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Fair value measurement | 12 Months Ended
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Dec. 31, 2016
Fair value measurement |
Fair value measurement | 3 Fair value measurement The following table sets forth the Company's assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2016 and 2015:
|  | Quoted prices in active markets (Level 1) |  | Significant other observable inputs (Level 2) |  | Significant unobservable inputs (Level 3) |  | Total |  | Classification in consolidated balance sheets
|  | in thousands |  |
At December 31, 2015 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 221,626 |  | $ | — |  | $ | — |  | $ | 221,626 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total assets |  |  | 221,626 |  |  | — |  |  | — |  |  | 221,626 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivative financial instruments—long-term debt |  |  | — |  |  | — |  |  | 259 |  |  | 259 |  | Accrued expenses and other current liabilities
Derivative financial instruments—related party |  |  | — |  |  | — |  |  | 578 |  |  | 578 |  | Other non-current liabilities
Contingent consideration |  |  | — |  |  | — |  |  | 2,926 |  |  | 2,926 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total liabilities |  | $ | — |  | $ | — |  | $ | 3,763 |  | $ | 3,763 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
At December 31, 2016 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  |  | 132,496 |  |  | — |  |  | — |  |  | 132,496 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total assets |  |  | 132,496 |  |  | — |  |  | — |  |  | 132,496 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivative financial instruments—long-term debt |  |  | — |  |  | — |  |  | 11 |  |  | 11 |  | Accrued expenses and other current liabilities
Derivative financial instruments—related party |  |  | — |  |  | — |  |  | 51 |  |  | 51 |  | Other non-current liabilities
Contingent consideration |  |  | — |  |  | — |  |  | 1,838 |  |  | 1,838 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total liabilities |  | $ | — |  | $ | — |  | $ | 1,900 |  | $ | 1,900 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Changes in Level 3 items during the years ended December 31, 2016, 2015 and 2014 are as follows:
|  | Contingent consideration |  | Level 3 Derivative financial instruments |  | Total |
|  | in thousands |
Balance at December 31, 2013 |  | $ | — |  | $ | 299 |  | $ | 299 |
Additions |  |  | 1,743 |  |  | — |  |  | 1,743 |
(Gains) / losses recognized in profit or loss |  |  | 195 |  |  | (14 | ) |  | 181 |
Currency translation effects |  |  | (171 | ) |  | (34 | ) |  | (205 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Balance at December 31, 2014 |  |  | 1,767 |  |  | 251 |  |  | 2,018 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Issuance of financial instruments |  |  | — |  |  | (10,060 | ) |  | (10,060 | )
Allocation to shareholders' equity |  |  | — |  |  | 3,614 |  |  | 3,614 |
(Gains) / losses recognized in profit or loss |  |  | 1,339 |  |  | 7,162 |  |  | 8,501 |
Currency translation effects |  |  | (180 | ) |  | (130 | ) |  | (310 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Balance at December 31, 2015 |  |  | 2,926 |  |  | 837 |  |  | 3,763 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
(Gains) / losses recognized in profit or loss |  |  | (1,080 | ) |  | (785 | ) |  | (1,865 | )
Currency translation effects |  |  | (8 | ) |  | 10 |  |  | 2 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Balance at December 31, 2016 |  | $ | 1,838 |  | $ | 62 |  | $ | 1,900 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Contingent consideration In connection with the acquisition of InoCard, the Company recorded contingent consideration related to amounts potentially payable to InoCard's former shareholders. The amounts payable are contingent upon realization of the following milestones:
| • | Successful completion of GLP toxicity and safety study;
| • | First patient dosed in a clinical study; and
| • | Full proof-of-concept of the product in human patients after finalization of a phase I/II study.
The valuation of the contingent liability is based on significant inputs not observable in the market such as the probability of success ("POS") of achieving the research milestones (estimated as probable for the first two milestones as of the balance sheet date), the time at which the research milestones are expected to be achieved (ranging from 2018 to 2021, as of the balance sheet date), as well as the 30% discount rate applied, which represents a Level 3 measurement. Varying, next to the passing of time, the unobservable inputs results in the following fair value changes:
|  | 2016 |  | 2015 |
|  | in thousands |
Change in fair value |  |  |  |  |  |  |
Delay in milestones by 6 months |  | $ | (209 | ) | $ | (313 | )
Increasing the POS for the first milestone by 20% |  |  | 367 |  |  | 585 |
Decreasing the POS for the first milestone by 20% |  |  | (367 | ) |  | (585 | )
Reducing the discount rate from 30% to 20% |  |  | 638 |  |  | 1,228 |
Increasing the discount rate from 30% to 40% |  |  | (309 | ) |  | (560 | )
Derivative financial instruments The Company issued various derivative financial instruments related to the collaboration with Bristol-Meyers Squibb Company ("BMS") and in relation to the issuance of the Hercules Technology Growth Corp. ("Hercules") loan facility: BMS collaboration On April 6, 2015 ("Execution Date"), the Company entered into agreements with BMS. Pursuant to the terms of the agreements, BMS was required to purchase from the Company a certain number of shares such that:
| • | BMS would own 4.9% of the issued and outstanding ordinary shares of the Company immediately after the approval of the collaboration by the Company's shareholders ("First Closing"); and
| • | Prior to December 31, 2015 BMS would own 9.9% of the issued and outstanding ordinary shares of the Company immediately after such purchase ("Second Closing").
The purchase price per ordinary share related to the First Closing was agreed at $33.84 per share at the Execution Date. The purchase price per ordinary share related to the Second Closing on August 7, 2015, was $29.67, which was equal to 110% of the Volume Weighted Average price ("VWAP") for the 20 trading days ending on the date that is 5 days prior to the Second Closing. The timing of the investment was at the sole discretion of BMS. Additionally, BMS was granted two warrants:
| • | A warrant allowing BMS to purchase a specific number of uniQure ordinary shares such that its ownership will equal 14.9% immediately after such purchase. The warrant can be exercised on the later of (i) the date on which the Company receives from BMS the Target Designation Fees (as defined in the collaboration agreements) associated with the first six New Targets (as defined in the collaboration agreements); and (ii) the date on which BMS designates the sixth New Target.
| • | A warrant allowing BMS to purchase a specific number of uniQure ordinary shares such that its ownership will equal 19.9% immediately after such purchase. The warrant can be exercised on the later of (i) the date on which uniQure receives from BMS the Target Designation Fees associated with the first nine New Targets; and (ii) the date on which BMS designates the ninth New Target.
The exercise price, in respect of each warrant, will be equal to the greater of (i) the product of (A) $33.84, multiplied by (B) a compounded annual growth rate of 10% and (ii) the product of (A) 1.10 multiplied by (B) the VWAP for the 20 trading days ending on the date that is five trading days prior to the date of a notice of exercise delivered by BMS. On the Execution Date, the Company recorded derivative financial instruments related to the First Closing, Second Closing and the two warrants at a combined fair value of $10.1 million (recorded as an asset). The Company evaluated the Share Subscription Agreement and the Collaboration Agreement (see note 4, "Collaboration arrangements and concentration of credit risk") as one agreement. The Company recorded other losses of $7.3 million related to the changes in fair value of the derivative financial asset related to the First Closing between the Execution Date and June 12, 2015. On June 12, 2015, the Company issued 1.1 million of its ordinary shares to BMS for aggregate cash proceeds of $37.6 million, thereby extinguishing the derivative financial asset at its fair value of $5.0 million at this date and raising $32.6 million equity. After the extinguishment the equity raised from the sale of ordinary shares in excess of the market price of $29.37 per share was recorded in additional paid-in capital as these amounts result from an investment decision made by BMS. The Company recorded other losses of $0.3 million related to changes in fair value of the derivative financial liability related to the Second Closing between the Execution Date and August 7, 2015. On August 7, 2015, the Company issued 1.3 million of its ordinary shares to BMS at $29.67 per ordinary share for aggregate cash proceeds of $37.9 million, thereby extinguishing the derivative financial liability at its fair value of $1.4 million at this date and raising $39.3 million equity. After the extinguishment the equity raised from the sale of ordinary shares in excess of the market price of $23.64 per share was recorded in additional paid-in capital as these amounts result from an investment decision made by BMS. The fair value of the warrants as of December 31, 2016 is $0.1 million (December 31, 2015: $0.6 million). During the year ended December 31, 2016, the Company recognized $0.5 million in other non-operating income (expense) (December 31, 2015: $0.5 million gain) related to fair value changes of the BMS warrants. The Company used Monte-Carlo simulations to determine the fair market value of the BMS warrants. The valuation model incorporated several inputs, including the underlying share price at both the Execution Date and on May 21, 2015, the effective date of the collaboration agreement ("Effective Date") as well as at the balance sheet date, the risk-free rate adjusted for the period affected, an expected volatility based on a peer group analysis, the expected yield on any dividends and management's expectations on the timelines of reaching certain defined trigger events for the exercising of the warrants, as well as management's expectations regarding the number of ordinary shares that would be issued upon exercise of the warrants. All of these represent Level 3 inputs. Additionally, the model assumes BMS will exercise the warrants only if it is financially rational to do so. Varying the unobservable inputs results in the following fair value changes as of December 31, 2016:
|  | 7th warrant |  | 10th warrant |  | Total |
|  | in thousands |
Base case |  | $ | 21 |  | $ | 30 |  | $ | 51 |
Increase volatility by 10% to 85% |  |  | 41 |  |  | 49 |  |  | 90 |
Extend exercise dates by one year |  |  | 42 |  |  | 38 |  |  | 80 |
Exercise of the warrants are expected to occur within 3 and 5 years after the balance sheet date. The Company classified the derivative financial liabilities as non-current at the balance sheet date. Hercules loan facility On June 14, 2013, the Company entered into a venture debt loan facility with Hercules ("Original Facility"). The Original Facility entered into with Hercules (see note 9, "Long-term debt") included a warrant. The warrant was not closely related to the host contract and was accounted for separately as a derivative financial liability measured at fair value though profit or loss. The warrant included in the Original Loan Agreement remained in place following the 2014 and 2016 amendments of the loan. The fair value of this derivative as of December 31, 2016 is $0.0 million (December 31, 2015: $0.3 million). During the year ended December 31, 2016, uniQure recognized a $0.3 million gain in other non-operating income / (expense) (December 31, 2015: $0.0 million) related to fair value changes of the Hercules warrants. The fair value of the warrant is based on the Black-Scholes model. Assumptions are made on inputs such as risk-free rate, the share price, time to maturity and unobservable inputs such as volatility and foreign exchange to translate to euro, the functional currency of the issuer, in order to determine the fair value per warrant. Varying the unobservable inputs results in the following fair value changes as of December 31, 2016:
|  | Share price |  | Volatility |  | Time to maturity |
|  | in thousands |
–10% |  | $ | 8 |  | $ | 8 |  | $ | 9 |
Base Case |  |  | 11 |  |  | 11 |  |  | 11 |
+10% |  |  | 15 |  |  | 15 |  |  | 13 |

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=66048111&loc=d3e19207-110258 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 28 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14064-108612 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=73719730&loc=d3e13537-108611 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 16 -URI http://asc.fasb.org/extlink&oid=73719730&loc=d3e13504-108611 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=73719730&loc=d3e13433-108611 + Details
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