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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number: 001-37773

 

MERUS N.V.

(Exact name of registrant as specified in its charter)

 

 

The Netherlands

Not Applicable

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

Yalelaan 62

3584 CM Utrecht

The Netherlands

Not Applicable

(Address of principal executive offices)

(Zip code)

 

+31 85 016 2500

(Registrant’s telephone number, including area code)

 

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

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

 

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common shares, nominal value €0.09 per share

MRUS

The Nasdaq Stock Market LLC

(Nasdaq Global Market)

 

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

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

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

 

Large accelerated filer

 

 

Accelerated filer

 

 

 

 

 

 

Non-accelerated filer

 

  

 

Smaller reporting company

 

 

 

 

 

 

 

 

 

 

Emerging growth company

 

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

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

 


 

As of October 30, 2020, the registrant had 29,088,670 common shares, nominal value €0.09 per share, outstanding.

 

 

 

 

 


 

 

PART I — FINANCIAL INFORMATION

 

 

 

Item 1. Financial Statements

2

 

 

Condensed Consolidated Balance Sheets
as of September 30, 2020 and December 31, 2019

2

 

 

Condensed Consolidated Statements of Operations and Comprehensive Loss
for the three and nine months ended September 30, 2020 and 2019

3

 

 

Condensed Consolidated Statements of Cash Flows
for the nine months ended September 30, 2020 and 2019

4

 

 

Condensed Consolidated Statements of Changes in Stockholders’ Equity
for three and nine months ended September 30, 2020 and 2019  

5

 

 

Notes to Condensed Consolidated Financial Statements

6

 

 

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

14

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

20

 

 

Item 4. Controls and Procedures

20

 

 

PART II — OTHER INFORMATION

 

 

 

Item 1. Legal Proceedings

21

 

 

Item 1A. Risk Factors

21

 

 

Item 5. Other Information

61

 

 

Item 6. Exhibits

61

 

 

Signatures

62

 

 


 

Cautionary Note Regarding Forward-looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. All statements other than statements of historical fact contained in this Quarterly Report on Form 10-Q, including without limitation statements regarding our plans to develop and commercialize our product candidates, the timing of our ongoing or planned clinical trials, the timing of and our ability to obtain and maintain regulatory approvals, the anticipated impact of the COVID-19 pandemic on our business and operations, the clinical utility of our product candidates, our commercialization, marketing and manufacturing capabilities and strategy, our expectations surrounding our collaborations, our expectations about the willingness of healthcare professionals to use our product candidates, the sufficiency of our cash, cash equivalents and investments, and the plans and objectives of management for future operations and capital expenditures are forward-looking statements.

The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions and are based largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of known and unknown risks, uncertainties and assumptions, including those described under the sections in this Quarterly Report on Form 10-Q entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report on Form 10-Q.

Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

 

 

 


 

PART I – FINANCIAL INFORMATION

Item 1.Financial Statements

MERUS N.V.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(Amounts in thousands, except per share data)

 

 

 

September 30,

2020

 

 

December 31,

2019

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

139,179

 

 

$

197,612

 

Marketable securities

 

 

51,021

 

 

 

42,153

 

Accounts receivable

 

 

538

 

 

 

941

 

Accounts receivable (related party)

 

 

1,568

 

 

 

1,711

 

Prepaid expenses and other current assets

 

 

9,010

 

 

 

4,951

 

Total current assets

 

 

201,316

 

 

 

247,368

 

Marketable securities

 

 

 

 

 

2,009

 

Property and equipment, net

 

 

3,792

 

 

 

3,715

 

Operating lease right-of-use assets

 

 

4,229

 

 

 

5,215

 

Intangible assets, net

 

 

2,784

 

 

 

2,876

 

Deferred tax assets

 

 

291

 

 

 

288

 

Other assets

 

 

1,081

 

 

 

1,905

 

Total assets

 

$

213,493

 

 

$

263,376

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

4,720

 

 

$

3,029

 

Accrued expenses

 

 

19,819

 

 

 

13,536

 

Current portion of lease obligation

 

 

1,536

 

 

 

1,380

 

Current portion of deferred revenue

 

 

699

 

 

 

941

 

Current portion of deferred revenue (related party)

 

 

18,657

 

 

 

17,901

 

Total current liabilities

 

 

45,431

 

 

 

36,787

 

Lease obligation

 

 

2,736

 

 

 

3,872

 

Deferred revenue, net of current portion

 

 

331

 

 

 

780

 

Deferred revenue, net of current portion (related party)

 

 

80,494

 

 

 

90,637

 

Total liabilities

 

 

128,992

 

 

 

132,076

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common shares, €0.09 par value; 45,000,000 shares authorized;

29,074,536 and 28,882,217 shares issued and outstanding as at

September 30, 2020 and December 31, 2019, respectively

 

$

2,938

 

 

$

2,918

 

Additional paid-in capital

 

 

448,617

 

 

 

441,395

 

Accumulated other comprehensive income

 

 

5,094

 

 

 

1,586

 

Accumulated deficit

 

 

(372,148

)

 

 

(314,599

)

Total stockholders’ equity

 

 

84,501

 

 

 

131,300

 

Total liabilities and stockholders’ equity

 

$

213,493

 

 

$

263,376

 

 

See accompanying notes to the Unaudited Condensed Consolidated Financial Statements.

2


 

MERUS N.V.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(UNAUDITED)

(Amounts in thousands, except per share data)

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Collaboration revenue

 

$

695

 

 

$

2,558

 

 

$

1,207

 

 

$

4,496

 

Collaboration revenue (related party)

 

 

7,875

 

 

 

5,690

 

 

 

19,720

 

 

 

19,061

 

Grant revenue

 

 

 

 

 

(93

)

 

 

 

 

 

(216

)

Total revenue

 

 

8,570

 

 

 

8,155

 

 

 

20,927

 

 

 

23,341

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

17,538

 

 

 

13,511

 

 

 

48,234

 

 

 

36,078

 

General and administrative

 

 

9,136

 

 

 

8,024

 

 

 

26,061

 

 

 

22,979

 

Total operating expenses

 

 

26,674

 

 

 

21,535

 

 

 

74,295

 

 

 

59,057

 

Operating loss

 

 

(18,104

)

 

 

(13,380

)

 

 

(53,368

)

 

 

(35,716

)

Other income (loss), net:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest (expense) income, net

 

 

(12

)

 

 

591

 

 

 

367

 

 

 

1,756

 

Foreign exchange (losses) gains

 

 

(4,782

)

 

 

3,468

 

 

 

(4,243

)

 

 

4,474

 

Other income (loss), net

 

 

(4,794

)

 

 

4,059

 

 

 

(3,876

)

 

 

6,230

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss before income taxes

 

 

(22,898

)

 

 

(9,321

)

 

 

(57,244

)

 

 

(29,486

)

Tax expense (benefit)

 

 

177

 

 

 

(54

)

 

 

305

 

 

 

239

 

Net loss

 

$

(23,075

)

 

$

(9,267

)

 

$

(57,549

)

 

$

(29,725

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Currency translation adjustment

 

 

4,414

 

 

 

(3,561

)

 

 

3,508

 

 

 

(4,363

)

Comprehensive loss

 

$

(18,661

)

 

$

(12,828

)

 

$

(54,041

)

 

$

(34,088

)

Net loss per share attributable to common stockholders:

      Basic and diluted

 

$

(0.64

)

 

$

(0.55

)

 

$

(1.86

)

 

$

(1.46

)

Weighted-average common shares outstanding:

      Basic and diluted

 

 

29,061

 

 

 

23,403

 

 

 

29,014

 

 

 

23,388

 

 

See accompanying notes to the Unaudited Condensed Consolidated Financial Statements.

3


 

MERUS N.V.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(Amounts in thousands)

 

 

 

Nine Months Ended

September 30,

 

 

 

2020

 

 

2019

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net loss

 

$

(57,549

)

 

$

(29,725

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization of property and equipment

 

 

830

 

 

 

635

 

Amortization of intangible assets

 

 

206

 

 

 

173

 

Foreign exchange gain

 

 

3,828

 

 

 

(2,932

)

Loss on disposal of property and equipment

 

 

17

 

 

 

 

Stock-based compensation expense

 

 

6,327

 

 

 

5,188

 

Amortization of discount on investments

 

 

(30

)

 

 

(452

)

Deferred tax (benefit) expense

 

 

(2

)

 

 

105

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

634

 

 

 

1,473

 

Operating lease right-of-use assets and lease obligations

 

 

2

 

 

 

(124

)

Prepaid expenses and other current assets

 

 

(2,935

)

 

 

(3,778

)

Accounts payable

 

 

1,587

 

 

 

(301

)

Accrued expenses

 

 

5,707

 

 

 

(218

)

Deferred revenue

 

 

(14,187

)

 

 

(13,348

)

Net cash used in operating activities

 

$

(55,565

)

 

$

(43,304

)

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchases of marketable securities

 

$

(49,359

)

 

$

(49,385

)

Proceeds from maturities of marketable securities

 

 

42,831

 

 

 

71,701

 

Purchases of intangible assets

 

 

 

 

 

(213

)

Purchases of property and equipment

 

 

(858

)

 

 

(2,079

)

Net cash (used in) provided by investing activities

 

$

(7,386

)

 

$

20,024

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Payment of offering costs

 

$

(164

)

 

$

 

Proceeds from stock options exercised

 

 

915

 

 

 

48

 

Net cash provided by financing activities

 

$

751

 

 

$

48

 

Foreign exchange impact on cash, cash equivalents and restricted cash

 

 

3,767

 

 

 

(6,900

)

Net decrease in cash, cash equivalents and restricted cash

 

 

(58,433

)

 

 

(30,132

)

Cash, cash equivalents, and restricted cash, beginning of period

 

 

197,813

 

 

 

164,730

 

Cash, cash equivalents, and restricted cash, end of period

 

$

139,380

 

 

$

134,598

 

SUPPLEMENTAL DISCLOSURES:

 

 

 

 

 

 

 

 

Income taxes paid

 

$

235

 

 

$

245

 

Non-cash purchases of property, equipment and intangibles

 

$

5

 

 

$

230

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

139,179

 

 

 

134,457

 

Restricted cash included in non-current other assets

 

 

201

 

 

 

141

 

 

 

$

139,380

 

 

$

134,598

 

 

See accompanying notes to the Condensed Consolidated Financial Statements.

4


 

MERUS N.V.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(UNAUDITED)

(Amounts in thousands, except share amounts)

 

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Accumulated

 

 

Accumulated

Other

Comprehensive

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Income (Loss)

 

 

Equity

 

Balance at January 1, 2019

 

 

23,358,977

 

 

$

2,366

 

 

$

360,045

 

 

$

(259,448

)

 

$

2,894

 

 

$

105,857

 

Exercise of stock options and vesting of restricted stock units

 

 

20,678

 

 

 

2

 

 

 

26

 

 

 

 

 

 

 

 

 

28

 

Stock-based compensation

 

 

 

 

 

 

 

 

1,260

 

 

 

 

 

 

 

 

 

1,260

 

Currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,900

)

 

 

(1,900

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(7,083

)

 

 

 

 

 

(7,083

)

Balance at March 31, 2019

 

 

23,379,655

 

 

$

2,368

 

 

$

361,331

 

 

$

(266,531

)

 

$

994

 

 

$

98,162

 

Exercise of stock options and vesting of restricted stock units

 

 

13,632

 

 

 

2

 

 

 

2

 

 

 

 

 

 

 

 

 

4

 

Stock-based compensation

 

 

 

 

 

 

 

 

1,860

 

 

 

 

 

 

 

 

 

1,860

 

Currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,098

 

 

 

1,098

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(13,375

)

 

 

 

 

 

(13,375

)

Balance at June 30, 2019

 

 

23,393,287

 

 

$

2,370

 

 

$

363,193

 

 

$

(279,906

)

 

$

2,092

 

 

$

87,749

 

Exercise of stock options and vesting of restricted stock units

 

 

14,265

 

 

 

1

 

 

 

15

 

 

 

 

 

 

 

 

 

16

 

Stock-based compensation

 

 

 

 

 

 

 

 

2,068

 

 

 

 

 

 

 

 

 

2,068

 

Currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,561

)

 

 

(3,561

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(9,267

)

 

 

 

 

 

(9,267

)

Balance at September 30, 2019

 

 

23,407,552

 

 

$

2,371

 

 

$

365,276

 

 

$

(289,173

)

 

$

(1,469

)

 

$

77,005

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2020

 

 

28,882,217

 

 

$

2,918

 

 

$

441,395

 

 

$

(314,599

)

 

$

1,586

 

 

$

131,300

 

Exercise of stock options and vesting of restricted stock units

 

 

127,205

 

 

 

13

 

 

 

589

 

 

 

 

 

 

 

 

 

602

 

Stock-based compensation

 

 

 

 

 

 

 

 

2,291

 

 

 

 

 

 

 

 

 

2,291

 

Currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,107

)

 

 

(3,107

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(16,500

)

 

 

 

 

 

(16,500

)

Balance at March 31, 2020

 

 

29,009,422

 

 

$

2,931

 

 

$

444,275

 

 

$

(331,099

)

 

$

(1,521

)

 

$

114,586

 

Exercise of stock options and vesting of restricted stock units

 

 

37,922

 

 

 

4

 

 

 

287

 

 

 

 

 

 

 

 

 

291

 

Stock-based compensation

 

 

 

 

 

 

 

 

1,192

 

 

 

 

 

 

 

 

 

1,192

 

Currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,201

 

 

 

2,201

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(17,974

)

 

 

 

 

 

(17,974

)

Balance at June 30, 2020

 

 

29,047,344

 

 

$

2,935

 

 

$

445,754

 

 

$

(349,073

)

 

$

680

 

 

$

100,296

 

Exercise of stock options and vesting of restricted stock units

 

 

27,192

 

 

 

3

 

 

 

19

 

 

 

 

 

 

 

 

 

22

 

Stock-based compensation

 

 

 

 

 

 

 

 

2,844

 

 

 

 

 

 

 

 

 

2,844

 

Currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,414

 

 

 

4,414

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(23,075

)

 

 

 

 

 

(23,075

)

Balance at September 30, 2020