Innate Pharma SA 6-K, filed Sep 15, 2022
Innate Pharma SA (IPHA)
6-K
2022-09-15
For: 2022-06-30
View Original
Added on
April 06, 2026
About this 6-K
Innate Pharma SA filed this 6-K on September 15, 2022.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
Date of report: September 15, 2022
Commission File Number: 001-39084
(Translation of registrant's name into English)
Innate Pharma SA
117 Avenue de Luminy—BP 30191
13009 Marseille, France
+ 33 (0) 4 30 30 30
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F. Form 20-F [ X ] Form 40-F [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [ ]
INCORPORATION BY REFERENCE
This Report on Form 6-K and Exhibit 99.1 and 99.2 to this Report on Form 6-K shall be deemed to be incorporated by reference into the registration statement on Form F-3 (File No. 333-252074) and registration statement on Form S-8 (File No. 333-233865) of Innate Pharma S.A. (including any prospectuses forming a part of such registration statements) and to be a part thereof from the date on which this report is furnished, to the extent not superseded by documents or reports subsequently filed or furnished.
EXHIBIT INDEX
Exhibit
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
INNATE PHARMA S.A.
Date: September 15, 2022 By: /s/ Mondher Mahjoubi Name: Mondher Mahjoubi
Title: Chief Executive Officer
INNATE PHARMA REPORTS FIRST HALF 2022 FINANCIAL RESULTS AND BUSINESS UPDATE
•Monalizumab and IPH5201 developed in collaboration with AstraZeneca advanced into Phase 3 and 2 clinical trials in lung cancer, triggering $55M in milestone payments
•Second preclinical asset based on Sanofi’s proprietary multifunctional CROSSDILES® platform and Innate’s proprietary multi-specific NK cell engager platform, ANKETTM targeting BCMA, selected by Sanofi for IND-enabling studies, with €3M milestone payment
•Cash position of €158.2 million1 as of June 30, 2022, anticipated cash runway into H2 2024
•Conference call to be held today at 2:00 p.m. CEST / 8:00 a.m. EDT
| Marseille, France, September 15, 2022, 7:00 AM CEST | ||
Innate Pharma SA (Euronext Paris: IPH; Nasdaq: IPHA) (“Innate” or the “Company”) today reported its consolidated financial results for the six months ended June 30, 2022. The consolidated financial statements are attached to this press release.
“Based on our strong financial position, we continued the momentum in our product pipeline during the second quarter of the year. We are advancing our anti-CD39 blocking monoclonal antibody IPH5201 to a Phase 2 clinical trial in lung cancer with AstraZeneca, and Sanofi selected a second asset for development, targeting BCMA, that benefits from ANKETTM, Innate’s proprietary multi-specific NK cell engager platform and Sanofi’s CROSSDILES® platform. The ANKETTM technology is the engine for development of our robust pipeline of much needed novel solutions to treat cancer.” said Mondher Mahjoubi, Chief Executive Officer of Innate Pharma. “We continue to see progress for monalizumab in the early non-small cell lung cancer setting, with the ongoing PACIFIC-9 Phase 3 study, sponsored by AstraZeneca, and recent Phase 2 data presentations. We look forward to further clinical readouts from the Phase 2 TELLOMAK trial for lacutamab and ANKETTM updates in the second half of the year.”
Webcast and conference call will be held today at 2:00 p.m. CEST (8:00 a.m. ET) Access to live webcast: https://event.on24.com/wcc/r/3824660/86089F900A17B3EA55F4BEE49AD268A8 Participants may also join via telephone by registering in advance of the event at https://registrations.events/direct/ID60133. Upon registration, participants will be provided with dial-in numbers, a direct event passcode and a unique registrant ID that they may use 10 minutes prior to the event start to access the call. This information can also be found on the Investors section of the Innate Pharma website, www.innate-pharma.com. A replay of the webcast will be available on the Company website for 90 days following the event. | ||
1 Including short term investments (€20.4 million) and non-current financial instruments (€34.8 million)
Innate Pharma |HY 2022 Financial results | 1
Pipeline highlights:
Lacutamab (anti-KIR3DL2 antibody):
•The Phase 2 TELLOMAK study in Sézary syndrome and mycosis fungoides continues to progress and the Company expects to report preliminary data from both cohorts in the second half of 2022.
•Preliminary results from the TELLOMAK Phase 2 study of lacutamab in patients with advanced mycosis fungoides according to KIR3DL2 expression will be presented at the EORTC-CLTG (European Organisation for Research and Treatment of Cancer - Cutaneous Lymphoma Tumours Group) 2022 meeting in Madrid on Friday 23 September.
•Two clinical trials are underway evaluating lacutamab in patients with KIR3DL2-expressing, relapsed/refractory peripheral T-cell lymphoma (PTCL):
◦Phase 1b trial: a Company-sponsored Phase 1b clinical trial to evaluate lacutamab as a monotherapy in patients with KIR3DL2-expressing relapsed PTCL.
◦Phase 2 KILT (anti-KIR in T Cell Lymphoma) trial: The Lymphoma Study Association (LYSA) investigator-sponsored, randomized trial to evaluate lacutamab in combination with chemotherapy GEMOX (gemcitabine in combination with oxaliplatin) versus GEMOX alone in patients with KIR3DL2-expressing relapsed/refractory PTCL.
•On the 11 September, at the ESMO (European Society for Medical Oncology) 2022 conference, the Company presented a poster on ongoing lacutamab Phase 1b trial design in monotherapy in PTCL.
ANKET™ (Antibody-based NK cell Engager Therapeutics):
•The Phase 1/2 clinical trial by Sanofi continues, evaluating IPH6101/SAR’579, the first NKp46/CD16-based NK cell engager, in patients with relapsed or refractory acute myeloid leukemia (R/R AML), B-cell acute lymphoblastic leukemia (B-ALL) or high-risk myelodysplastic syndrome (HR-MDS).
•During the period, Sanofi informed the Company of the decision to progress IPH6401/SAR’514 into investigational new drug (IND)-enabling studies, triggering a €3 million milestone payment. IPH6401/SAR’514 is a BCMA-targeting NK cell engager using Sanofi’s proprietary CROSSODILE® multi-functional platform, which comprises the Cross-Over-Dual-Variable-Domain (CODV) format. It induces a dual targeting of the NK activating receptors, NKp46 and CD16, for an optimized NK cell activation, based on Innate’s ANKETTM proprietary platform. IPH6401/SAR’514 has shown anti-tumor activity and promising drug properties in pre-clinical models. Sanofi will be responsible for all future development, manufacturing and commercialization of IPH6401/SAR’514.
•Innate plan to provide updates on IPH65, the tetra-specific ANKETTM, throughout the year as progress is made toward IND-enabling studies in 2023.
Monalizumab (anti-NKG2A antibody), partnered with AstraZeneca:
•On April 29, Innate announced a $50 million milestone payment from AstraZeneca was triggered for dosing the first patient in the Phase 3 clinical trial, PACIFIC-9,
Innate Pharma |HY 2022 Financial results | 2
evaluating durvalumab (anti-PD-L1) in combination with monalizumab or AstraZeneca’s oleclumab (anti-CD73) in patients with unresectable, Stage III non-small cell lung cancer (NSCLC) who have not progressed following definitive platinum-based concurrent chemoradiation therapy (CRT).
•Detailed results from the randomized AstraZeneca-sponsored Phase 2 COAST clinical trial, including monalizumab data in combination with durvalumab, were published in the Journal of Clinical Oncology on April 22. The results were initially presented during the ESMO Congress 2021. The results of the interim analysis showed monalizumab in combination with durvalumab improved progression-free survival (PFS) and objective response rate (ORR) compared to durvalumab alone in patients with unresectable, Stage III NSCLC who had not progressed after concurrent CRT. The Journal of Clinical Oncology publication now includes exploratory subgroup analysis.
•On April 11 at the American Association for Cancer Research (AACR) Annual Meeting, there was an oral presentation from the AstraZeneca-sponsored Phase 2 NeoCOAST randomized trial in resectable, early-stage NSCLC. The presentation highlighted improved disease responses with durvalumab in combination with monalizumab, oleclumab or danvatirsen, when compared to durvalumab alone. The follow-up randomized Phase 2 clinical trial, NeoCOAST-2, is enrolling patients with resectable, stage IIA-IIIA NSCLC to receive neoadjuvant durvalumab combined with chemotherapy and either oleclumab or monalizumab, followed by surgery and adjuvant durvalumab plus oleclumab or monalizumab.
•As a post-period event, on August 1, Innate announced that a planned futility interim analysis of the INTERLINK-1 study Phase 3 sponsored by AstraZeneca did not meet a pre-defined threshold for efficacy. The company announced that, based on the result and the recommendation of an Independent Data Monitoring Committee, the study was to be discontinued. There were no new safety findings. AstraZeneca plan to share the data in due course. The INTERLINK-1 study, sponsored by AstraZeneca, evaluated monalizumab in combination with cetuximab vs. cetuximab in patients with recurrent or metastatic squamous cell carcinoma of the head and neck who have been previously treated with platinum-based chemotherapy and PD-(L)1 inhibitors.
•On the 12 September at the ESMO 2022 congress, AstraZeneca presented an oral presentation on the Phase 2 NeoCOAST study assessing the safety and efficacy of neoadjuvant durvalumab in combination with chemotherapy and oleclumab or monalizumab and adjuvant treatment in patients with resectable, early-stage NSCLC.
IPH5201 (anti-CD39), partnered with AstraZeneca:
•On June 3, Innate announced that IPH5201, an anti-CD39 blocking monoclonal antibody developed in collaboration with AstraZeneca, will advance into a Phase 2 clinical trial in lung cancer. Innate received in August 2022 a $5 million milestone payment from AstraZeneca and will be responsible for conducting the study. AstraZeneca and Innate will share study costs and AstraZeneca will supply clinical trial drugs. AstraZeneca conducted a Phase 1 trial in solid tumors with IPH5201 alone or in combination with durvalumab. The data are expected to be presented at an upcoming medical meeting in due course.
IPH5301 (anti-CD73):
•The investigator-sponsored Phase 1 trial of IPH5301 (CHANCES), in collaboration with Institut Paoli-Calmettes is underway. The trial will be conducted in two parts,
Innate Pharma |HY 2022 Financial results | 3
Part 1, the dose escalation, followed by a Part 2 safety expansion study cohort. Part 2 will evaluate IPH5301 in combination with chemotherapy and trastuzumab in HER2+ cancer patients.
Preclinical updates:
•During the period, the Company received from AstraZeneca a notice that it will not exercise its option to license the four preclinical programs covered in the "Future Programs Option Agreement". This option agreement was part 2018 multi-term agreement between AstraZeneca and Innate. Innate has now regained full rights to further develop the four preclinical molecules.
Corporate Update:
•On May 03, Innate announced the commencement of an At-The-Market (ATM) program, pursuant to which it may, from time to time, offer and sell to eligible investors a total gross amount of up to $75 million American Depositary Shares (“ADS”). Each ADS representing one ordinary share of Innate. As of June 30, 2022, the balance available under our May 2022 sales agreement remains at $75 million.
•Announced on 20 May 2022, as part of the resolutions voted by shareholders, Dr Sally Bennett was appointed as new member of the Supervisory Board. She was appointed as a member of the Audit Committee during the Supervisory Board Meeting of May 20, 2022. On the same day it was announced that Mr Patrick Langlois decided to resign from his mandate of Supervisory Board member of Innate Pharma.
Innate Pharma |HY 2022 Financial results | 4
Financial highlights for the first half of 2022:
The key elements of Innate’s financial position and financial results as of and for the six-month period ended June 30, 2022 are as follows:
•Cash, cash equivalents, short-term investments and financial assets amounting to €158.2 million (€m) as of June 30, 2022 (€159.7m2 as of December 31, 2021).
•Revenue and other income from continuing operations3 amounted to €45.6m in the first half of 2022 (€14.7m in the first half of 2021) and mainly comprise of:
◦Revenue from collaboration and licensing agreements, which mainly resulted from the partial or entire recognition of the proceeds received pursuant to the agreements with AstraZeneca and Sanofi and which are recognized on the basis of the percentage of completion of the works performed by the Company under such agreements:
▪(i) Revenue from collaboration and licensing agreements for monalizumab increased by €10.3m to €16.4m in the first half of 2022 (€6.1m in the first half of 2021). This change mainly results from the transaction price increase of €13.4m ($14.0m) triggered by the launch of the “PACIFIC-9” Phase 3 trial on April 28, 2022. This change in the transaction price generated a €12.5 million favorable cumulative adjustment in the revenue related to monalizumab agreements for the first half of 2022, partially offset by effects of the decrease in direct monalizumab research and development costs over the period as compared to the first half of 2021, in connection with the Phase 1 & 2 trials maturity;
▪(ii) Revenue related to IPH5201 for the six months ended June 30, 2022 amounted to €4.8m and results from the entire recognition in revenue of the $5.0m milestone payment received in August 2022 from AstraZeneca following the signature on June 1, 2022 of an amendment to the initial contract signed in October 2018. This amendment sets the terms of the collaboration following AstraZeneca’s decision to advance IPH5201 to a Phase 2 study;
▪(iii) During the period, the Company received from AstraZeneca a notice that it will not exercise its option to license the four preclinical programs covered in the "Future Programs Option Agreement". This option agreement was part of the 2018 multi-term agreement between AstraZeneca and the Company under which the Company received an upfront payment of $20.0m (€17.4m). Innate has now regained full rights to further develop the four preclinical molecules. Consequently, the entire initial payment of $20.0m, or €17.4m was recognized as revenue as of June 30, 2022.
▪(iv) During the period, the Company was informed of Sanofi's decision to advance IPH6401/SAR'514 into investigational new drug (IND)-enabling studies. As such, Sanofi has selected a second multispecific antibody engaging NK cells as a drug candidate. This selection triggered a €3.0m milestone payment from
2 Cash and cash equivalents included proceeds relating to State-Guaranteed Loans
3 Comparative relating to the six months ended June 30, 2021 have been restated to reflect the impact of the classification of Lumoxiti's activities as discontinued operations in 2021.
Innate Pharma |HY 2022 Financial results | 5
Sanofi to the Company, fully recognized in revenue as of June 30, 2022. This amount was received by the Company on September 9, 2022.
◦Government funding for research expenditures of €4.3m in the first half of 2022 (€6.4m in the first half of 2021).
•Operating expenses from continuing operations are €37.1m in the first half of 2022 (€33.9m in the first half of 2021), of which 67.3% (€25.0m) are related to R&D.
◦R&D expenses from continuing operations increased by €3.7m to €25.0m in the first half of 2022 (€21.2m in the first half of 2021). This change mainly results from (i) a €0.7m increase in direct R&D expenses relating to lacutamab clinical program and to non-clinical programs, notably IPH65, partially offset by the decrease in others clinical programs expenses; (ii) a €1.7m increase in personnel expenses mainly explained by the increase in share-based payments and (iii) the increase in other R&D expenses explained by the provision relating to the payment to be made to Orega Biotech SAS upon receipt of the $5.0m milestone payment from AstraZeneca under the IPH5201 collaboration and agreement following the amendment signed on June 1, 2022.
◦General and administrative (G&A) expenses from continuing operations decreased by €0.5m to €12.1m in the first half of 2022 (€12.6m in the first half of 2021).
•A loss on the Lumoxiti discontinued operations amounting to €0.1m (€6.2m for the first half of 2021). As a reminder, the Company recorded, as of June 30, 2021, a provision for charges relating to the payment of €5.2 million ($6.2 million) to AstraZeneca under the Lumoxiti transition and termination agreement effective as of June 30, 2021. Persuant to the April 2022 underlied agreement, the amount of €5.9 million ($6.2 million) was paid by the Company.
•A net financial loss of €2.1m in the first half of 2022 (net financial gain of €1.7m in the first half of 2021), principally as a result of the decrease in fair value of certain of our financial instruments due to the negative impact of the COVID-19 health crisis as well as the Ukrainian crisis on the financial markets.
•A net income of €6.3m for the first half of 2022 (net loss of €23.7m for the first half of 2021).
The table below summarizes the IFRS consolidated financial statements as of and for the six months ended June 30, 2022, including 2021 comparative information.
Innate Pharma |HY 2022 Financial results | 6
| In thousands of euros, except for data per share | June 30, 2022 | June 30, 2021 (1) | ||||||
| Revenue and other income | 45,589 | 14,671 | ||||||
| Research and development expenses | (24,956) | (21,208) | ||||||
| General and administrative expenses | (12,140) | (12,643) | ||||||
| Operating expenses | (37,096) | (33,851) | ||||||
| Operating income (loss) | 8,494 | (19,179) | ||||||
| Net financial income (loss) | (2,118) | 1,709 | ||||||
| Income tax expense | — | — | ||||||
| Net income (loss) from continuing operations | 6,376 | (17,470) | ||||||
| Net income (loss) from discontinued operations | (73) | (6,249) | ||||||
| Net income (loss) | 6,303 | (23,719) | ||||||
| Weighted average number of shares ( in thousands) : | 79,754 | 78,998 | ||||||
| - Basic income (loss) per share | 0.08 | (0.30) | ||||||
| - Diluted income (loss) per share | 0.08 | (0.30) | ||||||
| -Basic income (loss) per share from continuing operations | 0.08 | (0.22) | ||||||
| - Diluted income (loss) per share from continuing operations | 0.08 | (0.22) | ||||||
| -Basic income (loss) per share from discontinued operations | — | (0.08) | ||||||
| - Diluted income (loss) per share from discontinued operations | — | (0.08) | ||||||
(1)Comparative relating to the six months ended June 30, 2021 have been restated to reflect the impact of the classification of Lumoxiti's activities as discontinued operations in 2021.
| June 30, 2022 | December 31, 2021 | |||||||
| Cash, cash equivalents and financial assets | 158,156 | 159,714 | ||||||
| Total assets | 280,430 | 267,496 | ||||||
| Total shareholders’ equity | 116,333 | 107,440 | ||||||
| Total financial debt | 43,374 | 44,251 | ||||||
Innate Pharma |HY 2022 Financial results | 7
About Innate Pharma:
Innate Pharma S.A. is a global, clinical-stage oncology-focused biotech company dedicated to improving treatment and clinical outcomes for patients through therapeutic antibodies that harness the immune system to fight cancer.
Innate Pharma’s broad pipeline of antibodies includes several potentially first-in-class clinical and preclinical candidates in cancers with high unmet medical need.
Innate is a pioneer in the understanding of Natural Killer cell biology and has expanded its expertise in the tumor microenvironment and tumor-antigens, as well as antibody engineering. This innovative approach has resulted in a diversified proprietary portfolio and major alliances with leaders in the biopharmaceutical industry including Bristol-Myers Squibb, Novo Nordisk A/S, Sanofi, and a multi-products collaboration with AstraZeneca.
Headquartered in Marseille, France with a US office in Rockville, MD, Innate Pharma is listed on Euronext Paris and Nasdaq in the US.
Learn more about Innate Pharma at www.innate-pharma.com
Information about Innate Pharma shares:
ISIN code Ticker code LEI | FR0010331421 Euronext: IPH Nasdaq: IPHA 9695002Y8420ZB8HJE29 | ||||
Innate Pharma |HY 2022 Financial results | 8
Disclaimer on forward-looking information and risk factors:
This press release contains certain forward-looking statements, including those within the meaning of the Private Securities Litigation Reform Act of 1995. The use of certain words, including “believe,” “potential,” “expect” and “will” and similar expressions, is intended to identify forward-looking statements. Although the company believes its expectations are based on reasonable assumptions, these forward-looking statements are subject to numerous risks and uncertainties, which could cause actual results to differ materially from those anticipated. These risks and uncertainties include, among other things, the uncertainties inherent in research and development, including related to safety, progression of and results from its ongoing and planned clinical trials and preclinical studies, review and approvals by regulatory authorities of its product candidates, the Company’s commercialization efforts, the Company’s continued ability to raise capital to fund its development and the overall impact of the COVID-19 outbreak on the global healthcare system as well as the Company’s business, financial condition and results of operations. For an additional discussion of risks and uncertainties which could cause the company's actual results, financial condition, performance or achievements to differ from those contained in the forward-looking statements, please refer to the Risk Factors (“Facteurs de Risque") section of the Universal Registration Document filed with the French Financial Markets Authority (“AMF”), which is available on the AMF website http://www.amf-france.org or on Innate Pharma’s website, and public filings and reports filed with the U.S. Securities and Exchange Commission (“SEC”), including the Company’s Annual Report on Form 20-F for the year ended December 31, 2021, and subsequent filings and reports filed with the AMF or SEC, or otherwise made public, by the Company.
This press release and the information contained herein do not constitute an offer to sell or a solicitation of an offer to buy or subscribe to shares in Innate Pharma in any country.
| For additional information, please contact: | |||||
| Investors | Media Relations | ||||
| Innate Pharma | NewCap | ||||
| Henry Wheeler | Arthur Rouille | ||||
| Tel.: +33 (0)4 84 90 32 88 | Tel. : +33 (0)1 44 71 00 15 | ||||
Henry.Wheeler@innate-pharma.fr | innate@newcap.eu | ||||
Innate Pharma |HY 2022 Financial results | 9
Summary of Interim Condensed Consolidated Financial Statements and Notes as of JUNE 30, 2022
Innate Pharma |HY 2022 Financial results | 10
Interim Condensed Consolidated Statements of Financial Position
(in thousand euros)
| June 30, 2022 | December 31, 2021 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | 102,949 | 103,756 | ||||||
| Short-term investments | 20,401 | 16,080 | ||||||
| Trade receivables and others | 48,447 | 18,420 | ||||||
| Total current assets | 171,797 | 138,256 | ||||||
| Non-current assets | ||||||||
| Intangible assets | 43,260 | 44,192 | ||||||
| Property and equipment | 9,556 | 10,174 | ||||||
| Non-current financial assets | 34,806 | 39,878 | ||||||
| Other non-current assets | 149 | 148 | ||||||
| Trade receivables and others - non-current | 13,084 | 29,821 | ||||||
| Deferred tax asset | 7,778 | 5,028 | ||||||
| Total non-current assets | 108,633 | 129,241 | ||||||
| Total assets | 280,430 | 267,496 | ||||||
| Liabilities | ||||||||
| Current liabilities | ||||||||
| Trade payables and others | 18,667 | 28,573 | ||||||
| Collaboration liabilities – current portion | 14,167 | 7,418 | ||||||
| Financial liabilities – current portion | 30,851 | 30,748 | ||||||
| Deferred revenue – current portion | 9,094 | 12,500 | ||||||
| Provisions - current portion | 782 | 647 | ||||||
| Total current liabilities | 73,561 | 79,886 | ||||||
| Non-current liabilities | ||||||||
| Collaboration liabilities – non-current portion | 58,954 | 32,997 | ||||||
| Financial liabilities – non-current portion | 12,523 | 13,503 | ||||||
| Defined benefit obligations | 2,696 | 2,975 | ||||||
| Deferred revenue – non-current portion | 8,333 | 25,413 | ||||||
| Provisions - non-current portion | 253 | 253 | ||||||
| Deferred tax liabilities | 7,778 | 5,028 | ||||||
| Total non-current liabilities | 90,537 | 80,169 | ||||||
| Shareholders’ equity | ||||||||
| Share capital | 3,988 | 3,978 | ||||||
| Share premium | 377,998 | 375,220 | ||||||
| Retained earnings | (272,241) | (219,404) | ||||||
| Other reserves | 284 | 456 | ||||||
| Net income (loss) | 6,303 | (52,809) | ||||||
| Total shareholders’ equity | 116,333 | 107,440 | ||||||
| Total liabilities and shareholders’ equity | 280,430 | 267,496 | ||||||
Innate Pharma |HY 2022 Financial results | 11
Interim Condensed Consolidated Statements of Income (loss) (in thousand euros)
| June 30, 2022 | June 30, 2021 (1) | |||||||
| Revenue from collaboration and licensing agreements | 41,271 | 8,304 | ||||||
| Government financing for research expenditures | 4,319 | 6,368 | ||||||
| Revenue and other income | 45,589 | 14,671 | ||||||
| Research and development expenses | (24,956) | (21,208) | ||||||
| General and administrative expenses | (12,140) | (12,643) | ||||||
| Operating expenses | (37,096) | (33,851) | ||||||
| Net income / (loss) distribution agreements | — | — | ||||||
| Operating income (loss) | 8,494 | (19,179) | ||||||
| Financial income | 4,048 | 3,490 | ||||||
| Financial expenses | (6,166) | (1,781) | ||||||
| Net financial income (loss) | (2,118) | 1,709 | ||||||
| Net income (loss) before tax | 6,376 | (17,470) | ||||||
| Income tax expense | — | — | ||||||
| Net income (loss) from continuing operations | 6,376 | (17,470) | ||||||
| Net income (loss) from discontinued operations | (73) | (6,249) | ||||||
| Net income (loss) | 6,303 | (23,719) | ||||||
| Weighted average number of shares : (in thousands) | 79,754 | 78,998 | ||||||
| - Basic income (loss) per share | 0.08 | (0.30) | ||||||
| - Diluted income (loss) per share | 0.08 | (0.30) | ||||||
| -Basic income (loss) per share from continuing operations | 0.08 | (0.22) | ||||||
| - Diluted income (loss) per share from continuing operations | 0.08 | (0.22) | ||||||
| -Basic income (loss) per share from discontinued operations | — | (0.08) | ||||||
| - Diluted income (loss) per share from discontinued operations | — | (0.08) | ||||||
(1)Comparative relating to the six months ended June 30, 2021 have been restated to reflect the impact of the classification of Lumoxiti's activities as discontinued operations in 2021.
Innate Pharma |HY 2022 Financial results | 12
Interim Condensed Consolidated Statements of Cash Flow
(in thousand euros)
| June 30, 2022 | June 30, 2021 | |||||||
| Net income (loss) | 6,303 | (23,719) | ||||||
| Depreciation and amortization, net | 2,030 | 2,168 | ||||||
| Employee benefits costs | 192 | 268 | ||||||
| Change in provision for charges | 134 | 4,952 | ||||||
| Share-based compensation expense | 2,596 | 853 | ||||||
| Change in valuation allowance on financial assets | 2,255 | (1,031) | ||||||
| Gains (losses) on financial assets | (1,333) | (443) | ||||||
| Change in valuation allowance on financial instruments | (100) | (170) | ||||||
| Gains on assets and other financial assets | (25) | (86) | ||||||
| Interest paid | 194 | 160 | ||||||
| Other profit or loss items with no cash effect | (52) | (1,476) | ||||||
| Operating cash flow before change in working capital | 12,194 | (18,524) | ||||||
| Change in working capital | (10,976) | (12,638) | ||||||
| Net cash generated from / (used in) operating activities: | 1,218 | (31,162) | ||||||
| Acquisition of intangible assets, net | — | (33) | ||||||
| Acquisition of property and equipment, net | (420) | (240) | ||||||
| Purchase of non-current financial instruments | — | — | ||||||
| Disposal of property and equipment | — | 2 | ||||||
| Purchase of other assets | (1) | (63) | ||||||
| Interest received on financial assets | 25 | 86 | ||||||
| Net cash generated from / (used in) investing activities: | (395) | (247) | ||||||
| Proceeds from the exercise / subscription of equity instruments | 192 | 61 | ||||||
| Repayment of borrowings | (958) | (1,127) | ||||||
| Net interest paid | (194) | (160) | ||||||
| Net cash generated / (used in) from financing activities: | (960) | (1,226) | ||||||
| Effect of the exchange rate changes | (670) | (178) | ||||||
| Net increase / (decrease) in cash and cash equivalents: | (807) | (32,812) | ||||||
| Cash and cash equivalents at the beginning of the year: | 103,756 | 136,792 | ||||||
| Cash and cash equivalents at the end of the six-months period: | 102,949 | 103,980 | ||||||
Innate Pharma |HY 2022 Financial results | 13
Revenue and other income
The following table summarizes operating revenue for the periods under review:
| In thousands of euros | June 30, 2022 | June 30, 2021 (1) | ||||||
| Revenue from collaboration and licensing agreements | 41,271 | 8,304 | ||||||
| Government funding for research expenditures | 4,319 | 6,368 | ||||||
| Revenue and other income | 45,589 | 14,671 | ||||||
(1)Comparative relating to the six months ended June 30, 2021 have been restated to reflect the impact of the classification of Lumoxiti's activities as discontinued operations in 2021.
Revenue from collaboration and licensing agreements
Revenue from collaboration and licensing agreements increased by €33.0 million, to €41.3 million for the six months ended June 30, 2022, as compared to revenues from collaboration and licensing agreements of €8.3 million for the six months ended June 30, 2021. These revenues mainly result from the partial or entire recognition of the proceeds received pursuant to the agreements with AstraZeneca and Sanofi and which are recognized on the basis of the percentage of completion of the works performed by the Company under such agreements.
The evolution for the first half of 2022 is mainly due to:
•A €10.3 million increase in revenue related to monalizumab, to €16.4 million for the six months ended June 30, 2022, as compared to €6.1 million for the six months ended June 30, 2021. This change mainly results from the transaction price increase of €13.4 million ($14.0 million) triggered by the launch of the “PACIFIC-9” Phase 3 trial on April 28, 2022. This change in the transaction price generated a €12.5 million favorable cumulative adjustment in the revenue related to monalizumab agreements for the first half of 2022, partially offset by effects of the decrease in direct monalizumab research and development costs over the period as compared to the first half of 2021, in connection with the Phase 1 & 2 trials maturity. As of June 30, 2022, the deferred revenue related to monalizumab was €17.3 million (€9.0 million as “Deferred revenue—Current portion” and €8.3 million as “Deferred revenue—Non-current portion).
•A €4.8 million increase in revenue related to IPH5201 for the six months ended June 30, 2022 amounted to and results from the entire recognition in revenue of the $5.0 million milestone payment received from AstraZeneca following the signature on June 1, 2022 of an amendment to the initial contract signed in October 2018. This amendment sets the terms of the collaboration following AstraZeneca’s decision to advance IPH5201 to a Phase 2 study. The Company will conduct the study. Both parties will share the external cost related to the study and incurred by the Company and AstraZeneca will provide products necessary to conduct the clinical trial.
•During the period, the Company received from AstraZeneca a notice that it will not exercise its option to license the four preclinical programs covered in the "Future Programs Option Agreement". This option agreement was part of the 2018 multi-term agreement between AstraZeneca and the Company under which the Company received an upfront payment of $20.0m (€17.4m). Innate has now regained full rights to further develop the four preclinical molecules. Consequently, the entire initial payment of $20.0m, or €17.4 million was recognized as revenue as of June 30, 2022.
Innate Pharma |HY 2022 Financial results | 14
•A €1.2 million decrease in revenue from invoicing of research and development costs. Pursuant to our agreements with AstraZeneca, clinical costs for the ongoing Phase 1 trial of avdoralimab and external research and development costs related to IPH5201 are equally shared between Innate Pharma and AstraZeneca, resulting in periodic settlement invoices.These costs are invoiced back on a quarterly basis. This change is mainly explained by the decrease in research and development costs incurred by the Company under these agreements.
•A €2.0 million increase in revenue from collaboration and research license agreements with Sanofi, to €3.0 million for the six months ended June 30, 2022, as compared to €1.0 million for the six months ended June 30, 2021. During the period, the Company was informed of Sanofi's decision to advance IPH6401/SAR'514 into investigational new drug (IND)-enabling studies. As such, Sanofi has selected a second multispecific antibody engaging NK cells as a drug candidate. This selection triggered a €3.0 million milestone payment from Sanofi to the Company, fully recognized in revenue as of June 30, 2022. This amount was received by the Company on September 9, 2022.
Government funding for research expenditures
Government financing for research expenditures decreased by €2.0 million, or 32.2%, to €4.3 million for the six months ended June 30, 2022 as compared to €6.4 million the six months ended June 30, 2021. This change is primarily a result of a decrease in the research tax credit (CIR) of €0.7 million, which is mainly due to (i) a decrease in eligible subcontracting costs included in research tax credit calculation, in connection with the end of the doubling of public subcontracting expenses eligible for the CIR since January 1, 2022, but also to the decrease in private R&D subcontracting over the period due to the maturity of clinical trials. In addition, this decrease is also explained by the deduction from the CIR calculation base of the remaining financing received over the period relating to FORCE (FOR COVID-19 Elimination) trial ; (ii) in addition, there is a €1.4 million decrease in grants in connection with the recording in revenue in the first half of 2021 of the first tranche of the repayable advance paid to the Company and linked to the BPI financing contract signed in August 2020. This payment was received by the Company at contract signing. This financing contract was set up as part of the program set up by the French government to help develop a therapeutic solution with a preventive or curative aim against COVID-19. As of June 30, 2021, this financing was considered by the Company to be non-refundable , in accordance with the terms of the agreement, in light of the technical and commercial failure of the project based on the results of the Phase 2 "Force" trial evaluating avdoralimab in COVID-19, published on July 6, 2021.
The Company is again eligible to the SME status under European Union criteria since December 31, 2021. Consecutively, the Company is eligible for the early repayment by French treasury of the 2021 research tax credit during the fiscal year 2022.
Operating expenses
The table below presents our operating expenses from continuing operations for the six months periods ended June 30, 2022 and 2021:
Innate Pharma |HY 2022 Financial results | 15
| In thousands of euros | June 30, 2022 | June 30, 2021 (1) | ||||||
| Research and development expenses | (24,956) | (21,208) | ||||||
| General and administrative expenses | (12,140) | (12,643) | ||||||
| Operating expenses | (37,096) | (33,851) | ||||||
(1)Comparative relating to the six months ended June 30, 2021 have been restated to reflect the impact of the classification of Lumoxiti's activities as discontinued operations in 2021.
Research and development expenses
Research and development (“R&D”) expenses from continuing operations increased by €3.7 million, or 17.7%, to €25.0 million for the six months ended June 30, 2022, as compared to €21.2 million for the six months ended June 30, 2021, representing a total of 67.3% and 62.7% of the total operating expenses, respectively. R&D expenses include direct R&D expenses (subcontracting costs and consumables), depreciation and amortization, and personnel expenses.
Direct R&D expenses increased by €0.7 million, or 5.9%, to €12.4 million for the six months ended June 30, 2022, as compared to €11.7 million for the six months ended June 30, 2021. This increase is mainly explained by (i) an increase of 1.7 million euros in expenses relating to the lacutamab program as well as (ii) an increase of 1.4 million euros in expenses relating to the IPH65 preclinical program partially offset by (iii) the decrease expenses related to the avdoralimab and monalizumab programs for respectively 1.8 million euros and 0.7 million euros. These decreases follow (i) the decision taken by the Company at the end of the first half of 2020 to stop recruitment in trials evaluating avdoralimab in oncology and (ii) the maturity of phase I/II clinical trials entering the scope of the collaboration with AstraZeneca regarding monalizumab.
Also, as of June 30, 2022, the collaboration liabilities relating to monalizumab and the agreements signed with AstraZeneca in April 2015, October 2018 and September 2020 amounted to €73.1 million, as compared to collaborations liabilities to €40.4 million as of December 31, 2021. This increase of €32.7 million mainly results from (i) the increase in the collaboration commitment for an amount of €34.3 million ($36.0 million USD) in connection with the launch of the PACIFIC-9 Phase 3 trial by AstraZeneca on April 28, 2022, and (ii) the increase in the collaboration commitment in the amount of €3.7 million in connection with the observed exchange rate fluctuations over the period for the euro-dollar parity, partially offset by (iii) net reimbursements of €5.0 million made in the first half of 2022 to AstraZeneca relating to the co-financing of the monalizumab program, mainly including the Phase 3 INTERLINK-1 trial launched in October 2020.
Personnel and other expenses allocated to R&D increased by €3.1 million, or 32.1%, to €12.6 million for the six months ended June 30, 2022, as compared to an amount of €9.5 million for the six months ended June 30, 2021. This increase is mainly due to (i) the increase of €1.7 million in personnel expenses allocated to research and development, of which €1.1 million related to share-based payments (implementation of an employee savings plan remunerated in free shares in particular) and (ii) the increase of €1.6 million in other expenses allocated to research and development in particular in connection with (a) the provision for charges in the amount of €0.6 million expensed in respect of the payment to be issued to the Company Orega Biotech SAS upon receipt of the milestone payment of $5.0m from AstraZeneca, following the signature on June 1, 2022 of an amendment to the initial IPH5201 contract signed in October 2018 and (b) the increase of €0.6 million in non-scientific fees allocated to research and development in view of an increase in the use of external service providers in the first half of 2022.
Innate Pharma |HY 2022 Financial results | 16
General and administrative expenses
General and administrative expenses from continuing activities decreased by €0.5 million, or 4.0%, to €12.1 million for the six months ended June 30, 2022, as compared to general and administrative expenses of €12.6 million for the six months ended June 30, 2021. Selling, general and administrative expenses represented a total of 32.7% and 37.3% of the total operating expenses for the six months ended June 30, 2022 and 2021, respectively.
Personnel expense includes the compensation paid to our employees, and increased by €0.6 million, to €5.8 million for the six months ended June 30, 2022, as compared to €5.2 million for six months ended June 30, 2021. This increase of €0.6 million is mainly due to the increase in share-based payments, in particular in connection with the implementation of an employee savings plan paid in bonus shares.
Non-scientific advisory and consulting expenses mostly consist of auditing, accounting, taxation and legal fees as well as consulting fees in relation to business strategy and operations and hiring services. Non-scientific advisory and consulting expenses decreased by €0.3 million, or 10.4%, to €2.2 million for the six months ended June 30, 2022 as compared to €2.5 million for the six months ended June 30, 2021. This decrease is mainly due to the decrease in fees in connection with (i) the services of lawyers relating to the arbitration procedure between the Company and Orega Biotech concerning the joint ownership of certain patents relating to IPH5201, settled at the end of 2021 and (ii) the services provided in 2021 as part of support for the application of internal control standards in connection with the Sarbanes-Oxley Act following the Nasdaq listing of the Company in October 2019.
The fall in other expenses of €0.8m mainly results from non recurring provisions for liabilities and charges booked in the 1st half of 2021 reversed in 1st half of 2022.
Financial income (loss), net
We recognized a net financial loss of €2.1 million in the six months ended June 30, 2022 as compared to a net financial gain of €1.7 million in the six months ended June 30, 2021. This variance mainly results from the variance in fair value of our financial instruments (net gain of €1.0 million as compared to a net loss of €2.3 million for the six months ended June 30, 2021 and 2022, respectively). The decline in the fair value of our financial instruments observed in the first half of 2022 results from the impact of the COVID-19 health crisis as well as the Ukrainian crisis on the financial markets.
Net loss fron discontinued operations
As a reminder, further to the decision to terminate the Lumoxiti Agreement and termination notice sent in December 2020, a Termination and Transition Agreement was discussed and executed, effective as of June 30, 2021 terminating the Lumoxiti Agreement as well as Lumoxiti related agreements (including the supply agreement, the quality agreement and other related agreements) and transferring of the U.S. marketing authorization and distribution rights of Lumoxiti back to AstraZeneca. Consecutively, the activities related to Lumoxiti are presented as a discontinued operation as of October 1, 2021 (and for all subsequent and prior period).
As a consequence, net loss from discontinued operations relating to Lumoxiti for the six months ended June 30 2022, decreased by €6.2m as compared to net loss from discontinued operations for the six months ended June 30, 2021. Net loss for the six months ended June 30, 2021 mainly resulted from the Settlement Amount of $6.2m
Innate Pharma |HY 2022 Financial results | 17
(€5.2m as of June 30, 2021) to be paid to AstraZeneca on April 30, 2022, as part of the Termination and Transition agreement.
Balance sheet items
Cash, cash equivalents, short-term investments and non-current financial assets amounted to €158.2 million as of June 30, 2022, as compared to €159.7 million as of December 31, 2021. Net cash as of June 30, 2022 amounted to €92.5 million (€89.1 million as of December 31, 2021). Net cash is equal to cash, cash equivalents and short-term investments less current financial liabilities.
The other key balance sheet items as of June 30, 2022 are:
•Deferred revenue of €17.4 million (including €8.3 million booked as ‘Deferred revenue – non-current portion’) and collaboration liabilities of €73.1 million (including €59.0 million booked as ‘Collaboration liabilities - non-current portion’) relating to the remainder of the initial payment received from AstraZeneca not yet recognized as revenue or used as part of the co-financing of the monalizumab program with AstraZeneca;
•Receivables from the French government amounting to €44.4 million in relation to the research tax credit for 2019 to 2021 and the six-month period ended June 30, 2022;
•Intangible assets for a net book value of €43.3 million, mainly corresponding to the rights and licenses relating to the acquisition of the monalizumab and avdoralimab;
•Shareholders’ equity of €116.3 million, including the net income of the period of €6.3 million;
Cash-flow items
As of June 30, 2022, cash and cash equivalents amounted to €102.9 million, compared to €103.8 million as of December 31, 2021, corresponding in a decrease of €0.8 million.
The net cash flow used during the period under review mainly results from the following:
•Net cash flow used by operations of €1.2 million for the six months ended June 30, 2022 as compared to net cash flows used by operations of €31.2 million for the six months ended June 30, 2021. This increase mainly results from the collection of €47.7 million, in June 2022, following the treatment of the first patient in the second Phase 3 clinical trial evaluating monalizumab, “PACIFIC-9”. This increase is partially offset by the €5.9 million payment to AstraZeneca on April 20, 2022 persuant to the Lumoxiti termination and transition agreement. As a reminder, net cash flow used in operating activities for the first half of 2021 included €8.0 million of proceeds from Sanofi in January and February 2021, under the IPH6101/SAR443579 agreement signed in 2016. Restated for these transactions, net cash flow used in operating activities for the first half of 2022 increases by €1.4 million as compared to the first half of 2021. This change results from the increase of the outflows in relation with the Company’s operating activities, notably the net collaboration liabilities outflows related to the monalizumab collaboration agreement. Net cash flow consumed by
Innate Pharma |HY 2022 Financial results | 18
operating activities in connection with the Lumoxiti discontinued operation amounted to €5.5 million for the first half of 2022, as compared to €4.4 million for the first half of 2021. The amount consumed for the first half of 2022 relates to the payment of €5.5 million ($6.2 million) made to AstraZeneca in April 2022 in accordance with the Lumoxiti termination and transition agreement effective as of June 30, 2021.
•Net cash flow used in investing activities of €0.4 million, as compared to €0.2 million for the first half of 2021. The Company has not made any investments in tangible, intangible or significant financial assets during the first half of 2022 and 2021. Net cash flows consumed by investing activities in connection with the Lumoxiti discontinued operation were nil for the first half of 2022 and 2021, respectively.
•Net cash flows used in financing activities for the six months ended June 30, 2022, are stable as compared to the six months ended June 30, 2021. These consumptions are mainly related to repayments of financial liabilities. Net cash flows consumed by financing activities in connection with the Lumoxiti discontinued operation were nil for the first half of 2022 and 2021, respectively.
Post period events
On August 1, 2022, the Company announced that the combination of monalizumab and cetuximab did not reach the pre-specified efficacy threshold in the protocol-planned interim futility analysis of the Phase 3 INTERLINK-1 clinical study conducted by AstraZeneca. AstraZaneca has thus informed the Company that the study will be discontinued. Consequently, the Company is not eligible for the additional payment of $50.0 million as provided for in the amendment signed in September 2020 relating to the monzalizumab collaboration and license agreement entered into with AstraZeneca in 2015. All other development and commercial milestone payments related to the agreement remain unchanged.
In August 2022, the Company communicated to Société Générale and BNP Paribas its desire to use the capital repayment extension options of the two State-Guaranteed Loans (“PGE”) contracted in December 2021. As a reminder, the Company had obtained non-dilutive financing of 28.7 million in the form of two PGEs from Société Générale (20.0 million euros) and BNP Paribas (8.7 million euros) with a maturity initial of one year with an option to extend up to five years. Discussions are currently underway with Société Générale and BNP Paribas regarding the conditions for extending repayment and the effective interest rate of loans. At the date of this report, the Company has obtained agreements in principle from Société Générale and BNP Paribas concerning financing rates after extension option of 1.56% and 0.95% respectively, excluding insurance and guarantee premium with an excess for the whole of 2023.
Nota
The interim consolidated financial statements for the six-month period ended June 30, 2022 have been subject to a limited review by our Statutory Auditors and were approved by the Executive Board of the Company on September 14, 2022. They were reviewed by the Supervisory Board of the Company on September 14, 2022. They will not be submitted for approval to the general meeting of shareholders.
Innate Pharma |HY 2022 Financial results | 19
Risk factors
Risk factors identified by the Company are presented in section 3 of the universal registration document (“Document d’Enregistrement Universel”) submitted to the French stock-market regulator, the “Autorité des Marchés Financiers”, on April 4, 2022 (AMF number D.22-0234). The main risks and uncertainties the Company may face in the six remaining months of the year are the same as the ones presented in the universal registration document available on the internet website of the Company.
Furthermore, the conflict triggered by Russia's invasion of Ukraine on February 24, 2022 had no significant direct or indirect consequences on the Company's interim consolidated financial statements for the first half of 2022. An update of that risk is presented in note G) of the half-year management review as of June 30, 2022. The risks that are likely to arise during the remaining six months of the current financial year could also occur during subsequent years.
Related party transactions:
Transactions with related parties during the periods under review are disclosed in Note 19 to the interim condensed consolidated financial statements for the period ended June 30, 2022 prepared in accordance with IAS 34.
Innate Pharma |HY 2022 Financial results | 20
INNATE PHARMA SA
HALF-YEAR FINANCIAL REPORT
JUNE 30, 2022
INNATE PHARMA S.A.
French société anonyme governed by an Executive Board and a Supervisory Boardé
with a share capital of 3,995,355.70 euros composed of
79,893,019 ordinary shares, and 14,095 preferred shares with a nominal value of 0.05 euros each
Registered office: 117, Avenue de Luminy, F-13009 Marseille, France
Registered with the Company and Trade Register of Marseille under number 424 365 336
The following interim condensed consolidated financial statements have been approved by the Executive Board of the Company on September 14, 2022, and have been subject to a limited review by our Statutory Auditors. They have been examined by the Supervisory Board of the Company on September 14, 2022.
SUMMARY
INNATE PHARMA AT A GLANCE............................................................................................................. | |||||
HALF-YEAR MANAGEMENT REVIEW...................................................................................................... | |||||
A.Revenue and other income..................................................................................................... | |||||
B.Operating expenses................................................................................................................. | |||||
C.Net financial income (loss)..................................................................................................... | |||||
D.Net income (loss) from discontinued operations ................................................................... | |||||
E.Balance sheet items................................................................................................................. | |||||
F.Cash-flow items....................................................................................................................... | |||||
G.Key events since January 1, 2022 ........................................................................................... | |||||
H.Nota......................................................................................................................................... | |||||
I.Main risks and uncertainties for the remaining six months of the fiscal year.......................................................................................................................................... | |||||
J.Related party transactions...................................................................................................... | |||||
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2022........................................................................................................................... | |||||
A.Interim Condensed Consolidated Statements of Financial Position (amounts in thousands of euro).................................................................................................................................... | |||||
B.Interim Condensed Consolidated Statements of Income (Loss) (amounts in thousands of euro, except share and per share amounts)........................................................................... | |||||
C.Interim Condensed Consolidated Statements of Comprehensive Income (Loss) (amounts in thousands of euro).............................................................................................................. | |||||
D.Interim Condensed Consolidated Statements of Cash Flows (amounts in thousands of euro)........................................................................................................................................ | |||||
E.Interim Consolidated Statements of Changes in Shareholders’ Equity (amounts in thousands of euro, except share data).................................................................................... | |||||
F.Interim Condensed Notes to the Consolidated Financial Statements.............................................................................................................................. | |||||
STATUTORY AUDITORS’ REVIEW REPORT ON THE HALF-YEARLY FINANCIAL INFORMATION....................................................................................................................................... | |||||
DECLARATION BY THE PERSON RESPONSIBLE FOR THIS HALF-YEAR FINANCIAL REPORT.................................................................................................................................................. | |||||
Innate Pharma |Half-year financial report June 30, 2022 | 2
INNATE PHARMA AT A GLANCE
Innate Pharma SA (the “Company” and, with its subsidiary, referred to as the “Group”), is a global, clinical-stage oncology-focused biotech company dedicated to improving treatment and clinical outcomes for patients through therapeutic antibodies that harness the immune system to fight cancer. Company’s broad pipeline of antibodies includes several potentially first-in-class clinical and preclinical candidates in cancers with high unmet medical need.
The Company has extensive experience in research and development in immuno-oncology, having been pioneers in the understanding of natural killer cell, or NK cell, biology, and later expanding its expertise in the tumor microenvironment, tumor antigens and antibody engineering fields. The Company has built, internally and through its business development strategy, a broad and diversified portfolio including an approved product, four clinical product candidates and a robust preclinical pipeline. The Company has entered into collaborations with leaders in the biopharmaceutical industry, such as AstraZeneca and Sanofi, to leverage their development capabilities and expertise for some of its candidates. The Company believe its product candidates and clinical development approach are differentiated from current immuno-oncology therapies and have the potential to significantly improve the clinical outcome for patients with cancer.
Since its creation, the Company has suffered losses due to its research and development ("R&D") activities. The first half of 2022 generated a net income of 6,303 thousand euros. As of June 30, 2022, shareholders' equity amounted to 116,333 thousand euros. Subject to receiving new milestone payments related to its collaboration agreements, the Company expects to incur additional losses until, if necessary, it can generate significant revenues from its product candidates in development.
The Company’s future operations are highly dependent on a combination of factors, including: (i) the success of its R&D; (ii) regulatory approval and market acceptance of the Company’s future product candidates; (iii) the timely and successful completion of additional financing; and (iv) the development of competitive therapies by other biotechnology and pharmaceutical companies. As a result, the Company is and should continue, in the short to mid-term, to be financed through partnership agreements for the development and commercialization of its drug candidates and through the issuance of new equity instruments.
The activity of the Company is not subject to seasonal effects.
As of June 30, 2022, the Company had one wholly owned subsidiary: Innate Pharma, Inc., incorporated under the laws of Delaware in 2009.
Innate Pharma is based in Marseille, France and listed on Euronext in Paris and Nasdaq in US, and had 213 employees as of June 30, 2022.
Learn more about Innate Pharma at www.innate-pharma.com.
Innate Pharma |Half-year financial report June 30, 2022 | 3
HALF-YEAR MANAGEMENT REVIEW
The key elements of Innate Pharma’s financial results for the first half of 2022 are as follows:
•Cash, cash equivalents and financial assets (current and non-current) amounting to €158.2m (million euros) as of June 30, 2022 (€159.7m as of December 31, 2021). At the same date, the financial liabilities amounted to €43.4m, including €12.5m of non-current liabilities (€44.3m as of December 31, 2021, including €13.5m of non-current financial liabilities).
•Revenue and other income from continuing operations amounting to €45.6m (€14.7m for the first half of 2021). This amount mainly results from collaboration and licensing revenue (€41.3m) and from research tax credit (€4.3m). Revenue from collaboration and licensing agreements mainly result from the agreements with AstraZeneca/Medimmune and Sanofi.
•Operating expenses from continuing operations amounting to €37.1m (€33.9m first half of 2021), of which 67.3% are related to research and development. Research and development expenses from continuing operations amount to €25.0m compared to €21.2m for the first half of 2021 and increase by €3.7m, mainly explained by (i) a €0.7m increase in direct R&D expenses relating to lacutamab clinical program and non-clinical programs, notably IPH65, partially offset by the decrease in others clinical programs expenses; (ii) a €1.7m increase in personnel expenses mainly explained by the increase in share-based payments and (iii) the increase in other R&D expenses explained by the provision relating to the payment to be made to Orega Biotech SAS upon receipt of the $5.0 million milestone payment from AstraZeneca under the IPH5201 collaboration and agreement following the amendment signed on June 1, 2022. General and administrative expenses from continuing operations amounting to €12.1m (€12.6m for the first half of 2021), decreasing by €0.5m. This decrease results mainly from downsizing of the finance organization and exceptional non recurring costs that occured in 2021.
•A loss on the Lumoxiti discontinued operations amounting to €0.1m (€6.2m for the first half of 2021). As a reminder, the Company recorded, as of June 30, 2021, a provision for charges relating to the payment of €5.2 million ($6.2 million) to AstraZeneca under the Lumoxiti transition and termination agreement effective as of June 30, 2021. Pursuant to the April 2022 underlied agreement, the amount of €5.9 million ($6.2 million) was paid by the Company.
•A net income for the first half of 2022 amounting to €6.4m (compared to net loss of €17.5m for the first half of 2021).
Note on change of accounting standards during the period
Application of the following amended standards is mandatory for the first time for the financial period beginning on January 1, 2022 and, as such, they have been adopted by the Company:
•Amendments to IAS 16: Property, Plant and Equipment
•Amendments to IAS 37 : Provisions, Contingent Liabilities and Contingent Assets
Those amended standards have no impact on the interim condensed consolidated financial statements.
Innate Pharma |Half-year financial report June 30, 2022 | 4
A.Revenue and other income
Revenue and other income from continuing operations resulted from collaboration and licensing agreements and government financing for research expenditure. Revenue and other income increased by €30.9 million, to €45.6 million for the six months ended June 30, 2022, as compared to revenue and other income of €14.7 million for the six months ended June 30, 2021.
| in thousands of euro | June 30, 2022 | June 30, 2021 (1) | ||||||
| Revenue from collaboration and licensing agreements | 41,271 | 8,304 | ||||||
| Government funding for research expenditures | 4,319 | 6,368 | ||||||
| Revenue and other income | 45,589 | 14,671 | ||||||
(1)Comparative relating to the six months ended June 30, 2021 have been restated to reflect the impact of the classification of Lumoxiti's activities as discontinued operations in 2021. See note 17 of the interim condensed consolidated financial statements as of June 30, 2022.
Revenue from collaboration and licensing agreements
Revenue from collaboration and licensing agreements increased by €33.0 million, to €41.3 million for the six months ended June 30, 2022, as compared to revenue from collaboration and licensing agreements of €8.3 million for the six months ended June 30, 2021. As a reminder, these revenues mainly resulted from the spreading of proceeds received in connection with the agreements signed with AstraZeneca in April 2015, October 2018 and September 2020, and with Sanofi in 2016. The revenue recognition is based on the percentage of completion of the work that the Company is committed to carry out under these agreements. Revenue from collaboration and licensing agreements are set forth in the table below:
| (in thousands of euro) | June 30, 2022 | June 30, 2021 (1) | ||||||
| Proceeds from collaboration and licensing agreements | 41,919 | 7,095 | ||||||
| of which monalizumab agreement (AstraZeneca) | 16,440 | 6,095 | ||||||
| of which IPH5201 agreement (AstraZeneca) | 4,826 | — | ||||||
| of which preclinical molecules agreement (AstraZeneca) | 17,400 | — | ||||||
| of which Sanofi agreement | 3,000 | 1,000 | ||||||
| of which other agreements | 252 | — | ||||||
| Invoicing of R&D costs (IPH5201 and advoralimab agreements) | (21) | 1,209 | ||||||
| Exchange gains on collaboration agreement | (627) | — | ||||||
| Revenue from collaboration and licensing agreements | 41,271 | 8,304 | ||||||
(1)Comparative relating to the six months ended June 30, 2021 have been restated to reflect the impact of the classification of Lumoxiti's activities as discontinued operations in 2021. See note 17 of the interim condensed consolidated financial statements as of June 30, 2022.
Proceeds from collaboration and licensing agreements
Proceeds from collaboration and licensing agreements result from the partial or entire recognition of the proceeds received pursuant to the agreements with AstraZeneca and Sanofi and which are recognized on the basis of the percentage of completion of the works performed by the Company under such agreements.
Innate Pharma |Half-year financial report June 30, 2022 | 5
For monalizumab, these amounts result from the partial recognition of the $250.0 million non-refundable upfront payment and the $100 million milestone regarding the exercise of the option received in June 2015 and October 2018 from AstraZeneca. The additional payment of $50.0 million received from AstraZeneca in December 2020 triggered by the dosing of the first patient in the Phase 3 trial evaluating monalizumab was treated in full as a collaboration commitment ("collaboration liability" in the consolidated balance sheet) in view to the commitment linked to the contract for the Phase I / II (co-financing) and Phase III studies (amendment signed in September 2020). Consequently, this additional payment has no impact on the transaction price.
In addition to these amounts, AstraZeneca made an additional payment of $50.0 million in June 2022, triggered by the treatment of the first patient in a second Phase 3 trial evaluating monalizumab in April 2022. This additional payment has been treated as a collaboration commitment ("collaboration liability" in the consolidated balance sheet) for an amount of $36.0 million in view to the contractual commitment linked to the Phase I/II studies (co-funding under the initial contract). The remaining $14.0 million was treated as a change in estimate of the transaction price, recognized in the income statement in line with the progress of the Phase I/II studies. This event mainly explains the increase of revenue recognized under monalizumab agreements in the first half of 2022 as compared to the first half of 2021 (cumulative adjustment recognized).
For IPH5201, revenue are related to the recognition of the $50.0 million non-refundable upfront payment received from AstraZeneca in October 2018 and two milestone payments of $5.0m received in March 2020 and August 2022, respectively.
The amounts not yet recognized in revenue are classified as deferred revenue.
Proceeds related to monalizumab - AstraZeneca:
Revenue related to monalizumab increased by €10.3 million, to €16.4 million for the six months ended June 30, 2022, as compared to €6.1 million for the six months ended June 30, 2021. This change mainly results from the transaction price increase of €13.4 million ($14.0 million) triggered by the launch of the “PACIFIC-9” Phase 3 trial on April 28, 2022. This change in the transaction price generated a €12.5 million favorable cumulative adjustment in the revenue related to monalizumab agreements for the first half of 2022, partially offset by effects of the decrease in direct monalizumab research and development costs over the period as compared to the first half of 2021, in connection with the Phase 1 & 2 trials maturity.
As of June 30, 2022, the deferred revenue related to monalizumab is €17.3 million (€9.0 million as “Deferred revenue—Current portion” and €8.3 million as “Deferred revenue—Non-current portion”).
Proceeds related to IPH5201 - AstraZeneca:
Revenue related to IPH5201 for the six months ended June 30, 2022 amounted to €4.8 million and results from the entire recognition in revenue of the $5.0 million milestone payment received from AstraZeneca following the signature on June 1, 2022 of an amendment to the initial contract signed in October 2018. This amendment sets the terms of the collaboration following decision to advance IPH5201 to a Phase 2 study. The Company will conduct the study. Both parties will share the external cost related to the study and incurred by the Company and AstraZeneca will provide products necessary to conduct the clinical trial.
As a reminder, the Company had fulfilled all of its commitments on preclinical work related to the start of Phase 1 of the IPH5201 program since December 31, 2020 and has not recognized any revenue related to the spreading of milestone received from the agreement with AstraZeneca on IPH5201 as of June 30, 2021.
Innate Pharma |Half-year financial report June 30, 2022 | 6
Proceeds related to the 2018 option agreement relating to future programs - AstraZeneca:
During the period, the Company received from AstraZeneca a notice that it will not exercise its option to license the four preclinical programs covered in the "Future Programs Option Agreement". This option agreement was part of the 2018 multi-term agreement between AstraZeneca and the Company under which the Company received an upfront payment of $20.0 million (€17.4 million). Innate has now regained full rights to further develop the four preclinical molecules. Consequently, the entire initial payment of $20.0 million, or €17.4 million was recognized as revenue as of June 30, 2022.
Proceeds related to IPH6401/SAR’514 - Sanofi :
During the period, the Company was informed of Sanofi's decision to advance IPH6401/SAR'514 into investigational new drug (IND)-enabling studies. As such, Sanofi has selected a second multispecific antibody engaging NK cells as a drug candidate. This selection triggered a €3.0 million milestone payment from Sanofi to the Company, fully recognized in revenue as of June 30, 2022. This amount was received by the Company on September 9, 2022.
Invoicing of research and development costs - AstraZeneca:
Pursuant to our agreements with AstraZeneca, clinical costs for the ongoing Phase I trial of avdoralimab and external research and development costs related to IPH5201 are equally shared between Innate Pharma and AstraZeneca, resulting in periodic settlement invoices. These costs are invoiced back on a quarterly basis.
Revenue from invoicing of research and development costs for the six months ended June 30, 2022 decreased by €1.2 million as compared to €1.2 million for the six months ended June 30, 2021. The change between the two periods is mainly explained by the decrease in research and development costs incurred by the Company under these agreements.
Government financing for research expenditures
Government financing for research expenditures decreased by €2.0 million, or 32.2%, to €4.3 million for the six months ended June 30, 2022 as compared to €6.4 million the six months ended June 30, 2021. This change is primarily a result of a decrease in the research tax credit of €0.7 million, which is mainly due to (i) a decrease in eligible subcontracting costs included in research tax credit calculation, in connection with the end of the doubling of public subcontracting expenses eligible for the CIR since January 1, 2022, but also to the decrease in private R&D subcontracting over the period due to the maturity of clinical trials. In addition, this decrease is also explained by the deduction from the CIR calculation base of the remaining FORCE financing received over the period ; (ii) in addition, there is a €1.4 million decrease in grants in connection with the recording in revenue in the first half of 2021 of the first tranche of the repayable advance paid to the Company and linked to the BPI financing contract signed in August 2020. This payment was received by the Company at contract signing. This financing contract was set up as part of the program set up by the French government to help develop a therapeutic solution with a preventive or curative aim against COVID-19. As of June 30, 2021, this financing was considered by the Company to be non-refundable , in accordance with the terms of the agreement, in light of the technical and commercial failure of the project based on the results of the Phase 2 "Force" trial evaluating avdoralimab in COVID-19, published on July 6, 2021.
The table below details government funding for research expenditures for the six months ended June 30, 2022 and 2021.
Innate Pharma |Half-year financial report June 30, 2022 | 7
| in thousands of euro | June 30, 2022 | June 30, 2021 | ||||||
| Research tax credits | 4,270 | 4,933 | ||||||
| Grants | 49 | 1,435 | ||||||
| Government financing for research expenditures | 4,319 | 6,368 | ||||||
B.Operating expenses
The table below presents our operating expenses from continuing activities for the six months periods ended June 30, 2022 and 2021:
| in thousands of euro | June 30, 2022 | June 30, 2021 (1) | ||||||
| Research and development expenses | (24,956) | (21,208) | ||||||
| General and administrative expenses | (12,140) | (12,643) | ||||||
| Operating expenses | (37,096) | (33,851) | ||||||
(1)Comparative relating to the six months ended June 30, 2021 have been restated to reflect the impact of the classification of Lumoxiti's activities as discontinued operations in 2021. See note 17 of the interim condensed consolidated financial statements as of June 30, 2022.
Research and development expenses (R&D)
Our R&D expenses from continuing activities in the periods presented primarily relate to activities for our clinical and preclinical programs. Our research and development expenses are broken down as set forth in the table below :
| in thousands of euro | June 30, 2022 | June 30, 2021 (1) | ||||||
| Monalizumab | (770) | (1,450) | ||||||
| Lacutamab | (6,900) | (5,250) | ||||||
| Avdoralimab | (167) | (1,970) | ||||||
| IPH5201 | (363) | (160) | ||||||
| Sub-total programs in clinical development | (8,200) | (8,830) | ||||||
| Sub-total programs in preclinical development | (4,188) | (2,863) | ||||||
| Total direct research and development expenses | (12,388) | (11,693) | ||||||
| Personnel expenses (including share-based payments) | (8,722) | (7,048) | ||||||
| Depreciation and amortization | (1,273) | (1,472) | ||||||
| Other expenses | (2,574) | (995) | ||||||
| Personnel and other expenses | (12,569) | (9,515) | ||||||
| Total research and development expenses | (24,956) | (21,208) | ||||||
(1)Comparative relating to the six months ended June 30, 2021 have been restated to reflect the impact of the classification of Lumoxiti's activities as discontinued operations in 2021. See note 17 of the interim condensed consolidated financial statements as of June 30, 2022.
R&D expenses from continuing activities increased by €3.7 million, or 17.7%, to €25.0 million for the six months ended June 30, 2022, as compared to R&D of €21.2 million for the six months ended June 30, 2021.
Innate Pharma |Half-year financial report June 30, 2022 | 8
R&D expenses represented a total of 67.3% and 62.7% of the total operating expenses for the six months ended June 30, 2022 and 2021, respectively. June 30, 2022, we had 152 employees in research and development functions, compared to 153 employees as of June 30, 2021.
Direct R&D expenses increased by €0.7 million, or 5.9%, to €12.4 million for the six months ended June 30, 2022, as compared to an amount of €11.7 million for the six months ended June 30, 2021. This increase is mainly explained by (i) an increase of 1.7 million euros in expenses relating to the lacutamab program as well as (ii) an increase of 1.4 million euros in expenses relating to the IPH65 preclinical program partially offset by (iii) the decrease expenses related to the avdoralimab and monalizumab programs for respectively 1.8 million euros and 0.7 million euros. These decreases follow (i) the decision taken by the Company at the end of the first half of 2020 to stop recruitment in trials evaluating avdoralimab in oncology and (ii) the maturity of phase I/II clinical trials entering the scope of the collaboration with AstraZeneca regarding monalizumab.
Also, as of June 30, 2022, the collaboration liabilities relating to monalizumab and the agreements signed with AstraZeneca in April 2015, October 2018 and September 2020 amounted to €73.1m, as compared to collaborations liabilities to €40.4m as of December 31, 2021. This increase of €32.7m mainly results from (i) the increase in the collaboration commitment for an amount of €34.3m (36.0 million dollars USD) in connection with the launch of the PACIFIC-9 Phase 3 trial by AstraZeneca on April 28, 2022, and (ii) the increase in the collaboration commitment in the amount of €3.7 million in connection with the observed exchange rate fluctuations over the period for the euro-dollar parity, partially offset by (iii) net reimbursements of €5.0 million made in the first half of 2022 to AstraZeneca relating to the co-financing of the monalizumab program, mainly including the Phase 3 INTERLINK-1 trial launched in October 2020.
Personnel and other expenses allocated to R&D increased by €3.1 million, or 32.1%, to €12.6 million for the six months ended June 30, 2022, as compared to an amount of €9.5 million for the six months ended June 30, 2021. This increase is mainly due to (i) the increase of €1.7m in personnel expenses allocated to research and development, of which €1.1m related to share-based payments (implementation of an employee savings plan remunerated in free shares in particular) and (ii) the increase of €1.6m in other expenses allocated to research and development in particular in connection with (a) the provision for charges in the amount of €0.6m expensed in respect of the payment to be issued to the Company Orega Biotech SAS upon receipt of the milestone payment of $5.0m from AstraZeneca, following the signature on June 1, 2022 of an amendment to the initial IPH5201 contract signed in October 2018 and (b) the increase of 0.6 million euros in non-scientific fees allocated to research and development in view of an increase in the use of external service providers in the first half of 2022.
General and administrative expenses:
General and administrative expenses from continuing activities decreased by €0.5 million, or 4.0%, to €12.1 million for the six months ended June 30, 2022, as compared to general and administrative expenses of €12.6 million for the six months ended June 30, 2021. Selling, general and administrative expenses represented a total of 32.7% and 37.3% of the total operating expenses for the six months ended June 30, 2022 and 2021, respectively. The table below presents our general and administrative expenses by nature for the six months ended June 30, 2022 and 2021:
| in thousands of euro | June 30, 2022 | June 30, 2021 (1) | ||||||
| Personnel expenses (including shared-based payments) | (5,769) | (5,206) | ||||||
| Non scientific advisory and consulting | (2,242) | (2,501) | ||||||
| Other expenses(2) | (4,129) | (4,936) | ||||||
| Total general and administrative expenses | (12,140) | (12,643) | ||||||
Innate Pharma |Half-year financial report June 30, 2022 | 9
(1) Comparative relating to the six months ended June 30, 2021 have been restated to reflect the impact of the classification of Lumoxiti's activities as discontinued operations in 2021. See note 17 of the interim condensed consolidated financial statements as of June 30, 2022.
(2) Other expenses are related to intellectual property, maintenance costs for laboratory equipment and our premises, depreciation and amortization and other selling, general and administrative expenses.
Personnel expense includes the compensation paid to our employees, and increased by €0.6 million, to €5.8 million for the six months ended June 30, 2022, as compared to €5.2 million for six months ended June 30, 2021. This increase of €0.6 million is mainly due to the increase in share-based payments, in particular in connection with the implementation of an employee savings plan paid in bonus shares. As of June 30, 2022, we had 61 employees in selling, general and administrative functions, compared to 59 employees as of June 30, 2021.
Non-scientific advisory and consulting expenses mostly consist of auditing, accounting, taxation and legal fees as well as consulting fees in relation to business strategy and operations and hiring services. Non-scientific advisory and consulting expenses decreased by €0.3 million, or 10.4%, to €2.2 million for the six months ended June 30, 2022 as compared to €2.5 million for the six months ended June 30, 2021. This decrease is mainly due to the decrease in fees in connection with (i) the services of lawyers relating to the arbitration procedure between the Company and Orega Biotech concerning the joint ownership of certain patents relating to IPH5201, settled at the end of 2021 and (ii) the services provided in 2021 as part of support for the application of internal control standards in connection with the Sarbanes-Oxley Act following the Nasdaq listing of the Company in October 2019.
The fall in other expenses of €0.8m mainly results from non recurring provisions for liabilities and charges booked in the 1st half of 2021 reversed in 1st half of 2022.
C.Net financial income (loss)
We recognized a net financial loss of €2.1 million in the six months ended June 30, 2022 as compared to a net financial gain of €1.7 million in the six months ended June 30, 2021. This variance mainly results from the variance in fair value of our financial instruments (net gain of €1.0 million as compared to a net loss of €2.3 million for the six months ended June 30, 2021 and 2022, respectively). The decline in the fair value of our financial instruments observed in the first half of 2022 results from the impact of the COVID-19 health crisis as well as the Ukrainian crisis on the financial markets.
The table below presents the components of our net financial income (loss) for the six months ended June 30, 2022 and 2021:
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| (in thousands of euro) | June 30, 2022 | June 30, 2021 | ||||||
| Interests on financial assets | 198 | 171 | ||||||
| Change in valuation allowance on financial instruments | 53 | 1,040 | ||||||
| Foreign exchange gains | 3,797 | 2,185 | ||||||
| Other financial income | — | 94 | ||||||
| Financial income | 4,048 | 3,490 | ||||||
| Foreign exchange losses | (3,663) | (1,602) | ||||||
| Unrealized losses on financial assets | (2,309) | — | ||||||
| Interest on financial liabilities | (194) | (160) | ||||||
| Other financial expenses | — | (18) | ||||||
| Financial expenses | (6,166) | (1,781) | ||||||
| Net financial income (loss) | (2,118) | 1,709 | ||||||
D.Net income (loss) from discontinued operations
Further to Innate's decision to terminate the Lumoxiti Agreement in December 2020, a Termination and Transition Agreement was negotiated and executed, effective as of June 30, 2021 terminating the Lumoxiti Agreement as well as Lumoxiti related agreements (including the supply agreement, the quality agreement and other related agreements) and transferring the U.S. marketing authorization and distribution rights of Lumoxiti back to AstraZeneca. Under the Termination and Transition Agreement, Innate and AstraZeneca delivered a notice to the FDA requesting that the U.S. marketing authorization be transferred back to AstraZeneca as from October 1, 2021.
Consecutively, activities related to Lumoxiti are presented as discontinued operations as of October 1, 2021. Comparative items for the first half of 2021 have been restated compared to previous publications, in accordance with IFRS5.
Thus, the net income from discontinued operations related to Lumoxiti represents a net loss of €0.1 million compared to a net loss of €6.2 million for the first half of 2022 and the first half of 2021, respectively. As a reminder, the Company had recorded as of June 30, 2021 a provision for charges of €5.2m ($6.2 million) in connection with the Lumoxiti termination and transition agreement, effective as of June 30, 2021. This amount was presented in selling, general and administrative expenses (see table below) was paid by the Company in accordance with said agreement in April 2022 for an amount of €5.9m ($6.2 million).
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| (in thousands of euro) | June 30, 2022 | June 30, 2021 | ||||||
| Revenue and other income | ||||||||
| Revenue from collaboration and licensing agreements | — | — | ||||||
| Sales | 42 | 1,015 | ||||||
| Total revenue and other income | 42 | 1,015 | ||||||
| Operating expenses | ||||||||
| Research and development expenses | (11) | (586) | ||||||
| Selling, general and administrative expenses | (104) | (6,678) | ||||||
| Impairment of intangible assets | — | — | ||||||
| Total operating expenses | (115) | (7,264) | ||||||
| Net income (loss) from distribution agreements | — | — | ||||||
| Operating income (loss) | (73) | (6,249) | ||||||
| Financial income | — | — | ||||||
| Financial expenses | — | — | ||||||
| Net financial income (loss) | — | — | ||||||
| Net income (loss) before tax | (73) | (6,249) | ||||||
| Income tax expense | — | — | ||||||
| Net income (loss) from discontinued operations | (73) | (6,249) | ||||||
E.Balance sheet items
Cash, cash equivalents, short-term investments and non-current financial assets amounted to €158.2m as of June 30, 2022, as compared to €159.7m as of December 31, 2021. Net cash as of June 30, 2022 amounted to €92.5m (€89.1m as of December 31, 2021). Net cash is equal to cash, cash equivalents and short-term investments less current financial liabilities.
Since its incorporation in 1999, the Company has been primarily financed by revenue from its collaboration, licensing agreements (€519.1m in total, or $592.0m), and by issuing new shares (€306.4m in total excluding share-based payments and the costs the costs associated with capital increases). The Company has also benefited from the research tax credit (CIR) and fundings received from BPI France (ex-Oseo) in repayable advances not bearing interest and PTZI loan. As of June 30, 2022, the Company is not liable for any reimbursement in respect of these reimbursable advances and PTZI loan. The Company also has bank borrowings of €40.9m, including €28.8m of State Guaranted Loans (“Prêts Garantis par l’Etat”) as of June 30, 2022, and €2.5m of lease liabilities.
Management has ensured that the Company is an SME Company according to the criteria of the European Union and can therefore benefit from the early repayment of the CIR (Research Tax Credit) until December 31, 2019. On this date, the Company no longer met the eligibility criteria for this status (criteria not met as of December 31, 2018 and 2019). Thus, the CIR for the years 2019 and 2020 represent a claim on the French Treasury which will in principle be set off against the French corporation tax due by the company for the following three years. The remaining portion of the tax credit not compensated at the end of such a period may then be reimbursed to the Company the European Union and can therefore benefit from the early reimbursement of the CIR in 2022 for the 2021 tax year. As of June 30, 2022, the CIR relating to the 2021 tax year has not yet been reimbursed to the Company. Since its creation, the Company has benefited from the CIR to the tune of €125.6m, of which €80.6m have been reimbursed.
Innate Pharma |Half-year financial report June 30, 2022 | 12
The other key balance sheet items as of June 30, 2022 are as follows:
•Deferred revenue of €17.4m (including €8.3m booked as ‘Deferred revenue – non-current portion’) and collaboration liabilities amounting to €73.1m (including €59.0m booked as ‘Collaboration liabilities - non-current portion’) relating to the remainder of the initial payment from AstraZeneca not yet recognized as revenue or used as part of the co-financing of the monalizumab program with AstraZeneca;
•Receivables from the French government amounting to €44.4m in relation to the research tax credit for 2019 to 2021 and the six-month period ended June 30, 2022;
•Intangible assets for a net book value of €43.3m, mainly corresponding to the rights and licenses relating to the acquisition of the monalizumab and avdoralimab;
•Shareholders’ equity of €116.3m including the net income for the first half of 2022 of €6.3m.
F.Cash-flow items
As of June 30, 2022, cash and cash equivalents amounted to €102.9m, a decrease of €0.8m compared to December 31, 2021.
The following table sets forth cash flow data for the six months ended June 30, 2022 and 2021:
| in thousands of euro | June 30, 2022 | June 30, 2021 | ||||||
| Cash flows from / (used in) operating activities | 1,218 | (31,163) | ||||||
| Cash flows from / (used in) investing activities | (395) | (247) | ||||||
| Cash flows from / (used in) financing activities | (960) | (1,226) | ||||||
| Effect of the exchange rate changes | (670) | (178) | ||||||
| Net increase / (decrease) in cash and cash equivalents: | (808) | (32,815) | ||||||
Cash flows from / (used in) operating activities:
Our net cash flow from operating activities increased by €32.4 million to €1.2 million for the six months ended June 30, 2022 as compared to net cash flow used in operating activities of €31.2 million for the six months ended June June 30, 2021. This increase mainly results from the collection of €47.7 million, in June 2022, following the treatment of the first patient in the second Phase 3 clinical trial evaluating monalizumab, “PACIFIC-9”. This increase is partially offset by the €5.9 million payment to AstraZeneca on April 20, 2022 persuant to the Lumoxiti termination and transition agreement.
As a reminder, net cash flow used in operating activities for the first half of 2021 included €8.0 million of proceeds from Sanofi in January and February 2021, under the IPH6101/SAR443579 agreement signed in 2016.
Restated for these transactions, net cash flow used in operating activities for the first half of 2022 increases by €1.4 million as compared to the first half of 2021. This change results from the increase of the outflows in relation with the Company’s operating activities, notably the net collaboration liabilities outflows related to the monalizumab collaboration agreement.
Net cash flow consumed by operating activities in connection with the Lumoxiti discontinued operation amounted to €5.5 million for the first half of 2022, as compared to €4.4 million for the first half of 2021. The amount consumed for the first half of 2022 relates to the payment of €5.5 million ($6.2 million) made to AstraZeneca in April 2022 in accordance with the Lumoxiti termination and transition agreement effective as of June 30, 2021.
Innate Pharma |Half-year financial report June 30, 2022 | 13
Cash flows from / (used in) investing activities:
Our net cash flow used in investing activities for the six months ended June 30, 2022 were €0.4 million, as compared to net cash flow used in investing activities of €0.2 million for the six months ended June 30, 2021. The Company has not made any investments in tangible, intangible or significant current and non-current financial assets during the first half of 2022 and 2021.
Net cash flows consumed by investing activities in connection with the Lumoxiti discontinued operation were nil for the first half of 2022 and 2021, respectively.
Cash flows from / (used in) financing activities:
Our net cash flows used in financing activities for the six months ended June 30, 2022 were €1.0 million as compared to net cash flow used in financing activities of €1.2 million the six months ended June 30, 2021. These consumptions are mainly related to repayments of financial liabilities.
Net cash flows consumed by financing activities in connection with the Lumoxiti discontinued operation were nil for the first half of 2022 and 2021, respectively.
G.Key events since January 1, 2022
•On April 29, 2022, the Company announced the inclusion of the first patient in the “PACIFIC-9” Phase 3 trial evaluating durvalumab in combination with monalizumab or oleclumab in patients with lung cancer. Under the monalizumab collaboration and license agreement entered into with AstraZeneca in 2015, AstraZeneca paid on June 17, 2022 a payment of $50.0 million (€47.7 million).
•On June 1, 2022, the Company signed an amendment to the collaboration and license option agreement IPH5201 concluded with AstraZeneca in October 2018. Subsequently, the Company announced on June 3, 2022 the progress of IPH5201 towards a study of Phase 2 in lung cancers for which the Company will be the sponsor. In accordance with the amendment signed on June 1, 2022, the Company is eligible for a milestone payment of $5.0 million by AstraZeneca. This milestone payment was received on August 2, 2022 by the Company for an amount of €4.9 million.
•During the period, the Company received from AstraZeneca a notice that it will not exercise its option to license the four preclinical programs covered in the "Future Programs Option Agreement". This option agreement was part of the 2018 multi-term agreement between AstraZeneca and the Company under which the Company received an upfront payment of $20.0 million (€17.4 million). Innate has now regained full rights to further develop the four preclinical molecules. Consequently, the entire initial payment of $20.0 million, or €17.4 million was recognized as revenue as of June 30, 2022
•During the period, the Company was informed of Sanofi's decision to advance IPH6401/SAR’514 towards regulatory preclinical studies aimed at studying an investigational new drug. As such, Sanofi has selected a second multispecific antibody that engages NK cells as a drug candidate. This selection triggered a €3.0 million milestone payment from Sanofi to the Company. This amount was received by the Company on September 9, 2022.
H.Nota
The interim condensed consolidated financial statements for the six-month period ended June 30, 2022 were established in accordance with IAS 34 standard adopted by European Union and have been subject to a limited
Innate Pharma |Half-year financial report June 30, 2022 | 14
review by our Statutory Auditors and were approved by the Executive Board of the Company on September 14, 2022. They were reviewed by the Supervisory Board of the Company on September 14, 2022. They will not be submitted for approval to the general meeting of shareholders.
I.Main risks and uncertainties for the remaining six months of the fiscal year
Risk factors identified by the Company are presented in section 3 of the universal registration document (“Document d’Enregistrement Universel”) submitted to the French stock-market regulator, the “Autorité des Marchés Financiers”, on April 4, 2022 (AMF number D.22-0234). The main risks and uncertainties the Company may face in the six remaining months of the year are the same as the ones presented in the universal registration document available on the internet website of the Company.
Furthermore, the conflict triggered by Russia's invasion of Ukraine on February 24, 2022 had no significant direct or indirect consequences on the Company's interim consolidated financial statements for the first half of 2022. The Company will continue to monitor developments in the situation in the second half of the year and will update its estimates and assumptions accordingly. At this stage, the Company does not expect a material impact on direct or indirect financial flows related to transactions with Ukraine and Russia.
Of note, the risks that are likely to arise during the remaining six months of the current financial year could also occur during subsequent years.
H.Related party transactions
Transactions with related parties during the periods under review are disclosed in Note 19 to the interim consolidated financial statements.
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INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2022
A.Interim Condensed Consolidated Statements of Financial Position (amounts in thousands of euro)
| Note | June 30, 2022 | December 31, 2021 | |||||||||
| Assets | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | 4 | ||||||||||
| Short-term investments | 4 | ||||||||||
| Trade receivables and others | 5 | ||||||||||
| Total current assets | |||||||||||
| Non-current assets | |||||||||||
| Intangible assets | 6 | ||||||||||
| Property and equipment | 7 | ||||||||||
| Non-current financial assets | 4 | ||||||||||
| Other non-current assets | |||||||||||
| Trade receivables and others - non-current | 5 | ||||||||||
| Deferred tax asset | 16 | ||||||||||
| Total non-current assets | |||||||||||
| Total assets | |||||||||||
| Liabilities | |||||||||||
| Current liabilities | |||||||||||
| Trade payables and others | 8 | ||||||||||
| Collaboration liabilities – current portion | 13 | ||||||||||
| Financial liabilities – current portion | 9 | ||||||||||
| Deferred revenue – current portion | 13 | ||||||||||
| Provisions - current portion | 18 | ||||||||||
| Total current liabilities | |||||||||||
| Non-current liabilities | |||||||||||
| Collaboration liabilities – non-current portion | 13 | ||||||||||
| Financial liabilities – non-current portion | 9 | ||||||||||
| Defined benefit obligations | 10 | ||||||||||
| Deferred revenue – non-current portion | 13 | ||||||||||
| Provisions - non-current portion | 18 | ||||||||||
| Deferred tax liabilities | 16 | ||||||||||
| Total non-current liabilities | |||||||||||
| Shareholders’ equity | |||||||||||
| Share capital | 11 | ||||||||||
| Share premium | 11 | ||||||||||
| Retained earnings | ( | ( | |||||||||
| Other reserves | |||||||||||
| Net income (loss) | ( | ||||||||||
| Total shareholders’ equity | |||||||||||
| Total liabilities and shareholders’ equity | |||||||||||
Innate Pharma |Half-year financial report June 30, 2022 | 16
B.Interim Condensed Consolidated Statements of Income (Loss) (amounts in thousands of euro, except share and per share amounts)
| Note | June 30, 2022 | June 30, 2021 (1) | |||||||||
| Revenue from collaboration and licensing agreements | 13 | ||||||||||
| Government financing for research expenditures | 13 | ||||||||||
| Lumoxiti Sales | 13 | ||||||||||
| Revenue and other income | |||||||||||
| Research and development expenses | 14 | ( | ( | ||||||||
| General and administrative expenses | 14 | ( | ( | ||||||||
| Operating expenses | ( | ( | |||||||||
| Operating income (loss) | ( | ||||||||||
| Financial income | 15 | ||||||||||
| Financial expenses | 15 | ( | ( | ||||||||
| Net financial income (loss) | ( | ||||||||||
| Net income (loss) before tax | ( | ||||||||||
| Income tax expense | 16 | ||||||||||
| Net income (loss) from continuing operations | ( | ||||||||||
| Net income (loss) from discontinued operations | 17 | ( | ( | ||||||||
| Net income (loss) | ( | ||||||||||
| Net income (loss) per share : | |||||||||||
| Weighted average number of shares : | |||||||||||
| (in € per share) | |||||||||||
| - Basic income (loss) per share | 20 | ( | |||||||||
| - Diluted income (loss) per share | 20 | ( | |||||||||
| -Basic income (loss) per share from continuing operations | 20 | ( | |||||||||
| - Diluted income (loss) per share from continuing operations | 20 | ( | |||||||||
| -Basic income (loss) per share from discontinued operations | 20 | ( | |||||||||
| - Diluted income (loss) per share from discontinued operations | 20 | ( | |||||||||
(1)Comparative relating to the six months ended June 30, 2021 have been restated to reflect the impact of the classification of Lumoxiti's activities as discontinued operations in 2021. See note 17 of the interim condensed consolidated financial statements as of June 30, 2022.
Innate Pharma |Half-year financial report June 30, 2022 | 17
C.Interim Condensed Consolidated Statements of Comprehensive Income (Loss) (amounts in thousands of euro)
| June 30, 2022 | June 30, 2021 | |||||||
| Net income (loss) for the period: | ( | |||||||
| Items which will not reclassified in the consolidated statement of income (loss) | ||||||||
| Actuarial gains and (losses) related to defined benefit obligations | ||||||||
| Elements which will be reclassified in the consolidated statement of income (loss) | ||||||||
| Foreign currency translation gain (loss) | ( | ( | ||||||
| Other comprehensive income (loss) | ( | |||||||
| Total comprehensive (loss) | ( | |||||||
Innate Pharma |Half-year financial report June 30, 2022 | 18
D.Interim Condensed Consolidated Statements of Cash Flows (amounts in thousands of euro)
| Note | June 30, 2022 | June 30, 2021 | |||||||||
| Net income (loss) | ( | ||||||||||
| Depreciation and amortization, net | 6, 7 | ||||||||||
| Employee benefits costs | 10 | ||||||||||
| Change in provision for charges | 18 | ||||||||||
| Share-based compensation expense | 14 | ||||||||||
| Change in valuation allowance on financial assets | 4 | ( | |||||||||
| Gains (losses) on financial assets | 4 | ( | ( | ||||||||
| Change in valuation allowance on financial instruments | 4 | ( | ( | ||||||||
| Gains on assets and other financial assets | 15 | ( | ( | ||||||||
| Interest paid | 15 | ||||||||||
| Other profit or loss items with no cash effect | 13 | ( | ( | ||||||||
| Operating cash flow before change in working capital | ( | ||||||||||
| Change in working capital | ( | ( | |||||||||
| Net cash generated from / (used in) operating activities: | ( | ||||||||||
| Acquisition of intangible assets, net | 5,6 & 8 | ( | |||||||||
| Acquisition of property and equipment, net | 7.8 | ( | ( | ||||||||
| Purchase of non-current financial instruments | 4 | ||||||||||
| Disposal of property and equipment | 4 | ||||||||||
| Purchase of other assets | ( | ( | |||||||||
| Interest received on financial assets | 15 | ||||||||||
| Net cash generated from / (used in) investing activities: | ( | ( | |||||||||
| Proceeds from the exercise / subscription of equity instruments | 11 | ||||||||||
| Repayment of borrowings | 9 | ( | ( | ||||||||
| Net interest paid | ( | ( | |||||||||
| Net cash generated / (used in) from financing activities: | ( | ( | |||||||||
| Effect of the exchange rate changes | ( | ( | |||||||||
| Net increase / (decrease) in cash and cash equivalents: | ( | ( | |||||||||
| Cash and cash equivalents at the beginning of the year: | 4 | ||||||||||
| Cash and cash equivalents at the end of the six-months period: | 4 | ||||||||||
Innate Pharma |Half-year financial report June 30, 2022 | 19
| Change in working capital | Note | June 30, 2022 | December 31, 2021 | Variance | ||||||||||
| Trade receivables and others (excluding rebates related to capital expenditures) | 5 | ( | ||||||||||||
| Deferred revenue - current and non-current portion | 13 | ( | ( | ( | ||||||||||
| Trade payables and others (excluding payables related to capital expenditures) | 8 | ( | ( | ( | ||||||||||
| Collaboration liabilities - current and non-current portion | 13 | ( | ( | |||||||||||
| Total change in Working Capital | ( | ( | ( | |||||||||||
| Change in working capital | Note | June 30, 2021 | December 31, 2020 | Variance | ||||||||||
| Trade receivables and others (excluding rebates related to capital expenditures) | 5 | |||||||||||||
| Deferred revenue - current and non-current portion | 13 | ( | ( | ( | ||||||||||
| Trade payables and others (excluding payables related to capital expenditures) | 8 | ( | ( | ( | ||||||||||
| Collaboration liabilities - current and non-current portion | 13 | ( | ( | ( | ||||||||||
| Total change in working capital | ( | ( | ( | |||||||||||
Innate Pharma |Half-year financial report June 30, 2022 | 20
E.Interim Consolidated Statement of Changes in Shareholders’ Equity (amounts in thousands of euro, except share data)
| In thousands of euro, except for data share | Ordinary Shares | Preferred Shares | Share capital | Share premium | Retained earnings | Other reserves | Net income (loss) | Total attributable to equity holders of the Company | ||||||||||||||||||
| December 31, 2020 | ( | ( | ||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | ( | ( | ||||||||||||||||||
| Actuarial gains on defined benefit obligations | — | — | — | — | — | — | ||||||||||||||||||||
| Foreign currency translation loss | — | — | — | — | ( | — | ( | |||||||||||||||||||
| Total comprehensive loss for the period | — | — | — | — | ( | ( | ||||||||||||||||||||
| Allocation of prior period income (loss) | — | — | — | — | ( | — | ||||||||||||||||||||
| Exercise and subscription of equity instruments | ( | — | — | — | ||||||||||||||||||||||
| Shared-based payment | — | — | — | — | — | — | ||||||||||||||||||||
| June 30, 2021 | ( | ( | ||||||||||||||||||||||||
| December 31, 2021 | ( | ( | ||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | ||||||||||||||||||||
| Actuarial loss on defined benefit obligations | — | — | — | — | — | — | ||||||||||||||||||||
| Foreign currency translation loss | — | — | — | — | ( | ( | — | ( | ||||||||||||||||||
| Total comprehensive loss for the period | — | — | — | — | ( | ( | ||||||||||||||||||||
| Allocation of prior period income (loss) | — | — | — | — | ( | — | ||||||||||||||||||||
| Exercise and subscription of equity instruments | — | — | — | — | ||||||||||||||||||||||
| Shared-based payment | — | — | — | — | — | — | ||||||||||||||||||||
| June 30, 2022 | ( | |||||||||||||||||||||||||
Innate Pharma |Half-year financial report June 30, 2022 | 21
F.Interim Condensed Notes to the Consolidated Financial Statements
1.The Company and key events
1.1The company
Innate Pharma SA (the “Company” and, with its subsidiary, referred to as the “Group”), is a global, clinical-stage oncology-focused biotech company dedicated to improving treatment and clinical outcomes for patients through therapeutic antibodies that harness the immune system to fight cancer.
Company’s broad pipeline of antibodies includes several potentially first-in-class clinical and preclinical candidates in cancers with high unmet medical need.
The company is a pioneer in the understanding of Natural Killer cell biology and has expanded its expertise in the tumor microenvironment and tumor-antigens, as well as antibody engineering. This innovative approach has resulted in a diversified proprietary portfolio and major alliances with leaders in the biopharmaceutical industry including Bristol-Myers Squibb, Novo Nordisk A/S, Sanofi, and a multi-products collaboration with AstraZeneca.
Since its creation, the Company has suffered losses due to its research and development ("R&D") activities. The first half of 2022 generated a net income of 6,303 thousand euros. As of June 30, 2022, shareholders' equity amounted to 116,333 thousand euros. Subject to receiving new milestone payments related to its collaboration agreements, the Company expects to incur additional losses until, if necessary, it can generate significant revenues from its product candidates in development.
The Company’s future operations are highly dependent on a combination of factors, including: (i) the success of its R&D; (ii) regulatory approval and market acceptance of the Company’s future product candidates; (iii) the timely and successful completion of additional financing; and (iv) the development of competitive therapies by other biotechnology and pharmaceutical companies. As a result, the Company is and should continue, in the short to mid-term, to be financed through partnership agreements for the development and commercialization of its drug candidates and through the issuance of new equity instruments.
The activity of the Company is not subject to seasonal effects.
As of June 30, 2022, the Company had one wholly owned subsidiary: Innate Pharma, Inc., incorporated under the laws of Delaware in 2009.
Innate Pharma is based in Marseille, France and listed on Euronext Paris and Nasdaq in the U.S., and had 213 employees as of June 30, 2022.
1.2Key events for the six-month period ended June 30, 2022
•On April 29, 2022, the Company announced the inclusion of the first patient in the “PACIFIC-9” Phase 3 trial evaluating durvalumab in combination with monalizumab or oleclumab in patients with lung cancer. Under the monalizumab collaboration and license agreement entered into with AstraZeneca in 2015, AstraZeneca paid on June 17, 2022 a payment of $50.0 million (€47.7 million).
•On June 1, 2022, the Company signed an amendment to the collaboration and license option agreement IPH5201 concluded with AstraZeneca in October 2018. Subsequently, the Company announced on June 3, 2022 the progress of IPH5201 towards a study of Phase 2 in lung cancers for which the Company will be the sponsor. In accordance with the amendment signed on June 1, 2022, the Company is eligible for a milestone payment of $5.0 million by AstraZeneca. This milestone payment was received on August 2, 2022 by the Company for an amount of €4.9 million.
Innate Pharma |Half-year financial report June 30, 2022 | 22
2.Basis of presentation and statement of compliance
2.1Basis of preparation
The interim condensed consolidated financial statements as of June 30, 2022 and for the six months ended June 30, 2022 and 2021 and the related notes (together, the “interim condensed consolidated financial statements”) have been prepared under the responsibility of the management of the Company in accordance with the underlying assumptions of going concern as the Company’s loss-making situation is explained by the innovative nature of the products developed, therefore involving a multi-year research and development phase.
The interim condensed consolidated financial statements were closed by the Executive Board, approved and authorized by the Supervisory Board upon recommendation of the Audit Committee on September 14, 2022.
They have been prepared in accordance with IAS 34, ‘Interim Financial Reporting’ as issued by the International Accounting Standard Board (“IASB”). Due to the listing of ordinary shares of the Company on Euronext Paris and in accordance with the European Union’s regulation No. 1606/2002 of July 19, 2002, the interim condensed consolidated financial statements are also prepared in accordance with IFRS, as adopted by the European Union (EU).For the presented periods, the differences between IFRS as issued by IASB and IFRS adopted by EU had no impact on the interim condensed consolidated financial statements.
The general accounting conventions were applied in accordance with the underlying assumptions, namely (i) going concern, (ii) permanence of accounting methods from one year to the next and (iii) independence of financial years, and in conformity with the general rules for the preparation and presentation of consolidated financial statements in accordance with International Financial Reporting Standards (“IFRS”). The interim condensed consolidated financial statements do not include all disclosures required for annual financial statements and should therefore be read in conjunction with the consolidated financial statements as of and for the year ended December 31, 2021.
The results of the operations for the six months ended June 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any other interim period or for any year in the future.
Except for number of shares and per share amounts, all amounts are expressed in thousands of euros, unless stated otherwise. Some amounts may be rounded for the calculation of financial information contained in the interim condensed consolidated financial statements. Accordingly, the totals in some tables may not be the exact sum of the preceding figures.
Innate Pharma |Half-year financial report June 30, 2022 | 23
2.2Use of judgments and estimates
The preparation of financial statements in accordance with IFRS requires the Company to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period.
These estimates can be revised where the circumstances on which they are based change. The actual results may therefore differ from the estimates initially formulated. The estimates and judgments which are mainly used by the Company are detailed in note 18.1.1 in paragraph 2.w) of the appendix to the consolidated financial statements as of December 31, 2021 of the Universal Registration Document published on April 24, 2022. Estimates and judgments which impact the condensed consolidated financial statements at June 30, 2022 are:
•accounting for collaboration and licensing agreements (note 6 and 13);
•estimate of the recoverable amount of the acquired and under progress licenses (note 6);
•estimate of the useful life of the acquired licenses (note 6).
2.3Recently issued accounting standards and interpretations
Application of the following amended standards is mandatory for the first time for the financial period beginning on January 1, 2022 and, as such, they have been adopted by the Company:
•Amendments to IAS 16: Property, Plant and Equipment
•Amendments to IAS 37 : Provisions, Contingent Liabilities and Contingent Assets
Those amended standards have no impact on the interim condensed consolidated financial statements.
2.4Translation of transactions denominated in foreign currency
Foreign currency transactions are translated into the presentation currency using the following exchange rates:
| June 30, 2021 | December 31, 2021 | June 30, 2022 | ||||||||||||||||||
| €1 equals to | Average rate | Closing rate | Average rate | Closing rate | Average rate | Closing rate | ||||||||||||||
| USD | ||||||||||||||||||||
3.Management of financial risks
Innate Pharma |Half-year financial report June 30, 2022 | 24
4.Cash, cash equivalents, short-term investments and non-current financial assets
| (in thousands of euro) | June 30, 2022 | December 31, 2021 | ||||||
| Cash and cash equivalents | ||||||||
| Short-term investments | ||||||||
| Cash, cash equivalents and short-term investments | ||||||||
| Non-current financial assets | ||||||||
| Cash, cash equivalents and financial assets | ||||||||
Cash and cash equivalents are mainly composed of current bank accounts, interest-bearing accounts and fixed-term accounts.
As of June 30, 2022, the Company also holds seven units in “SICAVs” and shares in mutual funds. The risk profiles of these funds are rated from 1 to 7 by the financial institution that manages and markets these funds (1 being the lowest risk profile).When the maturity of shares in mutual funds is longer than one year, they are classified as non-current financial instruments.
Non-current financial assets generally include a guarantee of capital at the maturity date (which is always longer than one year). These instruments are defined by the Company as financial assets at fair value through profit or loss and classified as non-current due to their maturity.
As of June 30, 2022 and December 31, 2021, the amount of cash, cash equivalents and financials assets denominated in US dollars amounted to €42,505 thousand and €47,164 thousand, respectively.
Changes in short-term investments and non-current financial assets for the six months ended June 30, 2021 and 2022 are the following:
| (in thousands of euro) | December 31, 2021 | Additions (1) | Deductions (2) | Variance of fair value through the consolidated statement of income (loss) | Variation of accrued interests | Foreign currency effect | June 30, 2022 | ||||||||||||||||
| Short-term investments | |||||||||||||||||||||||
| Non-current financial assets | ( | ( | |||||||||||||||||||||
| Total | ( | ( | |||||||||||||||||||||
| (in thousands of euro) | December 31, 2020 | Additions | Deductions | Variance of fair value through the consolidated statement of income (loss) | Variation of accrued interests | Foreign currency effect | June 30, 2021 | ||||||||||||||||
| Short-term investments | |||||||||||||||||||||||
| Non-current financial assets | |||||||||||||||||||||||
| Total | |||||||||||||||||||||||
(1) The additions correspond to both acquisitions and reclassifications of financial assets according to their maturity at the closing date.
Innate Pharma |Half-year financial report June 30, 2022 | 25
In the six months ended June 30, 2022 , variance of fair value through the consolidated statement of income (loss) is made of €2,308 thousand of unrealized loss on non-current financial assets and €53 thousand of unrealized gains on short-term investments. In the six months ended June 30, 2021, variance of fair value through the consolidated statement of income (loss) was made of €978 thousand of unrealized gains on non-current financial assets and €53 thousand of unrealized gains on short-term investments (see note 16).
5.Trade receivables and others
| (in thousands of euro) | June 30, 2022 | December 31, 2021 | ||||||
| Other receivables | ||||||||
| Research tax credit(1) | ||||||||
| Other tax credits | ||||||||
| Prepaid expenses | ||||||||
| VAT refund | ||||||||
| Trade account receivables (2) | ||||||||
| Prepayments made to suppliers | ||||||||
| Receivables and others | ||||||||
| Research tax credit(1) | ||||||||
| Receivables and others - non-current | ||||||||
| Trade receivables and others | ||||||||
(1) The Research tax credit is recognized as other operating income in the year to which the eligible research expenditure relates. The amount of €13,084 thousand recognized in non-current receivables corresponds to the CIR for the 2020 tax year following the fact that the Company no longer meets the eligibility criteria for the SME status as of December 31, 2019. As of December 31, 2020 and 2021 respectively, the Company has ensured that the eligibility criteria for the SME status are met again. The Company is therefore eligible for the early repayment by the French treasury during the fiscal year 2022 of the 2021 Research Tax Credit for an amount of €10,302 thousand. This amount has not yet been received by the Company as of June 30, 2022 and is classified as current receivable in the same way as the CIR for the 2019 tax year, for an amount of €16,737 thousand, and the first half of 2022 for an amount of €4,270 thousand.
The net book value of the receivables is considered to be a reasonable approximation of their estimated fair value. Trade receivables and others have payment terms of less than one year. No valuation allowance was recognized on trade receivables and others as the credit risk of each debtor was considered as not significant.
Innate Pharma |Half-year financial report June 30, 2022 | 26
6.Intangible assets
| (in thousands of euro) | Purchased licenses | Other intangible assets | In progress | Total | ||||||||||
| January 1, 2021 | ||||||||||||||
| Acquisitions | ||||||||||||||
| Additional considerations | ||||||||||||||
| Disposals | ||||||||||||||
| Amortizations | ( | ( | ( | |||||||||||
| Transfers | ||||||||||||||
| June 30, 2021 | ||||||||||||||
| January 1, 2022 | ||||||||||||||
| Acquisitions | ||||||||||||||
| Additional considerations | ||||||||||||||
| Disposals | ||||||||||||||
| Amortizations | ( | ( | ||||||||||||
| Transfers | ||||||||||||||
| June 30, 2022 | ||||||||||||||
Monalizumab rights under the 2014 monalizumab (NKG2A) Novo Nordisk agreement
Since their acquisition, monalizumab rights are amortized on a straight-line basis over the anticipated residual duration of the Phase II trials. The Company has reassessed the anticipated residual duration of the Phase 2 trials as of June 30, 2022 and estimated that it would be fully amortized by 2023, which is the same estimation as of December 31, 2021, as a result of the completion of some trials and by modifying the estimated end dates relating to certain cohorts.
The net book values of the monalizumab rights were €2,252 thousand and €3,155 thousand as of June 30, 2022 and December 31, 2021, respectively.
IPH5201 (Anti-CD39) rights acquired from Orega Biotech
This asset was amortized on a straight-line basis since November 1, 2018 (corresponding to the effective beginning date of the collaboration) until the date the Company expected to fulfill its commitment (end of fiscal year 2020). These collaboration commitments have all been fulfilled. Thus, the rights relating to IPH5201 have been fully amortized since December 31, 2020.
As a reminder, Orega Biotech claimed joint ownership of certain patents relating to IPH5201. The Company and Orega Biotech have resolved these claims in an arbitration proceeding, which decision was rendered in December 2021. As a result of this decision, the Company is required to pay a low-teen percentage of sub-licensing revenues received by the Company pursuant to its agreement with AstraZeneca regarding IPH5201. Following this arbitration decision, the Company paid in January 2022 an additional amount of €0.4 million to Orega. This additional payment was fully amortized as of December 31, 2021.
Avdoralimab (IPH5401) (anti-C5aR) rights acquired from Novo Nordisk A/S
At the agreement inception, an upfront payment of €40 million for acquired rights were recorded as intangible asset. As part of this agreement, an additional amount of €1.0 million was paid in October 2020 to Novo Nordisk A / S following the launch of the first avdoralimab Phase II trial. As avdoralimab is still in clinical trial, the acquired
Innate Pharma |Half-year financial report June 30, 2022 | 27
rights are classified as intangible asset in progress. They were subject to annual impairment test. No impairment were recorded since inception. These acquired rights will be amortized when the Company obtains economic benefits.
According to the agreement, the Company will pay additional payments according to the reach of specific steps. As of June 30, 2022, according to the uncertainty of these potential future payments, no liability was recognized.
Development costs incurred by the Company are recognized as research and development expenses.
As of June 30, 2022, the Company has not identified any indication of impairment of the avdoralimab rights in the first half of 2022.
As a reminder, the Company had performed an impairment test as of December 31, 2021, in accordance with IAS 36 "Impairment of assets". The Company applied IAS 36 "Impairment of assets" and assessed whether there was any indication of impairment that could lead to the impairment of a recognized intangible asset. The Company estimated the recoverable amount of the unamortized intangible asset avdoralimab using a discounted cash flow model which confirmed that no impairment is required. The following main assumptions were used to determine the recoverable amount, based on the cash flows determined using the marketing plan and budget approved by management :
•Cash flows are set on the basis of the development and commercialization plans and budgets approved by Management;
•A discount rate of 11 %;
•A risk of development is taken into consideration by applying probabilities of success of reaching future phases of development to cash flows related to each development phases; Those average probabilities of success of R&D projects are based on an article published in Nature Review Drug Discovery;
•For the commercialization phase, selling price and sales volume are estimated on the basis of the potential market and the observed performances of comparable drugs currently on the market. Decrease in sales volume applied to the forecasted revenue once the related rights fall off-patent.
In case of failure of the clinical trials in progress, the Company may have to depreciate the intangible asset corresponding to the avdoralimab rights.
The Company did not identify any reasonable potential variance in the key assumptions that may generate an impairment as of June 30, 2022.
Sensitivity testing regarding these following assumptions and other assumptions such as: discount rate (+1%), decrease in sales volume (- 25%) and growth rate at termination (-1%) were performed. These tests did not reveal any impairment.
Avdoralimab does not generate economic benefits yet for the Company. In accordance with IAS 38, it will be amortized when it generates economic benefits, which can result from:
•The drug candidate commercialization ; or,
•An out-licensed agreement.
If the Company commercialize the drug product on its own, it will have to determine the amortization period of the related capitalized rights. It will have to estimate their useful life, considering the date when they fall off patent. Those capitalized rights will be amortized on a straight line basis during the estimated useful life.
Innate Pharma |Half-year financial report June 30, 2022 | 28
7.Property and equipment
| (in thousands of euro) | Lands and buildings | Laboratory equipment and other | In progress | Total | Of which finannce leases | ||||||||||||
| January 1, 2021 | |||||||||||||||||
| Acquisitions | |||||||||||||||||
| Disposals | ( | ( | |||||||||||||||
| Depreciation | ( | ( | ( | ( | |||||||||||||
| Transfers | ( | ||||||||||||||||
| June 30, 2021 | |||||||||||||||||
| (in thousands of euro) | Lands and buildings | Laboratory equipment and other | In progress | Total | Of which right of use assets(3) | ||||||||||||
| January 1, 2022 | |||||||||||||||||
| Acquisitions | |||||||||||||||||
| Disposals | |||||||||||||||||
| Depreciation | ( | ( | ( | ( | |||||||||||||
| Transfers | |||||||||||||||||
| June 30, 2022 | |||||||||||||||||
8.Trade payables and others
| (in thousands of euro) | June 30, 2022 | December 31, 2021 | ||||||
| Suppliers (excluding payables related to capital expenditures) | ||||||||
| Tax and employee-related payables | ||||||||
| Other payables | ||||||||
| Trade payables and others (excluding payables related to capital expenditures) | ||||||||
| Payables related to capital expenditures | ||||||||
| Payables and others | ||||||||
The book value of trade payables and others is considered to be a reasonable approximation of their fair value.
Innate Pharma |Half-year financial report June 30, 2022 | 29
9.Financial liabilities
| (in thousands of euro) | December 31, 2021 | Proceeds from borrowing | Proceeds from lease liabilities and other non cash effects | Repayments of borrowings/leases liabilities | Exchange rate variation (non cash) | June 30, 2022 | ||||||||||||||
| State guaranteed loan Société Générale (1) | ||||||||||||||||||||
| State guaranteed loan BNP Paribas (1) | ||||||||||||||||||||
| Lease liabilities – Building "Le Virage" | ( | |||||||||||||||||||
| Lease liabilities – Premises Innate Inc. | ( | |||||||||||||||||||
| Lease liabilities – Laboratory equipment | ( | |||||||||||||||||||
| Lease liabilities – Vehicles | ( | |||||||||||||||||||
| Lease liabilities - Printers | ( | |||||||||||||||||||
| Borrowing – Equipment | ( | |||||||||||||||||||
| Borrowing – Building | ( | |||||||||||||||||||
| Total | ( | |||||||||||||||||||
| (in thousands of euro) | December 31, 2020 | Proceeds from borrowing | Proceeds from lease liabilities (non cash) | Repayments of borrowings/leases liabilities | Exchange rate variation (non cash) | June 30, 2021 | ||||||||||||||
| BPI PTZI IPH41 | ( | |||||||||||||||||||
| Lease liabilities – Real estate property | ( | |||||||||||||||||||
| Lease liabilities – Building "Le Virage" | ( | |||||||||||||||||||
| Lease liabilities – Premises Innate Inc. | ( | ( | ||||||||||||||||||
| Lease liabilities – Laboratory equipment | ( | |||||||||||||||||||
| Lease liabilities – Vehicles | ( | |||||||||||||||||||
| Lease liabilities - Printers | ( | |||||||||||||||||||
| Borrowing – Equipment | ( | |||||||||||||||||||
| Borrowing – Building | ( | |||||||||||||||||||
| Total | ( | ( | ( | |||||||||||||||||
(1) On January 5, 2022, the Company announced that it had obtained €28.7 million in non-dilutive financing in the form of two State Guaranteed Loans from Société Générale (€20.0 million) and BNP Paribas (€8.7 million). The Company received the funds related to these two loans on December 27 and 30, 2021 respectively. Both loans have an initial maturity of one year with an option to extend to five years usable from August, 2022. They are 90 % guaranteed by the French government as part of the package of measures put in place by the French government to support companies during the COVID-19 pandemic. As of June 30, 2022, the Company was not able to use the options to extend the principal repayment of these loans. Thus, at the same date, the effective interest rate applied to these contracts is 0.5 % which is the contractual rate for repayment within one year . In August 2022, the Company communicated to Société Générale and BNP Paribas its desire to use the capital repayment extension options of the two State-Guaranteed Loans (“PGE”) contracted in December 2021 (see note 21).
Finance lease obligations relate primarily to real estate property in relation to the acquisition in 2008 of the Company’s headquarters and main laboratories. They are presented in the above table net of the cash collateral paid to Sogebail, the lessor.
Innate Pharma |Half-year financial report June 30, 2022 | 30
On July 3, 2017, the Company borrowed from the Bank “Société Générale” in order to finance the construction of its future headquarters. This loan amounting to a maximum of €15,200 thousand will be raised during the period of the construction in order to pay the supplier payments as they become due. As of December 31, 2018 and 2019, the loan was raised at an amount of €1,300
The loan release period was limited to August 30, 2019. On August 30, 2019, the Company drew down the remaining portion of the €15,200 thousand loan granted, for an amount of €13,900 thousand. The reimbursement of the capital has begun in August 30, 2019 and will proceed until August 30, 2031 (12 years). Given the development of its portfolio and in particular the refocusing of its activities on research and development, the Company has for the time being suspended the project to build its new head office on the land acquired in Luminy. In the meantime, the loan will be used to finance several structuring projects (improvement of the information system, development of a commercial platform, development of additional premises rented, etc.). As of June 30, 2022, the remaining capital of the loan amounted to €11,933 thousand. The Company authorized collateral over financial “Société Générale” instruments amounting to €15,200 thousand. The security interest on the pledge financial instruments will be released in accordance with the following schedule: €4,200 thousand in July 2024, €5,000 thousand in July 2027 and €6,000 thousand in July 2031.
This loan bears a fixed interest rate of 2.01 %. It is subject to a covenant based on the assumption that the total cash, cash equivalents and current and non-current financial assets are at least equal to principal as of financial year end.
The table below shows the schedule for the contractual repayment of financial liabilities (being principal and interest payments) as of June 30, 2022:
| (in thousands of euro) | Within 1 year | From 2nd to 5th year included | Over 5 years | Total | ||||||||||
| State guaranteed loan Société Générale | ||||||||||||||
| State guaranteed loan BNP Paribas | ||||||||||||||
| Lease liabilities – Building "Le Virage" | ||||||||||||||
| Lease liabilities – Premises Innate Inc. | ||||||||||||||
| Lease liabilities – Laboratory equipment | ||||||||||||||
| Lease liabilities – Vehicles | ||||||||||||||
| Lease liabilities - Printers | ||||||||||||||
| Borrowing – Equipment | ||||||||||||||
| Borrowing – Building | ||||||||||||||
| Total financial liabilities | ||||||||||||||
10.Employee benefit
Defined benefit obligation
| (in thousands of euro) | June 30, 2022 | December 31, 2021 | ||||||
| Allowance for retirement defined benefit | ||||||||
| Allowance for seniority awards | ||||||||
| Defined benefit obligations | ||||||||
Innate Pharma |Half-year financial report June 30, 2022 | 31
| As of January 1, 2021 | |||||
| IAS19 Restatement related to change in calculation method - IFRIC (1) | ( | ||||
| As of January 1, 2021 Restated | |||||
| Service cost | |||||
| Interest costs | ( | ||||
| Actuarial (gain) / loss | ( | ||||
| As of December 31, 2021 | |||||
| Service cost | |||||
| Interest costs | ( | ||||
| Actuarial (gain) / loss | ( | ||||
| As of June 30, 2022 | |||||
Discount rates used by the Company to evaluate retirement benefits were based on iBoxx Corporate AA. They amounted to 3.20 % and 0.95 % as of June 30, 2022 and December 31, 2021, respectively.
11.Capital
11.1Share capital
The Company manages its capital to ensure that the Company will be able to continue as a going concern while maximizing the return to shareholders through the optimization of the debt and equity balance.
As of June 30, 2022, the Company’s share capital amounted to €3,988,388 divided into (i) 79,753,657 ordinary shares, each with a nominal value of €0.05 ; (ii) 6,514 “2016” preferred shares, each with a nominal value of €0.05 , and (iii) 7,581 “2017” preferred shares, each with a nominal value of €0.05 , respectively, fully paid up.
Share capital does not include BSAs, BSAAR, AGAs and AGAPs that have been granted to certain investors or natural persons, both employees and non-employees of the Company, but not yet exercised.
On October 21, 2019 and December 30, 2019, the retention period for the “2016 free preferred shares” has ended. The number of ordinary shares to which the conversion of one preferred share entitle has been determined according to the fulfilment of the performance criteria. Holders of “2016” preferred shares” are entitled to vote at our shareholders’ meetings, to dividends and to preferential subscription rights, on the basis of the number of ordinary shares to which they are entitled if they convert their preferred shares.
In April 3, 2021, the retention period for the "2017 free preferred shares" has ended. The number of ordinary shares to which the conversion of one preferred share entitle has been determined according to the fulfillment of the performance criteria. According to these same performance criteria, the Executive Board of April 7, 2021 noted that the "2017 preferred shares" did not give right to any ordinary shares. The “2017 preferred shares” will not be redeemed by the Company and will remain incorporated into the capital, unless subsequently decided by the
Innate Pharma |Half-year financial report June 30, 2022 | 32
Executive Board. As the conversion is void, the "2017 preferred shares" no longer give the right to vote at our general meetings, nor to receive dividends.
In the six months ended June 30, 2022, a capital increase of €10,552 occurred as a result of the Executive Board decisions on February 14, 2022 and April 22, 2022, subsequent to (i) the conversion of 750 “2012” BSAAR and (ii) the creation of 185,280 ordinary shares following the set-up of a company saving plan for the benefit of the Company’s employees, including 138,960 ordinary shares issued free of charge (top-up) and the definitive acquisition of 25,000 free shares allocated on April 29, 2019 under the “AGA New Members 2017” plan. These events led to a net capital increase of €10,552 and an increase in share premium of €180,891 , broken down as follows: (i) a creation of 750 ordinary shares, with a nominal value of €0.05 , for an issue price of €2.04 , (ii) a creation of 138,960 ordinary shares, with a nominal value of €0.05 and a creation of 46,320 ordinary shares, with a nominal value of €0.05 , for an issue price of €4.10 per share, and (iii) a creation of 25,000 ordinary shares, with a nominal value of €0.05 .
11.2Treasury shares
11.3Share based payments
Innate Pharma |Half-year financial report June 30, 2022 | 33
| Date | Types | Number of warrants issued as of 6/30/2022 | Number of warrants void as of 6/30/2022 | Number of warrants exercised as of 6/30/2022 | Number of warrants outstanding as of 6/30/2022 | Maximum number of shares to be issued as of 6/30/2022 | Exercise price per share (in €) | |||||||||||||||||||||||||||||||||||||
| Sept. 9, 2011 | BSAAR 2011 | |||||||||||||||||||||||||||||||||||||||||||
| May 27, 2013 | BSAAR 2012 | |||||||||||||||||||||||||||||||||||||||||||
| July 1, 2015 | BSAAR 2015 | |||||||||||||||||||||||||||||||||||||||||||
| October 21, 2016 | AGAP Management 2016-1 | |||||||||||||||||||||||||||||||||||||||||||
| October 21, 2016 | AGAP Employees 2016-1 | |||||||||||||||||||||||||||||||||||||||||||
| October 21, 2016 | AGA Management 2016-1 | |||||||||||||||||||||||||||||||||||||||||||
| December 30, 2016 | AGAP Management 2016-2 | |||||||||||||||||||||||||||||||||||||||||||
| December 30, 2016 | AGA Management 2016-2 | |||||||||||||||||||||||||||||||||||||||||||
| April 3,2018 | AGAP Employees 2017-1 | |||||||||||||||||||||||||||||||||||||||||||
| April 3,2018 | AGAP Management 2017-1 | |||||||||||||||||||||||||||||||||||||||||||
| April 3,2018 | AGA Employees 2017 | |||||||||||||||||||||||||||||||||||||||||||
| July 3, 2018 | AGA Bonus 2018-1 | |||||||||||||||||||||||||||||||||||||||||||
| November 20, 2018 | AGAP Perf Employees 2018-1 | |||||||||||||||||||||||||||||||||||||||||||
| November 20, 2018 | AGAP Perf Management 2018-1 | |||||||||||||||||||||||||||||||||||||||||||
| January 14, 2019 | AGA Employees 2018 | |||||||||||||||||||||||||||||||||||||||||||
| April 29, 2019 | AGA New Members 2017-1 | |||||||||||||||||||||||||||||||||||||||||||
| July 3, 2019 | AGA Bonus 2019-1 | |||||||||||||||||||||||||||||||||||||||||||
| July 13, 2020 | AGA Bonus 2020-1 | |||||||||||||||||||||||||||||||||||||||||||
| August 5, 2020 | AGAP Employees 2020-1 | |||||||||||||||||||||||||||||||||||||||||||
| August 5, 2020 | AGAP Management 2020-1 | |||||||||||||||||||||||||||||||||||||||||||
| July 22, 2021 | AGA Bonus 2021-1 | |||||||||||||||||||||||||||||||||||||||||||
| October 1, 2021 | AGAP Employees 2021-1 | |||||||||||||||||||||||||||||||||||||||||||
| October 1, 2021 | AGAP Management 2021-1 | |||||||||||||||||||||||||||||||||||||||||||
| July 21, 2020 | Stock Options 2020-1 | |||||||||||||||||||||||||||||||||||||||||||
| November 4, 2019 | AGAP 2019 Employees 2019 | |||||||||||||||||||||||||||||||||||||||||||
| November 4, 2019 | AGAP 2019 Management 2019 | |||||||||||||||||||||||||||||||||||||||||||
| July 29, 2011 | BSA 2011-2 | |||||||||||||||||||||||||||||||||||||||||||
| July 17, 2013 | BSA 2013 | |||||||||||||||||||||||||||||||||||||||||||
| July 16, 2014 | BSA 2014 | |||||||||||||||||||||||||||||||||||||||||||
| April 27, 2015 | BSA 2015-1 | |||||||||||||||||||||||||||||||||||||||||||
| July 1, 2015 | BSA 2015-2 | |||||||||||||||||||||||||||||||||||||||||||
| September 20, 2017 | BSA 2017 | |||||||||||||||||||||||||||||||||||||||||||
| Total as of June 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||
Innate Pharma |Half-year financial report June 30, 2022 | 34
12.Financial instruments recognized in the statement of financial position and related effect on the income statement
The following tables show the carrying amounts and fair values of financial assets and financial liabilities. The tables do not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.
| As of June 30, 2022 | Book value on the statement of financial position | Fair value through profit and loss (1) | Amortized cost (2) | Fair value | ||||||||||
| Financial assets | ||||||||||||||
| Non-current financial assets | ||||||||||||||
| Trade receivables and others | ||||||||||||||
| Short-term investments | ||||||||||||||
| Cash and cash equivalents | ||||||||||||||
| Total financial assets | ||||||||||||||
| Financial liabilities | ||||||||||||||
| Financial liabilities—non-current portion | ||||||||||||||
| Financial liabilities—current portion | ||||||||||||||
| Trade payables and others | ||||||||||||||
| Total financial liabilities | ||||||||||||||
| As of December 31, 2021 | Book value on the statement of financial position | Fair value through profit and loss (1) | Amortized Cost (2) | Fair value | ||||||||||
| Financial assets | ||||||||||||||
| Non-current financial assets | ||||||||||||||
| Trade receivables and others | ||||||||||||||
| Short-term investments | ||||||||||||||
| Cash and cash equivalents | ||||||||||||||
| Total financial assets | ||||||||||||||
| Financial liabilities | ||||||||||||||
| Financial liabilities—non-current portion | ||||||||||||||
| Financial liabilities—current portion | ||||||||||||||
| Trade payables and others | ||||||||||||||
| Total financial liabilities | ||||||||||||||
(1) The fair value of financial assets classified as fair value through profit and loss corresponds to the market value of the assets, which are primarily determined using level 2 measurements.
(2) The book amount of financial assets and liabilities measured at amortized cost was deemed to be a reasonable estimation of fair value.
In accordance with the amendments to IFRS 7, financial instruments are presented in three categories based on a hierarchy of methods used to determine fair value:
Level 1: fair value determined based on quoted prices in active markets for assets or liabilities;
Level 2: fair value determined on the observable database for the asset or liability concerned either directly or indirectly;
Innate Pharma |Half-year financial report June 30, 2022 | 35
13.Revenue, government financing for research expenditures and sales
13.1Revenue from collaboration and licensing agreements
Revenues from collaboration and licensing agreements result from agreements signed with AstraZeneca and Sanofi :
| (in thousands of euro) | June 30, 2022 | June 30, 2021 | ||||||
| Proceeds from collaboration and licensing agreements | ||||||||
| of which monalizumab agreement (AstraZeneca) | ||||||||
| of which IPH5201 agreement (AstraZeneca) | ||||||||
| of which preclinical molecules agreement (AstraZeneca) | ||||||||
| of which Sanofi agreement | ||||||||
| of which other agreements | ||||||||
| Invoicing of R&D costs (IPH5201 and advoralimab agreements) | ( | |||||||
| Exchange gains or losses on collaboration agreement | ( | |||||||
| Revenue from collaboration and licensing agreements | ||||||||
a) Revenue recognition related to monalizumab AZ agreements and amendments
Change in deferred revenue relating to monalizumab agreement:
| (in thousands of euro) | Total | ||||
| As of December 31, 2020 | |||||
| Revenue for the six months ended June 30, 2021 | ( | ||||
| Transfer from / (to) collaboration liabilities | |||||
| As of June 30, 2021 | |||||
| As of December 31, 2021 | |||||
Increase in deffered revenu resulting from the $ | |||||
| Revenue for the six months ended June 30, 2022 | ( | ||||
| Transfer from / (to) collaboration liabilities | ( | ||||
| As of June 30, 2022 | |||||
(1) The increase in deferred revenue relating to monalizumab agreement between December 31, 2021 and June 30, 2022 is explained by the additional payment of €47,687 thousand ($50,000 thousand) made by AstraZeneca in June 2022 and triggered by the launch of the “PACIFIC-9” Phase 3 trial on April 28, 2022. This increase has led to a simultaneous increase in collaboration commitment ("collaboration liability"- see below) of €34,335 thousand ($36,000 thousand) in accordance with the Company’s July 2019 option concerning the co-financing of Phase 3 trials in the field of collaboration.
Innate Pharma |Half-year financial report June 30, 2022 | 36
Change in collaboration liabilities relating to monalizumab agreement:
| (in thousands of euro) | Total | ||||
| As of December 31, 2020 | |||||
| Revenue for the six months ended Additions | |||||
| Deductions | ( | ||||
| As of June 30, 2021 | |||||
| As of December 31, 2021 | |||||
| Revenue for the six months ended Additions (1) | |||||
| Deductions | ( | ||||
| As of June 30, 2022 | |||||
b) Revenue recognition related to IPH5201 AstraZeneca collaboration and option agreement
Revenue related to IPH5201 for the six months ended June 30, 2022 is €4,826 thousand and results from the entire recognition in revenue of the $5.0 million milestone payment received from AstraZeneca following the signature on June 1, 2022 of an amendment to the initial contract signed in October 2018. This amendment sets the terms of the collaboration following AstraZeneca’s decision to advance IPH5201 to a Phase 2 study. The Company will conduct the study. Both parties will share the external cost related to the study and incurred by the Company and AstraZeneca will provide products necessary to conduct the clinical trial.
c) Revenue related to collaboration and option agreement related to four to-be-agreed upon molecules (preclinical molecules)
Change in deferred revenue relating to the 2018 future programs option agreement
| (in thousands of euro) | Total | ||||
| As of December 31, 2021 | |||||
| Augmentation | |||||
| Deductions | ( | ||||
| As of June 30, 2022 | |||||
During the period, the Company received from AstraZeneca a notice that it will not exercise its option to license the four preclinical programs covered in the "Future Programs Option Agreement". Consequently, the entire initial payment of €17,400 thousand was recognized as revenue as of June 30, 2022.
d) Revenue related to IPH6401 - Sanofi
Revenue related to IPH6401 under the collaboration and license agreement signed with Sanofi is €3,000 thousand for the six months ended June 30, 2022, as compared to a revenue of €1,000 thousand as of June 30, 2021. During the period, the Company announced the decision taken by Sanofi to advance IPH6401/SAR’514 towards regulatory
Innate Pharma |Half-year financial report June 30, 2022 | 37
preclinical studies aimed at studying an investigational new drug. This selection triggered a €3.0 million milestone payment from Sanofi to the Company fully recognized in revenue as of June 30, 2022. This amount was received by the Company on September 9, 2022.
e) Schedule of variance of deferred revenue
| (in thousands of euro) | As of December 31, 2021 | Recognition in P&L | Proceeds | Transfer from / (to) collaboration liabilities | As of June 30, 2022 | ||||||||||||
| Monalizumab | ( | ( | |||||||||||||||
| IPH5201 | |||||||||||||||||
| Preclinical molecules | ( | ||||||||||||||||
| Others | ( | ||||||||||||||||
| Total | ( | ( | |||||||||||||||
| (in thousands of euro) | As of December 31, 2020 | Recognition in P&L | Proceeds | Transfer from / (to) collaboration liabilities | As of June 30, 2021 | ||||||||||||
| Monalizumab | ( | ||||||||||||||||
| IPH5201 | |||||||||||||||||
| Preclinical molecules | |||||||||||||||||
| Total | ( | ||||||||||||||||
13.2Government financing for research expenditures
The Company receives grants from the European Commission, French government and state organizations in several different forms:
•Research Tax Credits; and
• Investment and operating grants.
As of June 30, 2022 and 2021, an estimate of the research tax credit amount for the first half period is calculated on the basis of eligible expenses over the period. Since January 1, 2022, public subcontracting expenses are no longer taken into account for twice their amount in the CIR calculation.
The total amount for government financing for research expenditures recorded as other income in the income statement can be analysed as follows:
| (in thousands of euro) | June 30, 2022 | June 30, 2021 | ||||||
| Research tax credit | ||||||||
| Grant | ||||||||
| Government financing for research expenditures | ||||||||
As a reminder, as of June 30, 2021, the total amount of grants recognized in the income statement includes an amount of €1,360 thousand representing the first tranche related to the BPI financing contract signed in August 2020 as part of the program set up by the French government to help develop a therapeutic solution with a preventive or curative aim against COVID-19.
Innate Pharma |Half-year financial report June 30, 2022 | 38
14.Operating expenses
| (in thousands of euro) | June 30, 2022 | June 30, 2021 (1) | ||||||||||||||||||
| R&D | G&A | Total | R&D | G&A | Total | |||||||||||||||
| Subcontracting costs(2) | ( | ( | ( | ( | ( | |||||||||||||||
| Cost of supplies and consumable materials | ( | ( | ( | ( | ( | ( | ||||||||||||||
| Personnel expenses other than share-based compensation | ( | ( | ( | ( | ( | ( | ||||||||||||||
| Share-based compensation | ( | ( | ( | ( | ( | ( | ||||||||||||||
| Personnel expenses | ( | ( | ( | ( | ( | ( | ||||||||||||||
| Non-scientific advisory and consulting(3) | ( | ( | ( | ( | ( | ( | ||||||||||||||
| Leasing and maintenance | ( | ( | ( | ( | ( | ( | ||||||||||||||
| Travel expenses and meeting attendance | ( | ( | ( | ( | ( | ( | ||||||||||||||
| Marketing, communication and public relations | ( | ( | ( | ( | ( | ( | ||||||||||||||
| Scientific advisory and consulting(4) | ( | ( | ( | ( | ||||||||||||||||
| Other purchases and external expenses | ( | ( | ( | ( | ( | |||||||||||||||
| Depreciation and amortization | ( | ( | ( | ( | ( | ( | ||||||||||||||
| Intellectual property expenses | ( | ( | ( | ( | ( | ( | ||||||||||||||
| Other income and (expenses), net | ( | ( | ( | ( | ( | |||||||||||||||
| Total operating expenses | ( | ( | ( | ( | ( | ( | ||||||||||||||
(1)Items relating to the six months ended June 30, 2021 have been restated to reflect the impact of the classification of Lumoxiti's activities as discontinued operations in 2021. These items are presented in note 17.
(2)The Company subcontracts a significant part of its pre-clinical (pharmaceutical development, tolerance studies and other model experiments, etc.) and clinical operations (coordination of trials, hospital costs, etc.) to third parties.
(3)Non-scientific advisory and consulting are services performed to support the general and administration activities of the Company, such as legal, accounting and audit fees as well as business development support.
(4)Scientific advisory and consulting expenses relate to consulting services performed by third parties to support the research and development activities of the Company.
14.1Personnel expenses other than share-based compensation
14.2Depreciation and amortization
14.3Cost of suppliers and consumable materials
Innate Pharma |Half-year financial report June 30, 2022 | 39
15.Net financial income / (loss)
Net financial income (loss) can be analyzed as follows :
| (in thousands of euro) | June 30, 2022 | June 30, 2021 | ||||||
| Interests on financial assets | ||||||||
| Change in valuation allowance on financial instruments | ||||||||
| Foreign exchange gains | ||||||||
| Other financial income | ||||||||
| Financial income | ||||||||
| Foreign exchange losses | ( | ( | ||||||
| Unrealized losses on financial assets | ( | |||||||
| Interest on financial liabilities | ( | ( | ||||||
| Other financial expenses | ( | |||||||
| Financial expenses | ( | ( | ||||||
| Net financial income (loss) | ( | |||||||
For the six months ended June 30, 2022 and 2021, the foreign exchange gains and losses mainly result from the variance of the exchange rate between the Euro and the US dollar on US dollars denominated cash and cash equivalent and financial assets accounts.
Unrealized losses on financial assets relate to unquoted instruments, the fair value of which is determined using level 2 measurements.
16.Income tax / (expense)
Due to the Company’s early stage of development, it is not probable that future taxable profit will be available against which the unused tax losses can be utilized. As a consequence, deferred tax assets are recognized up to deferred tax liabilities. The main temporary differences are related to the application of the IFRS 15 standard for fiscal years beginning on or after January 1, 2018, finance leases, provisions for pension commitments and tax loss carryforwards.
The Company did not recognize a current tax expense as at June 30, 2022 regarding a projected tax rate of nil as of December 31, 2022. As of June 30, 2022, the accumulated tax losses carryforwards of Innate Pharma SA were €392,359 20 years for the respective amounts of €14,967 515 15,482 16,081
17. Discontinued Operations
Innate Pharma |Half-year financial report June 30, 2022 | 40
a) Financial Performance
| (in thousands of euro) | June 30, 2022 | June 30, 2021 | ||||||
| Revenue and other income | ||||||||
| Revenue from collaboration and licensing agreements | ||||||||
| Sales | ||||||||
| Total revenue and other income | ||||||||
| Operating expenses | ||||||||
| Research and development expenses | ( | ( | ||||||
| Selling, general and administrative expenses | ( | ( | ||||||
| Impairment of intangible assets | ||||||||
| Total operating expenses | ( | ( | ||||||
| Net income (loss) from distribution agreements | ||||||||
| Operating income (loss) | ( | ( | ||||||
| Financial income | ||||||||
| Financial expenses | ||||||||
| Net financial income (loss) | ||||||||
| Net income (loss) before tax | ( | ( | ||||||
| Income tax expense | ||||||||
| Net income (loss) from discontinued operations | ( | ( | ||||||
b) Cash-Flows
| (in thousands of euro) | June 30, 2022 | June 30, 2021 | ||||||
| Net cash generated from / (used in) operating activities | ( | ( | ||||||
| Net cash generated from / (used in) investing activities | ||||||||
| Net cash generated from / (used in) financing activities | ||||||||
| Net cash flows from discontinued operations | ( | ( | ||||||
18.Commitments, contingencies and litigation
18.1Commitments
The Company has identified the following changes in off-balance sheet commitments since December 31, 2021:
•non-cancellable purchase commitments as of June 30, 2022 for a total of €2,666 thousand with various CMOs.These commitments are comprised of non-cancellable purchase orders placed during the first half of 2022 with contract manufacturing organizations (CMOs) for the supply of various services in relation with preclinical work for an amount of €2,485 thousand and clinical work for an amount of €181 thousand. The execution of these services has not yet started at the date of this report.
18.2Contingencies and litigations
Innate Pharma |Half-year financial report June 30, 2022 | 41
18.3Provisions
19.Related party transactions
Members of the Executive Board and Other Executive Members
For each of the period presented, the following compensation was granted to the members of the Executive Committee of the Company and were recognized as expense:
| (in thousands of euro) | June 30, 2022 | June 30, 2021 | ||||||
| Personnel and other short-term employee benefits | ||||||||
| Extra pension benefits | ||||||||
| Share-based compensation | ||||||||
| Executive Board Members and other Executive Members compensation | ||||||||
Personnel and other short-term employee benefits correspond to amounts included in personnel expenses for the six-month periods ended June 30, 2022 and 2021 respectively.
Members of the Supervisory Board
The Company recognized a provision of €176 thousand for attendance fees (jetons de presence) relating to the six months ended June 30, 2022. This amount includes the compensation for the Chairman of the Supervisory Board.
Related parties
Novo Nordisk A/S is a shareholder, Supervisory Board member and is related to the Company by three licensing agreements related to the drug-candidates lirilumab, monalizumab and avdoralimab. Under the terms of the agreements, Novo Nordisk A/S is eligible to receive milestone payments as well as royalties on future sales. As of June 30, 2022, the Company has no liability to Novo Nordisk A/S.
AstraZeneca is a shareholder and is related to the Company through several collaboration and option licensing or license agreements for different drug candidates (monalizumab, avdoralimab, IPH5201 and preclinical molecules) and by a termination and transition agreement relating to the rights of the drug Lumoxiti. The payments between the two companies as well as the liabilities and receivables as of June 30, 2022 are as follows:
Innate Pharma |Half-year financial report June 30, 2022 | 42
| As of June 30,2022 | ||||||||
| (in thousands of euro) | Payments | Assets/Liabilities | ||||||
| Collection (AstraZeneca to the Company) / Receivables | ||||||||
| Payments (the Company to AstraZeneca) / Liabilities | ( | ( | ||||||
| Total | ||||||||
Hervé Brailly is Chairman of the Supervisory Board of the Company and was a member of the Strategy Committee of Mi-mAbs until December 2021. Mi-mAbs is a company with which the Company entered into a framework contract on February 2, 2021 for the provision of services by Mi-mAbs of services in connection with the generation of monoclonal antibodies, the production of monoclonal antibodies or conjugated antibodies, or the in vitro or in vivo pharmacological characterization of potential drug candidates belonging to the Society. The maximum amount paid by the Company under this contract is capped at €600 thousand. The contract was initially concluded on February 2, 2021, with retroactive effect, for a period of one year , from January 1, 2021 to December 31, 2021. It was renewed on December 17, 2021 for a period of one year from from January 1, 2022. An amendment signed in April 4, 2022 modified the maximum amount of the contract, to cap it at €1.0 million for the entire duration of the contract (i.e. years 2021 and 2022).
Subsidiaries
The business relationships between the Company and its subsidiary are governed by intra-group and commercial agreements, concluded at market standard conditions on an arm’s length basis.
20.Income / (loss) per share
20.1Basic income / (loss) per share
Basic income / (loss) per share are calculated by dividing the net earnings attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period.
| June 30, 2022 | June 30, 2021 | |||||||
| Net income/(loss) | ( | |||||||
| Weighted average number of ordinary shares in circulation | ||||||||
| Basic income/(loss) per share (€ per share) | ( | |||||||
20.2Diluted income / (loss) per share
Innate Pharma |Half-year financial report June 30, 2022 | 43
| In thousands of euro, except for data share | June 30, 2022 | June 30, 2021 | ||||||
| Net income/(loss) for the period | ( | |||||||
| Weighted average number of ordinary shares in circulation | ||||||||
| Adjustment for share instruments | ||||||||
| Diluted income/(loss) per share (€ per share) | ( | |||||||
21.Events after the reporting date
On August 1, 2022, the Company announced that the combination of monalizumab and cetuximab did not reach the pre-specified efficacy threshold in the protocol-planned interim futility analysis of the Phase 3 INTERLINK-1 clinical study conducted by AstraZeneca. AstraZaneca has thus informed the Company that the study will be discontinued. Consequently, the Company is not eligible for the additional payment of $50.0 million as provided for in the amendment signed in September 2020 relating to the monalizumab collaboration and license agreement entered into with AstraZeneca in 2015. All other development and commercial milestone payments related to the agreement remain unchanged.
In August 2022, the Company communicated to Société Générale and BNP Paribas its desire to use the capital repayment extension options of the two State-Guaranteed Loans (“PGE”) contracted in December 2021. As a reminder, the Company had obtained non-dilutive financing of 28.7 million in the form of two PGEs from Société Générale (20.0 million euros) and BNP Paribas (8.7 million euros) with a maturity initial of one year with an option to extend up to five years . Discussions are currently underway with Société Générale and BNP Paribas regarding the conditions for extending repayment and the effective interest rate of loans. At the date of this report, the Company has obtained agreements in principle from Société Générale and BNP Paribas concerning financing rates after extension option of 1.56 % and 0.95 % respectively, excluding insurance and guarantee premium with an excess for the whole of 2023.
Innate Pharma |Half-year financial report June 30, 2022 | 44
STATUTORY AUDITORS' REVIEW REPORT ON THE HALF-YEARLY FINANCIAL INFORMATION
This is a free translation into English of the statutory auditors’ review report on the half-yearly financial information issued in French and is provided solely for the convenience of English-speaking users. This report includes information relating to the specific verification of information given in the Group’s half-yearly management report. This report should be read in conjunction with, and construed in accordance with, French law and professional standards applicable in France.
To the Shareholders of INNATE PHARMA,
In compliance with the assignment entrusted to us by your Annual General Meeting and in accordance with the requirements of article L. 451-1-2-III of the French Monetary and Financial Code ("code monétaire et financier"), we hereby report to you on:
•the review of the accompanying condensed half-yearly consolidated financial statements of Innate Pharma, for the period from January 1 to June 30, 2022,
•the verification of the information presented in the half-yearly management report.
These half-year condensed consolidated financial statements were prepared under the responsibility of the Executive Board. Our role is to express a conclusion on these financial statements based on our review.
Conclusion on the financial statements
We conducted our review in accordance with professional standards applicable in France. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with professional standards applicable in France and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed half-yearly consolidated financial statements are not prepared, in all material respects, in accordance with IAS 34, the IFRS standard as adopted by the European Union applicable to interim financial information.
Specific verification
We have also verified the information presented in the half-yearly management report commenting the condensed half-yearly consolidated financial statements subject to our review.
We have no matters to report as to its fair presentation and consistency with the condensed half-yearly consolidated financial statements.
Marseille and Paris-La Défense, September 15, 2022
The Statutory Auditors
French original signed by
Odycé Nexia SAS Deloitte & Associés
Member of Nexia International
Member of Nexia International
Guy CASTINEL Stéphane MENARD
Innate Pharma |Half-year financial report June 30, 2022 | 45
DECLARATION BY THE PERSON RESPONSIBLE FOR THIS HALF-YEAR FINANCIAL REPORT
I hereby declare, to the best of my knowledge, that the condensed consolidated interim financial statements for the six months ended June 30, 2022 have been prepared in accordance with applicable accounting standards and give a true and fair view of the assets, liabilities, financial position and results of the Company and the subsidiaries included in the consolidation, and that the half year management reviews stated on page 5 gives a fair description of the material events that occurred in the first six months of the financial year and their impact on the interim financial statements, as well as a description of the principal risks and uncertainties for the remaining six months of the year, along with the principal transactions with related parties.
Chairman of the Executive Board
Mr Mondher Mahjoubi
Innate Pharma |Half-year financial report June 30, 2022 | 46