Innate Pharma SA (Euronext Paris: IPH – ISIN: FR0010331421; Nasdaq:
IPHA) (“
Innate” or the “
Company”)
today reported its consolidated financial results for the six
months ended June 30, 2020. The consolidated financial statements
are attached to this press release.
“In the first half of 2020, Innate has made
meaningful progress across its portfolio, quickly resuming
enrollment in the lacutamab Phase 2 study, TELLOMAK, for patients
with Sézary syndrome and mycosis fungoides,” commented
Mondher Mahjoubi, Chief Executive Officer of Innate
Pharma. “In the second half of the year, our
partner, AstraZeneca, expects to initiate the Phase 3 clinical
study for monalizumab in combination with cetuximab in
IO-pretreated patients with recurrent or metastatic head and neck
squamous cell cancer. This represents a significant clinical
and financial milestone, as we progress our first Phase 3
asset and advance a promising, potentially first-in-class
treatment for a patient population that needs novel, effective and
tolerable therapies. More broadly, we continue to execute on
our long-term strategy, transitioning into a global
commercial-stage biotech company as we assume full US commercial
responsibilities for Lumoxiti by the end of the year.”
Webcast and conference call will be held today at 2:00pm
CEST (8:00am ET)Webcast access:
https://edge.media-server.com/mmc/p/ptr5apboor Dial in
numbers:France: +33 (0)1 70 70 07 81
US only: + 1 877 870 9135Standard
International: +44 (0) 2071 928338Conference ID:
7368163The presentation and access to the live
webcast will be available on Innate Pharma’s website 30 minutes
ahead of the conference. A replay will be available on Innate
Pharma’s website after the conference call. |
1 Including short term investments (€16.0 million)
and non-current financial instruments (€36.9 million)
Financial highlights for the first half of
2020:
The key elements of Innate’s financial position
and financial results as of and for the six-month period ended June
30, 2020 are as follows:
- Cash, cash equivalents, short-term investments and financial
assets amounting to €184.6 million (€m) as of June 30, 2020
(€255.9m as of December 31, 2019).
- Revenue and other income amounted to €36.7m in the first half
of 2020 (€59.2m in the first half of 2019) and mainly comprise of:
- Revenue from collaboration and licensing agreements, which
mainly resulted from the spreading of the upfront and opt-in
payments received from AstraZeneca (LSE/STO/NYSE: AZN):
- (i) Revenue from collaboration and licensing agreements for
monalizumab decreased by €4.7m to €19.6m in the first half of 2020
(€24.3m in the first half of 2019), due to a catch up on the period
of a non material decrease in the collaboration budget; and
- (ii) Revenue from collaboration and licensing agreements for
IPH5201 decreased by €13.8m to €8.7m in the first half of 2020
(€22.5m in the first half of 2019), primarily due to an extension
of the recognition period of such revenue after the renewal in
November 2019 of the collaboration with AstraZeneca for 12
months.
- Revenue from invoicing of research and development (R&D)
costs for avdoralimab (IPH5401) and IPH5201 was €1.1m the first
half of 2020 (€4.4m in the first half of 2019), after IPH5201
transitioned to Phase 1, which is carried out and paid by
AstraZeneca.
- Government funding for research expenditures of €6.9m in the
first half of 2020 (€7.6m in the first half of 2019).
- Operating expenses of €46.0m in the first half of 2020 (€45.9m
in the first half of 2019), of which 68.5% (€31.5m) are related to
R&D.
- R&D expenses decreased by €5.1m to €31.5m in the first half
of 2020 (€36.6m in the first half of 2019), following the
completion of regulatory work for certain pipeline programs,
including the Lumoxiti filing in Europe and the Phase 1 transition
of IPH5201 to AstraZeneca.
- Selling, general and administrative (SG&A) expenses
increased by €5.2m to €14.5m in the first half of 2020 (€9.3m in
the first half of 2019) primarily as a result of the
structuration of the US subsidiary and commercialization of
Lumoxiti.
- The Lumoxiti distribution agreement generated a net income of
€0.9m in the first half of 2020 (net loss of €3.8m in the first
half of 2019) primarily as a result of the transition of commercial
costs from AstraZeneca to Innate Pharma.
- A net financial loss of €2.0m in the first half of 2020 (net
financial income of €3.8m in the first half of 2019), 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
outbreak on the financial markets.
- A net loss of €10.3m for the first half of 2020 (net income of
€13.2m for the first half of 2019).
The table below summarizes the IFRS consolidated
financial statements as of and for the six months ended June 30,
2020, including 2019 comparative information.
In thousands of euros, except for data per
share |
|
June 30, 2020 |
June 30, 2019 |
Revenue and other income |
|
36,745 |
59,155 |
Research and development |
|
(31,499) |
(36,584) |
Selling, general and administrative |
|
(14,490) |
(9,295) |
Total operating expenses |
|
(45,989) |
(45,879) |
Net income (loss) from distribution agreements |
|
896 |
(3,820) |
Operating income (loss) |
|
(8,348) |
9,456 |
Net financial income (loss) |
|
(1,986) |
3,784 |
Income tax expense |
|
- |
- |
Net income (loss) |
|
(10,334) |
13,240 |
Weighted average number of shares outstanding (in thousands) |
|
78,892 |
63,988 |
Basic income (loss) per share |
|
(0.13) |
0.21 |
Diluted income (loss) per share |
|
(0.13) |
0.20 |
|
|
|
June 30, 2020 |
December 31, 2019 |
Cash, cash equivalents and financial asset |
|
184,614 |
255,869 |
Total assets |
|
333,066 |
401,361 |
Shareholders’ equity |
|
207,764 |
217,416 |
Total financial debt |
|
18,817 |
18,723 |
Pipeline highlights:
Lacutamab (IPH4102, anti-KIR3DL2
antibody):
- In June 2020, the U.S. Food and Drug Administration (FDA)
lifted the partial clinical hold placed on the TELLOMAK Phase 2
clinical trial, which evaluates the efficacy and safety of
lacutamab in patients with advanced T-cell lymphomas.
- In Europe, regulatory agencies in Spain and Germany have also
lifted the partial clinical hold on the TELLOMAK trial, enabling
the Company to resume recruitment of the trial in these countries
in addition to France, the United Kingdom and the United
States.
- Innate expects to start sharing data from this trial for
mycosis fungoides in 2021 and Sézary syndrome in 2022.
- In addition, the Company announced its plan to resume
development of lacutamab in peripheral t-cell lymphomas
(PTCL).
Monalizumab (anti-NKG2A antibody),
partnered with AstraZeneca:
- At the May ASCO20 Virtual Scientific Conference, efficacy data
was presented from a Phase 2 expansion cohort investigating the
combination of monalizumab and cetuximab in patients with recurrent
or metastatic head and neck squamous cell cancer (R/M SCCHN) who
have been previously treated with platinum-based chemotherapy and
PD-(L)1 inhibitors (“IO-pretreated”, “Cohort 2”). Those data showed
an overall response rate in line with previously reported data and
a manageable safety profile.
- As previously announced, the advancement of monalizumab into a
Phase 3 randomized clinical trial evaluating monalizumab in
combination with cetuximab in patients suffering from R/M SCCHN is
expected in the second half of 2020.
- Following review of longer patient follow-up and maturing
survival data from Cohort 2, and following discussions with
AstraZeneca, the Company has agreed to amend the agreement.
It will now receive a $50 million payment upon AstraZeneca’s dosing
of the first patient in the Phase 3 trial, and a $50 million
payment after the interim analysis demonstrates the combination
meets a pre-defined threshold of clinical activity. All other
potential development and commercial milestones related to the
agreement remains unchanged. The Company is planning to
present updated and longer term Cohort 2 data at a future
scientific conference.
- During the second quarter of 2020, the Company expanded a Phase
2 expansion cohort (“Cohort 3”), exploring the combination of
monalizumab, cetuximab and durvalumab in IO-naïve patients with R/M
SCCHN, from 20 to 40 patients. Recruitment for Cohort 3 is
complete, and the Company now expects to publish data in
2021.
Avdoralimab in Oncology (IPH5401, anti-C5aR
antibody):
- Avdoralimab is currently being tested in a Phase 1 dose
escalation and expansion study (STELLAR-001) in combination with
durvalumab in three expansion cohorts: 1) NSCLC patients with
secondary resistance to prior immuno-oncology (IO) treatment; 2)
IO-naïve HCC patients; and 3) IO-pretreated HCC patients. Based on
the data from our cohort expansions in NSCLC and IO-naïve HCC, the
Company has made the decision to stop enrollment in
STELLAR-001.
Avdoralimab in
Inflammation:
- Targeting C5a/C5aR has been demonstrated scientifically and
through positive clinical trials in some complement-driven
inflammatory diseases.
- The Company is pursuing investigator-sponsored trials in
chronic spontaneous urticaria (CSU) and bullous pemphigoid (BP)
where the C5aR1 pathway has been shown to be strongly involved in
the physiopathology of the disease.
- Both trials are expected to start in the second half of
2020.
Innate’s COVID-19 efforts:
- Innate has been conducting R&D programs in partnership with
several French-based hospitals and academic centers in an effort to
advance the scientific understanding of COVID‑19:
- FORCE (FOR COVID-19
Elimination): in April, the
Company announced an investigator-sponsored trial named FORCE (FOR
COVID-19 Elimination). FORCE is a randomized, double-blind Phase 2
clinical trial which aims to further explore avdoralimab in
COVID-19 patients with severe pneumonia and is currently ongoing.
- The Phase 2 trial is supported by an exploratory translational
study, EXPLORE, which suggests that patients who
progress towards severe COVID-19 disease exhibit an increase
activation of the C5a/C5aR1 pathway.
- Results from the EXPLORE study were published online in Nature
on July 29, 2020.
- ImmunONCOVID-20: a controlled, randomized,
study, sponsored by Centre Léon Bérard, Lyon, is exploring the
potential efficacy of monalizumab, a potentially first-in-class
immune checkpoint inhibitor, and avdoralimab, amongst other
treatment arms, against COVID‑19 in cancer patients with mild
symptoms and pneumonia respectively.
- Recruitment update: study recruitment for both
clinical studies had declined due to improving conditions in
France. However, due to the recent increase in COVID-19 cases and
the Company opening new centers in France, enrolment is starting to
resume in the FORCE trial. ImmunONCOVID-20 is currently suspended.
The Company continues to closely monitor the situation and is also
assessing the feasibility to expand its exploration of avdoralimab
in COVID-19 into other geographies.
- In August, the Company announced it obtained €6.8m in public
funding from the French government for its COVID-19 R&D
activities. This funding is part of the government’s PSPC-COVID
call for COVID-19 related projects and will enable the Company to
cover the development of its current COVID-19 activities, which
began in March 2020, including the EXPLORE COVID-19 translational
research study and its two Phase 2 clinical trials, FORCE and
ImmunONCOVID-20.
IPH5201 (anti-CD39 antibody), partnered
with AstraZeneca:
- In February 2020, the multicenter, open-label, dose-escalation
Phase 1 trial started, which is evaluating IPH5201 as monotherapy
or in combination with durvalumab (anti-PD-L1) with or without
oleclumab (anti-CD73) in advanced solid tumors. Following the
dosing of the first patient on March 9, 2020, AstraZeneca made a
$5m milestone payment to Innate pursuant to Innate’s collaboration
agreement with AstraZeneca and Innate made a €2.7m milestone
payment to Orega Biotech SAS pursuant to Innate’s licensing
agreement with Orega Biotech SAS.
Lumoxiti, a first-in-class marketed
product in-licensed from AstraZeneca for the treatment of relapsed
or refractory hairy cell leukemia:
- In January, the Company announced the European Medicines Agency
(EMA) accepted the filing of the Marketing Authorization
Application (MAA) for Lumoxiti.
- In March 2020, the Biologics License Application for Lumoxiti
was transitioned from AstraZeneca to Innate. The transition of the
full US commercial operations is on track to be completed in
2020.
- Relapsed or refractory hairy cell leukemia (HCL) is a rare
disease, and approximately 380 HCL patients in the US have received
at least two lines of prior systemic therapy, making them eligible
for Lumoxiti treatment. Prior to Lumoxiti, no new therapeutic had
been approved for HCL in over 20 years. The COVID-19 pandemic has
limited face-to-face interactions with oncology healthcare
professionals regarding Lumoxiti. Furthermore, it has caused
delays to treatment initiations for potential Lumoxiti patients. As
a result, the rate of new Lumoxiti patients has slowed, which is
expected to impact 2020 sales.
Corporate Update:
- In July 2020, Dr. Joyson Karakunnel was appointed as Executive
Vice President and Chief Medical Officer (CMO). Dr. Pierre Dodion,
CMO since 2014, retired from this position. Dr. Karakunnel
comes to the Company with deep experience in immuno-oncology, and a
proven track record in drug development. Most recently, Dr.
Karakunnel served as CMO and Senior Vice President at Tizona
Therapeutics, where he led the development of the company’s
biotherapeutics pipeline.
Post period event:
- On August 11, 2020, the Company announced that it has obtained
funding from Bpifrance Financement as part of the program
established by the French government to support the development of
therapeutic solutions with a preventative or curative aim for
COVID-19. This funding, in a maximum aggregate amount of €6.8
million, consists of (i) an advance reimbursable only upon
technical and commercial success and (ii) a non-reimbursable grant.
This funding will be received in four consecutive tranches. The
first tranche of €1.7m was received at signing, and the three
remaining tranches will be received upon achievement of certain
clinical milestones, particularly around the FORCE Phase 2
trial
- On September 7, 2020, the Company signed an amendment to the
monalizumab collaboration and license agreement concluded with
AstraZeneca in 2015. Following review of longer patient follow-up
and maturing survival data from Cohort 2, and following discussions
with AstraZeneca, the Company has agreed to amend the
agreement. It will now receive a $50 million payment upon
AstraZeneca’s dosing of the first patient in the Phase 3 trial, and
a $50 million payment after the interim analysis demonstrates the
combination meets a pre-defined threshold of clinical
activity. All other potential development and commercial
milestones related to the agreement remains unchanged. The Company
is planning to present updated and longer term Cohort 2 data at a
future scientific conference. The Phase 3 trial evaluating
monalizumab is expected to commence in the second half of
2020.
About Innate Pharma:
Innate Pharma S.A. is a commercial 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 commercial-stage product,
Lumoxiti, in-licensed from AstraZeneca in the US, EU and
Switzerland, was approved by the FDA in September 2018. Lumoxiti is
a first-in class specialty oncology product for hairy cell
leukemia. 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 has been 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.
Based in Marseille, France, 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 codeTicker
codeLEI |
FR0010331421Euronext: IPH Nasdaq: IPHA9695002Y8420ZB8HJE29 |
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, 2019,
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 Innate
Pharma
Tel.: +33 (0)4 30 30 30 30 investors@innate-pharma.com
|
Media Innate
Pharma Tracy Rossin (Global/US) Tel.: +1 240 801
0076 Tracy.Rossin@innate-pharma.com ATCG Press
Marie Puvieux (France) Tel.: +33 (0)9 81 87 46 72
innate-pharma@atcg-partners.com |
Summary of Interim Condensed Consolidated
Financial Statements and Notes as of June 30, 2020
Interim
Condensed Consolidated Statements of Financial Position
(in thousand euros)
|
June 30, 2020 |
December 31, 2019 |
|
|
|
Assets |
|
|
|
|
|
Cash and cash equivalents |
131,542 |
202,887 |
Short-term investments |
16,199 |
15,978 |
Trade receivables and others - current |
15,948 |
18,740 |
Total current assets |
163,689 |
237,605 |
|
|
|
Intangible assets |
95,215 |
96,968 |
Property and equipment |
12,434 |
11,672 |
Non-current financial assets |
36,872 |
37,005 |
Trade receivables and others - non-current |
23,447 |
16,737 |
Other non-current assets |
141 |
89 |
Deferred tax assets |
1,269 |
1,286 |
Total non-current assets |
169,377 |
163,756 |
|
|
|
Total assets |
333,066 |
401,361 |
|
|
|
Liabilities |
|
|
Trade payables and others |
26,544 |
49,504 |
Collaboration liabilities – Current portion |
12,012 |
21,304 |
Financial liabilities – Current portion |
2,035 |
2,130 |
Deferred revenue – Current portion |
41,581 |
48,770 |
Provisions – Current portion |
171 |
114 |
Total current liabilities |
82,345 |
121,822 |
|
|
|
Collaboration liabilities – Non current portion |
- |
- |
Financial liabilities – Non-current portion |
16,781 |
16,593 |
Defined benefit obligations |
4,155 |
3,760 |
Deferred revenue – Non-current portion |
20,491 |
40,342 |
Provisions – Current portion |
262 |
142 |
Deferred tax liabilities |
1,269 |
1,286 |
Total non-current liabilities |
42,958 |
62,123 |
|
|
|
Share capital |
3,946 |
3,941 |
Share premium |
370,440 |
369,617 |
Retained earnings |
(155,719) |
(134,912) |
Other reserves |
(568) |
(472) |
Net income (loss) |
(10,334) |
(20,759) |
Total shareholders’ equity |
207,764 |
217,416 |
|
|
|
Total liabilities and shareholders’ equity |
333,066 |
401,361 |
Interim
Condensed Consolidated Statements of Income
(loss)(in thousands euros)
|
June 30, 2020 |
June 30, 2019 |
|
|
|
Revenue from
collaboration and licensing agreements |
29,841 |
51,588 |
Government
financing for research expenditures |
6,904 |
7,567 |
|
|
|
Revenue and other income |
36,745 |
59,155 |
|
|
|
Research and
development expenses |
(31,499) |
(36,584) |
Selling,
general and administrative expense |
(14,490) |
(9,295) |
|
|
|
Operating expenses |
(45,989) |
(45,879) |
|
|
|
Net income /
(loss) distribution agreements |
896 |
(3,820) |
|
|
|
Operating income (loss) |
(8,348) |
9,456 |
|
|
|
Financial
income |
2,446 |
5,717 |
Financial
expenses |
(4,431) |
(1,933) |
|
|
|
Net financial income (loss) |
(1,986) |
3 784 |
|
|
|
Net income (loss) before tax |
(10,334) |
13,240 |
|
|
|
Income tax
expense |
- |
- |
|
|
|
Net income (loss) |
(10,334) |
13,240 |
|
|
|
- Basic
income (loss) per share |
(0,13) |
0,21 |
- Diluted income (loss) per share |
(0,13) |
0,20 |
Interim
Condensed Consolidated Statements of Cash Flows(in
thousand euros)
|
June 30, 2020 |
June 30, 2019 |
Net income (loss) |
(10,334) |
13,240 |
Depreciation
and amortization, net |
6,719 |
6,826 |
Employee
benefits costs |
264 |
318 |
Change in
provision for charges |
142 |
(70) |
Share-based
compensation expense |
824 |
1,975 |
Change in
valuation allowance on financial assets |
2,536 |
(2,308) |
Gains
(losses) on financial assets |
(48) |
(90) |
Change in
valuation allowance on financial instruments |
425 |
(101) |
Gains on
assets and other financial assets |
(758) |
(1069) |
Interest
paid |
173 |
44 |
Other profit
or loss items with no cash effect |
(373) |
(317) |
Operating cash flow before change in working
capital |
(430) |
18,448 |
Change in
working capital |
(57,595) |
41,187 |
Net cash generated from / (used in) operating
activities: |
(58,025) |
59,635 |
Acquisition
of intangible assets, net |
(9,306) |
(64,130) |
Acquisition
of property and equipment, net |
(544) |
(738) |
Purchase of
non-current financial instruments |
(3,000) |
- |
Disposal of
property and equipment |
36 |
- |
Disposal of
other assets |
- |
1 |
Purchase of
other assets |
(52) |
- |
Disposal of
non-current financial instruments |
- |
2,000 |
Interest
received on financial assets |
758 |
1069 |
Net cash generated from / (used in) investing
activities: |
(12,108) |
(61,798) |
Increase in
capital, net |
3 |
1 |
Repayment of
borrowings |
(1,029) |
(729) |
Net interest
paid |
(173) |
(44) |
Net cash generated / (used in) from financing
activities: |
(1,199) |
(772) |
Effect of
the exchange rate changes |
(13) |
(3) |
Net increase / (decrease) in cash and cash
equivalents: |
(71,345) |
(2,938) |
Cash and
cash equivalents at the beginning of the year: |
202,887 |
152,314 |
Cash and cash equivalents at the end of the six-months
period: |
131,542 |
149,376 |
Revenue and other income
The following table summarizes operating revenue
for the periods under review:
In thousands of euro |
June 30, 2020 |
June 30, 2019 |
Revenue
from collaboration and licensing agreements |
29,841 |
51,588 |
Government funding for research expenditures |
6,904 |
7,567 |
Revenue and other income |
36,745 |
59,155 |
Revenue from collaboration and licensing
agreements
Revenue from collaboration and licensing
agreements decreased by €21.7 million, or 42.2%, to €29.8 million
for the six months ended June 30, 2020, as compared to revenues
from collaboration and licensing agreements of €51.6 million for
the six months ended June 30, 2019. This revenue mainly results
from the spreading of the upfront and opt-in payments received from
AstraZeneca for monalizumab and IPH5201. This spreading is based on
the completion of the work the Company executed in relation to
these agreements.
The evolution for the first half of 2020 is
mainly due to:
- Revenue related to monalizumab decreased by €4.7 million, or
19.2%, to €19.6 million for the six months ended June 30, 2020, as
compared to €24.3 million for the six months ended June 30, 2019.
This change mainly resulted from the decrease of the budget in one
of the clinical trials carried out by the Company in the context of
the collaboration with AstraZeneca. Whereas not material at the
global scale, its impact is entirely recognized on the period under
review.As of June 30, 2020, the deferred revenue related to
monalizumab was €40.0 million (€24.0 million as “Deferred
revenue—Current portion” and €16.0 million as “Deferred
revenue—Non-current portion”).
- Revenue related to IPH5201 decreased by €13.8 million, or
61.2%, to €8.7 million for the six months ended June 30, 2020, as
compared to €22.5 million for the six months ended June 30, 2019.
The collaboration completion was initially planned in December
2019; the recognition period of the revenue was therefore planned
on a fifteen months period from October 2018. During the fourth
quarter of 2019, it was agreed that the collaboration between
AstraZeneca and the Company relating to IPH5201 will be extended
for twelve months. The recognition period of the revenue was
extended accordingly for the deferred revenue as of September 30,
2019, resulting in a fall of the portion recognized in revenue for
the six-months ended June 30, 2020, as compared to the portion
recognized in revenue for the six-months ended June 30,2019.As of
June 30, 2020, the deferred revenue related to IPH5201 was €4.7
million, classified as “Deferred revenue—Current portion”.
- Invoicing of research and development costs: Pursuant to our
agreements with AstraZeneca, clinical costs for the ongoing Phase 1
trial of avdoralimab are equally shared between Innate Pharma and
AstraZeneca and research and development costs related to IPH5201
are fully borne by 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, 2020 decreased by €3.3 million, or
75%; to €1.1 million, as compared to €4.4 million for the six
months ended June 30, 2019. This mainly resulted from a decrease in
the costs relating to IPH5201 invoiced back to AstraZeneca
following the transition of the program to Phase 1 trial, which is
carried out by AstraZeneca.
Government funding for research
expenditures
Government financing for research expenditures
decreased by €0.7 million, or 8.8%, to €6.9 million for the
six months ended June 30, 2020 as compared to €7.6 million the six
months ended June 30, 2019. This change is mainly due to a decrease
in amortization of the acquired licenses eligible to research tax
credit (monalizumab and IPH5201).
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, 2020 and 2019. Following the loss of the SME status
under European Union criteria as of December 31, 2019, the CIR for
the tax year 2020 will be imputable on the tax expense of the
following three tax years, or refunded if necessary at the end of
this delay.
Operating expenses
The table below presents our operating expenses
for the six months periods ended June 30, 2020 and 2019:
In thousands of euros |
June 30, 2020 |
June 30, 2019 |
Research
and development |
(31,499) |
(36,584) |
Selling,
general and administrative |
(14,490) |
(9
295) |
Total operating expenses |
(45,989) |
(45,879) |
Research and development
expenses
Research and development (“R&D”) expenses
decreased by €5.1 million, or 13.9%, to €31.5 million for the six
months ended June 30, 2020, as compared to €36.6 million for the
six months ended June 30, 2019, representing a total of 68.5% and
79.7% 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 expenses decreased by €5.2 million, or
24.8%, to €15.9 million for the six months ended June 30, 2020, as
compared to €21.1 million for the six months ended June 30, 2019.
This decrease is mainly explained by (i) the decrease in expenses
relating to Lumoxiti, as a result of the completion in 2019 of work
carried out for regulatory purposes, including for the regulatory
filing in Europe, (ii) a decrease in costs relating to programs
transitioning to clinics (IPH5201 and IPH5301) which were partially
offset by (iii) an increase in expenses relating to the lacutamab
program of which the clinical program Tellomak started in June
2019.
Depreciation and amortization expenses are
comparable, decreased by €0.2 million, or 3.2% to €6.1 million for
the six months ended June 30, 2020, as compared to €6.3 million for
the six months ended June 30, 2019.
Personnel expenses including share-based
payments compensation of our employees and consultants allocated to
R&D were €8.0 million for the six months ended June, 2020, as
compared to €7.8 million for the six months ended June 30,
2019.
Selling, general and administrative
expenses
Selling, general and administrative (“SG&A”)
expenses increased by €5.2 million, or 55.9%, to €14.5 million for
the six months ended June 30, 2020, as compared to €9.3 million for
the six months ended June 30, 2019, representing a total of 31.5%
and 20.3% of the total operating expenses, respectively.
Personnel expenses increased by €2.3 million, or
56.6%, to €6.4 million for the six months ended June 30, 2020 as
compared to €4.1 million for the six months ended June 30, 2019.
This increase mainly resulted from the recruitments completed
during the second half of 2019 and the first half of 2020 for our
US subsidiary, including staff allocated to the commercialization
of Lumoxiti and the Company general structuring process.
Non-scientific advisory and consulting expenses
mostly consist of auditing, accounting, taxation and legal fees.
Non-scientific advisory and consulting expenses increased by €1.8
million, or 76.2%, to €4.1 million for the six months ended June
30, 2020 as compared to €2.3 million for the six months ended June
30, 2019, primarily as a result of expenses related to the
commercialization of Lumoxiti and the structuring of our US
subsidiary, as well as certain insurance costs following the
listing of the shares of the Company on the Nasdaq stock exchange
in October 2019.
Net income (loss) from distribution
agreements
When product sales are performed by a partner in
the context of collaboration or transition agreements, the Company
must determine if the partner acts as an agent or a principal. The
Company concluded that AstraZeneca acts as a principal in the
context of the production and commercialization of Lumoxiti.
Consequently, the global inflows and outflows received from or paid
to AstraZeneca are presented on a single line in the statement of
income of Innate Pharma. This amount does not include the R&D
costs which are recognized as R&D operating expenses.
We recognized a net profit of €0.9 million from
the Lumoxiti distribution agreement in the six months ended June
30, 2020, as compared to a net loss of €3.8 million in the six
months ended June 30, 2019, which reflected revenue from sales of
Lumoxiti in the period, less administrative and selling expenses
associated with the sales revenue allocated to us. This €4.7
million change primarily resulted from a decrease in the commercial
costs invoiced by AstraZeneca, as a result of the transfer of the
commercial activities from AstraZeneca to the Company. It also
includes a one-time positive true-up relating to the rebates
applied to the gross sales generated over the whole period of
commercialization.
Financial income (loss),
net
We recognized a net financial loss of €2.0
million in the six months ended June 30, 2020 as compared to a net
financial income of €3.8 million in the six months ended June 30,
2019. This €5.8m decrease mainly resulted from the decrease in fair
value of certain of our financial instruments (net loss of €2.5
million as compared to a net gain of €2.3 million for the six
months ended June 30, 2020 and 2019, 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.
Balance sheet items
Cash, cash equivalents, short-term investments
and non-current financial assets amounted to €184.6m as of June 30,
2020, as compared to €255.9m as of December 31, 2019. Net cash as
of June 30, 2020 amounted to €145.7m (€216.7m as of December 31,
2019). 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,
2020 are:
- Deferred revenue of €62.1m (including €20.5m booked as
‘Deferred revenue – non-current portion’) and collaboration
liabilities of €12.0m relating to the remainder of the initial
payment received from AstraZeneca not yet recognized as revenue or
not yet refunded;
- Receivables from the French government amounting to €23.4m in
relation to the research tax credit for 2019 and the six-month
period ended June 30, 2020;
- Intangible assets for a net book value of €95.2m, mainly
corresponding to the rights and licenses relating to the
acquisition of the monalizumab, IPH5201, avdoralimab, and
Lumoxiti;
- Shareholders’ equity of €207.8m, including the net loss of the
period of €10.3m;
- Financial liabilities of €18.8m (€18.7m as of December 31,
2019).
Cash-flow items
As of June 30, 2020, cash and cash equivalents
amounted to €131.5m, compared to €202.8m as of December 31, 2019,
corresponding in a decrease of €71.3m.
The net cash flow generated during the period
under review mainly results from the following:
- Net cash flow used by operations of €58.0 million for the six
months ended June 30, 2020 as compared to net cash flows generated
by operations of €59.6 million for the six months ended June 30,
2019. As a reminder, Innate Pharma received from AstraZeneca
payments of €87.7 million and €21.1 million received in January
2019 in relation to monalizumab and IPH5201 agreements,
respectively. In April 2020, Innate Pharma received €4.6 million
payment from AstraZeneca following the dosing of the first patient
in the IPH5201 Phase 1 clinical trial.
- Net cash flow used in investing activities of €12.8 million,
which mainly resulted from (i) a €13.4 million ($15.0 million)
additional consideration paid to AstraZeneca regarding Lumoxiti
following the submission of the Biologics License Application 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 1 clinical trial and (iii) the acquisition of financial
assets for a net amount of €3.0 million. Such items were partially
offset by the reimbursement by AstraZeneca of the rebate relating
to the acquisition of Lumoxiti (€7.0 million).
- Net cash flows used in financing activities for an amount of
€1.2 million.
Post period events
- On August 11, 2020, the Company announced that it has obtained
funding signed a financing contract with BPIfrance
Financement as part of the program established by the French
government to support the development of therapeutic solutions with
a preventative or curative aim for COVID-19 This funding, in
a maximum aggregate amount of €6.8 million, consists of (i) an
advance reimbursable only upon technical and commercial success and
(ii) a non-reimbursable grant. This funding will be received in
four consecutive tranches. The first tranche of €1.7m
was received at signing, and the three remaining tranches will be
received upon achievement of certain clinical milestones,
particularly around the FORCE Phase 2 trial.
- On September 7, 2020, the Company signed an amendment to the
monalizumab collaboration and license agreement concluded with
AstraZeneca in 2015. Following review of longer patient follow-up
and maturing survival data from Cohort 2, and following discussions
with AstraZeneca, the Company has agreed to amend the
agreement. It will now receive a $50 million payment upon
AstraZeneca’s dosing of the first patient in the Phase 3 trial, and
a $50 million payment after the interim analysis demonstrates the
combination meets a pre-defined threshold of clinical activity. All
other potential development and commercial milestones related to
the agreement remains unchanged. The Company is planning to present
updated and longer term Cohort 2 data at a future scientific
conference. The Phase 3 trial evaluating monalizumab is expected to
commence in the second half of 2020.
Nota
The interim consolidated financial statements
for the six-month period ended June 30, 2019 have been subject to a
limited review by our Statutory Auditors and were approved by the
Executive Board of the Company on September 7, 2020. They were
reviewed by the Supervisory Board of the Company on September 7,
2020. They will not be submitted for approval to the general
meeting of shareholders.
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 20, 2020 (AMF number D.20-0352). 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 registration
document available on the internet website of the Company. In
addition, an update of the risks related to the current health
crisis of COVID-19 is presented in note G) of the half-year
management review as of June 30, 2020. Not only may these risks and
uncertainties occur during the six months remaining in the
financial year but also in the years to come.
Related party transactions:
Transactions with related parties during the
periods under review are disclosed in Note 19 to the interim
condensed consolidated financial statements prepared in accordance
with IAS 34. No material transaction was concluded with a member of
the executive committee or the Supervisory Board following the date
of the 2019 registration document.
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