EX-99.1 2 brhc10030377_ex99-1.htm EXHIBIT 99.1
Exhibit 99.1

INFLARX N.V.
 
UNAUDITED INTERIM CONDENSED CONSOLIDATED
 
FINANCIAL STATEMENTS – SEPTEMBER 30, 2021
 
These unaudited interim condensed financial statements are consolidated financial statements for the group consisting of InflaRx N.V. and its wholly-owned subsidiaries InflaRx GmbH, Jena, Germany, and InflaRx Pharmaceuticals Inc., Ann Arbor, Michigan, United States (together, the “Group”). The financial statements are presented in Euro (€).
 
InflaRx N.V. is a company limited by shares, incorporated and domiciled in Amsterdam, The Netherlands.
Its registered office and principal place of business is in Germany, Jena, Winzerlaer Str. 2.
 
F-1
INDEX TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021
 
Unaudited Interim Condensed Consolidated Financial Statements
  
Unaudited Interim Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2021 and 2020
3
Unaudited Interim Condensed Consolidated Statements of Financial Position as of September 30, 2021 and December 31, 2020
4
Unaudited Interim Condensed Consolidated Statements of Changes in Shareholders’ Equity for the nine months ended September 30, 2021 and 2020
5
Unaudited Interim Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020
6
 
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
7
 
1.
Summary of significant accounting policies and other disclosures
7
 
(a)
Reporting entity and Group’s structure
7
 
(b)
Basis of preparation
7
 
(c)
New and amended standards adopted by the Group
7
 
(d)
Significant events of the quarter and changes in circumstances
8
 
2.
Net Financial Result
10
 
3.
Other assets
11
 
4.
Financial assets and financial liabilities
11
 
5.
Cash and cash equivalents
12
 
6.
Equity
12
 
7.
Share-based payments
13
 
(e)
Equity settled share-based payment arrangements
13
 
(f)
Share options exercised
14
 
(g)
Share-based payment expense recognized
14
 
8.
Protective foundation
14
 
9.
Contractual Obligations and Commitments
15
 
10.
Subsequent Events
15

F-2
InflaRx N.V. and subsidiaries
Unaudited Interim Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2021 and 2020

         
For the three months
ended September 30,
    
For the nine months
ended September 30,
  
(in €, except for share data)
  
Note
    
2021
(unaudited)
    
2020
(unaudited)
    
2021
(unaudited)
    
2020
(unaudited)
  
                               
Operating Expenses
                              
Research and development expenses
          
(9,359,850
)
    
(5,246,536
)
    
(25,566,005
)
    
(19,901,661
)
General and administrative expenses
          
(3,395,606
)
    
(1,166,070
)
    
(9,115,783
)
    
(6,057,767
)
Total Operating Expenses
          
(12,755,456
)
    
(6,412,606
)
    
(34,681,788
)
    
(25,959,428
)
Other income
          
22,850
      
3,471
      
43,529
      
200,763
  
Other expenses
          
—
      
(13
)
    
(844
)
    
(9,184
)
Operating Result
          
(12,732,606
)
    
(6,409,148
)
    
(34,639,103
)
    
(25,767,849
)
Finance income
    
2
      
27,380
      
95,086
      
85,964
      
844,842
  
Finance expenses
    
2
      
(9,527
)
    
(9,995
)
    
(16,261
)
    
(15,253
)
Foreign exchange result
    
2
      
715,799
      
(660,907
)
    
1,621,165
      
(112,933
)
Other financial result
            
(56,000
)
    
126,000
      
(13,000
)
    
(74,000
)
Income Taxes
            
—
      
—
      
—
      
—
  
Loss for the Period
            
(12,054,955
)
    
(6,858,964
)
    
(32,961,235
)
    
(25,125,193
)
                                         
Share Information
                                        
Weighted average number of shares outstanding
            
44,186,279
      
27,733,778
      
40,740,353
      
26,674,233
  
Loss per share (basic/diluted)
            
(0.27
)
    
(0.25
)
    
(0.81
)
    
(0.94
)
                                         
Loss for the Period
            
(12,054,955
)
    
(6,858,964
)
    
(32,961,235
)
    
(25,125,193
)
Other comprehensive income (loss) that may be reclassified to profit or loss in subsequent periods:
                                        
Exchange differences on translation of foreign currency
            
2,536,278
      
(3,022,687
)
    
4,613,675
      
(2,761,792
)
Total Comprehensive Loss
            
(9,518,677
)
    
(9,881,651
)
    
(28,347,560
)
    
(27,886,985
)

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

[3]
InflaRx N.V. and subsidiaries
Unaudited Interim Condensed Consolidated Statements of Financial Position as of September 30, 2021 and December 31, 2020

(in €)
  
Note
    
September 30,
2021
(unaudited)
    
December 31,
2020
  
                   
ASSETS
                  
Non-current assets
                  
Property and equipment
          
299,896
      
408,263
  
Right-of-use assets
    
4
      
1,500,865
      
546,694
  
Intangible assets
            
262,641
      
350,183
  
Other assets
    
3
      
340,572
      
353,522
  
Financial assets
    
4
      
26,716,011
      
272,268
  
Total non-current assets
            
29,119,985
      
1,930,930
  
Current assets
                        
Current other assets
    
3
      
5,409,078
      
3,734,700
  
Current tax assets
            
918,021
      
1,419,490
  
Financial assets
    
4
      
23,957,605
      
55,162,033
  
Cash and cash equivalents
    
5
      
69,967,424
      
25,968,681
  
Total current assets
            
100,252,128
      
86,284,904
  
TOTAL ASSETS
            
129,372,113
      
88,215,834
  
                         
EQUITY AND LIABILITIES
                        
Equity
                        
Issued capital
    
6
      
5,302,354
      
3,387,410
  
Share premium
    
6
      
280,261,994
      
220,289,876
  
Other capital reserves
            
30,082,596
      
26,259,004
  
Accumulated deficit
            
(201,306,855
)
    
(168,345,620
)
Other components of equity
            
886,884
      
(3,726,791
)
Total equity
            
115,226,973
      
77,863,880
  
Non-current liabilities
                        
Lease liabilities
    
4
      
1,155,432
      
220,525
  
Other liabilities
            
34,770
      
33,323
  
Total non-current liabilities
            
1,190,202
      
253,847
  
Current liabilities
                        
Trade and other payables
    
4
      
11,517,356
      
8,258,133
  
Lease liabilities
    
4
      
363,876
      
338,516
  
Employee benefits
            
943,640
      
1,368,731
  
Other liabilities
            
130,066
      
117,727
  
Provisions
            
—
      
15,000
  
Total current liabilities
            
12,954,938
      
10,098,107
  
Total Liabilities
            
14,145,140
      
10,351,954
  
TOTAL EQUITY AND LIABILITIES
            
129,372,113
      
88,215,834
  

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

[4]
InflaRx N.V. and subsidiaries
Unaudited Interim Condensed Consolidated Statements of Changes in Shareholders’ Equity for the nine months ended September 30, 2021 and 2020

(in €, except for share data)
  
Note
    
Shares
outstanding
    
Issued capital
    
Share
premium
    
Other capital reserves
    
Accumulated deficit
    
Other compo-nents of equity
    
Total equity
  
                                                 
Balance as of January 1, 2021
          
28,228,415
      
3,387,410
      
220,289,876
      
26,259,004
      
(168,345,620
)
    
(3,726,790
)
    
77,863,880
  
Loss for the period
          
—
      
—
      
—
      
—
      
(32,961,235
)
    
—
      
(32,961,235
)
Exchange differences on
translation of foreign currency
          
—
      
—
      
—
      
—
      
—
      
4,613,675
      
4,613,675
  
Total comprehensive loss
          
—
      
—
      
—
      
—
      
(32,961,235
)
    
4,613,675
      
(28,347,560
)
Issuance of common shares and warrants
    
6
      
15,610,022
      
1,873,203
      
63,269,346
      
—
      
—
      
—
      
65,142,549
  
Transaction costs
    
6
      
—
      
—
      
(4,219,222
)
    
—
      
—
      
—
      
(4,219,222
)
Share-based payment expense
    
7
      
—
      
—
      
—
      
3,823,592
      
—
      
—
      
3,823,592
  
Share options exercised
    
7
      
347,842
      
41,741
      
921,994
      
—
      
—
      
—
      
963,735
  
Balance as of September 30, 2021 (unaudited)
            
44,186,279
      
5,302,354
      
280,261,994
      
30,082,596
      
(201,306,855
)
    
886,884
      
115,226,973
  
                                                                 
Balance as of January 1, 2020
            
26,105,255
      
3,132,631
      
211,006,606
      
25,142,213
      
(134,362,006
)
    
2,227,228
      
107,146,673
  
Loss for the period
            
—
      
—
      
—
      
—
      
(25,125,193
)
    
—
      
(25,125,193
)
Exchange differences
on translation of foreign currency
            
—
      
—
      
—
      
—
      
—
      
(2,761,792
)
    
(2,761,792
)
Total comprehensive loss
            
—
      
—
      
—
      
—
      
(25,125,193
)
    
(2,761,792
)
    
(27,886,985
)
Issuance of common shares and warrants
            
1,958,186
      
234,982
      
9,535,961
                                  
Transaction costs
                            
(729,841
)
                                
Share-based payment expense
    
7
      
—
      
—
      
—
      
897,438
      
—
      
—
      
897,438
  
Share options exercised
    
7
      
164,974
      
19,797
      
477,149
      
—
      
—
      
—
      
496,946
  
Balance as of September 30, 2020 (unaudited)
            
28,228,415
      
3,387,410
      
220,289,876
      
26,039,651
      
(159,487,199
)
    
(534,564
)
    
89,695,174
  

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
[5]
InflaRx N.V. and subsidiaries
Unaudited Interim Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020

(in €)
  
Note
    
For the nine months ended September 30, 2021
(unaudited)
    
For the nine months ended September 30, 2020
(unaudited)
  
             
Operating activities
                  
Loss for the period
          
(32,961,235
)
    
(25,125,193
)
Adjustments for:
                      
Depreciation & amortization of property and equipment, right-of-use assets and intangible assets
          
502,605
      
533,687
  
Net finance income
    
2
      
(1,677,868
)
    
(642,656
)
Share-based payment expense
    
7
      
3,823,592
      
897,438
  
Net foreign exchange differences
            
(3,185
)
    
(869,402
)
Changes in:
                        
Other assets
            
(1,159,960
)
    
(226,811
)
Employee benefits
            
(438,436
)
    
(191,042
)
Other liabilities
            
12,130
      
13,896
  
Trade and other payables
            
3,259,223
      
(2,415,210
)
Interest received
            
443,531
      
1,238,643
  
Interest paid
            
(15,072
)
    
(15,546
)
Net cash used in operating activities
            
(28,214,674
)
    
(26,802,196
)
Investing activities
                        
Purchase of intangible assets, property and equipment
            
(21,691
)
    
(83,855
)
Purchase of financial assets
            
(40,512,715
)
    
(68,169,518
)
Proceeds from the maturity of financial assets
            
48,250,724
      
97,465,290
  
Net cash from investing activities
            
7,716,318
      
29,211,918
  
Financing activities
                        
Proceeds from issuance of common shares
    
6
      
65,142,549
      
9,770,944
  
Transaction costs from issuance of common shares
    
6
      
(4,219,222
)
    
(729,841
)
Proceeds from exercise of share options
    
7
      
963,735
      
496,946
  
Repayment of lease liabilities
            
(271,608
)
    
(275,323
)
Net cash from financing activities
            
61,615,454
      
9,262,726
  
                         
Net increase in cash and cash equivalents
            
41,117,098
      
11,672,447
  
Effect of exchange rate changes on cash and cash equivalents
            
2,881,645
      
30,362
  
Cash and cash equivalents at beginning of period
            
25,968,681
      
33,131,280
  
Cash and cash equivalents at end of period
    
5
      
69,967,424
      
44,834,089
  

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

[6]
InflaRx N.V. and subsidiaries
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
 
1.
Summary of significant accounting policies and other disclosures
 
(a)
Reporting entity and Group’s structure
 
InflaRx N.V. is a Dutch public company with limited liability (naamloze vennootschap) with its corporate seat in Amsterdam, The Netherlands, and is registered in the Commercial Register of The Netherlands Chamber of Commerce Business Register under CCI number 68904312. The Company’s registered office is at Winzerlaer Straße 2 in 07745 Jena, Germany. Since November 10, 2017, InflaRx N.V.’s common shares have been listed on The NASDAQ Global Select Market under the symbol IFRX.
 
InflaRx is a clinical-stage biopharmaceutical Group focused on applying its proprietary anti-C5a technology to discover and develop first-in-class, potent and specific inhibitors of the complement activation factor known as C5a.
 
These consolidated financial statements of InflaRx comprise the Company and its wholly-owned subsidiaries InflaRx GmbH, Jena, Germany and InflaRx Pharmaceuticals Inc., Ann Arbor, Michigan, United States (together referred to as “the Group”).
 
InflaRx GmbH is a clinical-stage biopharmaceutical company founded in 2008. In 2017, InflaRx N.V. became the sole shareholder of InflaRx GmbH through the contribution of the subsidiary’s shares to InflaRx N.V. by its existing shareholders in exchange of new shares issued by InflaRx N.V.
 
(b)
Basis of preparation
 
These interim condensed consolidated financial statements for the three- and nine-month reporting periods ended September 30, 2021 and 2020 have been prepared in accordance with IAS 34 Interim Financial Reporting. These interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements. Accordingly, this report is to be read in conjunction with the financial statements in our annual report for the year ended December 31, 2020 on Form 20-F.
 
The interim condensed consolidated financial statements were authorized for issue by the board of directors on November 4, 2021.
 
The financial statements are presented in Euro (€). Euro is the functional currency of InflaRx GmbH. The functional currency of InflaRx N.V. and InflaRx Pharmaceuticals Inc. is U.S. Dollars. All financial information presented in Euro has been rounded. Accordingly, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that precede them or may deviate from other tables.
 
The accounting policies adopted are consistent with those followed in the preparation of the Group’s annual consolidated financial statements for the year ended December 31, 2020, except for the adoption of new standards effective as of January 1, 2021 as set out below. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.
 
(c)
New and amended standards adopted by the Group
 
The below listed amendments and interpretations were adopted effective January 1, 2021, but did not have a material impact on the consolidated financial statements of the Group:
 

 •
Interest Rate Benchmark Reform — Phase 2, Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16

•
COVID-19-related Rent Concessions, Amendment to IFRS 16
 
The following standards issued will be adopted in a future period and the potential impact, if any, they will have on the Group’s consolidated financial statements is being assessed:
 

 •
IFRS 17 Insurance Contracts, including Amendments to IFRS 17

[7]

 •
Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current and Classification of Liabilities as Current or Non-current

•
Amendments to IFRS 3 Business Combinations; IAS 16 Property, Plant and Equipment; IAS 37 Provisions, Contingent Liabilities and Contingent Assets; Annual Improvements 2018-2020

•
Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies

•
Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates

•
Amendments to IAS 12 Deferred Tax related to Assets and Liabilities arising from a Single Transaction

(d)
Significant events of the quarter and changes in circumstances
 
Vilobelimab in pyoderma gangraenosum (PG)
 
In April 2021, the Company announced the completion of enrollment in its Phase IIa proof-of-concept clinical study with vilobelimab in PG. This open-label trial enrolled 19 patients with moderate to severe PG, with 12 in the first two dose cohorts, at sites in the U.S., Canada and Europe. Data from the second dose cohort was announced on August 10, 2021. Ten patients were evaluable for the efficacy assessment on day 99 because two out of the 12 patients withdrew from the study before reaching day 99 of the treatment. Out of the 10 patients evaluable for efficacy at day 99, four patients met the response criteria, with three of them achieving complete closure of the target ulcer. The three patients who showed clinical response with a PGA score of ≤ 3 with complete target ulcer closure had elevated C5a levels at baseline. InflaRx previously reported the clinical response for two of these three patients in February 2020. The third patient demonstrating complete target ulcer closure had been increased from the 1600mg dose group to the highest dose of 2400mg dose on day 57 of the study and closed the ulcer after the dose escalation. The other six patients (three patients of which the results had been previously disclosed in February 2020) all showed slight improvement in their condition according to the PGA definition (PGA score = 4). Data from the third cohort was released on October 27, 2021. In the third dosing cohort at 2400mg biweekly, six of the seven patients achieved clinical remission with a PGA score of ≤ 1, which reflects a closure of the target ulcer. All patients in cohort 3 had elevated C5a levels at baseline that were continuously suppressed after initiation of vilobelimab. From all cohorts, two patients had related SAEs that were reported: One patient experienced an erysipelas leading to hospitalization (judged as non-related by sponsor), another developed a rash due to a delayed hypersensitivity reaction and withdrew from the study (which had been previously disclosed from cohort 2). No dose-related AEs were found. Overall, the observed AE profile was in line with the underlying diseases. Final results from this study are expected in the first half of 2022.
 
Vilobelimab for hidradenitis suppurativa (HS)
 
InflaRx submitted a Type A meeting request to the U.S. Food & Drug Administration (FDA) in July 2021 to align on the Phase III HS study design.  At the meeting, the discussion focused on reaching consensus on the overall study population and the primary endpoint measure. On September 8, 2021, InflaRx announced the outcome of this meeting in which the FDA was supportive of the proposed pivotal study program focusing on patients with active draining tunnels. The FDA also supported a new primary efficacy endpoint that will include measuring the reduction of all three lesions associated with HS - inflammatory nodules, abscesses and draining tunnels. InflaRx is still in active dialogue with the FDA on the final details of the pivotal Phase III study design. The Company plans to submit the clinical study protocol in Q4 2021 and start the study activities upon agreement with the FDA. The Company plans to include various secondary and exploratory endpoints to validate the newly proposed primary efficacy measure, which thus far has not been used in prospective randomized trials. Once the protocol is accepted by the FDA, the Company will provide more details about the study, including the primary endpoint.
 
Vilobelimab in ANCA-associated vasculitis (AAV)
 
In May 2021, the Company announced results from its US Phase IIa clinical study in AAV patients (IXPLORE). The results of the IXPLORE trial show vilobelimab is safe and well tolerated when added to standard of care therapy for AAV. These results support the continued study of vilobelimab for the treatment of AAV.
 
[8]
Furthermore, InflaRx previously reported that both Part 1 and Part 2 of the AAV Phase II study in Europe (IXCHANGE) are fully enrolled and have now finished the treatment period. Data from this randomized, double-blind, placebo-controlled trial with 57 patients are expected by the end of 2021.
 
Vilobelimab in cutaneous squamous cell carcinoma (cSCC)
 
The open label, multicenter Phase II study evaluating vilobelimab alone and in combination with pembrolizumab in patients with PD-1 or PD-L1 inhibitor resistant/refractory locally advanced or metastatic cSCC is currently enrolling. So far, a total of five patients have been enrolled in the monotherapy arm and one in the combination arm. After five weeks of treatment with the first three patients in the monotherapy arm, a safety assessment was completed, and enrollment in the combination arm was opened.
 
The Phase II clinical trial is expected to enroll approximately 70 patients at sites in Europe, the U.S. and elsewhere. The study will investigate two independent arms: vilobelimab alone and vilobelimab in combination with pembrolizumab. The main objectives of the trial are to assess the safety and antitumor activity of vilobelimab monotherapy and to determine the maximum tolerated or recommended dose, safety and antitumor activity in the combination arm.
 
COVID-19 Pandemic
 
The COVID-19 pandemic, which began in December 2019 has spread worldwide and continues to cause many governments to maintain measures to slow the spread of the outbreak through quarantines, travel restrictions, closure of borders and requiring maintenance of physical distance between individuals.
 
During the first nine months of 2021, the Company`s employees have continued to be able to work from their home offices and partially return to the Company’s offices. Our service providers also continued at regular operational levels and the recruitment of patients and new clinical trial sites likewise continued in the first nine month of 2021 through the date of issuance of these interim financial statements.
 
The Phase III part of the global Phase II/III trial evaluating vilobelimab in mechanically ventilated patients with COVID-19 was initiated in mid-September 2020, and recruitment has finished, enrolling 369 patients with sites initiated across several countries, including the EU, South America and other regions.
 
An interim analysis by an independent data monitoring committee took place in July 2020 analyzed the data of the first 180 patients evaluable for the 28-day mortality endpoint that completed the study and led to the recommendation to continue the study as planned.
 
Topline data at the 28-day mortality primary endpoint are expected to be available in the first quarter of 2022.
On October 19, 2021, InflaRx announced that it was awarded a grant of up to EUR 43.7 million from the German Ministry of Education and Research and the German Ministry of Health to support the Company’s development of vilobelimab for the treatment for severe COVID-19 patients. The initial tranche amounts to EUR 25.8 million (approximately USD 29.9 million) and is structured as reimbursement of 80% of certain pre-specified expenses related to the clinical development and manufacturing of vilobelimab. The remainder of the grant will be awarded in three additional subsequent tranches, each conditional on reaching agreed-upon development and manufacturing-related milestones for the preceding tranche and structured as reimbursement for Company expenses. Individual tranches will not be paid if the preceding milestone of a tranche is not met. Payments from this grant to the Company are expected to begin in the fourth quarter of 2021.
 
Changes to the Board and Management
 
On September 13, 2021, Ms. Lina Ma resigned as Member of the Board. Ms. Ma’s resignation from the Board was not due to any disagreement with the Company.

[9]
2.
Net Financial Result
 
The net financial result is comprised of the following items for the three and nine months ended September 30:
 
   
For the three months ended
September 30,
    
For the nine months ended
September 30,
  
(in €)
  
2021 (unaudited)
    
2020 (unaudited)
    
2021
(unaudited)
    
2020
(unaudited)
  
                         
Financial income
                        
Interest income
    
27,380
      
95,086
      
85,964
      
844,842
  
Financial expenses
                                
Interest expenses
    
(4,305
)
    
(8,321
)
    
(7,190
)
    
(9,384
)
Interest on lease liabilities
    
(5,222
)
    
(1,674
)
    
(9,071
)
    
(5,869
)
Total
    
17,853
      
85,091
      
69,703
      
829,589
  

Interest income results from marketable securities and short-term deposits in U.S. Dollars held by the Company and its subsidiaries.
 
   
For the three months ended
September 30,
    
For the nine months ended
September 30,
  
(in €)
  
2021
(unaudited)
    
2020
(unaudited)
    
2021
(unaudited)
    
2020
(unaudited)
  
                         
Foreign exchange result
                        
Foreign exchange income
    
910,411
      
1,230,281
      
5,002,650
      
2,748,961
  
Foreign exchange expense
    
(194,612
)
    
(1,891,188
)
    
(3,381,485
)
    
(2,861,894
)
Total
    
715,799
      
(660,907
)
    
1,621,165
      
(112,933
)

Foreign exchange income and expense is mainly derived from the translation of the U.S. Dollar cash, cash equivalents and securities held by the Company and its subsidiaries.
 
[10]
3.
Other assets
 
(in €)
  
As of September 30, 2021
(unaudited)
    
As of December 31, 2020
  
             
Non-current other assets
            
Prepaid expense
    
340,572
      
353,522
  
Total
    
340,572
      
353,522
  
Current other assets
                
Prepayments on research & development projects
    
4,896,075
      
2,340,643
  
Current tax assets
    
918,021
      
1,419,490
  
Prepaid expense
    
513,004
      
1,295,682
  
Other
    
—
      
98,374
  
Total
    
6,327,100
      
5,154,190
  
Prepaid expense mainly consists of prepaid insurance expense.
 
Prepayments on research & development projects consists of prepayments on clinical and production contracts. Mainly due to higher expense for the phase III part of our COVID-19 trial and the payments made under the related CRO contract, prepayments have increased as of September 30, 2021 compared to December 31, 2020.
 
Current tax assets as of September 30, 2021 mainly include VAT of €0.2 million and tax reclaims because of dividend tax withheld of €0.7 million. Such tax is withheld by our banks from securities interest payments, and the Company and its subsidiaries are reimbursed after filing a tax return.
 
4.          Financial assets and financial liabilities
 
Set out below is an overview of financial assets and liabilities, other than cash and cash equivalents, held by the Group as of September 30, 2021 and December 31, 2020:
 
(in €)
  
As of September 30, 2021
(unaudited)
    
As of
December 31, 2020
  
             
Financial assets at amortized cost
            
Non-current financial assets
    
26,716,011
      
272,268
  
Current financial assets
    
23,957,605
      
55,162,033
  
Financial liabilities at amortized cost
                
Trade and other payables
    
11,517,356
      
8,258,133
  
Interest bearing loans and borrowings
                
Non-current lease liabilities
    
1,155,432
      
220,525
  
Current lease liabilities
    
363,876
      
338,516
  

As of September 30, 2021, the fair value of current and non-current financial assets (primarily quoted debt securities) amounted to €50,369 thousand (Level 1). The Group’s debt instruments at amortized cost consist solely of quoted securities that are graded highly by credit rating agencies such as S&P Global and, therefore, are considered low credit risk investments. Some of the expiring investments were newly invested and therefore changed to non-current.
 
In May 2021, the Company entered into an agreement to amend its original lease of office space in Martinsried, Germany, by extending the contractual lease term for an additional five years. This resulted in an increase to the lease obligation and associated right-of-use asset.
 
[11]
5.
Cash and cash equivalents
 
(in €)
  
As of September 30, 2021
(unaudited)
    
As of
December 31, 2020
  
             
Short-term deposits
            
Deposits held in U.S. Dollars
    
58,255,159
      
22,616,767
  
Deposits held in Euro
    
—
      
1,800,000
  
Total
    
58,255,159
      
24,416,767
  
Cash at banks
                
Cash held in U.S. Dollars
    
7,105,638
      
362,788
  
Cash held in Euro
    
4,606,626
      
1,189,126
  
Total
    
11,712,265
      
1,551,914
  
Total cash and cash equivalents
    
69,967,424
      
25,968,681
  

6.
Equity
 
On July 8, 2020, the Company filed a Form F-3 (Registration Statement) with the United States Securities and Exchange Commission (SEC) with respect to the offer and sale of securities of the Company. The Company also filed with the SEC a prospectus supplement (Prospectus Supplement) relating to an at-the-market program providing for the sale of up to $50,000,000 of its common shares over time pursuant a Sales Agreement with SVB Leerink LLC.
 
During the three months ended March 31, 2021, the Company issued 610,022 common shares under its at-the-market program resulting in €2.8 million in net proceeds. No common shares were issued under this program in the second and third quarters of 2021. Following these and previous issuances under this program, the remaining value authorized for sale under the Sales Agreement amounts to $35.2 million.
 
On February 25, 2021, the Company sold an aggregate of 15,000,000 common shares through a public offering. The common shares were sold at $5.00 per share and have a nominal value of €0.12 per share. For each common share purchased, an investor also received a warrant to purchase a common share at an exercise price $5.80. The warrants are exercisable immediately and have a term of up to one year. The shares and warrants were issued and the transaction closed on March 1, 2021 with gross offering proceeds to the Group from this offering being $75.0 million (€62.2 million), before deducting $4.5 million (€3.7 million) in underwriting discounts and other offering expenses of $0.4 million (€0.5 million). As of the date that these interim condensed consolidated financial statements were authorized for issue, no warrants had been exercised.
 
[12]
7.
Share-based payments
 
(e)
Equity settled share-based payment arrangements
 
During its historical financing rounds prior to 2016 InflaRx GmbH granted options under the 2012 Stock Option Plan. Those InflaRx GmbH options were converted into options for common shares of InflaRx N.V. in November 2017:
 
Number of share options
  
2021
    
2020
  
Outstanding as of January 1,
    
148,433
      
148,433
  
Exercised during the nine months ended September 30
    
—
      
—
  
Outstanding as of September 30,
    
148,433
      
148,433
  
thereof vested
    
148,433
      
148,433
  

Under the terms and conditions of the share option plan 2016 InflaRx GmbH granted rights to subscribe for InflaRx GmbH’s common shares to directors, senior management, and key employees. Those InflaRx GmbH options were converted into options for common shares of InflaRx N.V. in November 2017:
 
Number of share options
  
2021
    
2020
  
Outstanding as of January 1,
    
1,094,852
      
1,181,484
  
Exercised during the nine months ended September 30
    
(202,020
)
    
(86,632
)
Outstanding as of September 30,
    
892,832
      
1,094,852
  
thereof vested
    
892,832
      
1,094,852
  

In conjunction with the closing of its initial public offering, InflaRx N.V. established a new incentive plan (the “2017 Long-Term Incentive Plan”). The initial maximum number of common shares available for issuance under equity incentive awards granted pursuant to the 2017 Long-Term Incentive Plan amounts to 2,341,097 common shares.
 
The annual general meeting on July 16, 2020, approved an amendment to the 2017 Long-Term Incentive Plan (LTIP) with effect from January 1, 2021:
 

 •
increasing the maximum annual number of common shares in the Company’s capital available for issuance under the LTIP, starting on January 1, 2021, to 4% (from 3%) of the Company’s outstanding common shares (determined as of December 31 of the immediately preceding year); and
 

 •
removing certain restrictions from the LTIP, which will allow the committee administering the LTIP and the Board to (i) lower the exercise price per share of any options and/or share appreciation rights issued under the LTIP or take any other action treated as a ‘repricing’ of an award and (ii) cancel any option and/or share appreciation rights in exchange for cash or another award granted under the LTIP, in either case, without prior approval of the Company’s shareholders.
 
Number of share options
  
2021
    
2020
  
Outstanding as of January 1,
    
2,146,478
      
2,181,105
  
Granted during the nine months ended September 30
    
1,219,074
      
96,188
  
Exercised during the nine months ended September 30
    
(145,822
)
    
(78,342
)
Forfeited during the nine months ended September 30
    
(31,400
)
    
(181,287
)
Outstanding as of September 30,
    
3,188,330
      
2,017,664
  
thereof vested
    
2,173,210
      
1,696,066
  

[13]
The number of share options granted during the nine months ended September 30, 2021 under the plan was as follows:
 
Share
options
granted
  
Number
    
Fair value per
option
    
FX rate as of grant date
    
Fair value per
option
    
Share price at grant date /
Exercise price
    
Expected volatility
    
Expected life
(midpoint based)
    
Risk-free rate
(interpolated, U.S. sovereign strips curve)
  
2021
                                                
January 4
    
839,260
    
$
4.53
      
0.8133
    
€
3.68
    
$
5.14
      
1.35
      
5.31
      
0.5
%
January 4
    
31,668
    
$
4.57
      
0.8133
    
€
3.72
    
$
5.14
      
1.35
      
5.50
      
0.5
%
July 2
    
327,436
    
$
2.64
      
0.8458
    
€
2.23
    
$
2.99
      
1.35
      
5.31
      
0.98
%
July 2
    
20,710
    
$
2.66
      
0.8458
    
€
2.25
    
$
2.99
      
1.35
      
5.49
      
1.01
%
     
1,219,074
                                                          

Of the 1,219,074 options granted in the nine months ended September 30, 2021, 1,134,436 were granted to members of the executive management or Board of Directors. In the nine months ended September 30, 2021, 31,400 options were forfeited.

Expected dividends are nil for all share options listed above.

(f)
Share options exercised
 
In the nine months ended September 30, 2021, 347,842 shares were issued upon the exercise of share options, resulting in proceeds to the Company in the amount of €964 thousand. Of the share options exercised, 202,020 were granted under the 2016 Share Option Plan and 145,822 were granted under the 2017 Long-Term Incentive Plan.
 
In the nine months ended September 30, 2020, no options under the 2012 Stock Option Plan were exercised.
 
(g)
Share-based payment expense recognized
 
For the nine months ended September 30, 2021, the Company recognized €3,824 thousand (2020: €1,485 thousand) of share-based payment expense in the statements of operations and comprehensive loss.
 
None of the share-based payments awards were dilutive in determining earnings per share due to the Group’s loss position.
 
8.
Protective foundation
 
According to the articles of association of the Company, up to 110,000,000 ordinary shares and up to 110,000,000 preferred shares with a nominal value of €0.12 per share are authorized to be issued. All shares are registered shares. No share certificates shall be issued.
 
In order to deter acquisition bids, the Company`s general meeting of shareholders approved the right of an in-dependent foundation under Dutch law, or protective foundation, to exercise a call option pursuant to the call option agreement, upon which preferred shares will be issued by the Company to the protective foundation of up to 100% of the Company’s issued capital held by others than the protective foundation, minus one share. The protective foundation is expected to enter into a finance arrangement with a bank or, subject to applicable restrictions under Dutch law, the protective foundation may request us to provide, or cause the Company’s subsidiaries to provide, sufficient funding to the protective foundation to enable it to satisfy its payment obligation under the call option agreement.
 
These preferred shares will have both a liquidation and dividend preference over the Company`s common shares and will accrue cash dividends at a pre-determined rate. The protective foundation would be expected to re-quire us to cancel its preferred shares once the perceived threat to the Company and its stakeholders has been removed or sufficiently mitigated or neutralized. We are of the opinion that the call option does not represent a significant fair value based on a Level 3 valuation, since the preference shares are restricted in use and can be can-celled by us.
 
[14]
In the three and nine months ended September 30, 2021, the Company expensed €15 thousand and €45 thousand, respectively, (2020: €15 thousand, €45 thousand) of ongoing costs to reimburse expenses incurred by the protective foundation.

9.
Contractual Obligations and Commitments
 
The Group enters contracts in the normal course of business with CROs and clinical sites for the conduct of clinical trials, professional consultants for expert advice and other vendors for clinical supply manufacturing or other services.
 
10.
Subsequent Events
 
In October 2021, the Company was awarded a grant of up to EUR 43.7 million from the German Ministry of Education and Research and the German Ministry of Health to support the Company’s development of vilobelimab for the treatment of severe COVID-19 patients. Refer to Note 1 for additional information regarding this grant.
 
In October 2021, the Company reported clinical data from the third cohort, showing that six of the seven patients in this dosing group achieved clinical remission with a PGA score of ≤ 1, which reflects a closure of the target ulcer. No dose-related AEs were found. Overall, the observed AE profile was in line with the underlying diseases.
 

[15]