INNATE PHARMA REPORTS FIRST HALF 2018 FINANCIAL RESULTS AND BUSINESS UPDATE

· Preliminary anti-tumor activity for lead asset, monalizumab, in combination with cetuximab in advanced head and neck cancer and durvalumab in microsatellite-stable colorectal cancer presented at medical conferences

· Recruiting additional patients into the cohort expansion for monalizumab in combination with cetuximab in advanced head and neck cancer

· Initiation of Phase I clinical trial for first-in-class anti-C5aR antibody, IPH5401, in combination with Imfinzi® (durvalumab) in solid tumors

· New clinical and translational data for monalizumab and IPH4102 to be presented at upcoming medical conferences

· Cash position €141.6m[1] (million euros) as of June 30, 2018Marseille, France, September 14, 2018, 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 2018. The financial statements are attached to this press release.
“In the first half of 2018 we have continued to advance our innovative portfolio, both with our partnered and proprietary immuno-oncology programs. We are encouraged by the emerging clinical data from our lead antibody, monalizumab, and look forward to presenting the updated data set from the Phase I/II study of monalizumab in combination with cetuximab in patients with recurrent or metastatic head and neck cancer at the upcoming ESMO 2018 congress,” commented Mondher Mahjoubi, Chief Executive Officer of Innate Pharma. ”Our commitment to continue the clinical development momentum remains a priority. Together with our partner AstraZeneca/MedImmune, we recently decided to recruit additional patients into the monalizumab plus cetuximab study to gain more experience in patients with advanced SCCHN[2] previously treated with anti-PD-1/L1. The Phase I trial evaluating IPH5401 in combination with durvalumab has been initiated and we look forward to share new data on IPH4102.”

A conference call will be held today at 2:00pm (CEST)

Dial in numbers:

France and International: +33 (0)1 72 72 74 03 US only: +1 646 722 4916

PIN code: 53841185#

The presentation will be made available on the Company’s website 30 minutes before the conference begins.

A replay will be available on Innate Pharma’s website after the conference call.
Financial highlights of the first half of 2018[3]:

The key elements of Innate Pharma’s financial results for the first half of 2018 are as follows:

· Cash, cash equivalents and financial assets (current and non-current) amounting to €141.6m (million euros) as of June 30, 2018 (€176.6m as of December 31, 2017).

o Financial liabilities amounting to €5.2m, including €3.9m of non-current liabilities (€5.9m as of December 31, 2017, including €4.5m of non-current liabilities).

· Revenue and other income amounting to €23.7m (€21.2m for the first half of 2017). This amount mainly results from revenue from licensing and collaboration agreements (€16.9m) and from research tax credit (€6.2m).

o Revenue related to the licensing and collaboration agreements mainly results from phasing of initial payment received by Innate Pharma in the context of the agreement signed in April 2015 relating to monalizumab with AstraZeneca/MedImmune (€16.7m).

· Operating expenses amounting to €39.4m (€37.1m for the first half of 2017), of which 86% are related to research and development.

o R&D expenses were up €4.6m during the periods under review, in line with the broadening and progress of Innate’s pipeline. Share-based payments were down €4.0m, including €1.9m in R&D and €2.1m in G&A, making up the most of G&A expenses decrease.

· A net loss for the first half of 2018 amounting to €16.2m (€16.6m for the first half of 2017).

The table below summarizes the IFRS consolidated financial statements for the six-month period ended June 30, 2018, including 2017 comparative information.

* The increase in the weighted average number of shares mainly results from the issuance of 3.3 millions of shares to the benefit of Novo Nordisk A/S in the context of the acquisition of the anti-C5aR antibody (shares issued in July 2017).

Pipeline update:

Monalizumab (anti-NKG2A antibody), partnered with AstraZeneca/MedImmune, is a checkpoint inhibitor. This first-in-class monoclonal antibody targets the NKG2A inhibitory receptor expressed on tumor infiltrating cytotoxic CD8 T lymphocytes and NK cells. This monoclonal antibody is currently being investigated in an exploratory program of Phase I or I/II clinical trials in various cancer indications.

· monalizumab and cetuximab:

In April 2018, preliminary data from an expansion cohort of an ongoing Phase I/II trial evaluating the safety and efficacy of the combination of monalizumab with cetuximab (anti-EGFR) in patients with recurrent or metastatic squamous cell carcinoma of the head and neck (SCCHN) were presented at the American Association for Cancer Research (AACR) Annual Meeting 2018. The safety profile of the combination was consistent with monotherapy profiles. Among 26 patients evaluable for efficacy, 31% showed confirmed partial responses, achieving the predefined number of responses needed to declare the trial positive. 54% of patients had stable disease.

Updated data on 40 patients will be presented at the European Society of Medical Oncology (ESMO) Congress in October 2018 (October 20, 2018, 15:00, presentation number 1049PD, Hall B3 – Room 23, ICM München, Germany – read the full press release on upcoming scientific meetings). Also, additional patients are being recruited to gain more experience in patients with recurrent or metastatic SCCHN previously treated with both platinum based chemotherapy and anti-PD-1/L1.

· monalizumab and durvalumab:

In June 2018, preliminary clinical data from an expansion cohort of an ongoing Phase I trial evaluating the safety and efficacy of the combination of monalizumab and durvalumab in patients with microsatellite-stable colorectal cancer (MSS-CRC) were presented at the annual meeting of the American Society of Clinical Oncology (ASCO) 2018. The safety profile of the combination was consistent with the monotherapy profiles. Among the 39 patients evaluable for efficacy, the overall response rate (ORR) was 8% with confirmed partial response in 3 patients and stable disease (SD) in 11 patients (28%), including 3 SD patients with tumor reduction who continued therapy for >200 days. The median duration of response was 16.1 weeks at the cut-off date. Data demonstrated a disease control rate (DCR) of 31% at 16 weeks.

Translational data from the Phase I study will be presented at the European Society of Medical Oncology (ESMO) Congress in October (October 20, 2018, 12:30, presentation number 1194P, Hall A3, ICM München, Germany – read the full press release on upcoming scientific meetings).

IPH4102 (anti-KIR3DL2 antibody) is a first-in-class, cytotoxicity-inducing antibody currently being tested in a Phase I clinical trial for the treatment of cutaneous T-cell lymphomas (CTCL), an orphan disease, in particular its most aggressive form, Sézary Syndrome (SS).

· In a previously reported Phase I trial with IPH4102 in 20 SS patients, data showed an objective response rate (ORR) of 50%. Accrual of 15 SS patients for an additional cohort expansion has been completed. Full data will be presented at the EORTC CLTF 2018 Meeting in September (September 29, 2018, 8:30 – 9:45, presentation number 078, Olma Messen Hall 9.2, St-Gallen, Switzerland – read the full press release on upcoming scientific meetings).

IPH5401 (anti-C5aR antibody) is a first-in-class antibody that specifically blocks C5a receptors (C5aR) expressed on subsets of immuno-suppressive myeloid-derived suppressor cells (MDSC).

· In January, the Company entered into a non-exclusive clinical trial collaboration with AstraZeneca/MedImmune that will accelerate development activities for IPH5401 in combination with PD-1/L1 blockers. In September, a Phase I trial evaluating IPH5401 and durvalumab in solid tumors (STELLAR-001) was initiated. The multicenter, open-label, dose-escalation and dose-expansion study will evaluate the safety, tolerability, and anti-tumor activity of IPH5401 in combination with durvalumab in solid tumors, including non-small-cell lung cancer (NSCLC) with secondary resistance to prior immuno-oncology (IO) treatment and IO-naïve hepatocarcinoma (HCC).

IPH5201 (anti-CD39 antibody) and IPH5301 (anti-CD73[7] antibody):

CD39 and CD73 are membrane-bound extracellular enzyme which play a major role in promoting immunosuppression through the pathway degrading adenosine triphosphate (ATP) into adenosine. The blockade of CD39 and CD73 has the potential to promote anti-tumor immune responses across a wide range of tumors.

· During the period, Innate Pharma has selected the lead candidate for each program, now called IPH5201 and IPH5301.

About Innate Pharma:

Innate Pharma S.A. is a clinical-stage biotechnology company dedicated to improving cancer treatment and clinical outcomes for patients through first-in-class therapeutic antibodies that harness the body’s own immune system.

Innate Pharma specializes in immuno-oncology, a new therapeutic field that is changing cancer treatment by mobilizing the power of the body’s immune system to recognize and kill cancer cells.

The Company’s broad pipeline includes several first-in-class clinical stage antibodies as well as preclinical candidates and technologies that have the potential to address a broad range of cancer indications with high unmet medical needs.

Innate Pharma has pioneered the discovery and development of checkpoint inhibitors, with a unique expertise and understanding of Natural Killer cell biology. This innovative approach has resulted in major alliances with leaders in the biopharmaceutical industry including AstraZeneca, Bristol-Myers Squibb, Novo Nordisk A/S and Sanofi. Innate Pharma is building the foundations to become a fully-integrated biopharmaceutical company.

Based in Marseille, France, Innate Pharma has more than 190 employees and is listed on Euronext Paris.

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

Information about Innate Pharma shares:

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.

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[1] Including short term investments (€17.4m) and non current financial instruments (€44.7m)
[2] Squamous Cell Carcinoma of the Head and Neck
[3] Change in the accounting method during the period: see note to the Financial statements
[4] Restated according to IFRS 9 and 15 (see Note 2.1 Basis of Preparation of the Half-year financial report).
[5] This column is not included in the condensed half-year consolidated financial statements as of June 30, 2018, which impacts of the first application of IFRS 15 and IFRS 9 are presented in Note 2.1, as the company opted for a simplified retrospective transition. Nevertheless, since the company has the necessary information for this purpose, the company presented the restated items of IFRS 15 in order to allow comparison with comparable standards.
[6] Current and non-current
[7] This program is developed within the TumAdoR project (www.tumador.eu), coordinated by Dr C. Caux (Centre Léon Bérard and Centre de Recherche en Cancérologie, Lyon, France), and funded under the European Community’s seventh framework Program (European Community’s Seventh Framework Program (FP7/2007-2013) under grant agreement n°602200).