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Innate Pharma (IPH.PA ) Release: Annual Results for 2012: Significant Advance for Four Drug Candidates and Strong Cash Position



3/5/2013 9:24:25 AM

MARSEILLE, FRANCE--(Marketwire - March 05, 2013) - Innate Pharma SA (the "Company") (EURONEXT PARIS: IPH) (ISIN FR0010331421)

  • Three clinical trials initiated with anti-KIR antibody lirilumab (IPH2102/BMS-986015)[1], including a Phase II trial
  • IPH2201/NN8765[2] Phase I clinical trial enrolling patients
  • IPH33[3] drug candidate selected and ready for partnering
  • IPH41[4] drug candidate selection expected by yearend
  • Higher revenue, lower expenditures and lower losses versus 2011
  • Strong cash position (32.6 million euros) with horizon to mid-2015

Innate Pharma SA (the "Company") (EURONEXT PARIS: IPH) (ISIN FR0010331421), the innate immunity company developing first-in-class drugs for cancer and inflammatory diseases, reports today its consolidated financial results for the year ended December 31, 2012. The consolidated financial statements are attached to this press release.

Hervé Brailly, Chief Executive Officer of Innate Pharma, commented: "2012 was a year of consolidation and significant progress at Innate Pharma. Three clinical trials were launched with the anti-KIR antibody lirilumab licensed to Bristol-Myers Squibb of which two are in selected solid tumors. A total of about 450 patients are expected to enrol in these trials.

The Phase I trial of IPH2201/NN8765 in rheumatoid arthritis is ongoing, led by Novo Nordisk A/S.

As to our proprietary programs, we selected and humanized a drug candidate for the IPH33 program, and have begun to actively search for a partner. Our objective for the IPH41 program is to select a drug candidate by the end of the year.

With the industry showing increasing interest in novel immunology approaches, we will be focusing on the next steps of value creation for our proprietary candidates in 2013. Our current cash management gives us a cash-horizon up to mid-2015."

A conference call for fund managers, financial analysts and journalists

will be held today at 4:00pm (CET) - Dial in number: +33 (0)1 70 77 09 40

A replay will be available during three months after the conference call. Dial in number:

+33 (0)1 72 00 15 00 Access number: 280550#

Update on 2012 key financial items:
The key elements of these results are as follows:

  • Revenue and other income of 14.3 million euros (vs. 11.7 million euros in 2011), primarily from collaboration agreements and research tax credit;
  • Operating expenses of 17.7 million euros (vs. 19.3 million euros in 2011), of which approximately 80% is in research and development;
  • Net loss amounting to 3.2 million euros (vs. 7.0 million euros in 2011); and
  • Cash, cash equivalents and current financial instruments of 32.6 million euros at December 31, 2012, with 4.5 million euros in debt. Based on its current programs, the Company estimates that it has sufficient cash to fund operation into mid-2015.

The table below summarizes the consolidated income statement for the 12-month period ended December 31, 2012, compared to the same period in 2011:

Year ended December 31 ---------------------- In thousands of euros (IFRS) 2012 2011 --------- ---------- Revenue from collaboration and licensing agreements 10,377 7,454 Government financing for research expenditures 3,905 4,286 Revenue and other income 14,282 11,740 Research and development expenses (13,417) (14,843) General and administrative expenses (4,251) (4,467) Net operating expenses (17,668) (19,310) Operating income / (loss) (3,386) (7,570) Financial result 185 590 Net income / (loss) (3,199) (6,980)

The consolidated annual IFRS financial statements as at December 31, 2012 as well as the management discussion on these results are in appendix at the end of this document.

Update on drug-candidates portfolio:
Lirilumab (anti-KIR antibody), partnered with Bristol-Myers Squibb:
In 2012, three new clinical trials started with lirilumab (IPH2102/BMS986015), which should enrol about 150 patients each:

  • A double-blind placebo-controlled randomized Phase II trial of lirilumab as maintenance treatment in elderly patients with Acute Myeloid Leukemia (AML) in first complete remission (study IPH2102-201, the "EffiKIR" trial).
  • A Phase I trial of lirilumab in combination with ipilimumab (Bristol-Myers Squibb) in solid tumors; and
  • A Phase I trial of lirilumab in combination with nivolumab, an anti-PD1 antibody (BMS-936558) in solid tumors.

Lirilumab is licenced to Bristol-Myers Squibb since July 2011. Under this agreement, Bristol-Myers Squibb holds worldwide and exclusive rights for the development and commercialization of lirilumab.

The agreement included an upfront payment of $35 million (EUR 24.9 million) when it was signed in July 2011 and potential milestone payments of up to another $430 million, as well as double-digit royalty payments on worldwide net sales. Bristol-Myers Squibb funds the development of IPH2102.

In 2012, the Company also updated on four early clinical trials with IPH2101 (hybridoma anti-KIR antibody) in Multiple Myeloma ("MM"):

  • Interim data of Phase I trial KIRIMID were presented at the American Society of Hematology meeting;
  • Phase I results of IPH2101 were published in Blood;
  • Results of Phase IIa trials REMYKIR and KIRMONO did not show activity signal on the primary efficacy endpoint of the studies.

IPH2201/NN8765 (anti-NKG2A antibody), partnered with Novo Nordisk A/S:
A Phase I clinical trial for IPH2201 in rheumatoid arthritis was initiated in 2011 and is ongoing. IPH2201 is a first-in-class monoclonal antibody generated by the research collaboration between Innate Pharma and Novo Nordisk A/S.

Proprietary pre-clinical programs IPH33 and IPH41:
IPH33 is an anti-TLR3 monoclonal antibody program for development in chronic inflammation. An antibody candidate was selected and humanized in 2012. The goal is now to qualify this candidate for an entry in regulatory preclinical development. Innate Pharma intends to find a partner for the development of this program.

IPH41 is an anti-KIR3DL2 monoclonal antibody program for development in blood cancer. Cadidates were selected on the basis of their efficacy profile and humanized. The goal is now to select and validate a candidate for an entry in regulatory preclinical development.
Innate Pharma continues to work on other targets with innovative mechanisms of action such as NKp46, for which an academic partner of Innate Pharma published in Science[5] in January 2012 and Innate Pharma co-owns intellectual property rights.
[1] Lirilumab is the international nonproprietary names of IPH2102/BMS-986015, an anti-KIR antibody licenced to Bristol-Myers Squibb in July 2011
[2] Anti-NKG2A monoclonal antibody licenced to Novo Nordisk A/S
[3] Anti-TLR3 monoclonal antibody developed in inflammation
[4] Anti-KIR3DL2 monoclonal antibody developed in cancer
[5] Tuning of Natural Killer Cell Reactivity by NKp46 and Helios Calibrates T Cell Responses - Science 20 January 2012: 344-348.

About Innate Pharma:
Innate Pharma S.A. is a biopharmaceutical company developing first-in-class immunotherapy drugs for cancer and inflammatory diseases.

The Company specializes in the development of new monoclonal antibodies targeting receptors and pathways controlling the activation of innate immunity cells. Its innovative approach has been validated by licence agreements with two major pharmaceutical companies, Novo Nordisk A/S and Bristol-Myers Squibb.

Incorporated in 1999 and listed on NYSE-Euronext in Paris in 2006, Innate Pharma is based in Marseilles, France, and had 82 employees as at December 31, 2012.

Learn more about Innate Pharma at www.innate-pharma.com.

Practical Information about Innate Pharma shares:

ISIN code FR0010331421 Ticker code IPH

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 AMF, which is available on the AMF website (http://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.

APPENDIX

Innate Pharma SA

The audit procedures on the consolidated financial statements have been performed. The auditors' report will be issued after the finalization of the required procedures relating to the filing of the annual report ('Document de Référence'). The consolidated financial statements have been approved by the Company's Executive Board on March 4, 2013. These statements were reviewed by the Company's Supervisory Board on March 4, 2013 and will be submitted for approval to the Shareholders' General Meeting on June 28, 2013.

Innate Pharma's financial annual report, included in the reference document, will be available in the second quarter of 2013.

Balance Sheet (in thousands of euros) At December 31 ----------------------- 2012 2011 ---------- ---------- Assets Current Assets Cash and cash equivalents 30,584 46,606 Financial instruments 2,032 - Current receivables 8,381 6,369 Total current assets 40,997 52,975 Non-current assets Intangible and tangible assets 6,824 6,442 Associates and joint ventures 475 692 Total non-current assets 7,299 7,134 Total assets 48,295 60,109 Liabilities Current liabilities Trade payables 14,186 13,221 Financial liabilities 1,178 2,273 Provisions - - Total current liabilities 15,364 15,494 Non-current liabilities Financial liabilities 3,327 4,497 Defined benefit obligations 643 381 Other non current liabilities 5,597 13,112 Total non-current liabilities 9,567 17,990 Shareholders' equity Capital and reserves attributable to equity holders of the Company Share capital 1,897 1,884 Share premium 108,552 108,453 Retained earnings (83,870) (76,710) Net income (loss) (3,199) (6,980) Other reserves (17) (22) Total capital and reserves attributable to equity holders of the Company 23,364 26,625 Total liabilities and equity 48,295 60,109 Income Statement (in thousands of euros) Year ended December 31 ----------------------- 2012 2011 ---------- ---------- Revenue from collaboration and licensing agreements 10,377 7,454 Government financing for research expenditures 3,905 4,286 Revenue and other income 14,282 11,740 Cost of supplies and consumable materials (1,279) (1,103) Intellectual property expenses (275) (535) Other purchases and external expenses (8,640) (9,788) Employee benefits other than share-based compensation (6,385) (6,511) Share-based compensation - (219) Depreciation and amortization (839) (920) Other expenses (249) (234) Net operating expenses (17,668) (19,310) Operating income (loss) (3,386) (7,570) Financial income 890 945 Financial expenses (334) (520) Net gain on de-recognition - 390 Share of profit (loss) of associates and joint ventures (371) (225) Net income (loss) before tax (3,199) (6,980) Income tax expense - - Net income (loss) (3,199) (6,980) Net income (loss) per share attributable to equity holders of the Company: Weighted average number of shares (in thousands): 37,802 37,687 (in EUR per share) - basic (0.08) (0.19) - diluted (0.08) (0.19) Statement of cash flows (in thousands of euros) Year ended December 31 ---------------------- 2012 2011 --------- ---------- Net income (loss) (3,199) (6,980) --------- ---------- Depreciation and amortization 839 901 Provisions for charges and defined benefit obligations 72 61 Share-based compensation - 219 Unrealized gains / (loss) on assets available for sale - (173) Share of profit (loss) of associates and joint ventures 371 225 (Gains) / losses on the Platine Pharma Services operation - (390) (Gains) / losses on disposal of fixed assets 3 3 --------- ---------- Operating cash flow before changing in working capital (1,914) (6,134) --------- ---------- Current receivables and prepayments (2,012) (700) Deferred revenue (7,516) 20,480 Trade payables 969 (660) --------- ---------- Net cash generated from / (used in) operating activities (1) (10,475) 12,986 --------- ---------- Acquisition of property and equipment (1,225) (322) Changes in other non-current assets - - Purchase of current financial instruments (2,032) - Disposal of current financial instruments - 2,767 Cash collateral in relation to a lease-financing (154) - --------- ---------- Net cash generated from / (used in) investing activities (3,411) 2,445 --------- ---------- Net proceeds from issuance of share capital - 36 Increase in financial liabilities - - Repayment of financial liabilities (2,264) (719) Transactions on treasury shares 116 24 --------- ---------- Net cash generated from / (used in) financing activities (2,148) (659) --------- ---------- Effect of the exchange rate changes 12 17 --------- ---------- Net increase / (decrease) in cash and cash equivalents (16,022) 14,789 --------- ---------- Cash and cash equivalents at the beginning of the year 46,606 31,818 Cash and cash equivalents at the end of the year 30,584 46,606 --------- ----------

Management discussion on annual results for 2012:

Revenue and other income

Revenue and other income result from government financing for research expenditure and collaboration and licensing agreements. The Company's revenue and other income was 11.7 million euros and 14.3 million euros for the fiscal years ending on December 31, 2011 and 2012, respectively, from the following sources:

Year ended December 31 ----------------------- In thousand euros 2012 2011 ----------- ----------- Revenue from collaboration and licensing agreements 10,377 7,454 Government financing for research expenditures 3,905 4,286 Revenue and other income 14,282 11,740

Revenue from collaboration and licensing agreements

Revenue from collaboration and licensing agreements respectively amounted to 7.5 million euros and 10.4 million euros for the fiscal years ended on December 31, 2011 and 2012. These revenue result from the licencing agreement signed with Novo Nordisk A/S (in 2011 only) and Bristol-Myers Squibb.

Following the licencing agreement signed with Bristol-Myers Squibb in July 2011, the Company received an upfront payment of 24.9 million euros (35.3 millions of dollars). This upfront payment, which is non-refundable and non-creditable, is recognized in turnover during the expected period of duration of the clinical program in course at the date of the contract. The amount that is not yet recognized as turnover is booked as deferred revenue in the balance sheet (13.3 million euros at December 31, 2012).

In addition to this upfront payment, the Company invoiced Bristol-Myers Squibb for its external costs for the licensed programs.

Government financing for research expenditures

The table below details government financing for research expenditure for the fiscal years ending December 31, 2011 and 2012:

Year ended December 31 ----------------------- In thousands of euros 2012 2011 ----------- ----------- Research tax credit 3,522 3,751 French and foreign grants 383 535 Government financing for research expenditures 3,905 4,286

Since the fiscal year ended on December 31, 2008, the calculation of the research tax credit is based on 30% of the amount of eligible expenses for the fiscal year.

The table below shows the amount of R&D expenses (net of grants) eligible for the fiscal years ending on December 31, 2011and 2012:

Year ended December 31 ----------------------- In thousands of euros 2012 2011 ----------- ----------- R&D expenses eligible for the research tax credit 11,641 12,793 Grants received, net 916 (569) Net expenses eligible for the research tax credit 12,557 12,224

The research tax credit is usually reimbursed by the French government during the fourth fiscal year following the one for which it was booked in the income statement, provided that it is not deducted from taxes due by the Company. However, beginning in fiscal year 2010, companies qualified as small and medium sized ("SMEs") according to the European Union are eligible to an anticipated reimbursement of their debt related to research tax credit. The Company meets the SME criteria according to the European Union. It therefore benefits from the anticipated reimbursement and received the cash relating to the 2011 tax credit in September 2012.

Since 2008, repayable grants received are deducted from the basis of calculation of the research tax credit. These amounted to respectively 569 (received) and 916 (reimbursed) thousand euros in 2011 and 2012. In parallel, the Company conducted some research outside of the European Union, notably in the USA, and these research expenses are not eligible for the research tax credit calculation.

For the fiscal years 2011 and 2012, the Company booked mainly a "Lyon Biopôle" cluster grant of 0.3 million euros for the year 2011 and 0.4 million euros for the year 2012.

These grants directly impact our income statement, as opposed to repayable loans which are recorded as debt and thus only impact our balance sheet.

Operating expenses by business function
The table below gives a breakdown of net operating expenses by business function:

Year ended December 31 ---------------------- In thousands of euros 2012 2011 ---------- ---------- Research and development expenses (13,417) (14,843) General and administrative expenses (4,251) (4,467) Net operating expenses (17,668) (19,310)

Research and development expenses include the cost of employees assigned to research and development operations (including employees assigned to work under the collaboration and licensing agreements), product manufacturing costs, subcontracting costs as well as costs of materials (reagents and other consumables) and pharmaceutical products.

Research and development expenses amounted to 14.8 million euros and 13.4 million euros for the fiscal years ended on December 31, 2011 and 2012, respectively. These expenses represented 77% of net operating expenses for the fiscal year ended on December 31, 2011 and 76% for the fiscal year ended on December 31, 2012. The decrease in research and development expenses between 2011 and 2012 is mostly explained by a fall in subcontracting costs in relation to IPH2101 (hybridoma version of the IPH21 program; the candidate for later development is IPH2102, produced in CHO). This variance is partly offset by the increase in subcontracting costs in relation to the clinical program IPH2102.

General and administrative expenses include expenses for employees not directly working on research and development, as well as the expenses necessary for the management of the business and its development. General and administrative expenses were 4.5 million euros and 4.3 million euros for the fiscal years e


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