Innate Pharma(IPHA) - 2023 Q1 - Quarterly Report

2022 Annual Report Overview Innate Pharma advanced its clinical pipeline and maintained a strong financial position in 2022, marked by key partnerships and milestone payments 2022 Business and Financial Highlights In 2022, Innate Pharma advanced its clinical and preclinical pipeline, notably expanding its ANKET® platform partnership with Sanofi, which included a €25 million payment. The company reported encouraging efficacy data for lacutamab and received a $50 million milestone payment from AstraZeneca for monalizumab. The company maintained a solid financial position with a cash runway anticipated into mid-2025 - Expanded partnership with Sanofi for NK cell engager therapeutics, including the B7-H3 ANKET® program, resulting in a €25 million payment[3][5] - Reported encouraging preliminary Phase 2 efficacy data for lacutamab in advanced cutaneous T cell lymphoma (Sézary syndrome and mycosis fungoides)[3][5] - Received a $50 million milestone payment from AstraZeneca after the first patient was dosed in the monalizumab PACIFIC-9 Phase 3 lung cancer trial[5][3] - Cash position was €136.6 million as of December 31, 2022, with an anticipated cash runway into mid-2025. This figure does not include the €25 million payment from Sanofi received post-period[5] Pipeline Update Innate Pharma's pipeline progressed with key clinical trials for lacutamab and ANKET® programs, alongside strategic advancements in partnered assets Lacutamab (IPH4102) Lacutamab showed promising clinical activity and a favorable safety profile in advanced cutaneous T-cell lymphomas (CTCL). Final data from the TELLOMAK Phase 2 trial for mycosis fungoides (MF) and Sézary syndrome are expected in H2 2023. Additionally, two trials are ongoing for peripheral T-cell lymphoma (PTCL), with initial data also expected in H2 2023 - In the TELLOMAK Phase 2 trial, preliminary data for mycosis fungoides (MF) patients showed a global objective response rate (ORR) of 28.6%[8] - For heavily pretreated Sézary syndrome patients, lacutamab demonstrated a global ORR of 21.6% in the ITT population, with a 37.8% ORR in blood and 35.1% ORR in skin[8] - Two trials are ongoing for relapsed/refractory peripheral T-cell lymphoma (PTCL), a Phase 1b monotherapy trial and the Phase 2 KILT combination trial, with initial data for both expected in H2 2023[8] ANKET® Platform The proprietary ANKET® platform is advancing with four public candidates. The partnership with Sanofi was expanded to include the B7-H3 targeted program (IPH62) and two additional targets, triggering a €25 million upfront payment. Sanofi is also progressing IPH6101 and IPH6401. Innate's proprietary tetra-specific ANKET®, IPH6501, is progressing towards a Phase 1 trial in 2023 - Sanofi licensed IPH62 (B7-H3 targeted) and has options for two more targets. Innate received a €25 million upfront payment and is eligible for up to €1.35 billion in milestones plus royalties[12] - Sanofi's decision to advance IPH6401 (BCMA-targeting) into IND-enabling studies triggered a €3 million milestone payment to Innate[12] - The proprietary CD20-targeted tetra-specific ANKET®, IPH6501, is on track for a Phase 1 clinical trial in 2023[10] Monalizumab (Partnered with AstraZeneca) Monalizumab's development is focused on non-small cell lung cancer (NSCLC). The PACIFIC-9 Phase 3 trial in Stage III NSCLC is ongoing, triggering a $50 million milestone payment from AstraZeneca. However, the INTERLINK-1 Phase 3 study in head and neck cancer was discontinued due to futility - A $50 million milestone payment was received from AstraZeneca for dosing the first patient in the PACIFIC-9 Phase 3 trial for unresectable, Stage III NSCLC[13] - The Phase 3 INTERLINK-1 study in head and neck cancer was discontinued after a planned futility analysis did not meet the pre-defined efficacy threshold[13] - Phase 2 COAST trial results showed monalizumab with durvalumab reduced the risk of disease progression by 58% (HR of 0.42) compared to durvalumab alone in Stage III NSCLC[13] Other Pipeline Assets The company is advancing other assets through partnerships and internal development. The MATISSE Phase 2 trial for IPH5201 (anti-CD39) in lung cancer has started, triggering a $5 million milestone from AstraZeneca. The Phase 1 trial for proprietary IPH5301 (anti-CD73) is ongoing. Conversely, development of avdoralimab (anti-C5aR1) in bullous pemphigoid has been discontinued - IPH5201 (anti-CD39): The MATISSE Phase 2 trial in neoadjuvant lung cancer has started, triggering a $5 million milestone payment from partner AstraZeneca[14][17] - IPH5301 (anti-CD73): The investigator-sponsored CHANCES Phase 1 trial is ongoing, evaluating IPH5301 in combination therapy for HER2+ cancer patients[15] - Avdoralimab (anti-C5aR1): The company has discontinued the development of avdoralimab in bullous pemphigoid and will evaluate out-licensing options[16] Corporate and Preclinical Update Innate Pharma focused on advancing its ANKET® platform and ADCs, regained rights to preclinical programs, and made key corporate appointments in 2022 Preclinical and Corporate Developments Innate is focused on developing novel cancer treatments through its ANKET® platform and exploring Antibody Drug Conjugates (ADCs). The company regained full rights to four preclinical programs after AstraZeneca declined its option. Corporate actions in 2022 included establishing a $75 million At-The-Market (ATM) program, which remains unused, and making key appointments to the Supervisory Board and Leadership Team - Innate regained full rights to four preclinical molecules after AstraZeneca did not exercise its option under the "Future Programs Option Agreement"[19] - An At-The-Market (ATM) program was established to potentially offer and sell up to $75 million in American Depositary Shares (ADS), with the full amount remaining available as of year-end 2022[19] - Key leadership changes included the appointment of Dr. Sally Bennett to the Supervisory Board and two new members to the Leadership Team in January 2023[19] Financial Performance In 2022, Innate Pharma saw significant revenue growth from collaborations but reported an increased net loss due to a substantial non-cash impairment charge Financial Summary For the year ended December 31, 2022, Innate Pharma's revenue more than doubled to €57.7 million, driven by collaboration agreements. However, the company recorded a net loss of €58.1 million, an increase from 2021, primarily due to a significant non-cash impairment charge of €41.0 million related to the discontinuation of the avdoralimab program. The company ended the year with a cash position of €136.6 million Financial Metric (in thousands of euros) | Financial Metric (in thousands of euros) | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Income Statement | | | | Revenue and other income | 57,674 | 24,703 | | Total operating expenses | (74,099) | (72,528) | | Impairment of intangible asset | (41,000) | — | | Operating income (loss) | (57,425) | (47,825) | | Net income (loss) | (58,103) | (52,809) | | Basic loss per share (€) | (0.73) | (0.66) | | Balance Sheet | | | | Cash, cash equivalents and financial assets | 136,604 | 159,714 | | Total assets | 207,863 | 267,496 | | Shareholders' equity | 54,151 | 107,440 | | Total financial debt | 42,251 | 44,251 | - A significant non-cash impairment charge of €41.0 million was recorded for the avdoralimab intangible asset, following the decision to halt its development[22][49] - Cash position stood at €136.6 million at year-end. This does not include a €25.0 million payment from Sanofi received in March 2023[22][57] Revenue Analysis Total revenue and other income increased significantly to €57.7 million in 2022 from €24.7 million in 2021, primarily driven by a more than fourfold increase in collaboration and licensing agreements, partially offset by decreased government funding for research Revenue Source (in thousands of euros) | Revenue Source (in thousands of euros) | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Revenue from collaboration and licensing agreements | 49,580 | 12,112 | | Government financing for research expenditures | 8,035 | 12,591 | | Total Revenue and other income | 57,674 | 24,703 | - Collaboration revenue growth was driven by several key events: Monalizumab: €14.9 million increase due to a milestone from the PACIFIC-9 trial; IPH5201: €4.7 million recognized from a milestone payment; AstraZeneca Preclinical Programs: €17.4 million recognized after AstraZeneca declined its license option; Sanofi: €3.0 million milestone payment for advancing IPH6401/SAR'514[37] - Government funding for research decreased by €4.6 million (36.2%), mainly due to a reduction in the research tax credit from lower eligible expenses and a provision following a tax inspection[38] Operating Expenses Analysis Operating expenses rose slightly by 2.2% to €74.1 million in 2022, driven by increased R&D costs for preclinical programs, while G&A expenses decreased due to lower personnel and advisory fees Expense Category (in thousands of euros) | Expense Category (in thousands of euros) | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Research and development expenses | (51,663) | (47,004) | | Selling, general and administrative expenses | (22,436) | (25,524) | | Total Operating expenses | (74,099) | (72,528) | - R&D expenses increased by €4.7 million, mainly due to a €5.0 million increase in preclinical development program costs (notably IPH6501), partially offset by a €4.3 million decrease in clinical program expenses[41][42] - G&A expenses decreased by €3.1 million, primarily due to lower wages, reduced non-scientific advisory fees, and a decrease in legal and compliance support costs[45][46][47] Balance Sheet and Cash Flow As of December 31, 2022, Innate Pharma held €136.6 million in cash, with net cash used in operations improving to €19.2 million, influenced by significant milestone receipts from partners - Total cash, cash equivalents, and financial assets stood at €136.6 million, down from €159.7 million in 2021[54] - Shareholders' equity decreased to €54.2 million from €107.4 million, largely due to the net loss of €58.1 million for the period[56] Cash Flow Activity (in thousands of euros) | Cash Flow Activity (in thousands of euros) | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | (19,154) | (58,457) | | Net cash from / (used in) investing activities | 1,877 | (917) | | Net cash from / (used in) financing activities | (1,828) | 26,818 | - A post-period event in March 2023 was the receipt of a €25.0 million payment from Sanofi related to the B7-H3 ANKET® program license agreement[57]