Immatics N.V.(IMTX) - 2022 Q2 - Quarterly Report

Unaudited Condensed Consolidated Financial Statements Unaudited Condensed Consolidated Statement of Financial Position As of March 31, 2022, total assets significantly increased to €282.2 million, primarily due to a rise in cash and cash equivalents, leading to a substantial increase in shareholders' equity to €116.0 million Consolidated Statement of Financial Position Highlights (in thousands of Euros) | Metric | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | 247,316 | 132,994 | | Total assets | 282,182 | 174,646 | | Total liabilities | 166,195 | 150,583 | | Total shareholders' equity | 115,987 | 24,063 | Unaudited Condensed Consolidated Statement of Profit/(Loss) For Q1 2022, the company reported a net profit of €85.7 million, a significant reversal from a prior-year loss, driven by a massive increase in collaboration revenue to €102.9 million Statement of Profit/(Loss) Summary (in thousands of Euros) | Metric | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :--- | :--- | :--- | | Revenue from collaboration agreements | 102,907 | 7,403 | | Research and development expenses | (25,144) | (23,049) | | General and administrative expenses | (9,278) | (8,431) | | Operating result | 68,492 | (23,838) | | Net profit/(loss) | 85,662 | (22,813) | | Basic EPS (€) | 1.36 | (0.36) | Unaudited Condensed Consolidated Statement of Cash Flows Net cash from operating activities significantly improved to a €109.1 million inflow in Q1 2022, primarily driven by net profit and a large upfront payment, increasing cash to €247.3 million Cash Flow Summary (in thousands of Euros) | Metric | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :--- | :--- | :--- | | Net cash from operating activities | 109,102 | (16,657) | | Net cash from investing activities | 5,836 | 2,559 | | Net cash from financing activities | (689) | (482) | | Net increase/(decrease) in cash | 114,249 | (14,580) | | Cash and cash equivalents at end of period | 247,316 | 195,333 | Unaudited Condensed Consolidated Statement of Changes in Shareholders' Equity Shareholders' equity substantially increased to €116.0 million as of March 31, 2022, primarily driven by the €85.7 million net profit and share-based compensation Changes in Shareholders' Equity (in thousands of Euros) | Metric | As of March 31, 2022 | As of January 1, 2022 | | :--- | :--- | :--- | | Total shareholders' equity | 115,987 | 24,063 | | Key Changes in Q1 2022 | | | | Net profit | +85,662 | | | Equity-settled share-based compensation | +5,702 | | Notes to the Unaudited Condensed Consolidated Financial Statements Significant Events and Changes The quarter's significant event was the BMS agreement, effective January 26, 2022, yielding a €133 million upfront payment and €91 million in license revenue, with no significant COVID-19 impact - The company entered into a collaboration agreement with Bristol-Myers-Squibb (BMS) which became effective on January 26, 2022, receiving a €133 million ($150 million) upfront cash payment[16] - For the BMS agreement, the company recognized €91 million of revenue related to the IMA401 license and deferred €42 million for clinical trial services. An additional €1.5 million in service revenue was recognized in the quarter[25] - Management stated that to date, the COVID-19 pandemic has not significantly impacted the Group's operations, though it continues to monitor potential future risks[27] Revenue from Collaboration Agreements Collaboration revenue surged to €102.9 million in Q1 2022, primarily driven by the new BMS agreement contributing €98.4 million, including €91.3 million from the IMA401 license Revenue by Collaborator (in thousands of Euros) | Collaborator | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :--- | :--- | :--- | | Amgen | — | 257 | | Genmab | 2,920 | 2,236 | | BMS | 98,425 | 3,293 | | GSK | 1,562 | 1,617 | | Total | 102,907 | 7,403 | - The company has not recognized any milestone revenue or received any royalty payments under its collaboration agreements as of March 31, 2022[41] Financial Result The financial result was a positive €17.2 million in Q1 2022, primarily due to a €16.5 million gain from the change in fair value of warrant liabilities as the warrant price decreased Financial Result Breakdown (in thousands of Euros) | Metric | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :--- | :--- | :--- | | Financial income | 1,759 | 3,464 | | Financial expenses | (1,117) | (1,224) | | Change in fair value of warrant liabilities | 16,528 | (1,215) | | Financial result | 17,170 | 1,025 | - The fair value of warrants decreased from €3.88 per warrant at year-end 2021 to €1.58 as of March 31, 2022, resulting in a €16.5 million non-cash gain[44] Share-Based Payments Total share-based compensation expense decreased to €5.7 million in Q1 2022, primarily due to Matching Stock Options becoming fully vested in July 2021 Share-Based Compensation Expense (in thousands of Euros) | Expense Category | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :--- | :--- | :--- | | Research and development expenses | 3,268 | 4,898 | | General and administrative expenses | 2,434 | 3,406 | | Total share-based compensation | 5,702 | 8,304 | - The decrease in share-based compensation expense was mainly because Matching Stock Options fully vested on July 31, 2021[64] Events Occurring After the Reporting Period After quarter-end, Immatics issued 2.4 million shares for €16.8 million and entered a new strategic collaboration with BMS for allogeneic therapies, receiving an $80 million total upfront payment - After March 31, 2022, the company issued 2.4 million shares under its ATM agreement, collecting gross proceeds of €16.8 million ($18.5 million)[71] - A new strategic collaboration was initiated with Bristol Myers Squibb for allogeneic therapies, with Immatics receiving a $60 million upfront payment. An existing collaboration was also expanded for an additional $20 million[72] Management's Discussion and Analysis of Financial Condition and Results of Operations Overview Immatics is a clinical-stage biotechnology company developing TCR-based immunotherapies, with €252.7 million in cash as of March 31, 2022, sufficient to fund operations for at least the next 12 months - The company is a clinical-stage biotech focused on developing TCR-based immunotherapies for cancer, with a proprietary pipeline of seven therapeutic programs and nine partnered programs[74][76] - As of March 31, 2022, the company held €252.7 million in cash, cash equivalents, and other financial assets and believes it has sufficient capital for at least the next 12 months[78] Results of Operations Q1 2022 operating results were dominated by a €95.5 million increase in collaboration revenue from the BMS agreement, with moderate increases in R&D and G&A expenses Revenue from Collaboration Agreements Collaboration revenue increased to €102.9 million in Q1 2022, primarily due to the new BMS agreement, which included €91.3 million from the IMA401 license Revenue by Collaborator (in thousands of Euros) | Collaborator | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Amgen | € — | € 257 | | Genmab | 2,920 | 2,236 | | BMS | 98,425 | 3,293 | | GSK | 1,562 | 1,617 | | Total | €102,907 | €7,403 | Research and Development Expenses Total R&D expenses rose to €25.1 million in Q1 2022, driven by higher personnel costs, partially offset by decreased share-based compensation due to vested options R&D Expense Breakdown (in thousands of Euros) | Category | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Direct external expenses | | | | ACT Programs | € 4,756 | € 4,055 | | TCR Bispecifics Programs | 1,063 | 2,354 | | Indirect R&D expenses | | | | Personnel related | € 8,979 | € 5,359 | | Share-based compensation | 3,268 | 4,898 | | Total R&D expenses | €25,144 | €23,049 | General and Administrative Expenses G&A expenses increased to €9.3 million in Q1 2022, primarily due to higher personnel and other external expenses, partially offset by lower share-based compensation G&A Expense Breakdown (in thousands of Euros) | Category | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Share-based compensation | € 2,434 | € 3,406 | | Personnel related | 2,614 | 2,042 | | Professional and consulting fees | 1,290 | 1,508 | | Other external expenses | 2,940 | 1,475 | | Total G&A expenses | € 9,278 | € 8,431 | Liquidity and Capital Resources Liquidity significantly strengthened in Q1 2022, with cash rising to €247.3 million due to the BMS upfront payment, and the company generated positive operating cash flow for the first time Sources of Liquidity The company's cash increased to €247.3 million in Q1 2022 due to a €133.0 million BMS payment, and it has an active ATM program for future funding - Cash and cash equivalents increased from €133.0 million as of December 31, 2021 to €247.3 million as of March 31, 2022, following the receipt of a €133.0 million upfront payment from BMS[116] - The company believes its existing cash will be sufficient to fund operating expenses and capital expenditure requirements for at least the next 12 months[117] Cash Flows Net cash from operating activities was a €109.1 million inflow in Q1 2022, driven by net income from the BMS collaboration, with positive investing and minor financing outflows Cash Flow Summary (in thousands of Euros) | Activity | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Operating activities | € 109,102 | € (16,657) | | Investing activities | 5,836 | 2,559 | | Financing activities | (689) | (482) | | Total cash flow | € 114,249 | € (14,580) | Critical Accounting Estimates Critical accounting estimates involve significant judgment, particularly in revenue recognition for collaboration agreements like the BMS deal, share-based compensation, and deferred tax asset assessment - Main areas requiring significant estimates are revenue recognition, research and development expenses, share-based compensation, and income taxes[131] - For the latest BMS collaboration, the company concluded there were two distinct performance obligations: the license (revenue recognized at a point in time) and clinical trial services (revenue recognized over time)[135] - Due to a history of losses, the company has not recognized any deferred tax assets on tax losses carried forward, despite the one-time net income in Q1 2022[140] Quantitative and Qualitative Disclosures about Market Risk The company is exposed to market risks including interest rate, credit, and significant currency risk, with 37% of cash in USD, and market price risk from fair-valued warrant liabilities - The main financial risks are interest rate risk, liquidity risk, and currency exchange risk[142] - The company is exposed to currency risk, as approximately 37% of its cash and cash equivalents held in Germany as of March 31, 2022, were denominated in U.S. Dollars[147] - The company is exposed to market risk from its warrants, which are fair-valued each period. A 10% change in the warrant price would result in a €1.1 million gain or loss before tax[149] Other Information Legal Proceedings The company is not currently a party to any legal proceedings expected to have a material adverse effect on its business - As of the report date, the company is not a party to any legal proceedings that management believes would likely have a material adverse effect on the business[150] Risk Factors No material changes have occurred from the risk factors described in the company's Annual Report on Form 20-F - No material changes have occurred from the risk factors described in the company's Annual Report[151]