INNATE PHARMA REPORTS FIRST HALF 2019 FINANCIAL RESULTS AND BUSINESS UPDATE
Marseille, France, September 13, 2019, 7:00 AM CEST
Innate Pharma SA (the “Company” - Euronext Paris: FR0010331421 – IPH), today reports its consolidated financial results for the first six months of 2019. The financial statements are attached to this press release.
“As Innate Pharma celebrates our 20th anniversary this month, we are proud to acknowledge our employees, patients, physicians, and other stakeholders who support our ambition to develop new oncology therapies for patients with high unmet medical need. We continue to deepen and mature our proprietary and partnered pipeline of assets to strengthen our broad and balanced portfolio,” commented Mondher Mahjoubi, Chief Executive Officer of Innate Pharma. “We are committed to continuing to invest and execute on our corporate, clinical and commercial strategy, which has recently been strengthened by the recruitment of new executive leadership. This will support our international expansion and execute on our long-term strategy to become a rare hemato-oncology focused commercial franchise.”
Webcast and conference call will be held today at 2:00pm (CEST)
Dial in numbers:
France and International: +33 (0)1 76 70 07 94 US only: +1 631 510 7495
PIN code: 5173329#
The Interim financial report, the 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.
Financial highlights of the first half of 2019:
The key elements of Innate Pharma’s financial position and financial results as of and for the six-month period ended June 30, 2019 are as follows:
The table below summarizes the IFRS consolidated financial statements as of and for the six-month period ended June 30, 2019, including 2018 comparative information.
In thousands of euros, except for data per share | June 30, 2019(1) | June 30, 2018 restated(2) | |
Revenue and other income | 59,155 | 22,996 | |
Research and development | (36,584) | (32,322) | |
General and administrative | (9,295) | (5,576) | |
Operating expenses | (45,879) | (37,898) | |
Net income (loss) from distribution agreements | (3,820) | - | |
Operating income (loss) | 9,456 | (14,902) | |
Net financial income (loss) | 3,784 | (550) | |
Income tax expense | - | 333 | |
Net income (loss) | 13,240 | (15,118) | |
Weighted average number of shares outstanding (in thousands) | 63,988 | 57,600 | |
Basic income (loss) per share | 0.21 | (0.26) | |
Diluted income (loss) per share | 0.20 | (0.26) | |
| |||
June 30, 2019(1) | December 31, 2018 | ||
Cash, cash equivalents and financial asset | 200,274 | 202,712 | |
Total assets | 352,555 | 451,216 | |
Shareholders’ equity | 181,266 | 167,240 | |
Total financial debt | 4,959 | 4,522 |
(1) The interim condensed consolidated financial statements as of and for the six months ended June 30, 2019 includes impacts of the first-time application of IFRS 16 that became applicable on January 1, 2019. The Company applied the modified retrospective transition method. Therefore 2018 comparative information has not been restated.
(2) The interim condensed consolidated statement of income (loss) for the six months ended June 30, 2018 includes corrective information relating to errors in the first application of IFRS 15 as of January 1, 2018, which have been identified and corrected by the Company in the course of the fourth quarter of 2018. See note 2.5 of the Interim Consolidated Financial Statements for more details.
Pipeline update:
Monalizumab (anti-NKG2A antibody), partnered with AstraZeneca:
IPH4102 (anti-KIR3DL2 antibody):
IPH5401 (anti-C5aR antibody):
Lumoxiti (CD22-directed immunotoxin):
Various Preclinical:
Corporate Update:
Post period event:
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, was approved by the FDA in September 2018. Lumoxiti is a first-in class specialty oncology product for hairy cell leukemia (HCL). 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 NK 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.
Learn more about Innate Pharma at www.innate-pharma.com
Information about Innate Pharma shares:
ISIN code Ticker code LEI | FR0010331421 IPH 9695002Y8420ZB8HJE29 |
Disclaimer:
This press release contains certain 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. For a 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 Document de Reference prospectus filed with the French Financial Markets Authority (“AMF”), which is available on the AMF website www.amf-france.org or on Innate Pharma’s website.
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.
Investors Innate Pharma Danielle Spangler / Jérôme Marino Tel.: +33 (0)4 30 30 30 30 investors@innate-pharma.com | Media ATCG Press Marie Puvieux Mob: +33 (0)6 10 54 36 72 innate-pharma@atcg-partners.com |
Summary of Interim Condensed Consolidated Financial Statements and Notes
as of June 30, 2019
Interim Condensed Consolidated Statements of Financial Position
(in thousand euros)
June 30, 2019(1) | December 31, 2018 | |
Assets | ||
Cash and cash equivalents | 149,376 | 152,314 |
Short-term investments | 15,578 | 15,217 |
Trade receivables and others | 51,724 | 152,112 |
Total current assets | 216,678 | 319,643 |
Intangible assets | 87,881 | 84,529 |
Property and equipment | 11,398 | 10,216 |
Non-current financial assets | 35,320 | 35,181 |
Other non-current assets | 87 | 86 |
Deferred tax assets | 1,191 | 1,561 |
Total non-current assets | 135,877 | 131,574 |
Total assets | 352,555 | 451,216 |
Liabilities | ||
Trade payables and others | 28,183 | 91,655 |
Collaboration liabilities – Current portion | 21,888 | 20,987 |
Financial liabilities – Current portion | 1,722 | 1,347 |
Deferred revenue – Current portion | 42,267 | 82,096 |
Provisions – Current portion | 489 | 652 |
Total current liabilities | 94,549 | 196,737 |
Collaboration liabilities – Non current portion | 5,950 | 10,669 |
Financial liabilities – Non-current portion | 3,237 | 3,175 |
Defined benefit obligations | 4,809 | 3,697 |
Deferred revenue – Non-current portion | 61,368 | 68,098 |
Provisions – Current portion | 182 | 38 |
Deferred tax liabilities | 1,191 | 1,561 |
Total non-current liabilities | 76,739 | 87,238 |
Share capital | 3,203 | 3,197 |
Share premium | 301,629 | 299,932 |
Retained earnings | (134,911) | (137,840) |
Net income (loss) | 13,240 | 3,049 |
Other reserves | (1,895) | (1,099) |
Total shareholders’ equity | 181,266 | 167,240 |
Total liabilities and shareholders’ equity | 352,555 | 451,216 |
(1) The condensed interim consolidated financial statements as of and for the six-month period ended June 30, 2019 include the impacts of the first application of IFRS 16 standard that became applicable on January 1, 2019. The Company applied the modified retrospective transition method. Therefore 2018 comparative information has not been restated. See Note 2.4 of the Interim Financial Report 2019 for more details on the impact of the transition.
Interim Condensed Consolidated Statements of Income (loss)
(in thousand euros)
June 30, 2019(1) | June 30, 2018 restated(2) | |
Revenue from collaboration and licensing agreements | 51,588 | 16,209 |
Government financing for research expenditures | 7,567 | 6,787 |
Revenue and other income | 59,155 | 22,996 |
Research and development expenses | (36,584) | (32,322) |
General and administrative expenses | (9,295) | (5,576) |
Operating expenses | (45,879) | (37,898) |
Net income (loss) from distribution agreements | (3,820) | - |
Operating income (loss) | 9,456 | (14,902) |
Financial income | 5,717 | 4,198 |
Financial expenses | (1,933) | (4,748) |
Net financial income (loss) | 3,784 | (550) |
Net income (loss) before tax | 13,240 | (15,452) |
Income tax expense | - | 333 |
Net income (loss) | 13,240 | (15,118) |
Net income (loss) per share: | ||
(in € per share) | ||
- basic income (loss) per share | 0.21 | (0.26) |
- diluted income (loss) per share | 0.20 | (0.26) |
(1) The interim consolidated financial statements as of and for the six-month period ended June 30, 2019 include the impacts of the first application of IFRS 16 standard that became applicable on January 1, 2019. The comparative consolidated financial statements as of and for the year ended December 31 2018 have not been restated. See Note 2.4 of the Interim Financial Report 2019 for more details on transition measures.
(2) The interim condensed consolidated statement of income (loss) for the six months ended June 30, 2018 include corrective information relating to errors in the first application of IFRS 15 as of January 1, 2018, which have been identified and corrected by the Company in the course of the fourth quarter of 2018. See note 2.5 of the Interim Consolidated Financial Statements for more details.
Interim Condensed Consolidated Statements of Cash Flows
(in thousand euros)
June 30, 2019 (1) | June 30, 2018 Restated (2) | |
Net income (loss) | 13,240 | (15,118) |
Depreciation and amortization | 6,826 | 2,439 |
Employee benefits costs | 318 | 225 |
Provisions for charges | (70) | (823) |
Share-based compensation expense | 1,975 | 1,065 |
Change in valuation allowance on financial assets | (2,308) | 1,432 |
Gains (losses) on financial assets | (90) | (1,022) |
Change in valuation allowance on financial assets | (101) | (186) |
Gains on assets and other financial assets | (1,069) | (906) |
Net interest paid | 44 | 55 |
Other profit or loss items with no cash effect | (317) | 181 |
Operating cash flow before change in working capital | 18,448 | (12,658) |
Change in working capital | 41,187 | (21,269) |
Net cash generated from / (used in) operating activities: | 59,635 | (33,927) |
Acquisition of intangible assets, net | (64,130) | (343) |
Acquisition of property and equipment, net | (738) | (709) |
Disposal of property and equipment | - | 10 |
Disposal of other assets | 1 | 26 |
Purchase of non-current financial instruments | 2,000 | 14,874 |
Interest received on financial assets | 1,069 | 906 |
Net cash generated from / (used in) investing activities: | (61,798) | 14,764 |
Proceeds from the exercise / subscription of equity instruments | 1 | - |
Repayment of borrowings | (729) | (630) |
Net interest paid | (44) | (55) |
Net cash generated from financing activities: | (772) | (685) |
Effect of the exchange rate changes | (3) | (17) |
Net increase / (decrease) in cash and cash equivalents: | (2,938) | (19,865) |
Cash and cash equivalents at the beginning of the year: | 152,314 | 99,367 |
Cash and cash equivalents at the end of the six-months period: | 149,376 | 79,502 |
(1) The interim condensed consolidated statement of cash flows for the six months ended June 30, 2019 includes impacts of the first-time application of IFRS 16 that became applicable on January 1, 2019.The Company applied the modified retrospective transition method. Therefore 2018 comparative information has not been restated. See note 2.4 for more details on the impact of the transition.
(2) The interim condensed consolidated statement of cash flow for the six months ended June 30, 2018 includes corrective information, see note 2.5 for more details.
Revenue and other income
The following table summarizes operating revenue for the periods under review:
In thousands of euro | June 30, 2019 | June 30, 2018 restated |
Revenue from collaboration and licensing agreements | 51,588 | 16,209 |
Government financing for research expenditures | 7,567 | 6,787 |
Revenue and other income | 59,155 | 22,996 |
Revenue from collaboration and licensing agreements
Revenues from collaboration and licensing agreements increased by €35.4 million, to €51.6 million for the six months ended June 30, 2019, as compared to revenues from collaboration and licensing agreements of €16.2 million as restated for the six months ended June 30, 2018. These revenues mainly result from to the spreading of the initial payment from the agreements signed with AstraZeneca in April 2015 and October 2018, based on the completion of the work the Company is engaged to perform.
Revenue related to monalizumab increased by €8.2 million, or 51.3%, to €24.3 million for the six months ended June 30, 2019, as compared to €16.1 million as restated for the six months ended June 30, 2018. This change is primarily due to (i) AstraZeneca’s payment to us of $100.0 million for the exercise of its option in October 2018, which resulted in incremental revenue of €2.9 million in the six months ended June 30, 2019 and (ii) an increase of €5.3 million of revenue recognized in the period based on the percentage of completion of development work. As of June 30, 2019, the deferred revenue related to monalizumab is €80.8 million (€36.9 million as “Deferred revenue—Current portion” and €43.9 million as “Deferred revenue—Non-current portion”).
Revenue related to IPH5201 for the six months ended June 30, 2019 was €22.5 million compared to nil for the six months ended June 30, 2018, based on the recognition of the $50.0 million non-refundable upfront payment received from AstraZeneca in October 2018. As of June 30, 2019, the amount not yet recognized in revenue amounted to €5.4 million, classified as “Deferred revenue—Current portion”.
Revenue from invoicing of research and development costs for the six months ended June 30, 2019 was €4.4 million compared to €0.2m for the six months ended June 30, 2018. Pursuant to our agreements with AstraZeneca, clinical costs for the ongoing Phase I trial of IPH5401 in combination with durvalumab are equally shared between us and AstraZeneca and research and development costs related to IPH5201 are fully borne by AstraZeneca, resulting in periodic settlement invoices.
Government funding for research expenditures
Government financing for research expenditures increased by €0.8 million, or 11.5%, to €7.6 million for the six months ended June, 2019, as compared to €6.8 million the six months ended June, 2018. This change is primarily a result of an increase in the research tax credit of €1.3 million, which is mainly due to an increase in amortization of the monalizumab intangible asset following an additional consideration due to Novo Nordisk A/S in 2018 and an amortization expense of the IPH5201 intangible asset from October 2018. The increase in the research tax credit was partially offset by a decrease of €0.5 million in other revenue from grants.
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, 2019 and 2018. The research tax credit is generally reimbursed by the French government three years after the fiscal year for which it is determined. However, since 2011, companies that meet the definition of small and medium sized enterprises (“SMEs”) according to the European Union criteria are eligible for early reimbursement of their research tax credit receivable. According to Management forecasts, Innate’s status of SME is expected to be lost at the end of the fiscal year 2019.
Operating expenses
The table below presents our operating expenses for the six months ended June 30, 2019 and 2018.
In thousands of euros | June 30, 2019 | June 30, 2018 restated |
Research and development expenses | (36,584) | (32,322) |
General and administrative expenses | (9,295) | (5,576) |
Operating expenses | (45,879) | (37,898) |
Research and development expenses
Research and development expenses increased by €4.3 million, or 13.2%, to €36.6 million for the six months ended June 30, 2019, as compared to research and development of €32.3 million for the six months ended June 30, 2018. Research and development expenses represented a total of 79.7% and 85.3% of the total operating expenses for the six months ended June 30, 2019 and 2018, respectively. Our research and development expenses in the periods presented primarily relate to activities for monalizumab, IPH4102, IPH5401 and IPH5201.
Personnel expenses including share-based compensation to our employees and consultants increased by €0.9 million, or 13.3%, to €7.8 million for the six months ended June 30, 2019, as compared to €6.9 million for the six months period ended June 30, 2018. This variance is the cumulative impact of the rise in wages and salaries (€0.5 million) and share-based compensation (€0.4 million). As of June 30, 2019, we had 157 employees in research and development functions, compared to 150 employees as of June 30, 2018.
Depreciation and amortization increased by €4.2 million, or 189.9%, to €6.3 million for the six months period ended June 30, 2019, as compared to €2.2 million for the six months period ended June 30, 2018. This rise mainly relates to the additional consideration paid to Novo Nordisk A/S for monalizumab and the amortization of IPH5201 and Lumoxiti intangible assets from October 2018.
General and administrative expenses
General and administrative expenses increased by €3.7 million, or 66.7%, to €9.3 million for the six months ended June 30, 2019, as compared to general and administrative expenses of €5.6 million for the six months ended June 30, 2018. General and administrative expenses represented a total of 20.3% and 14.7% of the total operating expenses for the six months ended June 30, 2019 and 2018, respectively.
Personnel expenses includes the compensation paid to our employees and consultants, and increased by €1.1 million, or 34.8%, to €4.1 million for the six months ended June 30, 2019, as compared to personnel expenses of €3.0 million for the six months ended June, 2018. This increase results from rises in share-based payments and wages and salaries (€0.5 million each). As of June 30, 2019, we had 43 employees in general and administrative functions, compared to 39 employees as of June 30, 2018.
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 increased by €1.3 million, or 115.6%, to €2.3 million for the six months ended June 30, 2019 as compared to €1.1 million for the six months ended June 30, 2018, notably resulting from fees relating to fees incurred in connection with potential capital raising activities.
Other expenses are related to intellectual property, maintenance costs for laboratory equipment and our headquarters, depreciation and amortization and other general and administrative expenses.
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 research and development costs which are recognized as R&D operating expenses.
We recognized a net loss of €3.8 million from the Lumoxiti distribution agreement 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 in the context of its launch in the United States.
Financial results
Net financial income increased by €4.3 million to a €3.8 million income for the six months ended June 30, 2019, as compared to a €0.6 million loss for the six months ended June 30, 2018.
For the six months ended June 30, 2019 and 2018, the foreign exchange gains and losses mainly result from the variance of the exchange rate between the Euro and the U.S. dollar on U.S. dollar-denominated cash and cash equivalents and financial assets. Unrealized losses on financial assets relate to unquoted instruments.
Balance sheet items
Cash, cash equivalents, short-term investments and financial assets (current and non-current) amounted to €200.3m as of June 30, 2019, as compared to €202.7m as of December 31, 2018. Net cash as of June 30, 2019 (cash, cash equivalents and current financial assets less current financial liabilities) amounted to €163.2m (€166.2m as of December 31, 2018). Cash and cash equivalents do not include the reimbursement of the 2018 research tax credit which was collected during in July 2019 (€13.5m).
The other key balance sheet items as of June 30, 2019 are:
Cash-flow items
The net cash flow consumed over the six-month period ended June 30, 2019 amounted to €2.9m, compared to a net consumption of €19.9m for the same year-ago period.
The cash flow consumed during the period under review mainly results from the following:
Post period event
On July 31, 2019, the Company notified to AstraZeneca its decision to co-fund the monalizumab Phase III clinical development program.
On August 30, 2019, the Company drew down the remaining portion of the €15.2 million loan granted in July 2017 by Société Générale, for an amount of €13.9 million. The loan amounted to €1.3 million as of June 30, 2019. The repayment schedule will begin on August 30, 2019.
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 12, 2019. They were reviewed by the Supervisory Board of the Company on September 12, 2019. They will not be submitted for approval to the general meeting of shareholders.
Risk factors
Risk factors identified by the Company are presented in paragraph 1.9 of the registration document (“Document de Référence”) submitted to the French stock-market regulator, the “Autorité des Marchés Financiers”, on April 30, 2019 (AMF number D.19-0444). 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. 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 2018 registration document.
1 Including short term investments (€15.6m) and non current financial instruments (€35.3m)
2 million euros
Attachment