6-K

UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION 

Washington, D.C. 20549

__________________

FORM 6-K

__________________

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

December 21, 2017

Commission File Number: 001-38283

__________________________________

InflaRx N.V.

__________________________________

Winzerlaer Str. 2

07745 Jena, Germany

(+49) 3641 508180

(Address of principal executive offices)

__________________________________

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ☒     Form 40-F ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

INCORPORATION BY REFERENCE

Exhibits 99.1 and 99.2 to this Report on Form 6-K shall be deemed to be incorporated by reference into the registration statement on Form S-8 (Registration Number 333-221656) of InflaRx N.V. and to be a part thereof from the date on which this report is filed, to the extent not superseded by documents or reports subsequently filed or furnished.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Jena, Germany, December 21, 2017.

INFLARX N.V.
By:	/s/ Niels Riedemann
	Name: Niels Riedemann Title:   Chief Executive Officer

EXHIBIT INDEX

Exhibit	Description of Exhibit
99.1	InflaRx GmbH Unaudited Condensed Consolidated Financial Statements as of and for the Three and Nine Months Ended September 30, 2017
99.2	InflaRx GmbH Management’s Discussion and Analysis of Financial Condition and Results of Operations

EX-99.1

Exhibit 99.1

InflaRx GmbH

Index to Unaudited Interim Condensed Consolidated

Financial Statements

Unaudited condensed consolidated statements of comprehensive loss	2
Condensed consolidated statements of financial position as of December 31, 2016 (audited) and September 30, 2017 (unaudited)	3
Unaudited condensed consolidated statements of changes in equity	4
Unaudited condensed consolidated statements of cash flows	5
Notes to the unaudited interim condensed consolidated statements	6

InflaRx GmbH

Unaudited condensed consolidated statements of comprehensive loss

			For the three months						For the nine months
			ended September 30,						ended September 30,
in € thousand	Note*		2016			2017			2016			2017
Other income and expenses (net)				54			81			139			111
Research and development expenses				(1,059	)		(2,606	)		(2,476	)		(8,108	)
General and administrative expenses				(528	)		(691	)		(1,052	)		(2,037	)
Loss before interest and income taxes				(1,533	)		(3,216	)		(3,389	)		(10,034	)
Finance costs (net)		5		(623	)		(841	)		(1,189	)		(2,496	)
Loss for the period				(2,156	)		(4,057	)		(4,578	)		(12,530	)
Other comprehensive income
Items that may be reclassified subsequently
to profit or loss:
Exchange differences on translating
foreign operations				0			2			0			0
Other comprehensive income for the period				0			2			0			0
Total comprehensive loss				(2,156	)		(4,055	)		(4,578	)		(12,530	)
Loss per common share in € (basic/diluted)				(77	)		(144	)		(163	)		(445	)

* The notes are an integral part of these consolidated financial statements.

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InflaRx GmbH

Condensed consolidated statements of financial position
as of December 31, 2016 and September 30, 2017

in € thousand	Note*		December 31, 2016			September 30, 2017
						unaudited
ASSETS
Non-current assets
Intangible assets				5			22
Laboratory and office equipment				131			149
Financial assets				1			19
Total non-current assets				137			190
Current assets
Other assets		3		264			1,734
Cash and cash equivalents				29,117			22,086
Total current assets				29,381			23,820
Total assets				29,518			24,010
EQUITY AND LIABILITIES
Equity
Issued capital				31			31
Other reserves		4		1,685			3,756
Accumulated deficit				(27,055	)		(39,585	)
Own shares				(350	)		(350	)
Total equity				(25,689	)		(36,148	)
Non-current liabilities
Preferred shares		5		53,440			57,428
Deferred income				19			16
Provisions				2			2
Total non-current liabilities				53,461			57,446
Current liabilities
Trade payables				1,534			2,520
Other liabilities				212			192
Total current liabilities				1,746			2,712
Total equity and liabilities				29,518			24,010

* The notes are an integral part of these consolidated financial statements.

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InflaRx GmbH

Unaudited condensed consolidated statements of changes in equity

				Other reserves
				currency		share	Accumu-
		Issued		trans-		based	lated		Own		Total
in € thousand		capital		lation		payments	deficit		shares		equity
Balance as of January 1, 2016	31		9		807		(18,116)	(350)		(17,619)
Comprehensive loss
Loss for the period	0		0		0		(4,578)	0		(4,578)
Other comprehensive income
Exchange differences on
translating foreign operations	0			0		0	0		0		0
Total comprehensive loss		0		0		0	(4,578)		0		(4,578)
Recognition of equity-settled
share-based payments	0		0		207		0	0		207
Balance as of September 30, 2016		31	9		1,014		(22,694)	(350)		(21,990)
Balance as of January 1, 2017	31		10		1,675		(27,055)	(350)		(25,689)
Comprehensive loss
Loss for the period	0		0		0		(12,530)	0		(12,530)
Other comprehensive income
Exchange differences on
translating foreign operations	0		0		0		0		0	0
Total comprehensive loss		0		0		0	(12,530)		0		(12,530)
Closure of InflaRx Inc.	0		(10)		0		0	0		(10)
Recognition of equity-settled
share-based payments	0		0		2,081		0	0		2,081
Balance as of September 30, 2017		31		0		3,756	(39,585)		(350)		(36,148)

* The notes are an integral part of these consolidated financial statements.

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InflaRx GmbH

Unaudited condensed consolidated statements of cash flows

	For the nine months
	ended September 30,
in € thousand	2016			2017
Cash flow from operating activities
Loss for the period		(4,578	)		(12,530	)
Adjustments for the period:
- Depreciation and amortization		24			53
- Expenses recognized in respect of equity-settled share-based payments		207			2,081
- Finance costs (net)		1,182			2,496
		(3,165	)		(7,900	)
Change in other assets		31			(1,470	)
Change in trade and other payables and deferred income		(29	)		963
Interest paid (received)		0			(18	)
Net cash used in operating activities		(3,163	)		(8,425	)
Cash flow from investing activities
Purchase of intangible assets		0			(21	)
Purchase of leasehold improvements and equipment		(8	)		(67	)
Cash paid for financial assets		0			(18	)
Net cash used in investing activities		(8	)		(106	)
Cash flow from financing activities
Proceeds from issuance of preferred shares		30,993			1,500
Share issue costs paid		(95	)		0
Net cash generated from financing activities		30,898			1,500
Net changes to cash and cash equivalents		27,727			(7,031	)
Cash and cash equivalents at the beginning of the year		3,302			29,117
Exchange gains on cash and cash equivalents		0			0
Cash and cash equivalents at the end of the year		31,029			22,086

* The notes are an integral part of these consolidated financial statements.

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InflaRx GmbH

Notes to the unaudited interim condensed consolidated financial statements

(1) Reporting entity

InflaRx GmbH (“InflaRx” or the “Company”) is a German private limited liability company formed in 2007 and is registered in the Commercial Register of the Jena local court HRB 502149. The Company’s registered office is at Winzerlaer Straße 2 in 07745 Jena, Germany.

InflaRx is a clinical-stage biopharmaceutical company focused on applying its proprietary technology to discover and develop first-in-class, potent and specific inhibitors of the complement activation factor known as C5a.

In November 2017, the Company executed a corporate reorganization whereby InflaRx N.V., a Dutch public company with limited liability (naamloze vennootschap) with its corporate seat in Amsterdam, the Netherlands, became the holding company for the Company in connection with the initial public offering of InflaRx N.V. and the listing of its common shares on the NASDAQ Global Select Market. For note disclosures describing the corporate reorganization and the initial public offering, refer to “note (7) Significant Events After the Reporting Date.”

The condensed consolidated interim financial statements (the “interim financial statements”) as of and for the three and nine months ended September 30, 2017 presented herein are reported by the Company and do not include the effects of the corporate reorganization, which occurred in the fourth quarter of 2017 as described in further detail in “note (7) Significant Events After the Reporting Date.” These interim financial statements comprise the Company and, until September 12, 2017, its wholly owned subsidiary, InflaRx Inc., Ann Arbor, Michigan, USA (together, the “Group”), which was dissolved on September 12, 2017. The consolidated financial statements of InflaRx and InflaRx N.V., together with any of its future consolidated subsidiaries, as of and for the year ended December 31, 2017 and for each reporting period going forward, will be reported by InflaRx N.V.

(2) Basis for preparation and changes to Group’s accounting policies

a) Statement of compliance

The interim financial statements of InflaRx for the three and nine months ended September 30, 2017 and 2016 have been prepared in accordance with IAS 34 Interim Financial Reporting. The interim financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group’s annual consolidated financial statements as at December 31, 2016.

The interim financial statements were authorized for issuance by management on December 14, 2017.

b) Critical judgements and accounting estimates

The preparation of the interim financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

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In preparing these interim financial statements, the critical judgments made by management in applying the Group’s accounting policies and the key accounting estimates were the same as those that applied to the annual consolidated financial statements as at and for the year ended December 31, 2016.

c) Functional and presentation currency

These interim financial statements are presented in thousands of Euro, which is also the Group’s functional currency. All financial information presented in Euro has been rounded to the nearest thousand (abbreviated €) or million (abbreviated € million).

d) Significant accounting policies

The accounting policies applied by the Group in these interim financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended December 31, 2016.

New standards and interpretations applied for the first time

The following amendments to standards and new or amended interpretations are effective for annual periods beginning on or before January 1, 2017, and will be applied in preparing the annual financial statements for the year 2017:

Standard/Interpretation	Effective Date 1
Amendments to IAS 7 Disclosure Initiative	January 1, 2017

¹ Shall apply for periods beginning on or after the date shown in the effective date column.

New standards and interpretations not yet adopted

The following standards, amendments to standards and interpretations are effective for annual periods beginning after December 31, 2017, and have not been applied in preparing these consolidated financial statements.

Standard/Interpretation	Effective Date 1
IFRS 15 Revenue from Contracts with Customers	January 1, 2018
IFRS 9 Financial Instruments (2014)	January 1, 2018
Clarifications to IFRS 15 Revenue from Contracts with Customers	January 1, 2018
Amendments to IFRS 2: Classification and Measurement of Share-
based Payment Transactions	January 1, 2018
Annual Improvements to IFRS Standards 2014-2016 Cycle	January 1, 2018
IFRS 16 Leases	January 1, 2019

¹ Shall apply for periods beginning on or after the date shown in the effective date column.

The Group is assessing the potential impact that IFRS 9 could have on its consolidated financial statements. The new accounting standard IFRS 15 is currently not applicable to InflaRx because no revenue will be generated for the foreseeable future by the Group.

InflaRx will adopt IFRS 9 initially on January 1, 2018. Management will apply the new standard retrospectively in accordance with IAS 8. In addition, management has elected to not restate comparative information as permitted by IFRS 9. At the date of initial application, InflaRx will record any difference between previous carrying amounts and those determined under IFRS 9 in opening retained earnings.

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InflaRx does not expect any actual impact on its financial statements for fiscal year 2018 from the adoption of IFRS 9. InflaRx currently holds other assets, trade and other payables. InflaRx does not hold and expects not to hold in 2018 any other financial instruments, including equity instruments, derivatives or financial liabilities, that would warrant a new classification or revised measurement under IFRS 9. The new standard will nevertheless require InflaRx to revise its accounting processes and internal controls related to reporting financial instruments that InflaRx may hold in the foreseeable future, and these changes are not yet complete. However, InflaRx is continuing to evaluate the potential impact from IFRS 9.

The other new or amended standards and interpretations are not expected to have a significant effect on the consolidated financial statements of the Group.

(3) Other assets

Other assets include prepaid expenses of €1,372 as of September 30, 2017 (as of 31 December 2016: €0) related to the Company’s initial public offering.

(4) Share-based payments

InflaRx established an equity-settled share-based payment program in 2016 (the “2016 Plan”). Pursuant to the 2016 Plan, InflaRx granted to its managing directors, certain executive officers and key employees options to acquire common shares. Each option grant vests on a graded pattern over a period of 36 months following the initial grant date, with one-twelfth of the options within such grant vesting every three months during the total vesting period. However, the vesting of options will automatically accelerate upon the occurrence of certain events such as an initial public offering or an exit event, as defined in the terms of the preferred shares (see note 5). Share based awards, including options granted under the 2016 Plan, were exchanged for awards exercisable for common shares of InflaRx upon consummation of the corporate reorganization. See “note (7) Significant Events After the Reporting Date” for further details.

Prior to the initial public offering, InflaRx was a private company with no active market for its shares. Therefore, the determination of fair values at the grant date, prior to the initial public offering of the successor entity InflaRx N.V. on November 10, 2017, of InflaRx’s share-based payment awards required significant judgment and involved the use of unobservable inputs which are defined as level 3 inputs in IFRS 13.

The fair value of options granted under the 2016 Plan was measured using a hybrid method which considered the value of InflaRx as a whole and allocated such value to the common shares and various tranches of preferred shares of InflaRx under an option-pricing model, after considering the probabilities of various exit scenarios, including an initial public offering or a future sale of InflaRx.

The inputs used in the measurement of the fair value at grant date of the awards granted in March 2017 under the 2016 Plan were as follows:

Fair value of stock option in €	527
Fair value of common share in €	831
Exercise price in €	656
Volatility (weighted average)	62%
Expected life (range)	4.25 to 7 years
Dividend yield	-
Risk-free rate (range)	-0.83 to -0.04%

The inputs used in the measurement of the fair value at grant date of the awards granted in July 2017 under the 2016 Plan were as follows:

Fair value of stock option in €	505
Fair value of common share in €	711

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Exercise price in €	656
Volatility (weighted average)	57%
Expected life (range)	4.99 to 7.67 years
Dividend yield	-
Risk-free rate (range)	-0.22 to 0.14%

Expected volatility was based on an evaluation of the historical and implied volatility of a peer group of companies. The range of outcomes for the expected life of the instruments was based on expectations for option-holder behavior in the exit scenarios considered.

The number of options under the 2016 Plan were as follows:

Outstanding at January, 2017	11,223
Granted in 2017	3,530
Forfeited	-
Outstanding at September 30, 2017	14,753
Thereof vested	-

In the three and nine months ended September 30, 2017, compensation expense of €592 and €2,081, respectively (2016: €50 and €207, respectively) was recognized for all share-based payment awards.

None of the share-based payments awards were dilutive in determing earnings per share due to the loss situation of the Company.

In September 2017, the Chairman of the Supervisory Board of InflaRx, exercised 217 options, resulting in a capital increase of €217.

(5) Preferred shares

InflaRx issued voting preferred shares for cash to investors in several financing rounds to fund its development activities. All of the preferred shares of InflaRx were exchanged for common shares of InflaRx N.V. in the corporate reorganization. Refer to “note (7) Significant Events After the Reporting Date” for further details regarding the corporate reorganization and share exchange.

The carrying amount of the preferred shares is determined as the amortized cost using the effective interest rate method based on the contractual cash flows of the instrument. InflaRx did not elect to recognize the preferred shares at fair value through profit or loss.

In the nine months ended September 30, 2017, interest expense of €2,229 (nine months ended September 30, 2016: €1,101) was recognized for all outstanding preferred shares.

(6) Related parties

Remuneration of managing directors of InflaRx amounted to €924 in the nine months ended September 30, 2017 (nine months ended September 30, 2016: €708). The Group recognized share-based payment expense of €1,486 for managing directors of InflaRx in the nine months ended September 30, 2017 (nine months ended September 30, 2016: €207).

(7) Significant Events After the Reporting Date

On October 12, 2017, InflaRx and its shareholders entered into an investment and adherence agreement with entities affiliated with RA Capital Management, LLC, Bain Capital Life Sciences Investors, LLC and Cormorant Asset Management LLC and certain funds and accounts managed or advised by subsidiaries of BlackRock, Inc., which are collectively referred to as the Series D investors, pursuant to which it was

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agreed to issue and sell in a private placement an aggregate of 27,555 Series D preferred shares to the Series D investors at a price per share of €927.92, for aggregate net cash proceeds to InflaRx (after expenses) of approximately €24.9 million.

In connection with InflaRx N.V.’s initial public offering in the fourth quarter of 2017, the Company executed a corporate reorganization whereby InflaRx N.V. became the holding company for InflaRx GmbH, which was previously the Group‘s parent company and remains the principal operating subsidiary of InflaRx N.V. In the initial step of the corporate reorganization, the existing preferred and common shareholders of InflaRx GmbH became a party to a notarial deed of issue pursuant to which they subscribed for 16,743,972 new common shares of Fireman B.V., a newly incorporated Dutch private company with limited liability, and agreed to contribute and transfer their shares in InflaRx GmbH to Fireman B.V. in consideration therefor. Upon consummation of the contribution and transfer, Fireman B.V. became the sole shareholder of InflaRx GmbH. In the final step of the corporate reorganization, the legal form of Fireman B.V. was converted from a Dutch private company with limited liability to a Dutch public company with limited liability. The conversion resulted in a name change from Fireman B.V. to InflaRx N.V. In conjunction with the corporate reorganization, the outstanding option awards exercisable for common shares of InflaRx GmbH, including those granted under the Stock Option Plan 2016 Terms and Conditions, were exchanged for awards exercisable for common shares of InflaRx N.V. The shares of InflaRx GmbH were exchanged on a one-to-84 basis. The conversion of outstanding option awards into awards exercisable for common shares of InflaRx N.V. also occurred on a one-to-84 basis.

On November 10, 2017, InflaRx N.V. completed its initial public offering of common shares pursuant to a Registration Statement on Form F-1, as amended (Registration No. 333-220962) filed with the U,S. Securities and Exchange Commission that was declared effective on November 7, 2017. Under the registration statement, InflaRx N.V. sold an aggregate of 6,667,000 common shares at a price to the public of $15.00 per share. In connection with the initial public offering, InflaRx N.V. also granted to the underwriters for the offering an option to purchase up to an additional 1,000,050 common shares to cover over-allotments. On December 1, 2017, the underwriters partially exercised such option to purchase 401,128 common shares, which sale settled on December 6, 2017. InflaRx N.V.’s common shares are listed on The NASDAQ Global Select Market under the symbol “IFRX.”

The following table sets forth InflaRx N.V.’s cash, cash equivalents and capitalization as of September 30, 2017:

· on an actual basis;

· on a pro forma basis to give effect to (i) the closing of the Series D financing and (ii) InflaRx N.V.’s corporate reorganization as if these events had occurred on September 30, 2017; and

· on a pro forma as adjusted basis to give effect to (i) the closing of the Series D financing, (ii) InflaRx N.V.’s corporate reorganization and (iii) the issuance and sale of 6,667,000 common shares in InflaRx N.V.’s initial public offering and partial exercise of option to purchase another 401,128 common shares, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by InflaRx N.V, as if these events had occurred on September 30, 2017.

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	as of September 30, 2017
	Actual			Pro forma			Pro forma
							as adjusted
Cash and cash equivalents		22,086			46,955			129,822
Preferred shares		57,428			0			0
Equity
Issued capital		31			2,009			2,857
Other reserves		3,756			84,075			166,094
Own shares		(350	)		0			0
Accumulated deficit		(39,585	)		(39,585	)		(39,585	)
Total equity		(36,148	)		46,499			129,367
Total capitalization		21,280			46,499			129,367

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EX-99.2

Exhibit 99.2

Management’s Discussion and Analysis
of Financial Condition and Results of Operations

This management’s discussion and analysis is designed to provide you with a narrative explanation of our financial condition and results of operations. We recommend that you read this discussion together with our unaudited condensed consolidated financial statements, including the notes thereto, as of and for the three and nine month periods ended September 30, 2017 and 2016 included as Exhibit 99.1 to the Report on Form 6-K to which this discussion is attached as Exhibit 99.2. We also recommend that you read our management’s discussion and analysis and our audited consolidated financial statements and unaudited condensed consolidated financial statements, and the notes thereto, that appear in our prospectus (our “Final Prospectus”) relating to our Registration Statement on Form F-1, as amended (Registration No. 333-220962) (our “Registration Statement”), filed with the U.S. Securities and Exchange Commission (the “SEC”) pursuant to Rule 424(b) under the U.S. Securities Act of 1933, as amended.

The following discussion is based on our financial information prepared in accordance with IFRS as issued by the IASB, which may differ in material respects from generally accepted accounting principles in the United States and other jurisdictions. We maintain our books and records in euros. Unless otherwise indicated, all references to currency amounts in this discussion are in euros. We have made rounding adjustments to some of the figures included in this discussion and analysis. Accordingly, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that precede them.

The following discussion includes forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including but not limited to those described under “Risk factors” in the Final Prospectus. In connection with our initial public offering in the fourth quarter of 2017, we executed a corporate reorganization whereby InflaRx N.V., a Dutch public company with limited liability, became the holding company for InflaRx GmbH, a German limited liability company, which was previously our parent company and remains our principal operating company. In the initial step of the corporate reorganization, the existing preferred and common shareholders of InflaRx GmbH became a party to a notarial deed of issue pursuant to which they subscribed for 16,743,972 new common shares of Fireman B.V., a newly incorporated Dutch private company with limited liability, and agreed to contribute and transfer their shares in InflaRx GmbH to Fireman B.V. in consideration therefor. Upon consummation of the contribution and transfer, Fireman B.V. became the sole shareholder of InflaRx GmbH. In the final step of the corporate reorganization, the legal form of Fireman B.V. was converted from a Dutch private company with limited liability to a Dutch public company with limited liability. The conversion resulted in a name change from Fireman B.V. to InflaRx N.V. In conjunction with the corporate reorganization, the outstanding option awards exercisable for common shares of InflaRx GmbH, including those granted under the Stock Option Plan 2016 Terms and Conditions, were exchanged for awards exercisable for common shares of InflaRx N.V. The shares of InflaRx GmbH were exchanged on a one-to-84 basis. The conversion of outstanding option awards into awards exercisable for common shares of InflaRx N.V. also occurred on a one-to-84 basis.

Unless otherwise indicated or the context otherwise requires, all references to “InflaRx” or the “company,” “we,” “our,” “ours,” “us” or similar terms refer to InflaRx GmbH prior to the completion of our corporate reorganization, and to InflaRx N.V. and its subsidiary InflaRx GmbH as of the completion of our corporate reorganization and thereafter. See “Corporate Reorganization” in the Final Prospectus.

As the periods to which this discussion relates were completed prior to the corporate reorganization described above, the discussion relates solely to the financial condition and results of operations of InflaRx GmbH, other than as explicitly referenced.

Overview

We are a clinical-stage biopharmaceutical company focused on applying our proprietary anti-C5a technology to discover and develop first-in-class, potent and specific inhibitors of the complement activation factor known as C5a. C5a is a powerful inflammatory mediator involved in the progression of a wide variety of autoimmune and other inflammatory diseases. Our lead product candidate, IFX-1, is a novel intravenously delivered first-in-class anti-C5a monoclonal antibody that selectively binds to free C5a and has demonstrated disease-modifying clinical activity and tolerability in multiple clinical settings. We are developing IFX-1 for the treatment of HS, a chronic debilitating

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systemic inflammatory skin disease, for which we plan to initiate a Phase IIb clinical trial in the first quarter of 2018. Beyond HS, we intend to develop IFX-1 and other proprietary antibodies to address a wide array of complement-mediated diseases with significant unmet needs, including AAV, a rare, life-threatening autoimmune disease.

Since our inception in December 2007, we have devoted substantially all of our resources to establishing our company, raising capital, developing our proprietary anti-C5a technology, identifying and testing potential product candidates and conducting clinical trials of our lead product candidate, IFX-1. To date, we have not generated any product revenue and have financed our operations primarily through the private placement of our securities and other income from various grants. As of September 30, 2017, we had raised an aggregate of €48.5 million, comprised of €47.3 million gross proceeds from private placements of our securities and €1.2 million in payments in connection with various grants. As of September 30, 2017, we had cash and cash equivalents of €22.1 million.

As of September 30, 2017, we had an accumulated deficit of €39.6 million (€22.7 million as of September 30, 2016). We have incurred significant losses in every year since our inception and expect to continue to incur increasing losses for the foreseeable future. Our losses may fluctuate significantly from quarter to quarter and year to year. We anticipate that our expenses will increase significantly if, and as we:

· conduct a Phase IIb clinical trial of IFX-1 in HS;

· continue to advance our lead product candidate, IFX-1, through additional clinical development, including by conducting a Phase II clinical trial of IFX-1 in AAV;

· initiate and continue our current research programs and development activities, including development of IFX-2;

· seek to identify additional research programs and additional product candidates;

· maintain, expand and protect our intellectual property portfolio;

· hire and retain additional personnel, such as clinical quality control and scientific personnel; and

· incur additional costs associated with operating as a public company, including expanding our operational, finance and management teams.

We do not expect to generate revenue from product sales unless and until we successfully complete development and obtain regulatory approval for a product candidate, which we expect will take a number of years and is subject to significant uncertainty. If we obtain regulatory approval for any product candidate, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution. Accordingly, we may seek to further fund our operations through public or private equity or debt financings or other sources, including strategic collaborations. We may, however, be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. Our failure to raise capital or enter into such other arrangements as and when needed, would have a negative impact on our financial condition and our ability to develop IFX-1 or any additional product candidates.

Recent Developments

On November 10, 2017, we completed our initial public offering of common shares pursuant to our Registration Statement that was declared effective on November 7, 2017. Under the Registration Statement, we sold an aggregate of 6,667,000 common shares. All of these common shares were sold at a price to the public of $15.00 per share. In connection with the initial public offering, we also granted to the underwriters for the offering an option to purchase up to an additional 1,000,050 common shares to cover over-allotments. On December 1, 2017, the underwriters partially exercised such option to purchase 401,128 common shares, which sale settled on December 6, 2017. Our common shares are listed on the NASDAQ Global Select Market under the symbol “IFRX.” In connection with the initial public offering, we consummated the corporate reorganization described above.

Research and Development Expenses

Research and development expenses have consisted principally of:

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· employee-related expenses, including salaries, benefits and stock-based compensation expense based upon employees’ role within the organization;

· professional fees for lawyers related to the protection and maintenance of our intellectual property; and

· expenses incurred under agreements with contract research organizations, or CROs, contract manufacturing organizations, or CMOs, consultants and independent contractors that conduct research and development, preclinical and clinical activities on our behalf.

We expect that our total research and development expenses in 2017 will be significantly higher compared to our expenses in 2015 and 2016. Such increased research and development expenses primarily relate to the following key programs:

· IFX-1. In 2017, we completed enrollment and dosing in our Phase IIa clinical trial of IFX-1 in patients with HS. We expect our expenses associated with IFX-1 will further increase as we prepare to commence a Phase IIb clinical trial of IFX-1 in patients with HS and a Phase II clinical trial in patients with AAV. We anticipate that our research and development expenses will increase substantially in connection with the commencement of these and any additional clinical trials. In addition, we are also incurring expenses related to the manufacturing of clinical trial material and investigating commercial scale production options.

· IFX-2. We are continuing preclinical development of IFX-2, expenses for which mainly consist of salaries, costs for preclinical testing conducted by CROs and costs for the production of preclinical material.

· Other development programs. Our other research and development expenses relate to our preclinical studies of other product candidates and discovery activities, expenses for which mainly consist of salaries, costs for production of preclinical compounds and costs paid to CROs.

In 2015 and 2016, we incurred research and development expenses of €3.5 million and €5.3 million, respectively. For the three months ended September 30, 2017 and 2016, we incurred research and development expenses of €2.6 million and €1.1 million, respectively. For the nine months ended September 30, 2017 and 2016, we incurred research and development expenses of €8.1 million and €2.5 million. The principal driver of the increase in our research and development expenses was primarily due to clinical development and manufacturing of IFX-1. Our research and development expenses may vary substantially from period to period based on the timing of our research and development activities, including due to timing of clinical trial initiation and potential enrollment. Research and development expenses are expected to increase as we advance the clinical development of IFX-1 and IFX-2 and further advance the research and development of our preclinical product candidates.

We expense research and development costs as incurred. We recognize costs development activities, such as preclinical studies and clinical trials, based on an evaluation of the progress to completion of specific tasks. We use information provided to us by our vendors such as patient enrollment or clinical site activations for services received and efforts expended. Research and development activities are central to our business model. We expect research and development costs to increase significantly for the foreseeable future as our current development programs progress and new programs are added.

The successful development of our product candidates is highly uncertain. At this time, we cannot reasonably estimate the nature, timing and estimated costs of the efforts that will be necessary to complete the development of, or the period, if any, in which material net cash inflows may commence from, any of our product candidates.

For a discussion of our other key financial statement line items, please see “Management’s discussion and analysis of financial condition and results of operations—Financial operations overview” in the Final Prospectus.

Results of Operations

The numbers below have been derived from our consolidated financial statements included elsewhere herein. The discussion below should be read along with these consolidated financial statements, and it is qualified in its entirety by reference to them.

Comparison of the Three Months Ended September 30, 2016 and 2017

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	Three Months Ended September 30,
	2016			2017			Change
	(in thousands of €)
Other income and expenses (net)		54			81			27
Research and development expenses		(1,059	)		(2,606	)		(1,547	)
General and administrative expenses		(528	)		(691	)		(163	)
Loss before interest and income taxes		(1,533	)		(3,216	)		(1,683	)
Finance income		0			0			0
Finance costs		(623	)		(841	)		(218	)
Loss before tax		(2,156	)		(4,057	)		(1,901	)
Income tax expense		—			—
Loss for the period		(2,156	)		(4,057	)		(1,901	)
Foreign currency translation differences		0			2			2
Total comprehensive loss attributable to owners of the Company		(2,156	)		(4,055	)		(1,899	)

Research and Development Expenses

	Three Months Ended September 30,
	2016		2017		Change
	(in thousands of €)
Third party expenses		841		1,669		828
Personnel expenses		182		737		555
Other expenses		36		200		164
Total Research and development expenses		1,059		2,606		1,547

We use our employee and infrastructure resources across multiple research and development programs directed toward developing IFX-1 and IFX-2. We manage certain activities such as contract research and manufacturing of IFX-1 and our discovery programs through our third-party vendors. We did not track the costs of these activities on a program-by-program basis until 2017.

Research and development expenses incurred for the three months ended September 2017 increased over the corresponding period in 2016 by €1.5 million. This increase is primarily attributable to a €0.8 million increase in CRO and CMO expenses associated with preclinical studies and clinical trials conducted for IFX-1 as well as a €0.6 million increase in employee-related costs associated with salaries, bonus, benefits and non-cash stock-based compensation, principally from equity award grants under our Stock Option Plan 2016.

General and Administrative Expenses

	Three Months Ended September 30,
	2016		2017		Change
	(in thousands of €)
General and administrative expense:
Personnel expenses		214		503		289
Legal, consulting and audit fees		211		99		(112	)
Other expenses		103		89		(14	)
Total		528		691		163

General and administrative expenses increased by €0.2 million to €0.7 million for the three months ended September 30, 2017, from €0.5 million for the three months ended September 30, 2016. This increase is primarily attributable to a €0.3 million increase in employee-related costs associated with salaries, bonus, benefits and non-

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cash stock-based compensation, principally from equity award grants under our Stock Option Plan 2016. This increase is partially offset by a decrease of legal, consulting and audit fees of €0.1 million.

Finance Costs – Net

Finance costs increased by €0.2 million to €0.7 million for the three months ended September 30, 2017, from €0.5 million for the three months ended September 2016. Such increase is mainly attributable to interest expense recognized on our outstanding Series C preferred shares.

Comparison of the Nine Months Ended September 30, 2016 and 2017

	Nine Months Ended September 30,
	2016			2017			Change
	(in thousands of €)
Other income and expenses (net)		139			111			(28	)
Research and development expenses		(2,476	)		(8,108	)		(5,632	)
General and administrative expenses		(1,052	)		(2,037	)		(985	)
Loss before interest and income taxes		(3,389	)		(10,034	)		(6,645	)
Finance income		0			0			0
Finance costs		(1,189	)		(2,496	)		(1,307	)
Loss before tax		(4,578	)		(12,530	)		(7,952	)
Income tax expense		—			—			—
Loss for the period		(4,578	)		(12,530	)		(7,952	)
Foreign currency translation differences		0			0			0
Total comprehensive loss attributable to owners of the Company		(4,578	)		(12,530	)		(7,952	)

Research and Development Expenses

	Nine Months Ended September 30,
	2016		2017		Change
	(in thousands of €)
Third party expenses		1,679		5,155		3,476
Personnel expenses		641		2,379		1,738
Other expenses		156		574		418
Total Research and development expenses		2,476		8,108		5,632

Research and development expenses for the nine months ended September 30, 2017 increased over the corresponding period in 2016 by €5.6 million. This increase is primarily attributable to a €3.5 million increase in CRO and CMO expenses associated with preclinical studies and the Phase IIa clinical trial for IFX-1, a €1.7 million increase in employee-related costs associated with salaries, bonus, benefits and non-cash stock-based compensation, principally from equity award grants under the Stock Option Plan 2016, and a €0.4 million increase in clinical and regulatory consulting expenses.

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General and Administrative Expenses

	Nine Months Ended September 30,
	2016		2017		Change
	(in thousands of €)
General and administrative expense:
Personnel expenses		572		1,380		808
Legal, consulting and audit fees		254		367		113
Other expenses		226		290		64
Total		1,052		2,037		985

General and administrative expenses increased by €1.0 million to €2.0 million for the nine months ended September 30, 2017, from €1.1 million for the nine months ended September 30, 2016. This increase is primarily attributable to a €0.8 million increase in employee-related costs associated with salaries, bonus, benefits and non-cash stock-based compensation, principally from equity award grants under the Stock Option Plan 2016, and to a €0.1 million increase in legal, consulting and audit fees.

Finance Costs – Net

Finance costs increased by €1.3 million to €2.5 million for the nine months ended September 30, 2017, from €1.2 million for the nine months ended September 2016. Such increase is mainly attributable to interest expense recognized on our outstanding Series C preferred shares.

Liquidity and Capital Resources

Since inception, we have incurred significant operating losses. For the nine months ended September 30, 2017, we incurred a net loss of €12.5 million. To date, we have financed our operations primarily through the sale of our securities. As of September 30, 2017, we had cash and cash equivalents of €22.1 million.

Our cash and cash equivalents primarily consist of bank deposit accounts and a money market investment fund.

Cash Flows

The table below summarizes our consolidated statement of cash flows for the nine months ended September 30, 2016 and 2017:

	Nine Months Ended September 30,
	2016			2017
	(in thousands of €)
Cash used in operating activities		(3,163	)		(8,425	)
Net cash used in investing activities		(8	)		(106	)
Net cash from financing activities		30,898			1,500
Cash and cash equivalents at the beginning of the period		3,302			29,117
Exchange gains on cash and cash equivalents		0			0
Cash and cash equivalents at the end of the period		31,029			22,086

Net Cash Used in Operating Activities

The use of cash in all periods resulted primarily from our net losses, adjusted for non-cash charges and changes in components of working capital.

Net cash used in operating activities increased from €3.2 million in the nine months ended September 30, 2016 to €8.4 million in the nine months ended September 30, 2017 mainly due to the increase of cash expenses, such as

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third-party expenses for manufacturing and clinical trials for our lead program IFX-1 and our own personnel expenses.

Net Cash Used in Investing Activities

Net cash used for investing activities increased by €0.1 million in the nine months ended September 30, 2017 due to investments in software and office equipment.

Net Cash Provided by Financing Activities

Net cash generated from financing activities decreased by €29.4 million to €1.5 million in the nine months ended September 30, 2017, compared to €30.9 million in the nine months ended September 30, 2016, when cash contributions from the sale of the Series C preferred shares were received.

Funding Requirements

We expect our expenses to increase in connection with our ongoing activities, particularly as we conduct Phase II clinical trials of IFX-1 in patients with HS and AAV, continue preclinical development of IFX-2, initiate new research and preclinical development efforts and seek marketing approval for any product candidates that we successfully develop and receive approval for. If the planned Phase IIb of HS is successful, we plan to commence a Phase III program of IFX-1 in HS and currently anticipate that the cost of such program could be in the range of €40 to €50 million. In addition, if we obtain marketing approval for any of our product candidates, we expect to incur significant commercialization expenses related to establishing sales, marketing, distribution and other commercial infrastructure to commercialize such products. Furthermore, following the closing of this offering, we expect to incur additional costs associated with operating as a public company. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our research and development programs or future commercialization efforts.

Subsequent to the end of the third quarter, we completed our initial public offering of common shares and listing of such common shares on the NASDAQ Global Select Market. In this offering, we raised an aggregate of $93 million in net proceeds. As such, we believe that our existing liquidity will enable us to fund our operating expenses and capital expenditure requirements for at least the next 24 months.

Until such time, if ever, that we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, debt financings, royalty-based financings, future collaborations, strategic alliances and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include voting or other rights that adversely affect your rights as a common shareholder. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise funds through additional collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us.

For more information as to the risks associated with our future funding needs, see “Risk factors” in the Final Prospectus.

Off-Balance Sheet Arrangements

As of September 30, 2017, and during the periods presented, we did not have any off-balance sheet arrangements other as described under “Management’s discussion and analysis of financial condition and results of operations—Off-balance sheet arrangements” in the Final Prospectus.

Contractual Obligations and Commitments

As of the date of this discussion and analysis, we do not have any, and during the periods presented we did not have any, contractual obligations and commitments other than as described under “Management’s discussion and

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analysis of financial condition and results of operations—Contractual obligations and commitments” in the Final Prospectus.

Quantitative and Qualitative Disclosures about Market Risk

During the nine months ended September 30, 2017, there were no significant changes to our quantitative and qualitative disclosures about market risk from those reported in “Management’s discussion and analysis of financial condition and results of operations–Quantitative and qualitative disclosures about market risk” in the Final Prospectus. 

Critical Judgments and Accounting Estimates

There have been no material changes to the significant accounting policies and estimates described in “Management’s discussion and analysis of financial condition and results of operations—Critical judgments and accounting estimates” in the Final Prospectus.

JOBS Act Exemptions

On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for an “emerging growth company.” As an emerging growth company, we are not required to provide an auditor attestation report on our system of internal controls over financial reporting. This exemption will apply for a period of five years following the completion of our initial public offering or until we no longer meet the requirements of being an “emerging growth company,” whichever is earlier. We would cease to be an emerging growth company if we have more than $1.0 billion in annual revenue, have more than $700 million in market value of our common shares held by non-affiliates or issue more than $1.0 billion of non-convertible debt over a three-year period.

Cautionary Statement Regarding Forward Looking Statements

Forward-looking statements appear in a number of places in this discussion and analysis and include, but are not limited to, statements regarding our intent, belief or current expectations. Many of the forward-looking statements contained in this discussion and analysis can be identified by the use of forward-looking words such as “anticipate,” “believe,” “could,” “expect,” “should,” “plan,” “intend,” “estimate” and “potential,” among others. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. Such statements are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied in the forward-looking statements due to of various factors, including, but not limited to, those identified under the section entitled “Risk factors” in the Final Prospectus. These risks and uncertainties include factors relating to:

· our operation as a development stage company with limited operating history and a history of operating losses; as of September 30, 2017, our accumulated deficit was €39.6 million;

· the timing of any submission of filings for regulatory approval of IFX-1 or any other product candidate, and the timing of and our ability to obtain and maintain regulatory approval of IFX-1 for any indication;

· the chance our clinical trials may be delayed or not be successful and clinical results may not reflect results seen in previously conducted preclinical studies and clinical trials;

· our reliance on sponsors of, and clinical investigators in, trials of our product candidates, contract manufacturers and contract research organizations over which we have limited control;

· our lack of adequate funding to complete development of IFX-1 and our other product candidates and the risk we may be unable to access additional capital on reasonable terms or at all to complete development and begin commercialization of our product candidates;

· our dependence on the success of IFX-1, which is still in clinical development and may eventually prove to be unsuccessful;

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· uncertainty surrounding whether the clinical development steps up to commercialization will gain regulatory approval;

· our ability to leverage our proprietary anti-C5a technology to discover and develop therapies to treat complement-mediated autoimmune and inflammatory diseases;

· the chance that we may become exposed to costly and damaging liability claims resulting from the testing of our product candidates in the clinic or, if approved, in the commercial stage;

· if our product candidates obtain regulatory approval, our being subject to expensive ongoing obligations and continued regulatory overview;

· our ability to comply with enacted and future legislation in seeking marketing approval and commercialization;

· our expectations regarding the size of the patient populations for, market opportunity for and clinical utility of IFX-1 or any other product candidates, if approved for commercial use;

· our manufacturing capabilities and strategy, including the scalability and cost of our manufacturing methods and processes and the optimization of our manufacturing methods and processes, and our ability to continue to rely on our existing third-party manufacturers for our planned future clinical trials;

· our competitive position and the development of and projections relating to our competitors in the development of C5a inhibitors or our industry;

· our future growth and ability to compete, which depends on our retaining key personnel and recruiting additional qualified personnel; and

· other risk factors discussed under “Risk factors” in the Final Prospectus.

Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them in light of new information or future developments or to release publicly any revisions to these statements in order to reflect later events or circumstances or to reflect the occurrence of unanticipated events except as required by law.

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