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Annual Report 2019 FSHD Unlimited Coöperatie U.A. Facio Therapies B.V. Facio Intellectual Property B.V. Driving Innovative Therapies for FSHD

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Annual Report 2019 FSHD Unlimited Coöperatie U.A. Facio Therapies B.V. Facio Intellectual Property B.V.
Driving Innovative Therapies for FSHD
Cover Image
The cover image shows a three-dimensional representation of the structure of the Casein Kinase 1 protein (CK1). In June 2019, Facio Therapies announced the discovery of the CK1 protein as the intracellular target of several novel classes of compounds that repress the cause of FSHD in muscle cells (DUX4 expression).
The human body makes many thousands of different proteins, each with their own specific function, such as transmitting biological signals or catalyzing reactions. A protein’s function is determined by its structure, which can be quite complex. Proteins - including CK1 – have a primary structure of a long stretch of amino acids, which form secondary structures such as helices and sheets (shown as the colored helices and flat arrows in the cover image), which then “fold” further into a stable and specific tertiary structure. A protein can also form quarternary structures by complexing with other proteins; the cover image actually shows such a quarternary structure of two CK1 proteins of subtype epsilon forming a dimer.
“Protein CSNK1E PDB 1cki” by Emw is licensed under CC BY-SA 3.0.
Contents
Board Report ................................................................................................................................. 4 Financial Results .......................................................................................................................... 14
Tax Position .................................................................................................................... 15 Consolidated Balance Sheet ........................................................................................... 16 Consolidated Profit and Loss Account ............................................................................ 18 Notes to the Consolidated Financial Statements ........................................................... 19 Notes to the Consolidated Balance Sheet ...................................................................... 22
Notes to the Consolidated Profit and Loss Account ....................................................... 26
Company Balance Sheet ................................................................................................. 29
Company Profit and Loss Account .................................................................................. 31 Notes to the Company Balance Sheet ............................................................................ 33 Notes to the Company Profit and Loss Account............................................................. 38
Other Information .......................................................................................................... 41 Independent Auditor's Report .................................................................................................... 42
Annual Report 2019 FSHD Unlimited 4 – 44
Board Report
Annual Report 2019 FSHD Unlimited 5 – 44
Board Report 1. MISSION AND ORIGIN Facio Therapies, an operating company of FSHD Unlimited, is a single-minded pharmaceutical company. Our focus is entirely on one disease: FSHD. Affecting an estimated 900,000 people worldwide, FSHD – short for facioscapulohumeral dystrophy – causes muscle wasting in the face (‘facio’), in the shoulders (‘scapulo’), and in the upper arms (‘humeral’), sometimes spreading to the hips and legs. The progressive muscle wasting has an insidious effect on daily life. Simple, everyday tasks like eating, drinking or rising from a chair become difficult or even impossible. About 20% of FSHD patients become bound to a wheelchair. Less visible and therefore underestimated symptoms of FSHD are chronic pain and fatigue. Moreover, FSHD imposes a heavy emotional burden. Frustration, guilt, shame, grief, and social isolation are often reported. Perhaps most importantly, there is uncertainty about the future because the course of FSHD is unpredictable. There is no approved therapy. In 2010, the scientific consensus emerged that FSHD is caused by the presence in skeletal muscle of a protein that should not be there. In September 2014, three prominent members of the FSHD community took matters into their own hands. Kees van der Graaf (Netherlands), a former member of the Board of Directors of Unilever; Bill Moss AO, a former executive director of the Australian investment bank, Macquarie Group; and Neil Camarta (Canada), President and CEO of Enlighten Innovations and a former executive at Shell, jointly founded FSHD Unlimited, the parent company of Facio Therapies. Kees’s elder son, Bart, has FSHD. Bill and Neil have FSHD themselves. We aim to meet the medical needs of all people with FSHD, and therefore enshrined this double mission in our articles of association:
• A product mission: to develop safe and effective therapies that stop the progression of FSHD. We use the plural, “therapies”, because the disease is so variable (even identical twins may have very different symptoms) that in order to treat all people with FSHD more than one drug may be needed.
• A socio-economic mission: to maximize access to therapy by ensuring affordable pricing, and to allocate 50% of our future net profits to both medicinal and non-medicinal programs designed to give people with FSHD a better quality of life.
Figure 1: Facio’s Shareholder Base.
Annual Report 2019 FSHD Unlimited 6 – 44
We could never pursue this mission without the support of our investors. Since inception, we have raised €16.1 million (or about US$17.9 million) in equity, an unprecedented 77% of which was provided by families living with FSHD and FSHD foundations, complemented by investments from our partners, including our R&D partner, the leading drug discovery company, Evotec SE. Our investors appreciate that, in order to be sustainable, the (bio)pharmaceutical business model should focus first and foremost on serving the needs of patients, so that shareholder value follows from patient value.
2. EXECUTING OUR PRODUCT MISSION: BASIC PRINCIPLES 2.1 First objective: discover compounds that tackle the cause of FSHD
FSHD is caused by the undue production of a protein called DUX4. When produced in skeletal muscle, DUX4 sets in motion a cascade of cellular events that eventually result in the devastating effects of FSHD. In people without FSHD, the production of DUX4 in skeletal muscle is repressed by regulatory mechanisms. Our first objective is to develop compounds that tackle the cause of FSHD by restoring DUX4 repression as much as possible. Pursuing this goal (like any other drug discovery endeavor) comes with a high risk of technical failure. That is why we developed tools to maximize the chance of success early on. First, as a drug discovery method we chose so-called phenotypic screening for the following reasons.
• Screening is a well-established, automated method for testing a great many compounds for their desired effect in a suitable test system.
• Phenotypic screening is primarily designed to identify compounds that work in a biological, cell- based system. After identifying the most promising compounds, we look at how they work. In other words, phenotypic screening is not biased by assumptions – which may or may not prove to be correct – about how DUX4 repression might be brought about.
• Phenotypic screening also reveals if compounds found to repress DUX4 have toxic side effects in the test system. This method thus enables gathering information on the effects of compounds on the biology of the test system – its phenotype, in other words. Hence the name.
Second, we chose to screen so-called small-molecule compounds because they are, by far, the best characterized class of therapeutic compounds; over 90% of marketed therapeutic drugs are small molecules. Moreover, they are relatively simple compounds that can be manufactured by means of industrial chemical synthesis. Third, we acknowledged that any compound purported to repress DUX4 must be shown to do exactly that in a lab-based system that captures human FSHD biology as much as possible. Obvious though that may sound, the odds were that it couldn’t be done:
• DUX4 is an extremely elusive protein. Its production is concentrated in only a tiny fraction of FSHD-affected muscle cells, and, to complicate things further, is not continuous but burst-wise.
• Capturing human FSHD biology in a test system fit for screening requires culturing unadulterated (or “primary”) human FSHD-affected muscle cells, but those cells have a very limited life span because they are killed by the DUX4 they produce.
Annual Report 2019 FSHD Unlimited 7 – 44
Figure 2: Facio’s Screening Platform.
But we did beat these odds. That makes us the only company in the FSHD field with the ability
• to test a well-established class of compounds (small molecules) in large numbers
• using a well-established automated discovery method (phenotypic screening) in order to efficiently identify small molecules
• that reliably show meaningful effects (repression of human DUX4 protein production alongside minimal side effects)
• in a meaningful system (cultured primary human FSHD-affected muscle cells). 2.2. Second objective: Pave the way to the clinic Successful discovery of DUX4 repressors, while essential, is just the first milestone on the way to the market. Therapeutic drugs may only be marketed if government agencies (such as the European Medicines Agency and the US Food and Drug Administration) find that safety and efficacy have been sufficiently demonstrated in clinical trials in humans. Clinical trials are regulated by various directives and guidelines. In fact, entering the clinic with a drug candidate also requires permission. Paving the way to the clinic is our second objective. This involves getting over two main hurdles. First hurdle: compounds fit for treating FSHD have to be designed. This means that DUX4 repressors emerging from a screen (known as “hits”) must pass an extensive battery of tests and modifications before they may evolve into FSHD drug candidates. For example, a DUX4 repressor must have the right chemical properties to enter FSHD-affected muscle cells from the bloodstream, where moreover it must survive long enough to reach those muscle cells in quantities sufficient for repressing DUX4. Once inside an FSHD muscle cell, the DUX4 repressor binds to a protein or enzyme and thereby starts a series of events that ultimately result in repression of DUX4. However, that may also result in undesired side effects, which, in turn, may make it necessary to modify the repressor molecule further.
Annual Report 2019 FSHD Unlimited 8 – 44
Second hurdle: clinical trials in FSHD are very challenging. Overall, FSHD progresses slowly, making it very difficult to demonstrate a meaningful treatment effect within a manageable period. In addition, symptoms vary widely between patients, which makes it very difficult to select a manageable trial population. And that is not all. Clinical trials with a DUX4-repressing compound pose a challenge of their own. The concept is that treating people with FSHD with such a compound will give them a better quality of life, for example by stopping the progression of FSHD, but that concept needs to be proven in clinical trials. And so, the need to maximize the chance of success appears yet again. We improve our chances of passing the first hurdle by building a portfolio of different series of compounds (and the associated patents). We improve our chances of getting over the second hurdle by searching for “biomarker” compounds: on the one hand, biomarkers that over time correlate with slowly changing disease severity but change relatively quickly themselves, and, on the other hand, biomarkers that over time link DUX4 repression in people with FSHD with improved quality of life. Importantly, the above illustrates that in drug discovery and development there is a constant tension between speed and quality. It is common for biopharmaceutical startups to make progress at the highest possible pace and thus create a high return for their (financially driven) investors. We break that mold because while progress creates hope, real hope requires real progress, and real progress requires rigorous R&D. We take the time needed to make real progress for people with FSHD. We want to be the best rather than simply the first. 3. EXECUTING OUR PRODUCT MISSION: PROGRESS IN 2019 3.1. Progress in discovering compounds that tackle the cause of FSHD We are the only company known to have a portfolio of proprietary, chemically diverse small-molecule repressors of DUX4. In addition to the first two compound series announced in 2018, we disclosed the selection of more than 100 novel DUX4 repressors in March 2019. All these novel compounds were proven to concentration-dependently repress DUX4 production while leaving muscle cell formation intact in our screening system. In June 2019, we revealed inhibition of the enzyme, casein kinase 1 (CK1), as a novel mechanism targeting the cause of FSHD. Using our DUX4 screening platform, we had previously deselected several known compounds, including b2AR agonists, BET inhibitors and p38 inhibitors, because they bear the risk of being false positives by impairing muscle cell formation. These discoveries were first disclosed by means of an oral presentation at the FSHD International Research Congress in June 2019, which is available at https://www.facio-therapies.com/wp-content/uploads/2019/06/Facio-Therapies-FSHD-IRC-2019.pdf.
Annual Report 2019 FSHD Unlimited 9 – 44
Figure 3: The RNA profiles of healthy muscle cells (H) and FSHD affected muscle cells (F) are radically different. Treating FSHD affected muscle cells with a CK1 inhibitor almost completely restores the RNA profile (CK1) to its healthy state. 3.2. Progress in paving the way to the clinic In March 2019, we announced entering an agreement with the Centre for Human Drug Research (CHDR; Leiden, the Netherlands) on a study aimed at discovering FSHD clinical outcome measures based on real- world patient data. Co-financed by Facio and CHDR, this exploratory study represents the very first effort in the FSHD field to evaluate the utility of real-world data for monitoring the progression of FSHD and the impact of FSHD on daily life. The study employs a digital platform developed by CHDR, which uses a mobile app and a wearable device to continuously monitor over 60 physical activity, social activity, and biometric variables. The study’s primary objective is to assess the extent to which digital scores correlate with a disease severity score and a functional score. The secondary objective of the study is to assess which digital scores distinguish people with FSHD from people without FSHD.
Annual Report 2019 FSHD Unlimited 10 – 44
We announced completion of this study in October 2019. The study enrolled 38 people with FSHD and 20 healthy controls, who were monitored for six weeks. The results will be published. 3.3. Progress in organization and financing The year 2019 began with a grave shock when our managing director, David Dasberg, passed away suddenly at the age of 52 while vacationing in the Italian Alps. In February 2019, we announced that David had been succeeded by his deputy, Otto Postma, who is also managing director of FSHD Unlimited (Facio’s parent). Otto has over 30 years of biopharmaceutical business experience and holds an MSc in Chemistry from Utrecht University. In February 2019, we also announced that Prof.Dr. Gerd Schnorrenberg had agreed to join our Scientific Advisory Board. He retired from Boehringer Ingelheim Pharma GmbH & Co KG as Head of Research, Germany, and member of the International Research Committee overseeing all research activities. In the course of a 36-year career he made many contributions to Boehringer Ingelheim’s research and development pipeline and drug approvals across a variety of disease domains. Gerd received his PhD from the University of Bonn. In November 2019, we expanded our core team with the appointment of Hanna van Beuzekom to the position of Manager, Corporate Development. Hanna holds an MSc degree in Biomedical Sciences from Utrecht University.
Figure 4: Facio’s Board members, Team members and Advisors.
Annual Report 2019 FSHD Unlimited 11 – 44
We began the year with €6.6M in cash and cash equivalents, enough to take us well beyond 2019. In September 2019, we opened a €20M equity financing round with a planned first closing in the second quarter of 2020. We plan to issue preference shares to investors who contribute €500,000 or more and ordinary shares to investors who contribute less than that. These are shares in the capital of FSHD Unlimited, the parent company of Facio and of its sister company, Facio Intellectual Property (Facio IP). Facio IP holds all intellectual property rights necessary for Facio to reach its goals, including sole ownership of all results from our collaboration with Evotec. The main difference between these two share classes is that all major decisions of the Board require prior approval from the preference shareholders. Similarly, all major decisions of the management of Facio and of Facio IP require prior Board approval.
Figure 5: Facio’s Corporate Structure. 3.4. Looking forward We will use the proceeds of the current financing round to continue operations as we work towards a first-in-human trial with a novel, proprietary therapeutic candidate. We plan to start government- mandated pre-clinical studies by mid 2021. This step will be the last leg on our journey to the clinic. 4. EXECUTING OUR SOCIO-ECONOMIC MISSION: PRINCIPLES We want all people with FSHD to be able to access our future drugs. That means two things: the price of our future FSHD drugs must be low enough to be affordable, and high enough to generate the funds necessary to expand treatment options and to support projects that give people with FSHD a higher quality of life. These two requirements may sound contradictory, but in fact they are not. All we need is an economically viable way to ensure affordable prices, and that way is based on two simple rules:
• Spend less: only incur costs if and when they are necessary;
• Achieve more: when costs are incurred, make them as productive as possible.
Annual Report 2019 FSHD Unlimited 12 – 44
We spend less because we solely focus on FSHD therapy development. Therefore, we only engage in activities on the critical path to that goal and thus only incur “therapy-critical” costs. That is why our drug discovery program is primarily designed to identify compounds that repress DUX4, not to test a biochemical hypothesis about DUX4 repression and then – if the hypothesis proves to be correct, which may or may not be so – find a compound that fits the hypothesis. When in the course of our work we encounter interesting but non-critical issues, we do not pursue them. Neither do we explore if our compounds can be used to treat diseases other than FSHD. We also spend less because we are a network company, and thus keep therapy-critical costs flexible by outsourcing all R&D. We do not and will not have an expensive R&D infrastructure to maintain. Likewise, we outsource support services. Outsourced activities are more costly because providers charge a margin, but when completed they can be terminated immediately. That enables us to keep fixed cost at a functional minimum. We only maintain a small core team that is charged with essential strategic and management tasks (including management of outside relationships). We pay our staff fair but, compared to industry standards, moderate compensation while rewarding performance with share options. Senior management have waived cash bonuses. Our Board members have waived compensation. Our real-estate costs are limited to the lease of a single office space. Our capital expenditure is limited to computers and office furniture. We achieve more by boosting the productivity of therapy-critical costs. This is a direct consequence of our R&D approach being built on improving the chance of success of therapy-critical activities. By being rigorous in our R&D, we reduce the risk of clinical drug development failure, also known as “attrition”. This is very important because in the traditional pharmaceutical industry attrition rates are high (various studies show that overall, only about 5% of drugs entering clinical studies ultimately get approved). High attrition drives drug prices up because the costs of failure, which can be quite substantial, can only be recovered by the few drugs that do make it to market. As the public debate on drug pricing both widens and deepens, it might appear that high drug prices are a political issue that requires a political solution. We beg to differ. High drug prices are a business issue that requires a business solution, and that solution is capital efficiency supported by investors rooted in the patient community. 5. EXECUTING OUR SOCIO-ECONOMIC MISSION – PROGRESS IN 2019
Figure 6: Facio’s achievements versus cumulative operating costs.
Annual Report 2019 FSHD Unlimited 13 – 44
Our R&D results continue to demonstrate that capital-efficient drug R&D (“a bigger bang for the buck”) is quite possible. As appears from the figure above, we have been able to achieve significant R&D progress at cumulative operational cost of €11M – to be sure, serious money but also an amount that a typical big pharmaceutical company spends on R&D in less than one day. Leiden, the Netherlands, 29 February 2020
Kees van der Graaf Neil Camarta Cord Dohrmann David Mackay Bill Moss AO Chip Wilson Chairman
The original copy has been signed by the Board of FSHD Unlimited
Annual Report 2019 FSHD Unlimited 14 – 44
Financial Results
Annual Report 2019 FSHD Unlimited 15 – 44
Tax Position Tax unity For purposes of corporation tax, FSHD Unlimited Coöperatie U.A. (the "Company") forms a fiscal unity with its subsidiaries: - Facio Therapies B.V. - Facio Intellectual Property B.V.
Taxable result 2019 The taxable result for 2019 is calculated as follows:
2019
Non-deductible expenses 4,600
Activated R&D expenses related to development of intangible assets 3,246,208 3,250,808
Taxable amount 2019 -622,447 No corporate income tax is due over the taxable amount.
Tax loss carry forward As at 31 December 2019 the tax losses available for set-off against future taxable profits amount to € 3,039,606.
The tax losses may be offset against possible future taxable profits within the coming nine years.
Offsettable
€ € €
2,417,159 622,447 3,039,606
Deferred tax No deferred tax asset is included in the annual report because it is uncertain that there will be available taxable
profits in the next nine years.
Annual Report 2019 FSHD Unlimited 16 – 44
Consolidated Balance Sheet As at 31 December 2019 (after appropriation of result)
31 December 2019 31 December 2018
€ € € €
Trade and other receivables Taxes and social securities Other receivables, prepayments and accrued
income
EQUITY AND LIABILITIES Group equity
Current liabilities Trade creditors Taxes and social securities Other liabilities and accruals and deferred
income
€ € € €
Annual Report 2019 FSHD Unlimited 18 – 44
Consolidated Profit and Loss Account For the year ended 31 December 2019
Costs Employee expenses
Result before tax
Annual Report 2019 FSHD Unlimited 19 – 44
Notes to the Consolidated Financial Statements General
The Cooperative is in the drug discovery stage, and has not yet generated any revenues from product sales. The
existing financial position will be sufficient to fund the ongoing programs and operations for at least the next 12
months. The Cooperative depends on additional funds in the form of grants, loans and/or equity to obtain
sufficient resources to continue its R&D program and operations. Activities
The main activity of the Cooperative, domiciled in Leiden, Galileiweg 8, and its group companies consists of developing and marketing an affordable and accessible treatment for Facioscapulohumeral Muscular Dystrophy (FSHD) and/or means to improve the quality of life of people with FSHD, including the research for treatments, the production of treatments and causing others to perform these activities and all things that are related or may be conducive to the above, all of this in the broadest sense of the word. Registered address
The registered and actual address of FSHD Unlimited Coöperatie U.A. (CoC file 61470433) is Galileiweg 8 in
Leiden.
Group structure FSHD Unlimited Coöperatie U.A. in Leiden is the head of a group of legal entities. LIST OF PARTICIPATING INTERESTS FSHD Unlimited Coöperatie U.A. in Leiden is the head of a group of legal entities. The overview of the data as required in accordance with Articles 2:379 and 2:414 of the Dutch Civil Code is included below:
Share in issued capital
Name, statutory registered office Included in consolidation
% Facio Therapies B.V. Leiden 100 Ja Facio Intellectual Property B.V. Leiden 100 Ja Consolidation principles
Financial information relating to group companies and other legal entities which are controlled by the Cooperative, has been consolidated in the financial statements of the Cooperative. Intra-group balances, and any other unrealized income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. The consolidated financial statements have been prepared in accordance with the accounting principles of the Cooperative.
Annual Report 2019 FSHD Unlimited 20 – 44
General accounting principles for the preparation of the consolidated financial statements The consolidated financial statements are drawn up in accordance with Part 9 of Book 2 of the Dutch Civil Code.
Valuation of assets and liabilities and determination of the result takes place under the historical cost
convention. Unless presented otherwise at the relevant principle for the specific balance sheet item, assets
and liabilities are presented at nominal value.
According to the guidelines an operating statement should be presented. FSHD Unlimited Coöperatie U.A.
has decided to use Model E, thereby satisfying the requirement according to Article 2: 362 paragraph 4 of
the Civil Dutch Code The financial statements of the Cooperative are presented in euros, which is the Cooperative’s functional currency. Comparative figures
The figures of the preceding year are changed for comparison purposes.
Principles of valuation of assets and liabilities
Tangible fixed assets
Tangible fixed assets are stated at cost less accumulated depreciation and, if applicable, less impairments.
Depreciation is based on estimated useful life and is calculated as a fixed percentage of cost, taking into
account any residual value. Depreciation is recognized from the date an asset comes into use. Land, assets
under construction and prepayments on tangible fixed assets are not depreciated. Financial fixed assets
Participating interests with significant influence over the business and financial policy are valued according to
the equity method on the basis of net asset value. This net asset value is based on the same accounting
principles as applied by the Cooperative. Participating interests with a negative net asset value are valued at
nil. In case the Cooperative fully or partly guarantees for the debts of the respective participating interest, a
provision is recognized. Trade and other receivables
The receivables are initially valued at fair value, and subsequently valued at amortized cost, which is similar to
the face value, after deduction of any provisions if necessary. Liabilities
Current liabilities are initially valued at fair value, and subsequently valued at amortized cost, which is similar to
the face value. Accruals are valued at face value. All current liabilities are short-term.
Annual Report 2019 FSHD Unlimited 21 – 44
Principles for the determination of the result
General
The result is defined as the difference between the revenue from goods delivered and services performed on
one hand and the costs and expenses for that year, valued at historical costs on the other hand. Amortization/depreciation
The depreciation on tangible fixed assets is calculated by using a fixed rate on the acquisition cost or cost of conversion. Gains and losses on disposal of (in)tangible fixed assets are recorded under amortization/depreciation. Financial result
Financial income and expenses comprise interest income and expenses on loans as accounted for in the current
reporting period. Share in result from investments in participating interests
Dividends received from participating interests is accounted for in the profit and loss account as financial income.
Taxation Corporate income tax expense comprises current and deferred tax. Corporate income tax expense is recognized in profit or loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred tax is provided for temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes.
Annual Report 2019 FSHD Unlimited 22 – 44
Notes to the Consolidated Balance Sheet As at 31 December 2019
31-12-2019 31-12-2018
Acquisition costs 2,385
Accumulated depreciation -437
Acquisition costs 3,975
Accumulated depreciation -1,179
Rate of depreciation
2. Trade and other receivables
31-12-2019 31-12-2018
Other receivables 2,147 2,147
18,169 6,785
Other receivables
F, van Lanschot Bankiers N,V,, current accounts 3,889,938 5,798,682
F, van Lanschot Bankiers N,V,, deposit 837,175 837,175
4,727,113 6,635,857
Cash and cash equivalents are stated at nominal value. The cash and cash equivalents per 31 December 2019 are
freely available.
4. Group equity 2019 2018
€ € € €
equity at 1 January 6,425,503 2,555,393
Consolidated net result after tax -3,873,255 -3,190,681
Total other comprehensive income of the
entity as part of group equity - -
Total comprehensive income of entity
-3,873,255
-3,190,681
Employee share option plan 1,028 23,971
Total transactions of owners
Equity of the entity as part of group equity at
31 December 4,407,576 6,425,503
5. Current liabilities
Accruals and deferred income 81,558 63,839
Accruals and deferred income
Invoices to be received 49,324 25,231
Holiday bonus 17,132 21,322 Holiday pay 2,428 6,412 Bonus 12,600 10,800 Interest and bank costs 74 74
81,558 63,839
Off-balance sheet commitments or arrangements Research & Development Commitments In 2019 Facio Therapies and CHDR entered in a research agreement. This research project will be finished by CHDR in the first quarter of 2020 and the related costs for 2020 are estimated at €23,000.
Employee Share Option Plan
During 2019 the Cooperative granted to employees of Facio Therapies B.V. and FSHD Unlimited Coöperatie U.A.
the option to subscribe for a total of 1,600 ordinary shares in the Company at an exercise price of €140 per
option, subject to the conditions contained in the Option Plan and Option Agreement. To date, 5,030 employee
share options have been granted. At year-end, 7,208 employee share options remained available for grant.
Annual Report 2019 FSHD Unlimited 26 – 44
Notes to the Consolidated Profit and Loss Account For the year 2019
2019 2018
388,270 481,601
Vacation accruals -3,984 -1,641
Holiday allowance 24,490 30,896
Other personnel expenses
Other personnel expenses 305 112
6,607 28,815 Staff During the 2019 financial year, the average number of employees in the Group, converted into full-time equivalents, amounted to 3 (2018: 4). 2019 2018
The breakdown is as follows:
Management 1.0 2.0
3.0 4.0
2019 2018
Tangible fixed assets 742 505 Gain/loss disposal fixed assets - 1,347
742 1,852
742 1,852
Selling and distribution expenses 50,273 36,777 General expenses 49,452 49,319
3,484,243 2,707,049
Accommodation expenses
28,325 24,968
Operating costs
3,342,342 2,585,237
Office expenses
IT costs 6,458 3,981 Telephone 1,209 983 Contributions and subscriptions 500 580 Insurance 4,990 4,912 Other office supplies 694 292
13,851 10,748
2019 2018
50,273 36,777
General expenses
Fee concerning the audit of the annual accounts 10,000 12,690
Accounting fee / Annual report 17,637 22,745
Legal charges 16,930 10,041
49,452 49,319
Interest and similar income - - -
- -179
Annual Report 2019 FSHD Unlimited 29 – 44
Company Balance Sheet As at 31 December 2019 (after appropriation of result)
31 December 2019 31 December 2018
€ € € €
Trade and other receivables (11)
Receivable from group companies - 3,399
Taxes and social securities 190 909 Other receivables, prepayments and accrued income 2,785 4,635
2,975 8,943
4,438,707 6,455,964
31 December 2019 31 December 2018
€ € € €
Members’ equity Members’ capital Share premium reserve Other reserves Current liabilities Trade creditors Taxes and social securities Accruals and deferred income
(13)
Annual Report 2019 FSHD Unlimited 31 – 44
Company Profit and Loss Account For the year ended 31 December 2019
Costs
Operating result
Result before tax
interests (18)
Annual Report 2019 FSHD Unlimited 32 – 44
Principles for the valuation of assets and liabilities and the determination of the result The Company financial statements have been prepared in accordance with Title 9 Book 2 of the Dutch Civil Code.
For the general accounting principles for the preparation of the financial statements, the principles of valuation
of assets and liabilities and determination of the result, as well as for the notes to the assets and liabilities and
the results, we refer to the notes in the consolidated financial statements, unless further explanation is provided.
Annual Report 2019 FSHD Unlimited 33 – 44
Notes to the Company Balance Sheet As at 31 December 2019
10. Financial fixed assets 31-12-2019 31-12-2018
€ €
Facio Intellectual Property B.V. 44,826 26,014
372,776 169,747
2019 2018
Investments 3,750,002 2,900,000
327,950 143,733
The authorized share capital of Facio Therapies B.V. amounts to €1, of which at incorporation €1 was issued and
fully paid up in 100 shares with a par value of € 0.01 each. The excess above the paid up share capital is classified as share premium reserve.
The 2019 result in Facio Therapies B.V. is a loss of €3,565,785
Facio Intellectual Property B.V.
Investments 115,000 75,000
Balance as at 31 December 44,826 26,014
Annual Report 2019 FSHD Unlimited 34 – 44
The authorized share capital of Facio Intellectual Property B.V. amounts to €1, of which at incorporation €1 was
issued and fully paid up in 100 shares with a par value of €0.01 each. The excess above the paid up share capital is classified as share premium reserve.
The 2019 result in Facio Intellectual Property B.V. is a loss of €96,188.
11. Trade and other receivables 31-12-2019 31-12-2018
€ €
- 3,399
Accounting - 2,315
Change -1,084 -
- 1,084
Change -2,315 -7,044
Accounting 2019 - 2,315
31-12-2019 31-12-2018
31-12-2019 31-12-2018
Other receivables - -
2,785 4,635
12. Cash and cash equivalents F. van Lanschot Bankiers N.V., current accounts 3,225,781 5,440,099
F. van Lanschot Bankiers N.V., deposit 837,175 837,175
4,062,956 6,277,274
13. Members’ equity
Members capital
10,793 (convertible) ordinary shares at a par value of €1 10,793 10,793
111,594 (convertible) preference shares at a par value of €1 111,594 98,349
122,387 109,142
In 2019 the Company issued 13,245 new Convertible Preferred Shares. The contribution for each share was €140.
The amount above par value has been added to the Share Premium reserve.
2019 2018
Addition 1,841,055 6,986,557
Balance as at 31 December 16,021,793 14,180,738
The par value of each share is €1.00. The purchase price in 2019 was €140 (in 2018 €140). The above-par value on transfer
date has been added to the share premium reserve.
Other reserves
-11,737,632 -7,888,348
Balance as at 31 December -11,736,604 -7,864,377
Appropriation of loss
According to legislation the loss for 2019 amounting to €3,873,255 has been deducted from the other reserves.
The appropriation of loss has been incorporated in the financial statement.
Annual Report 2019 FSHD Unlimited 37 – 44
14. Current liabilities
Holiday bonus 9,250 7,567
Holiday pay 235 2,476
23,887 25,517
Annual Report 2019 FSHD Unlimited 38 – 44
€ €
181,915 174,951
Other personnel expenses
Other personnel expenses 201 117
1,619 24,478
Staff During the 2019 financial year, the average number of employees, converted into full-time equivalents, amounted to
1 (2018: 1).
General expenses 21,051 29,087
29,367 36,894
Because there is no pension obligation in the company, no pension premiums were paid.
Annual Report 2019 FSHD Unlimited 39 – 44
2019 2018
4,143 3,497
General expenses
Fee concerning the audit of the annual accounts 10,000 12,690
Accounting fee / Annual report 8,181 3,922
Legal charges - 8,822
Notarial charges - 3,525
21,051 29,087 17. Financial income and expenses
Interest and similar income - -
- -179
Share in result of Facio Therapies B.V. -3,565,785 --2,882,362
Share in result of Facio Intellectual Property B.V. -96,188 -96,295
-3,661,973 -2,978,657
Signature directors
C.J. van der Graaf W.J. Moss N. Camarta
C. Dohrmann A.D.D. Mackay D.J. Wilson The original copy has been signed by the Board of FSHD Unlimited
Annual Report 2019 FSHD Unlimited 41 – 44
Other Information Provisions in the Articles of Association governing the appropriation of profit The profits made during the current financial year will be allocated to the Members in proportion to the number of Shares held by each member, irrespective of the category of those Shares. The Shares held by the Cooperative will not be taken into account when calculating the distribution of profit. The General meeting decides to what extent these profits will be distributed to the Members and to what extent these profits will be added to the Member's Accounts. Such resolution is subject to the prior approval of the Meeting of A Members. The General Meeting will add at least one half of the profits to the Member's Accounts in order to be spent on projects complying with the Cooperative's objects. If the General Meeting fails to decide on the allocation of profits prior to or immediately after the adoption of the annual accounts or if the Meeting of A Members fails to grant approval, the profits will be added to the Member's Accounts.
Annual Report 2019 FSHD Unlimited 42 – 44
Independent Auditor’s Report
Annual Report 2019 FSHD Unlimited 43 – 44
Independent Auditor’s Report To: the members and the board of FSHD Unlimited Coöperatie UA Report on the audit of the financial statements 2017 Our opinion We have audited the financial statements 2019 of FSHD Unlimited Coöperatie UA, based in Leiden. The Financial statements include the consolidated financial statements and the company financial statements In our opinion, the enclosed financial statements give a true and fair view of the financial position of FSHD Unlimited Coöperatie UA as at 31 December 2019 and of its result for 2019 in accordance with Part 9 of Book 2 of the Dutch Civil Code. The financial statements comprise: 1. the consolidated and company balance sheet as at 31 December 2019; 2. the consolidated and company profit and loss account for 2019; and 3. the notes comprising a summary of the applicable accounting policies and other explanatory
information. Basis for our opinion We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. Our responsibilities under those standards are further described in the ‘Our responsibilities for the audit of the financial statements’ section of our report. We are independent of FSHD Unlimited Coöperatie UA in accordance with the ‘Wet toezicht accountantsorganisaties’ (Wta, Audit firms supervision act), the ‘Verordening inzake de onafhankelijkheid van accountants bij assurance-opdrachten’ (ViO, Code of Ethics for Professional Accountants, a regulation with respect to independence) and other relevant independence regulations in the Netherlands. Furthermore, we have complied with the ‘Verordening gedrags- en beroepsregels accountants’ (VGBA, Dutch Code of Ethics). We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Report on the other information included in the annual report In addition to the financial statements and our auditor’s report thereon, the annual report contains other information that consists of:
• The management board report;
Based on the following procedures performed, we conclude that the other information:
• Is consistent with the financial statements and does not contain material misstatements;
• Contains the information as required by Part 9 of Book 2 of the Dutch Civil code.
We have read the other information. Based on our knowledge and understanding obtained through our audit of the financial statements or otherwise, we have considered whether the other information contains material misstatements.
Annual Report 2019 FSHD Unlimited 44 – 44
By performing these procedures, we comply with the requirements of Part 9 Book 2 of the Dutch Civil Code and the Dutch Auditing Standard 720. The scope of the procedures performed is substantially less than the scope of those performed in our audit of the financial statements. Management is responsible for the preparation of the management board’s report in accordance with Part 9 of Book 2 of the Dutch Civil Code. Description of responsibilities regarding the financial statements Responsibilities of management for the financial statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with Part 9 of Book 2 of the Dutch Civil Code. Furthermore, management is responsible for such internal control as management determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error. As part of the preparation of the financial statements, management is responsible for assessing the company’s ability to continue as a going concern. Based on the financial reporting framework mentioned, management should prepare the financial statements using the going concern basis of accounting unless management either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so. Management should disclose events and circumstances that may cast significant doubt on the company’s ability to continue as a going concern in the financial statements. Our responsibilities for the audit of the financial statements Our objective is to plan and perform the audit assignment in a manner that allows us to obtain sufficient and appropriate audit evidence for our opinion. Our audit has been performed with a high, but not absolute, level of assurance, which means we may not detect all material errors and fraud during our audit. Misstatements can arise from fraud and error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. The materiality affects the nature, timing and extent of our audit procedures and the evaluation of the effect of identified misstatements on our opinion. We have exercised professional judgment and have maintained professional skepticism throughout the audit, in accordance with Dutch Standards on Auditing, ethical requirements and independence requirements. For further details on these standards and requirements, please refer to https://www.nba.nl/eng_algemeen_01. Rotterdam, the Netherlands, 29 February 2020
On behalf of Grant Thornton Accountants en Adviseurs BV, drs. M.P. van Rijssel RA The original copy has been signed by Grant Thornton
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Annual Report 2019 FSHD Unlimited
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