Innate Pharma SA — FY2021 Form 20-F Summary
Reporting period: Fiscal year ended December 31, 2021; annual report filed April 4, 2022. Innate Pharma is a French clinical-stage oncology biotech developing immunotherapies. Financial statements are audited and prepared under IFRS in euros. The 2020 comparatives were restated to present Lumoxiti as a discontinued operation.
Financial performance and position
Amounts below are € millions unless otherwise noted.
| Metric | FY2021 | FY2020 |
|---|---|---|
| Revenue and other income | 24.7 | 69.8 |
| Collaboration and licensing revenue | 12.1 | 56.2 |
| Government research funding | 12.6 | 13.6 |
| Research and development expense | 47.0 | 49.7 |
| General and administrative expense | 25.5 | 19.0 |
| Operating loss | (47.8) | 1.1 |
| Net financial income (loss) | 2.3 | (1.9) |
| Loss from continuing operations | (45.5) | (0.8) |
| Loss from discontinued operations | (7.3) | (63.2) |
| Net loss | (52.8) | (64.0) |
| Basic loss per share | €0.66 | €0.81 |
Revenue and other income fell 64.6%, principally because lower collaboration revenue was recognized. R&D expense declined 5.4%, but G&A expense rose 34.4%, including higher personnel, insurance and other costs. The operating loss equaled about 194% of revenue and other income; the filing does not present a gross margin. The smaller total net loss mainly reflects the prior-year €43.5 million Lumoxiti impairment, not a return to operating profitability.
| Liquidity, debt and cash flow | FY2021 / December 31, 2021 |
|---|---|
| Cash, cash equivalents and short-term investments | €119.8 million |
| Including non-current financial assets | €159.7 million |
| Total assets | €267.5 million |
| Shareholders’ equity | €107.4 million |
| Financial liabilities and defined-benefit obligations | €47.2 million |
| Cash used in operating activities | €58.5 million |
| Cash used in investing activities | €0.9 million |
| Cash from financing activities | €26.8 million |
| Decrease in cash and cash equivalents | €33.0 million |
Management said available cash, investments and expected operating cash flow were sufficient for the next 12 months, while also stating that additional funding would be needed to complete development and potential commercialization of internally developed candidates. The company received €28.7 million in state-guaranteed loans in December 2021, initially due within one year, with an option to extend up to five years. Its €12.5 million building loan remained outstanding, with a cash covenant and collateral pledged.
Material changes and operating developments
- Collaboration and licensing revenue dropped to €12.1 million from €56.2 million. Monalizumab revenue was €7.5 million versus €33.6 million; IPH5201 revenue was nil versus €13.4 million, as its initial payment and milestone had been recognized in 2020. Sanofi revenue was €3.0 million.
- Direct R&D expense increased to €26.7 million from €23.4 million, mainly reflecting greater lacutamab and preclinical spending; lower amortization reduced total R&D expense.
- Lumoxiti was classified as discontinued following the return of its U.S. marketing and distribution rights to AstraZeneca. The FDA transfer was completed February 8, 2022. Innate recorded a €5.5 million payable to AstraZeneca for its share of manufacturing costs, due April 30, 2022.
- Cash and cash equivalents, short-term investments and non-current financial assets declined to €159.7 million from €190.6 million. Equity declined to €107.4 million from €156.0 million.
Outlook, commentary and risks
- Outlook: No specific revenue or earnings guidance is provided. Management expects continued significant expenses and losses, and identifies collaboration payments, grants and French research tax credits as important funding sources.
- Pipeline: Monalizumab remained in Phase 3 testing for head and neck cancer. AstraZeneca’s Phase 2 COAST interim results reported a 10-month progression-free survival rate of 72.7% for durvalumab plus monalizumab versus 39.2% for durvalumab alone, and confirmed response rates of 36% versus 18%. These are interim clinical findings, not proof of approval or commercial success. Lacutamab showed an early signal in KIR3DL2-expressing mycosis fungoides; the filing notes the small patient number and need for longer follow-up. Sanofi began a Phase 1/2 trial of IPH6101 in December 2021; an investigator-sponsored Phase 1 trial of IPH5301 also began in December.
- Unusual clinical outcome: The Phase 2 FORCE trial of avdoralimab in severe COVID-19 pneumonia missed its primary endpoints; the related development effort was stopped. The company treated €2.0 million of related Bpifrance funding as non-refundable grant revenue following the project’s technical and commercial failure.
- Principal risks: Clinical and regulatory failure, trial delays, adverse effects, dependence on AstraZeneca and Sanofi, third-party manufacturing and supply, competition, intellectual-property challenges, and the need for further financing. The company has no manufacturing capabilities and does not use foreign-exchange hedging.
- Other matters: COVID-19 could affect trial enrollment, operations and financing; Russia’s invasion of Ukraine occurred after year-end and its effects were described as uncertain. A French tax audit opinion was received in March 2022; management said the audit had not started and it had identified no specific risk. Management reported that the material weakness in financial reporting controls identified for 2020 was remediated by year-end 2021, while acknowledging residual risk around unusual and complex transactions. The independent auditor did not attest to internal controls.
Key facts investors should verify
- Whether monalizumab’s Phase 3 program produces the interim activity needed for the potential $50 million AstraZeneca milestone, and whether the trials ultimately demonstrate benefit.
- Updated lacutamab efficacy, safety and companion-diagnostic results, particularly given the early and limited patient data described.
- Cash burn, timing and repayment or extension of the €28.7 million state-guaranteed loans, and compliance with the building-loan cash covenant.
- Future collaboration milestones, option exercises and tax-credit receipts: the filing’s large contingent-payment estimates depend on partner decisions and successful milestones and are not assured.
- Execution of the Lumoxiti transition and payment of the €5.5 million manufacturing-cost obligation; also monitor the residual complex-transaction control risk and the tax audit.