preparation

2. Basis of preparation

(a) Statement of compliance

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

(b) Basis of measurement

The financial statements have been prepared on the historical cost basis except for financial instruments and share-based payment obligations which have been based on fair value. Historical cost is generally based on the fair value of the consideration given in exchange for assets.

These consolidated financial statements are presented in euro, which is the Company’s functional currency. All amounts have been rounded to the nearest thousand, unless otherwise indicated.

(d) Going Concern

The management board of ProQR has, upon preparing and finalizing the 2020 financial statements, assessed the Company’s ability to fund its operations for a period of at least one year after the date of signing these financial statements.

The management board of the Company expects the Company to be a going concern based on its existing funding, taking into account the Company’s current cash position and the projected cash flows based on the activities under execution on the basis of ProQR’s business plan and budget.

(e) Use of estimates and judgements

In preparing these consolidated financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

Information about assumptions and estimation uncertainties that may have a significant risk of resulting in a material adjustment is included below.

(i) Research and development expenditures

Research expenditures are not capitalized. Development expenses are currently reflected in the income statement because the criteria for capitalization are not met. At each balance sheet date, the Company estimates the level of service performed by the vendors and the associated costs incurred for the services performed.

Although we do not expect the estimates to be materially different from amounts actually incurred, the understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and could result in reporting amounts that are too high or too low in any particular period.

(ii) Convertible debt

The terms of our convertible debt agreements are evaluated to determine whether the convertible debt instruments contain both liability and equity components, in which case the instrument is a compound financial instrument. Convertible debt agreements are also evaluated to determine whether they contain embedded derivatives, in which case the instrument is a hybrid financial instrument. Judgement is required to determine the classification of such financial instruments based on the terms and conditions of the convertible debt agreements, the currencies in which the debt instruments are denominated and the Company’s functional currency.

Estimation methods are used to determine the fair values of the liability and equity components of compound financial instruments and to determine the fair value of embedded derivatives included in hybrid financial instruments. The determination of the effective interest used for the host contracts of hybrid financial instruments and the liability components of compound financial instruments is dependent on the outcome of such estimations. Evaluating the reasonableness of these estimations and the assumptions and inputs used in the valuation methods requires a significant amount of judgement and is therefore subject to an inherent risk of error.

(f) Changes in accounting policies

The following Standards and Interpretations became effective for annual reporting periods beginning on or after January 1, 2020:

Interest Rate Benchmark Reform amendments to IFRS 9 and IFRS 7;

Covid-19-Related Rent Concessions Amendment to IFRS 16;

Amendments to References to the Conceptual Framework in IFRS Standards;

Amendments to IFRS 3 Definition of a business;

Amendments to IAS 1 and IAS 8 Definition of material.

None of these new Standards and Interpretations had a material impact on our financial statements.

Significant Accounting Policies

12 Months Ended

Dec. 31, 2020

Significant Accounting Policies

Significant Accounting Policies

3. Significant Accounting Policies

The Company has consistently applied the following accounting policies to all periods presented in these consolidated financial statements.

(a) Basis of consolidation

(i) Subsidiaries

Subsidiaries are entities controlled by the Company. The Company controls an entity when it has power over the entity, is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The Company reassesses whether or not it controls an entity if facts and circumstances indicate that there are changes to one or more of these elements. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases.

(ii) Non-controlling interests (“NCI”)

NCI are measured at their proportionate share of the acquiree's identifiable net assets at the acquisition date. Changes in the Company's interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

(iii) Loss of control

When the Company loses control over a subsidiary, it derecognizes the assets and liabilities of the subsidiary, and any non-controlling interests and other components of equity. Any resulting gain or loss is recognized in profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is lost.

(iv) Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated. Unrealized gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Company’s interest in the investee. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.

(v) Associates

Associates are entities over which the Company has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting. Equity accounting involves recording the investment in associates initially at cost, and recognizing the Company’s share of the post-acquisition results of associates in the consolidated income statement and the Company’s share of post-acquisition other comprehensive income in consolidated other comprehensive income. The cumulative post-acquisition movements are adjusted against the carrying amount of the investments in associates in the consolidated statement of financial position.

When the Company’s share of losses in an associate equals or exceeds its interest in the associate, the Company does not recognize further losses unless it has incurred or guaranteed obligations in respect of the associate.

(b) Classes of financial instruments

Financial instruments are both primary financial instruments, such as receivables and payables, and financial derivatives. For the Company’s primary financial instruments, reference is made to the treatment per the corresponding balance sheet item.

Financial derivatives are valued at fair value. Upon first recognition, financial derivatives are recognized at fair value and then revalued as at balance sheet date. Changes in the fair value of derivatives are generally recognized in profit or loss. If the Company is involved with hybrid contracts, the Company applies the following with regard to the embedded derivatives in the hybrid contract. Embedded derivatives are separated from the host contract and accounted for separately if the host contract is not a financial asset and the following criteria are met:

the economic characteristics and risk of the embedded derivative are not closely related to the economic characteristics and risks of the host contract;

a separate instrument with the same terms as the embedded derivative would meet the definition of a derivate; and

the hybrid contract is not measured at fair value with changes in fair value recognized in profit or loss.

If an embedded derivative is separated from the hybrid contract, the host contract is accounted for in accordance with the determined policies for such a contract. The embedded derivative is accounted for in accordance with the Company’s principles for the applicable derivatives.

(i) Foreign currency transactions

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated into the functional currency at the exchange rate when the fair value was determined. Foreign currency differences are generally recognized in profit or loss. Non-monetary items that are measured based on historical cost in a foreign currency are translated at the exchange rate prevailing at the date of the transaction.

(ii) Foreign operations

The assets and liabilities of foreign operations are translated into euro at exchange rates at the reporting date. The income and expenses of foreign operations are translated into euros at the exchange rates at the dates of the transactions. Foreign currency differences are recognized in OCI and accumulated in the translation reserve, except to the extent that the translation difference is allocated to NCI.

(d) Recognition of other income

Other income includes amounts earned from third parties and is recognized when earned in accordance with the substance and under the terms of the related agreements and when it is probable that the economic benefits associated with the transaction will flow to the Company and the amount of the income can be measured reliably. The grants are recognized in other income on a systematic basis over the period the Company recognizes as expenses the related costs for which the grants are expected to compensate.

(e) Government grants — WBSO

The WBSO (“afdrachtvermindering speur- en ontwikkelingswerk”) is a Dutch fiscal facility that provides subsidies to companies, knowledge centers and self-employed people who perform research and development activities (as defined in the WBSO Act). Under this Act, a contribution is paid towards the labor costs of employees directly involved in research and development. The contribution is in the form of a reduction of payroll taxes and social security contributions recognized on a net basis within the labor costs.

(Government) Grant income is not recognized until there is reasonable assurance that the Company will comply with the conditions attached to them. (Government) Grants are recognized in profit or loss on a systematic basis over the period the Company recognizes as expenses the related costs for which the grants are intended to compensate.

(f) Employee benefits

(i) Short-term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

(ii) Share-based payment transactions

The grant-date fair value of equity-settled share-based payment awards granted to employees is generally recognized as an expense, with a corresponding increase in equity, over the vesting period of the awards. The amount recognized as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognized is based on the number of awards that meet the related service conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant-date fair value of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.

(iii) Pension obligations

The Company operates defined contribution pension plans for all employees funded through payments to insurance companies. The Company has no legal or constructive obligation to pay further contributions once the contributions have been paid. The contributions are recognized as employee benefit expense when employees have rendered the service entitling them to the contributions. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in the future payments is available.

(g) Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax. It is recognized in profit or loss except to the extent that it relates to a business combination, or items recognized directly in equity or in OCI.

(i) Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the income statement because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

(ii) Deferred tax

Deferred tax is recognized on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Since the Company does not expect to be profitable in the foreseeable future, its deferred tax assets are valued at nil.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

(h) Property, plant and equipment

(i) Recognition and measurement

Items of property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses. If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment. Any gain or loss on disposal of an item of property, plant and equipment is recognized in profit or loss.

(ii) Depreciation

Depreciation is calculated to write off the cost of items of property, plant and equipment less their estimated residual values using the straight-line method over their estimated useful lives and is recognized in profit or loss. Right-of-use assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Company will obtain ownership by the end of the lease term.

The estimated useful lives of property, plant and equipment for current and comparative periods are as follows:


 Buildings and leasehold improvements:	5-10	years;
 laboratory equipment:	5	years;
 other:	3-5	years.

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

(i) Impairment of assets

At the end of each reporting period, the Company reviews the carrying amounts of its non-current assets, including right-of-use assets, to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

The recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

(j) Financial assets

All financial assets are recognized and derecognized on the trade date where the purchase or sale of a financial asset is under a contract whose terms require delivery of the financial asset within the timeframe established by the market concerned, and are initially measured at fair value and subsequently measured at amortized cost or fair value on the basis of the entity’s business model for managing the financial assets and the contractual cash flow characteristics of the financial assets.

Specifically:

debt instruments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal amount outstanding, are measured subsequently at amortized cost, and

all other debt investments and equity investments are measured subsequently at fair value through profit or loss (FVTPL).

The Company applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due. Trade receivables are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the group, and a failure to make contractual payments for a period of greater than 120 days past due. Impairment losses on trade receivables and contract assets are presented as net impairment losses within operating profit. Subsequent recoveries of amounts previously written off are credited against the same line item.

(k) Cash and cash equivalents

Cash and cash equivalents include cash on hand and all highly liquid investments with original maturities of three months or less that are readily convertible to a known amount of cash and bear an insignificant risk of change in value.

(l) Financial liabilities and equity instruments

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognized at the proceeds received, net of direct issue costs.

Compound financial instruments

Compound financial instruments issued by the Company comprise convertible notes denominated in euro that can be converted to share capital at the option of the holder, when the number of shares to be issued is fixed and does not vary with changes in fair value.

The component parts of convertible loan notes issued by the Group are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument. A conversion option that will be settled by the exchange of a fixed amount of cash or another financial asset for a fixed number of the Company’s own equity instruments is an equity instrument. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for a similar non-convertible instrument. This amount is recorded as a liability on an amortized cost basis using the effective interest method until extinguished upon conversion or at the instrument’s maturity date.

The conversion option classified as equity is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognized and included in equity, net of income tax effects, and is not subsequently remeasured. In addition, the conversion option classified as equity will remain in equity until the conversion option is exercised, in which case, the balance recognized in equity will be transferred to share premium. Where the conversion option remains unexercised at the maturity date of the convertible loan note, the balance recognized in equity will be transferred to accumulated losses. No gain or loss is recognized in profit or loss upon conversion or expiration of the conversion option.

Transaction costs that relate to the issue of the convertible loan notes are allocated to the liability and equity components in proportion to the allocation of the gross proceeds. Transaction costs relating to the equity component are recognized directly in equity. Transaction costs relating to the liability component are included in the carrying amount of the liability component and are amortized over the lives of the convertible loan notes using the effective interest method.

Interest related to the financial liability is recognized in profit or loss.

Financial liabilities at fair value through profit or loss

Financial liabilities held for trading are classified as at fair value through profit or loss (FVTPL). A financial liability is classified as held for trading if it is a derivative (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument).

Financial liabilities at FVTPL are measured at fair value, with any gains or losses arising on changes in fair value recognized in profit or loss. The net gain or loss recognized is included in the ‘results related to financial liabilities measured at fair value through profit or loss’ line item in profit or loss.

Fair value is determined in the manner described in note 5.

Other financial liabilities

Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs incurred, and are subsequently measured at amortized cost using the effective interest method, with interest expense recognized on an effective yield basis.

The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period.

Borrowings and other financial liabilities are classified as ‘non-current liabilities,’ other than liabilities with maturities up to one year, which are classified as “current liabilities”.

The Company derecognizes financial liabilities when the liability is discharged, cancelled or expired. For all financial liabilities, the fair value approximates its carrying amount.

(m) Leases

The Company has applied IFRS 16 as of January 1, 2019, using the modified retrospective approach. Therefore, comparative information for 2018 has not been restated and is presented applying IAS 17. The details of accounting policies under both IAS 17 and IFRS 16 are presented separately below.

Policies applicable from January 1, 2019

At inception of the contract, the Company assesses whether a contract is or contains a lease. The Company recognizes a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets (such as tablets and personal computers, small items of office furniture and telephones). For these leases, the Company recognizes the lease payments in operating costs on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the interest rate implicit in the lease. When the interest rate implicit in the lease cannot be readily determined, the Company uses its incremental borrowing rate.

Lease payments included in the measurement of the lease liability comprise:

Fixed lease payments (including in-substance fixed payments), less any lease incentives receivable;

Variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date;

The amount expected to be payable by the Company under residual value guarantees;

The exercise price of purchase options, if the Company is reasonably certain to exercise the options; and

Payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease.

The lease liability is presented as a separate line in the consolidated statement of financial position. In the cash flow statement, repayments of the principal portion of the lease liability are included in financing activities. Payments relating to the interest component of the lease liability are included in operating activities. Short-term lease payments and payments for leases of low-value assets are included in operating activities.

The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.

The Company remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever:

The lease term has changed or there is a significant event or change in circumstances resulting in a change in the assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate.

The lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which cases the lease liability is remeasured by discounting the revised lease payments using an unchanged discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a revised discount rate is used).

A lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate at the effective date of the modification.

The right-of-use asset comprises the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day, less any lease incentives received and any initial direct costs. It is subsequently measured at cost less accumulated depreciation and impairment losses.

Whenever the Company incurs an obligation for costs to dismantle and remove a leased asset, restore the site on which it is located or restore the underlying asset to the condition required by the terms and conditions of the lease, a provision is recognized and measured under IAS 37. To the extent that the costs relate to a right-of-use asset, the costs are included in the related right-of-use asset, unless those costs are incurred to produce inventories.

Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Company expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease.

The right-of-use asset is presented under Property, Plant and Equipment in the consolidated statement of financial position, in the category Buildings and leasehold improvements.

As a practical expedient, IFRS 16 permits a lessee not to separate non-lease components, and instead account for any lease and associated non-lease components as a single arrangement. The Company has used this practical expedient.

Policies applicable before January 1, 2019

(i) Determining whether an arrangement contains a lease

At inception of an arrangement, the Company determines whether such an arrangement is or contains a lease.

At inception or on reassessment of an arrangement that contains a lease, the Company separates payments and other consideration required by such an arrangement into those for the lease and those for other elements on the basis of their relative fair values. If the Company concludes for a finance lease that it is impracticable to separate the payments reliably, then an asset and a liability are recognized at an amount equal to the fair value of the underlying asset. Subsequently, the liability is reduced as payments are made and an imputed finance cost on the liability is recognized using the Company’s incremental borrowing rate.

(ii) Leased assets

Assets held by the Company under leases that transfer to the Company substantially all of the risks and rewards of ownership are classified as finance leases. The leased assets are measured initially at an amount equal to the lower of their fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the assets are accounted for in accordance with the accounting policy applicable to that asset.

Assets held under other leases are classified as operating leases and are not recognized in the Company’s statement of financial position.

(iii) Lease payments

Payments made under operating leases are recognized in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognized as an integral part of the total lease expense, over the term of the lease.

Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

New standards and interpretations not yet adopted	12 Months Ended
New standards and interpretations not yet adopted	Dec. 31, 2020
New standards and interpretations not yet adopted
New standards and interpretations not yet adopted	4. New standards and interpretations not yet adopted A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after January 1, 2021 and have not been applied in preparing these consolidated financial statements. There are no standards that are not yet effective and that would be expected to have a material impact on the Company in the current or future reporting periods and on foreseeable future transactions. The Company does not plan to adopt these standards early.

Financial Risk Management

12 Months Ended

Dec. 31, 2020

Financial Risk Management

Financial Risk Management

5. Financial Risk Management

5.1 Financial risk factors

The Company’s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk. The Company’s overall financial risk management seeks to minimize potential adverse effects resulting from unpredictability of financial markets on the Company’s financial performance.

Financial risk management is carried out by the finance department. The finance department identifies and evaluates financial risks and proposes mitigating actions if deemed appropriate.

(a) Market risk

Market risk is the risk that changes in market prices – such as foreign exchange rates, interest rates and equity prices – will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

Foreign exchange risk

Foreign exchange risk arises from future commercial transactions and recognized assets and liabilities in foreign currencies, primarily with respect to the U.S. dollar. The Company has an exposure associated with the time delay between entering into a contract, budget or forecast and the realization thereof. The Company operates a foreign exchange policy to manage the foreign exchange risk against the functional currency based on the Company’s cash balances and the projected future spend per major currency.

At year-end, a substantial amount of our cash balances are denominated in U.S. Dollars. This amount reflects our current expectation of future expenditure in U.S. dollars.

At December 31, 2020 there was a net asset in U.S. dollars of € 22,237,000 (2019: € 39,004,000. Foreign currency denominated receivables and trade payables are short term in nature (generally 30 to 45 days). As a result, the foreign exchange results recognized in 2020 and 2019 are mainly caused by the cash balance denominated in U.S. dollars.

A reasonably possible weakening of the U.S. dollar by 10% against the functional currency of the Company at December 31, 2020 would have increased our net loss by € 2,224,000 (2019: € 3,900,000). A 10% strengthening of the U.S. dollar against the functional current of the Company would have an equal but opposite effect on our net loss. The analysis assumes that all other variables, in particular interest rates, remain constant.

Price risk

The market prices for the production of preclinical and clinical materials and services as well as external contracted research may vary over time. Currently, the commercial prices of any of the Company’s product candidates is uncertain. When the development products near the regulatory approval date or potential regulatory approval date, the uncertainty of the potential sales price decreases. The Company is not exposed to commodity price risk.

Furthermore, the Company does not hold investments designated for sale, therefore are not exposed to equity securities price risk.

Cash flow and fair value interest rate risk

The Company’s exposure to interest rate risks is limited due to the use of loans with fixed rates. The Company has several loans with fixed interest rates, totaling € 17,324,000 at December 31, 2020 (2019: € 13,052,000). Details on the interest rates and maturities of these loans are provided in Note 13.

(b) Credit risk

Credit risk represents the risk of financial loss caused by default of the counterparty. The Company has no large receivables balances with external parties. The Company’s principal financial assets are cash and cash equivalents which are held at ABN Amro, Rabobank and Wells Fargo. Our cash management policy is focused on preserving capital, providing liquidity for operations and optimizing yield while accepting limited risk (Short-term credit ratings must be rated A‑1/P‑1/F1 at a minimum by at least one of the Nationally Recognized Statistical Rating Organizations (NRSROs) specifically Moody’s, Standard & Poor’s or Fitch. Long-term credit rating must be rated A2 or A at a minimum by at least one NRSRO).

At December 31, 2020 and December 31, 2019, substantially all of our cash and cash equivalents were held at three large institutions, Rabobank, ABN Amro and Wells Fargo. All institutions are highly rated (ratings of Aa3, A1 and A2 for Rabobank, ABN Amro and Wells Fargo respectively) with sufficient capital adequacy and liquidity metrics.

There are no financial assets past due date or impaired. No credit limits were exceeded during the reporting period.

Liquidity risk represents the risk that an entity will encounter difficulty in meeting obligations associated with its financial liabilities. Prudent liquidity risk management implies ensuring sufficient availability of cash resources for funding of operations and planning to raise cash if and when needed, either through issue of shares or through credit facilities. Management monitors rolling forecasts of the Company’s liquidity reserve on the basis of expected cash flow.

The table below analyzes ProQR’s undiscounted liabilities into relevant maturity groupings based on the remaining period at year-end until the contractual maturity date:


	Less than	Between 1	Between 2
	1 year	and 2 years	and 5 years	Over 5 years
	(€ in thousands)
At December 31, 2020
Borrowings	2,391	6,674	13,808	—
Lease liabilities	2,079	2,079	6,235	11,432
Trade payables and other payables	7,067	—	—	—
Total	11,537	8,753	20,043	11,432

At December 31, 2019
Borrowings	343	10,054	4,790	322
Lease liabilities	513	—	—
Trade payables and other payables	10,142	—	—	—
Total	10,998	10,054	4,790	322

5.2 Capital risk management

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders, benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders (although at this time the Company does not have retained earnings and is therefore currently unable to pay dividends), return capital to shareholders, issue new shares or sell assets to reduce debt.

The total amount of equity as recorded on the balance sheet is managed as capital by the Company.

5.3 Fair value measurement

For financial instruments that are measured on the balance sheet at fair value, IFRS 13 requires disclosure of fair value measurements by level of the following fair value measurement hierarchy:

quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);

inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2); and

inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).

Fair value of financial liabilities that are measured at fair value on a recurring basis

Some of the Company’s financial liabilities are measured at fair value at the end of each reporting period. The following table gives information about how the fair values of these financial liabilities are determined (in particular, the valuation technique and inputs used).


			Relationship and sensitivity of significant unobservable inputs to fair value

	Valuation technique	Significant unobservable
Financial liabilities	and key inputs	inputs

Warrants and conversion options	Black-Scholes model. The following variables were taken into consideration: current underlying price of the Company's shares, options strike price, expected life, historical volatility of ProQR share returns over a period equal to the expected life, risk-free rate: based on the US Treasury yield curve rates per the valuation date (interpolated) for the expected life.	None	Not applicable

Warrants and conversion options are measured using valuation methods based on so-called Level 2 inputs. Level 2 inputs are inputs other than quoted prices that are observable for the liability, either directly or indirectly.

The carrying amount of all financial assets and financial liabilities is a reasonable approximation of the fair value and therefore information about the fair values of each class has not been disclosed.

Share options granted to employees and consultants are measured at the fair value of the equity instruments granted. Fair value is determined through the use of an option-pricing model considering, among others, the following variables:

the exercise price of the option;

the expected life of the option;

the current value of the underlying shares;

the expected volatility of the share price;

the dividends expected on the shares; and

the risk-free interest rate for the life of the option.

Segment Information	12 Months Ended
Segment Information	Dec. 31, 2020
Segment Information
Segment Information	6. Segment Information The Company operates in one reportable segment, which comprises the discovery and development of innovative, RNA based therapeutics. The management board is identified as the chief operating decision maker. The management board reviews the operating results regularly to make decisions about resources and to assess overall performance. The Company has not generated any revenues since inception. Substantially all non-current assets of the Company are located in the Netherlands. The amounts provided to the management board with respect to total assets and liabilities are measured in a manner consistent with that of the financial statements.

Property, Plant and Equipment ('PP&E')

12 Months Ended

Dec. 31, 2020

Property, Plant and Equipment ('PP&E")

Property, Plant and Equipment ('PP&E')

7. Property, plant and equipment (‘PP&E’)


	Buildings and
	leasehold	Laboratory
	improvements	equipment	Other	Total
	(€ in thousands)	(€ in thousands)	(€ in thousands)	(€ in thousands)
Balance at January 1, 2019
Cost	4,233	2,285	1,322	7,840
Accumulated depreciation	(1,098)	(1,488)	(1,031)	(3,617)
Carrying amount	3,135	797	291	4,223

Additions	141	694	—	835
Depreciation	(1,485)	(433)	(134)	(2,052)
Effect of lease modification (note 22)	(566)	—	—	(566)
Disposals	—	—	—	—
Movement for the period	(1,910)	261	(134)	(1,783)

Balance at December 31, 2019
Cost	3,808	2,979	1,322	8,109
Accumulated depreciation	(2,583)	(1,921)	(1,165)	(5,669)
Carrying amount	1,225	1,058	157	2,440

Balance at January 1, 2020
Cost	3,808	2,979	1,322	8,109
Accumulated depreciation	(2,583)	(1,921)	(1,165)	(5,669)
Carrying amount	1,225	1,058	157	2,440

Additions	244	655	25	924
Depreciation	(1,750)	(498)	(107)	(2,355)
Recognition of right-of-use asset	16,332	—	—	16,332
Effect of lease modification (note 22)	1,260	—	—	1,260
Disposals	—	—	—	—
Movement for the period	16,086	157	(82)	16,161

Balance at December 31, 2020
Cost	21,644	3,634	1,347	26,625
Accumulated depreciation	(4,333)	(2,419)	(1,272)	(8,024)
Carrying amount	17,311	1,215	75	18,601

The depreciation charge for 2020 is included in the research and development costs for an amount of € 1,789,000 (2019: €1,583,000) and in the general and administrative costs for an amount of € 566,000 (2019: € 469,000).

Buildings and leasehold improvements include a right-of-use asset relating to the lease of our Leiden office and laboratory space, with a carrying amount of € 16,775,000 at December 31, 2020 (2019: € 606,000).

Investments in associates

12 Months Ended

Dec. 31, 2020

Investments in associates

Investments in associates

8. Investments in associates

In May 2019, the Company acquired a non-controlling interest in Wings Therapeutics Inc. as part of the strategic spin out of the Dystrophic Epidermolysis Bullosa (DEB) activities. Wings Therapeutics Inc. was formed and financed by EB Research Partnership (EBRP), the largest global non-profit dedicating to treating and curing EB. Wings Therapeutics focuses on developing therapies for DEB and continues to conduct the ongoing clinical trial with QR-313 targeting exon 73 as well as progress other RNA molecules that are designed for other mutations that cause DEB.


		Investment
		in associate
		(€ in thousands)
Balance at January 1, 2019

Gain on initial recognition of investment in associate		949
Share of loss from continuing operations		(520)

Balance at December 31, 2019		429

Share of loss from continuing operations		(322)

Balance at December 31, 2020		107

Social Security and Other Taxes

12 Months Ended

Dec. 31, 2020

Social Security and Other Taxes

Social Security and Other Taxes

9. Social Security and Other Taxes


	December 31,	December 31,
	2020	2019
	(€ in thousands)
Value added tax	421	557
Wage tax	—	293
	421	850

All receivables are considered short-term and due within one year.

Prepayments and Other Receivables

12 Months Ended

Dec. 31, 2020

Prepayments and Other Receivables.

Prepayments and Other Receivables

10. Prepayments and Other Receivables


	December 31,	December 31,
	2020	2019
	(€ in thousands)
Prepayments	3,383	1,526
Other receivables	379	340
	3,762	1,866

All receivables are considered short-term and due within one year.

Cash and Cash Equivalents

12 Months Ended

Dec. 31, 2020

Cash and Cash Equivalents.

Cash and Cash Equivalents

11. Cash and Cash Equivalents


	December 31,	December 31,
	2020	2019
	(€ in thousands)
Cash at banks	75,838	111,950
Bank deposits	—	—
	75,838	111,950

The cash at banks is at full disposal of the Company.

Shareholders’ Equity

12 Months Ended

Dec. 31, 2020

Shareholders’ Equity

Shareholders’ Equity

12. Shareholders’ Equity

(a) Share capital


	Number of shares 2020	Number of shares 2019	Number of shares 2018
	Ordinary	Ordinary	Ordinary
Balance at January 1	53,975,838	43,149,987	36,425,014
Issued for cash	53,708	10,454,545	6,612,500
Issued for services	102,007	371,306	112,473
Exercise of share options	303,408	46,900	226,098
Treasury shares issued (transferred)	(303,408)	(46,900)	(226,098)
Balance at December 31	54,131,553	53,975,838	43,149,987

The authorized share capital of the Company amounting to € 7,200,000 consists of 90,000,000 ordinary shares and 90,000,000 preference shares with a par value of € 0.04 per share. At December 31, 2020, 54,131,553 ordinary shares were issued and fully paid, of which 3,926,743 were held by the Company as treasury shares (2019: 4,230,151).

In September 2018, the Company consummated an underwritten public offering and concurrent registered direct offering of 6,612,500 ordinary shares at an issue price of $ 15.75 per share. The gross proceeds from this offering amounted to € 89,983,000 while the transaction costs amounted to € 5,792,000, resulting in net proceeds of € 84,191,000.

In November 2018, the Company issued 112,473 shares in the aggregate amount of $ 2,500,000, at $ 22.23 (€ 19.46) per share to Ionis Pharmaceuticals, Inc. Under the terms of the agreement, an upfront payment in ordinary shares to its common stock was made to Ionis upon signing the worldwide license agreement. The Company was granted an exclusive worldwide license to QR-1123 and relevant patents. The Company will also make future milestone payments, certain of which will be made in equity and others in cash or equity at the company’s discretion, and royalties on net sales of 20% through the royalty term.

On November 7, 2018, the Company filed a shelf registration statement, which permitted: (a) the offering, issuance and sale by the Company of up to a maximum aggregate offering price of $ 300,000,000 of its ordinary shares, warrants and/or units; and (b) as part of the $ 300,000,000, the offering, issuance and sale by us of up to a maximum aggregate offering price of $ 75,000,000 of its ordinary shares that may be issued and sold under a sales agreement with H.C. Wainwright & Co in one or more at-the-market offerings.

In October 2019, the Company consummated an underwritten public offering of 10,454,545 ordinary shares at an issue price of $ 5.50 per share. The gross proceeds from this offering amounted to € 51,597,000 while the transaction costs amounted to € 3,047,000, resulting in net proceeds of € 48,550,000.

In December 2019, the Company issued 371,306 shares in the aggregate amount of $ 3,501,000, at $ 9.43 (€ 8.51) per share to Ionis Pharmaceuticals, Inc. Under the terms of the agreement, the second installment of the upfront payment in ordinary shares to the Company’s common stock was made to Ionis upon the dosing of the first patient in the phase 1/2 Aurora clinical trial for QR-1123.

In March 2020, the Company terminated its sales agreement with H.C. Wainwright & Co and entered into a sales agreement, which permitted the offering, issuance and sale by the Company of up to a maximum aggregate offering price of $ 75,000,000 of its ordinary shares that may be issued and sold in one or more at-the-market offerings with Citigroup Global Markets, Inc. and Cantor Fitzgerald & Co. In 2020, no shares were issued pursuant to this ATM facility.

(b) Equity settled employee benefit reserve

The costs of share options for employees, members of the Supervisory Board and members of the Management Board are recognized in the income statement, together with a corresponding increase in equity during the vesting period, taking into account (deferral of) corporate income taxes. The accumulated expense of share options recognized in the income statement is shown separately in the equity category ‘equity settled employee benefit reserve’ in the ‘statement of changes in equity’. On September 25, 2017, we established a Dutch foundation named Stichting Bewaarneming Aandelen ProQR for holding shares in trust for employees, members of the Management Board and members of the Supervisory Board of the Company and its group companies who from time to time will exercise options under the Company’s equity incentive plans.

The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations.

(d) Share options

The Company operates an equity-settled share-based compensation plan which was introduced in 2013. Options may be granted to employees, members of the Supervisory Board, members of the Management Board and consultants. The compensation expenses included in operating costs for this plan were € 7,838,000 in 2020 (2019: € 5,948,000), of which € 4,423,000 (2019: € 3,323,000) was recorded in general and administrative costs and € 3,415,000 (2019: € 2,625,000) was recorded in research and development costs based on employee allocation.

Options granted under this stock option plan are exercisable once vested. Any vesting schedule may be attached to the granted options, however the typical vesting period is four years (25% after every year). The options expire ten years after date of grant. Options granted under the stock option plan are granted at exercise prices which equal the fair value of the ordinary shares of the Company at the date of the grant.

The fair value of the options is estimated at the date of grant using the Black-Scholes option-pricing model, with on average the following assumptions:


	Options granted		Options granted		Options granted
	in 2020		in 2019		in 2018
Risk-free interest rate	1.432	%	2.430	%	2.223	%
Expected dividend yield	—	%	—	%	—	%
Expected volatility	78.7	%	80.2	%	80.9	%
Expected life in years	5	years	5	years	5	years

The resulting weighted average grant date fair value of the options amounted to € 5.01 in 2020 (2019: € 7.71). The stock options granted have a 10-year life following the grant date and are assumed to be exercised five years from date of grant for all awards.

Movements in the number of options outstanding and their related weighted average exercise prices are as follows:


	2020			2019			2018
	Number of	Average		Number of	Average		Number of	Average
	options	exercise price		options	exercise price		options	exercise price
Balance at January 1	5,575,454	€	5.80	4,511,512	€	4.24	3,331,875	€	4.78
Granted	1,851,056	€	7.88	1,237,506	€	11.77	1,570,366	€	3.11
Forfeited	(85,584)	€	7.14	(119,338)	€	9.35	(142,467)	€	4.29
Exercised	(303,408)	€	2.34	(46,900)	€	4.18	(226,098)	€	4.02
Expired	(16,283)	€	8.26	(7,326)	€	8.76	(22,164)	€	6.42
Balance at December 31	7,021,235	€	6.47	5,575,454	€	5.80	4,511,512	€	4.24
Exercisable at December 31	3,401,449			2,521,477			1,683,731

The options outstanding at December 31, 2020 had an exercise price in the range of € 1.11 to € 20.34 (2019: € 1.11 to € 20.34) and a weighted-average contractual life of 7.0 years (2019: 7.2 years).

The weighted-average share price at the date of exercise for share options exercised in 2020 was € 7.11 (2019: € 12.47).

Please refer to note 24 for the options granted to key management personnel.

Borrowings

12 Months Ended

Dec. 31, 2020

Borrowings

Borrowings

13. Borrowings


	December 31,	December 31,
	2020	2019
	(€ in thousands)
Innovation credit	2,770	7,191
Accrued interest on innovation credit	307	3,124
Convertible loans	13,812	2,473
Accrued interest on convertible loans	435	264
Total borrowings	17,324	13,052
Current portion	(1,135)	(343)
Total non-current borrowings	16,189	12,709

Innovation credit (“Innovatiekrediet”)

On June 1, 2012, ProQR was awarded an Innovation credit by the Dutch government, through its agency RVO of the Ministry of Economic Affairs, for the Company’s cystic fibrosis program. Amounts were drawn under this facility in the course of the years 2013 through 2017. The credit covers 35% of the costs incurred in respect of the program up to € 5,000,000. The credit was interest-bearing at a rate of 10% per annum. In June 2020, ProQR received a final waiver of the full amount of the Innovation credit, including accumulated interest. Consequently, the carrying amount of € 8,423,000, including accumulated interest, was recognized in other income (under grant income) in 2020.

On December 10, 2018 ProQR was awarded an Innovation credit for the sepofarsen program. Amounts will be drawn under this facility from 2018 through 2022. The credit of € 4,755,000 will be used to conduct the Phase 2/3 clinical study and efforts to obtain regulatory and ethical market approval (NDA/MAA) of sepofarsen for LCA10, of which € 2,770,000 had been received at December 31, 2020. The credit, including accrued interest of 10% per annum, is repayable depending on obtaining market approval.

The assets which are co-financed with the granted innovation credit are subject to a right of pledge for the benefit of RVO.

Convertible loans

In July 2020, the Company entered into a convertible debt financing agreement with Pontifax Medison Debt Financing. Under the agreement, the Company will have access to up to $ 30 million in convertible debt financing in three tranches of $ 10 million each that will mature over a 54-month period and have an interest-only period of 24 months. One tranche of $ 10 million had been drawn down as at December 31, 2020. A second close of the convertible debt financing agreement was completed in August 2020 with Kreos Capital. Under the second agreement, the Company will have access to up to € 15 million in convertible debt financing in three tranches of € 5 million each that will mature over a 54-month period and have an interest-only period of 24 months. One tranche of € 5 million had been drawn down as at December 31, 2020.

Pontifax and/or Kreos may elect to convert the outstanding loans into ProQR ordinary shares at any time prior to repayment at a fixed conversion price of $7.88 per share. ProQR also has the ability to convert the loans into its ordinary shares, at the same conversion price, if the Company’s stock price reaches a pre-determined threshold. In connection with the loan agreement, the Company issued to Pontifax and Kreos warrants to purchase up to an aggregate of 302,676 shares of its common stock at a fixed exercise price of $7.88.

Pontifax’ conversion option and warrants are accounted for as embedded derivatives and are recognized separately from the host contract as financial liabilities at fair value through profit or loss. The host contract is recognized at amortized cost.

The Kreos loan is accounted for as a compound financial instrument. The liability component is recognized at amortized cost. The equity component is initially recognized at fair value as option premium on convertible loan and will not be subsequently remeasured. Kreos’ warrants are accounted for as embedded derivatives and are recognized as financial liabilities at fair value through profit or loss.

As security for the Pontifax and Kreos convertible loans, the Company has pledged the following items, with their respective carrying amounts as at December 31, 2020: cash at banks with a carrying amount of € 75,838,000, other receivables with a carrying amount of € 379,000, investments in associates with a carrying amount of € 107,000, leasehold improvements with a carrying amount of € 536,000 and equipment with a carrying amount of € 1,215,000.

Convertible loans were issued to Amylon Therapeutics B.V. in 2018 and 2019 and are interest-bearing at an average rate of 8% per annum. They are convertible into a variable number of ordinary shares within 36 months at the option of the holder or the Company in case financing criteria are met. Any unconverted loans become payable on demand after 24 – 36 months in equal quarterly terms.

In March 2018, the Company entered into a convertible loan, pursuant to which we borrowed an aggregate of € 260,000 from the lender. The loan bore interest at a rate of 3% per annum. The outstanding principal and interest under the loan were converted into ordinary shares in May 2020.

Current liabilities

12 Months Ended

Dec. 31, 2020

Current liabilities

Current liabilities

14. Current Liabilities


	December 31,	December 31,
	2020	2019
	(€ in thousands)
Borrowings	1,135	343
Lease liabilities	1,260	508
Derivative financial instruments	839	—
Trade payables	221	445
Current income tax liability	—	64
Social securities and other taxes	22	108
Pension premiums	6	2
Deferred income	700	711
Accrued expenses and other liabilities	6,118	8,812
	10,301	10,993

At December 31, 2020, current liabilities included derivative financial instruments consisting of conversion options and warrants issued in connection with our convertible loans, which are described in Note 13.

At December 31, 2020 and 2019, current liabilities included deferred income resulting from funds received for our research and innovation programs. Accrued expenses and other liabilities consisted principally of accruals for services provided by vendors not yet billed, payroll-related accruals and other miscellaneous liabilities.

Other income

12 Months Ended

Dec. 31, 2020

Other income

Other income

15. Other income


	2020	2019	2018
	(€ in thousands)
Grant income	9,307	1,778	5,378
Rental income from property subleases	—	—	174
Other income	145	155	209
	9,452	1,933	5,761

In June 2020, ProQR received a final waiver of the full amount of the Innovation credit for the Company’s cystic fibrosis program. Consequently, the carrying amount of € 8,423,000, including accumulated interest, was recognized in grant income in 2020.

On February 9, 2018, the Company entered into a partnership agreement with Foundation Fighting Blindness (FFB), under which FFB has agreed to provide funding of $ 7,500,000 for the preclinical and clinical development of QR‑421a for Usher syndrome type 2A targeting mutations in exon 13. FFB grant income amounted to € 624,000 in 2020 compared to € 1,312,000 in 2019.

On June 5, 2018, the Company entered into a partnership agreement with EB Research Partnership (EBRP) and EB Medical Research Foundation (EBMRF) under which EBRP and EBMRF have agreed to provide funding of $ 5,000,000 for the clinical development of QR‑313 for Dystrophic Epidermolysis Bullosa targeting mutations in exon 73. The EBRP/EBMRF grant agreement was terminated on March 26, 2019 as part of the strategic spin out of the Dystrophic Epidermolysis Bullosa (DEB) activities into a newly formed company, Wings Therapeutics. As such, no grant income was recognized in 2020 and 2019 related to this grant. In 2018, € 1,301,000 had been recognized as other income.

In 2015, the European Commission (EC) through its Horizon 2020 program awarded us and our academic partners a grant of € 5,997,000 to support the clinical development of eluforsen (ProQR: € 4,627,000). Horizon 2020 is one of the largest research and innovation programs in the European Union with nearly € 80 billion in available funding for qualified projects from 2014 to 2020. This program has ended at December 31, 2017 and the final amount of € 1,300,000 was recognized as other income in 2018.

Research and Development costs	12 Months Ended
Research and Development costs	Dec. 31, 2020
Research and Development costs
Research and Development Costs	16. Research and Development Costs Research and development costs amounted to € 38,135,000 in 2020 (2019: € 46,491,000, 2018: € 29,514,000) and comprise allocated employee costs, the costs of materials and laboratory consumables, the costs of external studies including, amongst others, clinical studies and toxicology studies and external research, license- and IP-costs and allocated other costs.

Employee Benefits

12 Months Ended

Dec. 31, 2020

Employee Benefits

Employee Benefits

17. Employee Benefits


	2020	2019	2018
	(€ in thousands)
Wages and salaries	13,251	13,187	11,558
Social security costs	1,710	1,433	1,346
Pension costs — defined contribution plans	1,037	910	868
Equity-settled share based payments	7,838	5,948	3,224
	23,836	21,478	16,996
Average number of employees for the period	156.3	139.8	127.7

Employees per activity at December 31 (converted to FTE):


	December 31, 2020	December 31, 2019	December 31, 2018
Research and Development	113.8	118.3	89.2
General and Administrative	36.6	36.1	29.6
Total number of employees at December 31 (converted to FTE)	150.4	154.4	118.8

Of all employees 135.3 FTE are employed in the Netherlands (2019: 143.1 FTE).

Included in the wages and salaries for 2020 is a credit of € 1,379,000 (2019: € 714,000, 2018: € 1,294,000) with respect to WBSO subsidies.

Financial Income and Expense

12 Months Ended

Dec. 31, 2020

Financial Income and Expense

Financial Income and Expense

18. Financial Income and Expense


	2020	2019	2018
	(€ in thousands)
Interest income:
Current accounts and deposits	313	763	189
Interest costs:
Current accounts and deposits	(129)	—	—
Loans and borrowings	(1,911)	(1,083)	(810)
Foreign exchange result:
Net foreign exchange benefit/(loss)	(1,989)	722	(171)
	(3,716)	402	(792)

Results related to financial liabilities measured at fair value through profit or loss	12 Months Ended
	Dec. 31, 2020
Results related to financial liabilities measured at fair value through profit or loss
Results related to financial liabilities measured at fair value through profit or loss	19. Results related to financial liabilities measured at fair value through profit or loss In 2020, results related to financial liabilities measured at fair value through profit or loss represent changes in the fair value of derivative financial instruments since their initial recognition. These derivative financial instruments consist of conversion options and warrants issued in connection with our convertible loans, which are described in Note 13.

Income Taxes

12 Months Ended

Dec. 31, 2020

Income Taxes

Income Taxes

20. Income Taxes

The calculation of the tax charge is as follows:


	2020		2019		2018
	(€ in thousands)
Income tax based on domestic rate	11,542		14,261		9,106
Tax effect of:
Different tax rates in foreign jurisdictions	16		17		—
Non-deductible expenses	(2,742)		(1,501)		(818)
Share- and loan-issue expenditures that are taxable	174		843		1,448
Change in unrecognized deductible temporary differences	(44)		(7)		(25)
Current year losses for which no deferred tax asset was recognized	(9,029)		(13,703)		(9,712)
True-up for prior year	(41)		(42)		—
Income tax charge	(124)		(132)		(1)
Effective tax rate	—	%	—	%	—	%

The Company recognizes deferred tax assets arising from unused tax losses or tax credits only to the extent that the Company has sufficient taxable temporary differences or there is convincing evidence that sufficient taxable profit will be available against which the unused tax losses or unused tax credits can be utilized. Management’s judgment is that such convincing evidence is currently not sufficiently available and a deferred tax asset is therefore only recognized to the extent that the Company has sufficient taxable temporary differences. Consequently, the Company has not recognized a deferred tax asset related to operating losses.

As per December 31, 2020, the Company has a total amount of € 254.2 million (2019: € 218.1 million, 2018: € 162.6 million) tax loss carry-forwards available for offset against future taxable profits. According to current tax regulations, an amount of € 0.5 million of our total loss carry-forwards will expire in 2021. On October 5, 2020, the Dutch State Secretary for Finance submitted an amendment to the Tax Plan 2021 to the House of Representatives, which provides for changes in the loss offset rules. Effective from January 1, 2022, losses may be carried forward indefinitely. However, the offset of losses will be limited in a given year against the first € 1 million of taxable profit. For taxable profit in excess of this amount, losses may only be offset up to 50% of this excess.

Earnings Per Share

12 Months Ended

Dec. 31, 2020

Earnings Per Share

Earnings Per Share

21. Earnings Per Share

(a) Basic and diluted earnings per share

Basic earnings per share are calculated by dividing the result attributable to owners of the Company by the weighted average number of shares outstanding during the year.


	2020		2019		2018
Result attributable to owners of the Company (€ in thousands)		(46,565)		(56,480)		(36,894)
Weighted average number of shares outstanding		50,060,565		41,037,244		34,052,520
Basic (and diluted) earnings per share (€ per share)	€	(0.93)	€	(1.38)	€	(1.08)

(b) Diluted earnings per share

For the periods included in these financial statements, the share options are not included in the diluted earnings per share calculation as the Company was loss-making in all periods. Due to the anti-dilutive nature of the outstanding options, basic and diluted earnings per share are equal.

The Company did not declare dividends for any of the years presented in these financial statements.

Leases

12 Months Ended

Dec. 31, 2020

Leases

Leases

22. Leases

The Company leases office and laboratory facilities of 4,795 square meters at Zernikedreef in Leiden, the Netherlands, where our headquarters and our laboratories are located. The current lease agreement for these facilities terminates on June 30, 2031 and may be renewed for subsequent 5-year terms. The lease agreement contains no significant dismantling requirements.

The lease liability and the corresponding right-of-use asset for the Leiden office and laboratory facilities initially recognized on January 1, 2019 both amounted to € 2,359,000. In September 2019, the lease agreement was modified, resulting in a reduction in the carrying amount of the right-of-use asset of € 566,000 and a reduction in the lease liability of € 590,000. The modification consisted of a change in the termination date from December 31, 2020 to June 30, 2020, as a result of the new lease commencing on July 1, 2020.

A new 10-year lease agreement for the Leiden office and laboratory facilities was accounted for as of commencement date July 1, 2020. This 10-year period was extended by 1 year to an 11-year period in December 2020. The lease contract may be extended for subsequent 5-year periods. As the Company is not reasonably certain to exercise these extension options, these are not included in the lease term.

The lease liability and the corresponding right-of-use asset for this new lease contract, initially recognized on July 1, 2020, amounted to €16,203,000 and € 16,332,000, respectively. The original 10-year period was extended by 1 year to an 11-year period in December 2020. This modification resulted in an increase in the carrying amounts of the lease liability and the right-of-use asset of € 1,260.

The following table summarizes the relevant disclosures in relation to our leases in 2020 and 2019:


	2020	2019
	(€ in thousands)	(€ in thousands)
Depreciation charge for right-of-use asset	1,422	1,187
Interest expense on lease liability	409	48
Expense relating to short-term leases	141	189
Total cash outflow for leases	1,014	1,310
Additions to right-of-use assets during the period	17,591	—

The carrying amount of the right-of-use asset at the end of the reporting period is disclosed in note 7 Property, Plant & Equipment.

A maturity analysis of our lease liability is included in note 5 Financial Risk Management under (c) Liquidity risk. The total undiscounted commitment for the new lease agreement to which the Company had committed at December 31, 2020 amounts to € 21,825,000. This amount does not include potential commitments that may arise from contractual extension options, as the Company is not reasonably certain that any extension options will be exercised.

The lease expenditure charged to the income statement in 2018 amounted to € 1,813,000.

The Company leased out a part of its office in the U.S. and the Netherlands during early 2018. In 2020 and 2019, total sublease income amounted to € nil (2018: € 174,000). In 2018, sublease income was recorded in other income.

Commitments and Contingencies	12 Months Ended
Commitments and Contingencies	Dec. 31, 2020
Commitments and Contingencies
Commitments and Contingencies	23. Commitments and Contingencies (a) Claims There are no claims known to management related to the activities of the Company. (b) Patent license agreements On October 26, 2018, the Company and Ionis Pharmaceuticals, Inc. entered into a License Agreement, pursuant to which Ionis granted an exclusive, worldwide, royalty-bearing license to us to develop and commercialize certain pharmaceutical products, including the product designated by Ionis as IONIS-RHO-2.5Rx, which has been re-designated by us as QR-1123, for the prevention or treatment of retinitis pigmentosa in humans, including patient screening. Ionis also granted to the Company certain sub-license rights. Under the License Agreement, we are required to make an upfront payment of an aggregate of up to $ 6.0 million in installments, and certain payments up to an aggregate of $ 20.0 million upon the satisfaction of certain development and sales milestones. In addition, Ionis is entitled to royalty payments in the low double digits of aggregate annual net sales, subject to minimum sales in certain circumstances, and subject to reduced rates in certain circumstances. The royalty term lasts on a product-by-product and country-by-country basis, until the later of the expiration of the patent rights licensed to us and the expiration of regulatory-based exclusivity for such product in such country. The License Agreement may also be terminated by either party based upon certain uncured material breach by, or insolvency of, the other party, or by us at any time with advanced notice. In connection with the upfront payments and development milestone payments, we also simultaneously entered into a Stock Purchase Agreement with Ionis, pursuant to which we agreed to issue an aggregate of $ 2.5 million of ordinary shares to satisfy the first installment upfront payment, and the remaining installment of the upfront payment in ordinary shares determined upon the due date of such installment. In addition, the Stock Purchase Agreement provides for the ability for us, at our discretion, to pay the development milestone payments in ordinary shares when such payments are due. We may not issue ordinary shares to Ionis to the extent that such issuance would result in Ionis owning in excess of 18.5% of our issued and outstanding shares, nor may we issue ordinary shares if such issuance, together with previous issuances under the Stock Purchase Agreement, would exceed 19.9% of our outstanding ordinary shares as of the date of the execution of the Stock Purchase Agreement. Under these circumstances, we are required to pay the remainder of the upfront and/or development milestone payments in cash. In addition, in connection with the Stock Purchase Agreement, we also entered into an Investor Agreement with Ionis, pursuant to which we agreed to register for resale the ordinary shares issued by us under the Stock Purchase Agreement, under the circumstances described in the Investor Agreement. The Investor Agreement also contains customary covenants related to our registration of such shares, preparation of filings in connection therewith and indemnification of Ionis. The Investor Agreement also contains lockup provisions prohibiting the disposition of our ordinary shares issued under the Stock Purchase Agreement for a period of 12 months from the applicable issuance date, as well as voting provisions requiring Ionis to vote its ordinary shares in accordance with the recommendations of our board of directors, in each case subject to certain exceptions. In April 2014 the Company entered into a Patent License Agreement with Radboud University Medical Center (Radboud) in the field of antisense oligonucleotide-based therapy for Leber congenital amaurosis (LCA). Under the terms of this license agreement, the Company has an exclusive, sublicensable, world-wide royalty-bearing license under certain Radboud patent rights to develop, make, have made, use, sell, offer for sale and import certain licensed products of Radboud for use in all prophylactic and therapeutic uses in the field of LCA. Pursuant to the terms of the license agreement, the Company is obligated to pay Radboud net-sales-related royalties which shall be determined on a product-by-product and country-by-country basis. If the Company is required to pay any third party royalties, it may deduct that amount from that which is owed to Radboud. Radboud shall provide human resources, materials, facilities and equipment that are necessary for preclinical and clinical trials and if the Company does not purchase such trial facilities from Radboud, it is required to pay an increased net-sales-related royalty. In the Company’s sole discretion, it may elect to convert the obligation to pay net-sales-related royalties into one of the two lump-sum royalty options contained in the license agreement, the amount of which depends on whether the Company elects to convert prior to or after regulatory approval has been filed. The license agreement will remain in effect until the date on which all of the relevant patent applications and all granted patents ensuing from such applications have expired or is terminated earlier in accordance with the agreement. Either party may terminate the agreement if the other party is in default of a material obligation under the agreement which has not been cured within 30 days of notice of such default. Either party may also terminate the agreement if the other party declares bankruptcy, dissolves, liquidates or is subject to other analogous proceedings. Radboud may also terminate the license agreement if the Company does not pay any amount owed under the agreement and such payment remains overdue for at least 30 days after receiving notice from Radboud of the amount due. In June 2015, the Company entered into another license agreement with Radboud. Under the terms of this license agreement, the Company has an exclusive, sublicensable, world-wide royalty-bearing license under certain Radboud patent rights to develop, make, have made, use, sell, offer for sale and import certain licensed products of Radboud for use in all prophylactic and therapeutic uses in the field of Usher syndrome. Pursuant to the terms of the license agreement, the Company is obligated to pay Radboud net-sales-related royalties which shall be determined on a product-by-product and country-by-country basis. If the Company is required to pay any third party royalties, it may deduct that amount from that which is owed to Radboud. Radboud shall provide human resources, materials, facilities and equipment that are necessary for preclinical and clinical trials and if the Company does not purchase such trial facilities from Radboud, it is required to pay an increased net-sales-related royalty. In the Company’s sole discretion, it may elect to convert the obligation to pay net-sales-related royalties into one of the two lump-sum royalty options contained in the license agreement, the amount of which depends on whether it elects to convert prior to or after regulatory approval has been filed. The license agreement will remain in effect until the date on which all of the relevant patent applications and all granted patents ensuing from such applications have expired or is terminated earlier in accordance with the agreement. Either party may terminate the agreement if the other party is in default of a material obligation under the agreement which has not been cured within 30 days of notice of such default. Either party may also terminate the agreement if the other party declares bankruptcy, dissolves, liquidates or is subject to other analogous proceedings. Radboud may also terminate the license agreement if the Company does not pay any amount owed under the agreement and such payment remains overdue for at least 30 days after receiving notice from Radboud of the amount due. In January 2018, the Company entered into a license agreement with Inserm Transfert SA and Assistance-Publique-Hôpiteaux de Paris. Under the terms of the agreement, the Company has a world-wide, exclusive, royalty-bearing license under patent rights belonging to Inserm Transfert SA and other co-owners to develop, have developed, make, have made, use, have used and sell, have sold or otherwise distribute certain licensed products related to antisense oligonucleotides for treating LCA and method of treatment claims relating to modulation of the splicing of the CEP290 gene product. The Company has the right to grant sublicenses to third parties subject to certain limitations such as the sublicensee’s activities not conflicting with the public order or ethical obligations of Inserm Transfert SA or any co-owner and not tarnishing the image of Inserm Transfert SA or any co-owner. In January 2020, the license agreement with Inserm Transfert SA and Assistance-Publique-Hôpiteaux de Paris was amended so as to include a world-wide, non-exclusive, royalty-bearing license under patent rights belonging to Inserm Transfert SA and other co-owners to develop, have developed, make, have made, use, have used and sell, have sold or otherwise distribute certain licensed products for us in a method for antisense oligonucleotide-mediated exon skipping in the retina. In partial consideration of the rights and licenses granted by the license agreement, the Company is required to pay a lumpsum payment and an annual license maintenance fee, as well as to make payments upon the completion of certain milestones: completion of a clinical trial more advanced than First in Man, such as a phase IIb; and the first marketing authorization or any foreign equivalent for a first product. In further consideration of the rights and license granted under the agreement, the Company shall pay to Inserm Transfert SA a running royalty on net sales of products sold by us or our sublicensee. Unless terminated earlier pursuant to termination provisions of Agreement, the license agreement will remain in effect on a country-by-country basis, until the later to occur of the following events (i) the invalidation or expiration of the last to expire or to be invalidated patent rights which covers the manufacture, use or sale of the product in said country or until the expiration of the exclusive commercialization right granted by a regulatory agency to a product as an orphan drug or (ii) five years after the first commercial sale of a product in the country in which the product is sold. The agreement may be terminated by either party in the event of an uncured breach by the other party. Inserm Transfert SA may terminate the agreement if we become the subject of voluntary or involuntary winding-up proceedings or judicial recovery, if the Company or its sublicensees interrupt development activities for at least one year, if the Company or its sublicensees interrupt commercialization for more than twelve months after the first commercialization in a country, if the Company does not commercialize a product within two years following our obtaining of marketing approval in a country, or if the Company or our sublicensees do not put a product into commercial use and do not keep products reasonably available to the public within twelve years of the effective date of the agreement. In January 2016, the Company entered into an agreement with Leiden University Medical Center (LUMC) which gives us a world-wide, exclusive, royalty-bearing license in the field of amyloid beta related diseases, notably Alzheimer’s disease and HCHWA-D, under certain patent rights of LUMC regarding antisense oligonucleotide based therapies. This license agreement contains certain diligence obligations for the Company coupled to milestone payments and complements the Company’s intellectual property relating to its CNS program. On September 12, 2017, this program was transferred to Amylon Therapeutics B.V., in which the Company maintains a majority ownership interest. In January 2017, the Company entered into an agreement with LUMC, which gives us a world-wide, exclusive, royalty-bearing license in the field of Huntington’s disease, under certain patent rights of LUMC regarding antisense oligonucleotide based therapies. This license agreement contains certain diligence obligations for the Company coupled to milestone payments and complements the Company’s intellectual property relating to the HD program. In February 2019, the Company entered into an agreement with the University of Rochester, New York, which gives us a world-wide, exclusive, royalty-bearing, sublicensable license in the field of antisense oligonucleotides for use in nucleotide specific RNA editing through pseudouridylation, under certain patent rights of University of Rochester. This license agreement contains certain diligence obligations for the Company coupled to milestone payments and complements the Company’s intellectual property relating to the Axiomer/pseudouridylation program. In September 2020, the Company entered into an agreement with Vico Therapeutics B.V., which gives us a world-wide, exclusive, royalty-bearing, sublicensable license in the field of the prophylactic and therapeutic use of antisense oligonucleotide for the treatment of Fuch’s Endothelial Corneal Dystrophy (FECD) caused by a trinucleotide repeat, under certain patent rights of Vico Therapeutics B.V. In partial consideration of the rights and licenses granted by the license agreement, the Company is required to make annual maintenance payments. Unless terminated earlier in accordance with this the license agreement, the agreement will stay in effect until the expiration of all of the licensed patent rights. The license agreement may be terminated by either party in the event of an uncured breach by the breaching party. Vico Therapeutics B.V. may terminate the license agreement if the Company applies for an order or an order is made declaring the Company bankrupt or granting the Company suspension of payments, or a liquidator is appointed for the Company, or the Company is dissolved, liquidated, or ceases to carry on all or a substantial part of its business or a decision is taken to that effect, or in the event uncured payment defaults. (c) Clinical support agreements On February 9, 2018, the Company entered into an agreement with Foundation Fighting Blindness (FFB), under which FFB will provide funding of $ 7.5 million (€ 6.1 million) to advance QR‑421a into the clinic and will receive future milestone payments. Pursuant to the terms of the agreement, the Company is obligated to make a one-time milestone payment to FFB of up to $ 37.5 million (€ 30.6 million), payable in four equal annual installments following the first commercial sale of QR‑421a, the first of which is due within 60 days following the first commercial sale. The Company is also obligated to make a payment to FFB of up to $ 15 million (€ 12.2 million) if it transfers, sells or licenses QR‑421a other than for certain clinical or development purposes, or if the Company enters into a change of control transaction. However, the payment in the previous sentence may be set-off against the $ 37.5 million milestone payment. Either FFB or the Company may terminate the agreement for cause, which includes the Company’s material failure to achieve certain commercialization and development milestones. The Company’s payment obligations survive the termination of the agreement. In August 2014, the Company entered into an agreement with Cystic Fibrosis Foundation Therapeutics, Inc. (CFFT), a subsidiary of the Cystic Fibrosis Foundation, pursuant to which CFFT agreed to provide the Company with up to $ 3 million (€ 2.4 million) to support the clinical development of eluforsen. Pursuant to the terms of the agreement, the Company is obligated to make a one-time milestone payment to CFFT of up to approximately $ 16 million (€ 13 million), payable in three equal annual installments following the first commercial sale of eluforsen, the first of which is due within 90 days following the first commercial sale. The Company is also obligated to make a one-time milestone payment to CFFT of up to $ 3 million (€ 2.4 million) if net sales of eluforsen exceed $ 500 million (€ 407 million) in a calendar year. Lastly, the Company is obligated to make a payment to CFFT of up to approximately $ 6 million (€ 5 million) if it transfers, sells or licenses eluforsen other than for certain clinical or development purposes, or if the Company enters into a change of control transaction prior to commercialization. However, the payment in the previous sentence may be set-off against the $ 16 million milestone payment. Either CFFT or the Company may terminate the agreement for cause, which includes the Company’s material failure to achieve certain commercialization and development milestones. The Company’s payment obligations survive the termination of the agreement. (d) Research and development commitments The Company has research and development commitments, mainly with CRO’s, amounting to € 12,003,000 at December 31, 2020 (2019: € 19,472,000). Of these obligations an amount of € 6,491,000 is due in 2021, the remainder is due in 1 to 5 years.

Related-Party Transactions

12 Months Ended

Dec. 31, 2020

Related-Party Transactions

Related-Party Transactions

24. Related-Party Transactions

Details of transactions between the Company and related parties are disclosed below.

(a) Compensation of the Supervisory Board

The remuneration of the supervisory board members in 2020 is set out in the table below:


	2020
	Short term	Post-employment	Share-based
	employee benefits	benefits	payment	Total
	(€ in thousands)
Mr. Dinko Valerio	—	—	123	123
Mr. Antoine Papiernik	—	—	—	—
Ms. Alison Lawton	34	—	123	157
Mr. James Shannon	45	—	125	170
Mr. Bart Filius	41	—	104	145
Ms. Theresa Heggie	36	—	99	135
	156	—	574	730

In 2020, Mr. Valerio and Mr. Papiernik waived their short-term benefits in support to the Company during the COVID-19 pandemic.

The remuneration of the supervisory board members in 2019 is set out in the table below:


	2019
	Short term	Post employment	Share-based
	employee benefits	benefits	payment	Total
	(€ in thousands)
Mr. Dinko Valerio	74	—	106	180
Mr. Antoine Papiernik	104	—	—	104
Ms. Alison Lawton	41	—	107	148
Mr. Paul Baart	144	—	—	144
Mr. James Shannon	48	—	109	157
Mr. Bart Filius	30	—	26	56
Ms. Theresa Heggie	19	—	18	37
	460	—	366	826

The 2018 remuneration is set out in the table below:


	2018
	Short term	Post employment	Share-based
	employee benefits	benefits	payment	Total
	(€ in thousands)
Mr. Dinko Valerio	36	—	69	105
Mr. Antoine Papiernik	72	—	—	72
Ms. Alison Lawton	31	—	75	106
Mr. Paul Baart	80	—	—	80
Mr. James Shannon	33	—	73	106
	252	—	217	469

As at December 31, 2020:

Mr. Dinko Valerio holds 693,420 ordinary shares in the Company, as well as 155,458 options. These options vest in four annual equal tranches of 25% starting for the first time as of the first anniversary of the date of grant. In 2020, Mr. Valerio was granted 24,615 options under the Option Plan to acquire depositary receipts issued for ordinary shares at an exercise price of € 8.82 per option. In 2019, Mr. Valerio was granted 14,918 options at an average exercise price of € 13.78 per option. In 2018, Mr. Valerio was granted 27,500 options at an average exercise price of € 2.74 per option. On September 12, 2017, Mr. Valerio provided a convertible loan to Amylon Therapeutics B.V. This loan is interest-bearing at an average rate of 8% per annum and is convertible into a variable number of ordinary shares at the option of the holder or the Company in case financing criteria are met. The unconverted loan became payable on demand after 24 months in equal quarterly terms.

Mr. Antoine Papiernik does not hold any shares or options in the Company. As a managing partner of Sofinnova Partners SAS, the management company of Sofinnova Capital VII FCPR, holder of 2,764,194 ordinary shares, Mr. Papiernik may be deemed to have share voting and investment power with respect to such shares.

Ms. Alison Lawton holds 136,006 options. In 2020, Ms. Lawton was granted 24,615 options under the Option Plan to acquire depositary receipts issued for ordinary shares at with an exercise price of € 8.82 per option. In 2019, Ms. Lawton was granted 14,918 options with an average exercise price of € 13.78 per option. In 2018, Ms. Lawton was granted 27,500 options with an average exercise price of € 2.74 per option. Under these option grants, options vest in four equal annual tranches of 25%, commencing at the first anniversary of the date of grant.

Mr. James Shannon holds 61,538 ordinary shares in the Company and 132,266 options. In 2020, Mr. Shannon was granted 24,615 options under the Option Plan to acquire depositary receipts issued for ordinary shares at an exercise price of € 8.82 per option. In 2019, Mr. Shannon was granted 14,918 options at an exercise price of € 13.78 per option. In 2018, Mr. Shannon was granted 27,500 options at an exercise price of € 2.74 per option. Under these option grants, options vest in four equal annual tranches of 25%, commencing at the first anniversary of the date of grant.

Mr. Bart Filius holds 37,370 options. These options vest in four equal annual tranches of 25%, commencing at first anniversary of the date of grant. In 2020, Mr. Filius was granted 24,615 options under the Option Plan to acquire depositary receipts issued for ordinary shares at with an exercise price of € 8.82 per option. In 2019, Mr. Filius was granted 12,755 options at an exercise price of € 10.47 per option.

Ms. Theresa Heggie holds 37,949 options. These options vest in four equal annual tranches of 25%, commencing at the first anniversary of the date of grant. In 2020, Ms. Heggie was granted 24,615 options under the Option Plan to acquire depositary receipts issued for ordinary shares at with an exercise price of € 8.82 per option. In 2019, Ms. Heggie was granted 13,334 options at an exercise price of € 8.00 per option.

(b) Compensation of key management

Our management board is supported by our officers, or senior management. The total remuneration of the management board and senior management in 2020 amounted to € 7,693,000 with the details set out in the table below:


	2020
	Short term	Post
	employee	employment	Share-based
	benefits	benefits	payment	Total
	(€ in thousands)
Mr. D.A. de Boer1	689	10	1,925	2,624
Management Board	689	10	1,925	2,624
Senior Management	1,620	55	3,394	5,069
	2,309	65	5,319	7,693

Short term employee benefits includes a bonus for Mr. Daniel de Boer, of € 240,000 based on goals realized in 2020.

The total remuneration of the management board and senior management in 2019 amounted to € 6,117,000 with the details set out in the table below:


	2019
	Short term	Post
	employee	employment	Share-based
	benefits	benefits	payment	Total
	(€ in thousands)
Mr. D.A. de Boer1	722	10	1,533	2,265
Management Board	722	10	1,533	2,265
Senior Management	1,545	48	2,259	3,852
	2,267	58	3,792	6,117

Short term employee benefits includes a bonus for Mr. Daniel de Boer of € 273,000 based on goals realized in 2019.

The total remuneration of the management board and senior management in 2018 amounted to € 5,481,000 with the details set out in the table below:


	2018
	Short term	Post
	employee	employment	Share-based
	benefits	benefits	payment	Total
	(€ in thousands)
Mr. D.A. de Boer1	726	9	668	1,403
Mr. R.K. Beukema2	809	16	464	1,289
Management Board	1,535	25	1,132	2,692
Senior Management	1,726	64	999	2,789
	3,261	89	2,131	5,481

Short term employee benefits includes a bonus for Mr. Daniel de Boer of € 281,000 based on goals realized in 2018.

Short term employee benefits includes a bonus for Mr. René Beukema of € 134,000 based on goals realized in 2018.

As at December 31, 2020:

Mr. Daniel de Boer holds 705,309 ordinary shares in the Company as well as 1,477,376 options. In 2020, Mr. de Boer was awarded 395,561 options to acquire ordinary shares at an exercise price of € 8.82 per option. In 2019, Mr. de Boer was awarded 253,192 options at an exercise price of € 13.78 per option. In 2018, Mr. de Boer was awarded 379,285 options at an exercise price of € 2.74 per option. These options vest over four years in equal annual installments and had a remaining weighted-average contractual life of 7.2 years as at December 31, 2020.

ProQR does not grant any loans, advance payments and guarantees to members of the Management and Supervisory Board.

Auditor fees

12 Months Ended

Dec. 31, 2020

Auditor fees

Auditor fees

25. Auditor fees

The fees for services provided by our external auditor, Deloitte Accountants B.V., are specified below for each of the financial years indicated:


	2020	2019	2018
	(€ in thousands)
Audit fees	487	515	181
Audit-related fees	24	57	261
Tax fees	—	—	—
All other fees	—	—	—
	511	572	442

Audit fees consist of aggregate fees for professional services provided in connection with the annual audit of our financial statements, procedures on our quarterly financial statements, consultations on accounting matters directly related to the audit. Audit-related fees consist of procedures relating to share offerings, such as comfort letters, as well as consents and review of documents filed with the SEC.

Subsequent events	12 Months Ended
Subsequent events	Dec. 31, 2020
Subsequent events
Subsequent events	26. Subsequent events In January 2021, the Company issued 585,398 ordinary shares under our sales agreement for at-the-market offerings with Citigroup Global Markets Inc. and Cantor Fitzgerald & Co. The gross proceeds from this sale amounted to € 2,767,000. In January 2021, Wings Therapeutics Inc. merged into Phoenicis Therapeutics Inc. by means of a non-cash transaction. ProQR holds a 3.9% interest in Phoenicis Therapeutics Inc.

Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2020

Significant Accounting Policies

Basis of consolidation

(a) Basis of consolidation

(i) Subsidiaries

(ii) Non-controlling interests (“NCI”)

(iii) Loss of control

(iv) Transactions eliminated on consolidation

(v) Associates

Classes of financial instruments

(b) Classes of financial instruments

the economic characteristics and risk of the embedded derivative are not closely related to the economic characteristics and risks of the host contract;

a separate instrument with the same terms as the embedded derivative would meet the definition of a derivate; and

the hybrid contract is not measured at fair value with changes in fair value recognized in profit or loss.

Foreign currencies

(i) Foreign currency transactions

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions.

(ii) Foreign operations

Recognition of other income

(d) Recognition of other income

Government grants — WBSO

(e) Government grants — WBSO

Employee benefits

(f) Employee benefits

(i) Short-term employee benefits

(ii) Share-based payment transactions

(iii) Pension obligations

Taxation

(g) Taxation

(i) Current tax

(ii) Deferred tax

Deferred tax is recognized on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit.

Property, plant and equipment

(h) Property, plant and equipment

(i) Recognition and measurement

(ii) Depreciation

The estimated useful lives of property, plant and equipment for current and comparative periods are as follows:


 Buildings and leasehold improvements:	5-10	years;
 laboratory equipment:	5	years;
 other:	3-5	years.

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate

Impairment of assets

(i) Impairment of assets

Financial assets

(j) Financial assets

Specifically:

all other debt investments and equity investments are measured subsequently at fair value through profit or loss (FVTPL).

Contract receivables

Cash and cash equivalents

(k) Cash and cash equivalents

Financial liabilities and equity instruments