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Fair value measurement | 6 Months Ended
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Jun. 30, 2019
Fair value measurement | 4 Fair value measurement ​ The Company measures certain assets and liabilities at fair value, either upon initial recognition or for subsequent accounting or reporting. U.S. GAAP requires disclosure of methodologies used in determining the reported fair values, and establishes a hierarchy of inputs used when available. The three levels of the fair value hierarchy are described below:
| ● | Level 1 - Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company can access at the measurement date.
| ● | Level 2 - Valuations based on quoted prices for similar assets or liabilities in markets that are not active or models for which the inputs are observable, either directly or indirectly.
| ● | Level 3 - Valuations that require inputs that reflect the Company’s own assumptions that are both significant to the fair value measurement and are unobservable.
To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized as Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. ​ The carrying amount of cash and cash equivalents, accrued income from related parties, prepaid expenses, other assets, accounts payable, accrued expenses and other current liabilities reflected in the consolidated balance sheets approximate their fair values due to their short-term maturities. The following table sets forth the Company’s assets and liabilities that are required to be measured at fair value on a recurring basis as of June 30, 2019, and December 31, 2018: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 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, 2018 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Assets: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Cash, cash equivalents and restricted cash | ​ | $ | 237,342 | ​ | $ | — | ​ | $ | — | ​ | $ | 237,342 | ​ | Cash and cash equivalents; restricted cash
Total assets | ​ | $ | 237,342 | ​ | $ | — | ​ | $ | — | ​ | $ | 237,342 | ​ | ​
Liabilities: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Derivative financial instruments - debt | ​ | $ | — | ​ | $ | — | ​ | $ | 572 | ​ | $ | 572 | ​ | Accrued expenses and other current liabilities
Derivative financial instruments - related party | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 803 | ​ | ​ | 803 | ​ | ​
Total liabilities | ​ | $ | — | ​ | $ | — | ​ | $ | 1,375 | ​ | $ | 1,375 | ​ | ​
At June 30, 2019 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Assets: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Cash, cash equivalents and restricted cash | ​ | $ | 187,035 | ​ | $ | — | ​ | $ | — | ​ | $ | 187,035 | ​ | Cash and cash equivalents; restricted cash
Total assets | ​ | $ | 187,035 | ​ | $ | — | ​ | $ | — | ​ | $ | 187,035 | ​ | ​
Liabilities: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Derivative financial instruments - related party | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 3,251 | ​ | ​ | 3,251 | ​ | ​
Total liabilities | ​ | $ | — | ​ | $ | — | ​ | $ | 3,251 | ​ | $ | 3,251 | ​ | ​
​ Changes in Level 3 items during the six months ended June 30, 2019, are as follows ​
​ | ​ | ​ | ​ | ​
​ | ​ | Derivative | ​
​ | ​ | financial | ​
​ |  | instruments |
​ | ​ | (in thousands) | ​
Balance at December 31, 2018 | ​ | $ | 1,375 | ​
Losses recognized in profit or loss | ​ | ​ | 2,634 | ​
Exercise of warrants | ​ | ​ | (770) | ​
Currency translation effects | ​ | ​ | 12 | ​
Balance at June 30, 2019 | ​ | $ | 3,251 | ​
​
​ | ​ | ​ | ​
Derivative financial instruments ​ The Company issued derivative financial instruments related to its collaboration with Bristol-Meyers Squibb Company and in relation to the issuance of the Hercules Technology Growth Corp. (“Hercules”) loan facility. The Hercules warrants were exercised as of February 1, 2019. The Company issued 37,175 ordinary shares at $34.25 following the exercise of all Hercules warrants and receipt of $0.5 million from Hercules. ​ The fair value of the BMS derivative financial instruments (“BMS warrants”) as of June 30, 2019, was $3.3 million compared to a fair value of both the BMS and Hercules derivative financial instruments of $1.4 million as of December 31, 2018. Changes in the fair value of the BMS warrants are primarily impacted by changes in the Company’s share price, whereby an increase in share price generally results in an increase of the fair value. These BMS warrants are described in more detail below. ​ BMS warrants ​ Pursuant to the BMS CLA, the Company granted BMS 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 BMS CLA) associated with the first six new targets (a total of seven Collaboration Targets); and (ii) the date on which BMS designates the sixth new target (the seventh Collaboration 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 (a total of ten Collaboration Targets); and (ii) the date on which BMS designates the ninth new target (the tenth Collaboration Target).
Pursuant to the terms of the BMS CLA, the exercise price in respect of each warrant is equal to the greater of (i) the product of (A) $33.84, multiplied by (B) a compounded annual growth rate of 10% (or approximately $49.93 as of June 30, 2019) 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. ​ As of June 30, 2019, BMS had designated a total of four Collaboration Targets, and as such, the warrants were not exercisable. The Company had estimated the exercise of warrants to occur within two and four years after the balance sheet date. ​ The Company conducted a sensitivity analysis to assess the impact on changes in assumptions on the fair value. Specifically, the Company examined the impact on the fair market value of the warrants by increasing the volatility by 10% to 82.5%. A further sensitivity analysis was performed assuming the warrants would be exercised a year later than currently estimated. The table below illustrates the impact on the fair market valuation associated with these changes in assumptions as of June 30, 2019. ​
​ | ​ | ​ | ​
​ | ​ | ​ | Total warrants
​ | ​ | (in thousands)
Base case | ​ | $ | 3,251
Increase volatility by 10% to 82.5% | ​ | ​ | 687
Extend exercise dates by one year | ​ | ​ | (38)
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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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=117815213&loc=d3e19207-110258 + Details
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