Innate Pharma Reports First Half 2021 Financial Results and Business Update
MARSEILLE, France, Sept. 15, 2021 (GLOBE NEWSWIRE) -- 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, 2021. The consolidated financial statements are attached to this press release.
“In the first half of 2021, we had two key advancements in our portfolio – encouraging new lacutamab data in a subtype of cutaneous T-cell lymphoma, mycosis fungoides, and new data from our proprietary, multi-specific NK cell engager platform, ANKET™. These progressions have set the stage for delivering both near and long-term value, while also highlighting the strength and depth of our core R&D efforts,” said Mondher Mahjoubi, Chief Executive Officer of Innate Pharma. “We look forward to the continued progress of our pipeline, including the upcoming monalizumab presentation at ESMO and our lacutamab clinical trial program, in addition to advancing our early-stage R&D activities. These important efforts will help to progress the next wave of innovation at Innate.”
Financial highlights for the first half of 2021:
The key elements of Innate’s financial position and financial results as of and for the six-month period ended June 30, 2021 are as follows:
The table below summarizes the IFRS consolidated financial statements as of and for the six months ended June 30, 2021, including 2020 comparative information.
Lacutamab (anti-KIR3DL2 antibody):
ANKET™ (Antibody-based NK cell Engager Therapeutics):
Monalizumab (anti-NKG2A antibody), partnered with AstraZeneca:
Avdoralimab (IPH5401, anti-C5aR antibody):
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:
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, 2020, 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.
Summary of Interim Condensed Consolidated Financial Statements and Notes as of JUNE 30, 2021
Interim Condensed Consolidated Statements of Cash Flow
Revenue and other income
Revenue from collaboration and licensing agreements
Revenue from collaboration and licensing agreements decreased by €21.5 million, or 72.2%, to €8.3 million for the six months ended June 30, 2021, as compared to revenues from collaboration and licensing agreements of €29.8 million for the six months ended June 30, 2020. These revenues were derived principally from our agreements with AstraZeneca and Sanofi and are recognized on the basis of the percentage of completion of the works performed by the Company.
The evolution for the first half of 2021 is mainly due to:
As of June 30, 2021, the deferred revenue related to monalizumab was €20.7 million (€10.5 million as “Deferred revenue—Current portion” and €10.2 million as “Deferred revenue—Non-current portion).
Government funding for research expenditures
Government financing for research expenditures decreased by €0.5 million, or 7.8%, to €6.4 million for the six months ended June 30, 2021 as compared to €6.9 million the six months ended June 30, 2020. This change is mainly due to (i) a decrease in amortization of the acquired licenses (monalizumab and IPH5201) and decrease in eligible private subcontracting costs included in research tax credit calculation, in connection with the decrease in R&D subcontracting over the period; (ii) partly offset by an increase in grants of €1.3 million in connection with the recording in revenue of the first relative repayable advance tranche paid to the Company and pursuant 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 is 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 research tax credit is calculated as 30% of the amount of research and development expenses, net of grants received, eligible for the research tax credit for the six months ended June 30, 2021 and 2020. Following the loss of the SME status under European Union criteria since December 31, 2019, the CIR for the tax year 2021 will be imputable on the tax expense of the following three tax years, or refunded if necessary at the end of this delay.
As of June 30, 2021, following the end of the transition period relating to the commercialization of Lumoxiti in the United States on September 30, 2020, the Company recognized net sales of Lumoxiti for the first half of 2021 for an amount of €1.0 million.
The table below presents our operating expenses for the six months periods ended June 30, 2021 and 2020:
Research and development expenses
Research and development (“R&D”) expenses decreased by €9.7 million, or 30.8%, to €21.8 million for the six months ended June 30, 2021, as compared to €31.5 million for the six months ended June 30, 2020, representing a total of 53.0% and 68.5% 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 expenses decreased by €3.8 million, or 23.8%, to €12.1 million for the six months ended June 30, 2021, as compared to €15.9 million for the six months ended June 30, 2020. This decrease is mainly explained by (i) a decrease of €1.4 million in expenses relating to Lumoxiti, which is explained by the end of the transition period with AstraZeneca in September 2020 and the decision taken by the Company to return commercial rights in the United States and in Europe notified in December 2020, (ii) a decrease of €1.7 million in expenses relating to the avdoralimab program in connection with 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 (iii) a €0.7 million decrease in expenses relating to monalizumab in connection with the maturity of clinical trials falling within the scope of the collaboration with AstraZeneca.
Personnel and other expenses allocated to R&D decreased by €5.9 million, or (37.9%), to €9.7 million for the six months ended June 30, 2021, as compared to an amount of €15.6 million for the six months ended June 30, 2020. This decrease is mainly explained by the decrease in depreciation and amortization expenses allocated to R&D for €4.7 million in connection with the decrease in depreciation expenses relating to the licenses acquired and concerning (i) Lumoxiti for €2.0 million (intangible asset fully depreciated as of December 31, 2020), (ii) IPH5201 for €1.8 million (intangible asset fully amortized as of December 31, 2020) and (iii) monalizumab for €0.7 million, in connection with the extension of the estimated end date of the program clinical studies.
Selling, general and administrative expenses
Selling, general and administrative (“SG&A”) expenses increased by €4.8 million, or 33.3%, to €19.3 million for the six months ended June 30, 2021, as compared to €14.5 million for the six months ended June 30, 2020, representing a total of 47.0% and 31.5% of the total operating expenses, respectively.
Personnel expenses are stable, to €6.4 million for the six months ended June 30, 2021 as compared to €6.4 million for the six months ended June 30, 2020.
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 €0.8 million, or (19.9%), to €3.3 million for the six months ended June 30, 2021 as compared to €4.1 million for the six months ended June 30, 2020, primarily as a result of expenses related to the commercialization of Lumoxiti and the structuring of our U.S subsidiary in the first semester of 2020.
Selling, general and administrative expenses include the provision for charges relating to the payment of $6.2 million (€5.2 million as of June 30, 2021) to be made on April 30, 2022 to AstraZeneca under the Lumoxiti transition and termination agreement effective as of June 30, 2021. The provision thus constituted is presented under “Provision - current portion” in the consolidated balance sheet.
Following the December 2020 announcement, Innate and AstraZeneca have successfully executed the Lumoxiti termination and transition agreement. The companies are currently in a transition period, in which Innate will remain the Biologics License Application (BLA) holder in the U.S until September 30, 2021. AstraZeneca will reimburse Innate for all Lumoxiti related costs and expenses, and Innate will remit proceeds from net sales to AstraZeneca. In the full year results 2020 announcement, the Company reported a contingent liability of up to $12.8 million in its consolidated financial statements, which was linked to the split of certain manufacturing costs. As part of the termination and transition agreement, Innate and AstraZeneca agreed to split the manufacturing costs, and Innate will pay $6.2 million on April 30, 2022.
The rise in other expenses mainly results from insurance costs, which increase following the listing of the Company on the Nasdaq.
Net income (loss) from distribution agreements
During the transition period which ended on September 30, 2020, Lumoxiti products were commercialized in the U.S by AstraZeneca who is the owner of the regulatory approval. The Company concluded that it did not meet the criteria for being principal under IFRS 15 during the transition period. Consequently, the net result resulting from all Lumoxiti marketing’s operations was disclosed in the item line “Net income / (loss) from distribution agreements.” The Company recognized a €896 thousand net gain for the six months ended June 30, 2020, corresponding to production and marketing costs, net of sales proceeds, as invoiced by AstraZeneca in relation to Lumoxiti distribution agreement for the period.
Financial income (loss), net
We recognized a net financial gain of €1.7 million in the six months ended June 30, 2021 as compared to a net financial loss of €2.0 million in the six months ended June 30, 2020. This €3.7 million increase mainly resulted from the decrease in fair value of certain of our financial instruments (net gain of €1.0 million as compared to a net loss of €2.5 million for the six months ended June 30, 2021 and 2020, respectively). Such decrease in fair value of certain of our financial instruments resulted from the negative impact of the COVID-19 outbreak on the financial markets in the first half of 2020.
Balance sheet items
Cash, cash equivalents, short-term investments and non-current financial assets amounted to €159.4 million as of June 30, 2021, as compared to €190.6 million as of December 31, 2020. Net cash as of June 30, 2021 amounted to €117.3 million (€149.5 million as of December 31, 2020). 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, 2021 are:
As of June 30, 2021, cash and cash equivalents amounted to €104.0 million, compared to €136.8 million as of December 31, 2020, corresponding in a decrease of €32.8 million.
The net cash flow generated during the period under review mainly results from the following:
As a reminder, our net cash flow used in investing activities for the six months ended June 30, 2020 were €12.1 million and were mainly driven by (i) a €13.4 million ($1.5 million) additional consideration paid to AstraZeneca regarding Lumoxiti following the submission of the BLA to the European Medicine Agency (EMA) in November 2019 (ii) a €2.7 million additional consideration paid to Orega Biotech in April 2020 relating to IPH5201 following the dosing of a first patient in a Phase I clinical trial and (iii) the acquisition of financial assets for a net amount of €3.0 million. These items were partly offset by the reimbursement by AstraZeneca of the rebate relating to the acquisition of Lumoxiti (€7.0 million).
Post period events
The interim consolidated financial statements for the six-month period ended June 30, 2021 have been subject to a limited review by our Statutory Auditors and were approved by the Executive Board of the Company on September 14, 2021. They were reviewed by the Supervisory Board of the Company on September 14, 2021. They will not be submitted for approval to the general meeting of shareholders.
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 27, 2021 (AMF number D.21-0361). 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, except the risk described in the paragraph 3.4 “Risks relating to the return of rights from Lumoxiti to Astrazeneca” of the universal registration document, which is not relevant anymore for the Company. An update of that risk is presented in note G) of the half-year management review as of June 30, 2021. 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:
1 Including short term investments (€15.3 million) and non-current financial instruments (€40.1 million)
2 See note 18) of the consolidated financial statements as of December 31, 2020
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