EXHIBIT 99.1 

 

INFLARX N.V.

 

UNAUDITED CONDENSED CONSOLIDATED

 

FINANCIAL STATEMENTS - JUNE 30, 2022

 

These unaudited 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 Pharmaceutical 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.

 

 

 

 

INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND SIX MONTHS ENDED JUNE 30, 2022

 

Unaudited Condensed Consolidated Financial Statements

 

 

 

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2022 and 2021.

 

3

 

Unaudited Condensed Consolidated Statements of Financial Position as of June 30, 2022 and December 31, 2021.

 

4

 

Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity for the six months ended June 30, 2022 and 2021.

 

5

 

Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021.

 

6

 

Notes to the Unaudited Condensed Consolidated Financial Statements.

 

7

 

 

 

Summary of significant accounting policies and other disclosures.

 

7

 

 

 

 

Reporting entity and Group’s structure.

 

7

 

 

 

 

Basis of preparation.

 

7

 

 

 

 

Significant events of the quarter and changes in circumstances.

 

8

 

 

 

Other income.

 

9

 

 

 

Net financial result.

 

10

 

 

 

Other assets.

 

11

 

 

 

Financial assets and financial liabilities.

 

11

 

 

 

Cash and cash equivalents.

 

12

 

 

 

Equity.

 

12

 

 

 

Share-based payments.

 

12

 

 

 

 

Equity settled share-based payment arrangements.

 

12

 

 

 

Share-based payment expense recognized.

 

14

 

 

 

Protective foundation.

 

14

 

 

 
2

 

 

InflaRx N.V. and subsidiaries

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss

for the three and six months ended June 30, 2022 and 2021

 

 

 

 

 

For the three months

ended June 30,

 

 

For the six months

ended June 30,

 

(in €, except for share data)

 

Note

 

 

 

2022

(unaudited)

 

 

2021

(unaudited)

 

 

2022

(unaudited)

 

 

2021

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development expenses

 

 

 

 

 

(11,180,958)

 

 

(11,299,270)

 

 

(21,652,881)

 

 

(16,206,155)

General and administrative expenses

 

 

 

 

 

(4,346,965)

 

 

(2,697,839)

 

 

(8,734,408)

 

 

(5,720,177)

Total Operating Expenses

 

 

 

 

 

(15,527,923)

 

 

(13,997,109)

 

 

(30,387,289)

 

 

(21,926,332)

Other income

 

 

2

 

 

 

14,441,541

 

 

 

15,216

 

 

 

14,443,135

 

 

 

20,678

 

Other expenses

 

 

 

 

 

 

(279)

 

 

(279)

 

 

(844)

 

 

(844)

Operating Result

 

 

 

 

 

 

(1,086,661)

 

 

(13,982,172)

 

 

(15,944,999)

 

 

(21,906,498)

Finance income

 

 

3

 

 

 

82,401

 

 

 

35,622

 

 

 

110,362

 

 

 

58,584

 

Finance expenses

 

 

3

 

 

 

(7,945)

 

 

(3,050)

 

 

(32,531)

 

 

(6,734)

Foreign exchange result

 

 

3

 

 

 

1,563,580

 

 

 

(826,303)

 

 

2,291,513

 

 

 

905,367

 

Other financial result

 

 

3

 

 

 

(86,000)

 

 

(5,000)

 

 

39,000

 

 

 

43,000

 

Income Taxes

 

 

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Income (Loss) for the Period

 

 

 

 

 

 

465,376

 

 

 

(14,780,903)

 

 

(13,536,654)

 

 

(20,906,280)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share Information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding

 

 

 

 

 

 

44,203,763

 

 

 

44,186,279

 

 

 

44,203,763

 

 

 

39,024,533

 

Income (Loss) per share (basic/diluted)

 

 

 

 

 

 

0.01

 

 

 

(0.33)

 

 

(0.31)

 

 

(0.54)

Other comprehensive income (loss) that may be reclassified to profit or loss in subsequent periods:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exchange differences on translation of foreign currency

 

 

 

 

 

 

4,408,940

 

 

 

(1,427,302)

 

 

5,718,815

 

 

 

2,077,397

 

Total Comprehensive Income (Loss)

 

 

 

 

 

 

4,874,316

 

 

 

(16,208,205)

 

 

(7,817,839)

 

 

(18,828,883)

  

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

 

 
3

 

 

InflaRx N.V. and subsidiaries

Unaudited Condensed Consolidated Statements of Financial Position

as of June 30, 2022 and December 31, 2021

 

(in €)

 

Note

 

 

June 30,

2022

(unaudited)

 

 

December 31,

2021

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

 

 

Property and equipment

 

 

 

 

 

231,133

 

 

 

274,373

 

Right-of-use assets

 

 

 

 

 

1,506,039

 

 

 

1,408,078

 

Intangible assets

 

 

 

 

 

187,218

 

 

 

235,216

 

Other assets

 

 

4

 

 

 

341,666

 

 

 

336,566

 

Financial assets

 

 

5

 

 

 

237,412

 

 

 

27,206,990

 

Total non-current assets

 

 

 

 

 

 

2,503,468

 

 

 

29,461,224

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

 

Current other assets

 

 

4

 

 

 

10,130,597

 

 

 

10,983,458

 

Current tax assets

 

 

 

 

 

 

1,518,072

 

 

 

1,282,177

 

Financial assets from government grants

 

 

5

 

 

 

8,260,503

 

 

 

-

 

Other financial assets

 

 

5

 

 

 

76,804,249

 

 

 

57,162,266

 

Cash and cash equivalents

 

 

6

 

 

 

15,416,152

 

 

 

26,249,995

 

Total current assets

 

 

 

 

 

 

112,129,573

 

 

 

95,677,896

 

TOTAL ASSETS

 

 

 

 

 

 

114,633,041

 

 

 

125,139,120

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EQUITY AND LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

Issued capital

 

 

7

 

 

 

5,304,452

 

 

 

5,304,452

 

Share premium

 

 

7

 

 

 

280,310,744

 

 

 

280,310,744

 

Other capital reserves

 

 

 

 

 

 

35,259,689

 

 

 

30,591,209

 

Accumulated deficit

 

 

 

 

 

 

(227,512,333)

 

 

(213,975,679)

Other components of equity

 

 

 

 

 

 

8,769,086

 

 

 

3,050,270

 

Total equity

 

 

 

 

 

 

102,131,638

 

 

 

105,280,996

 

Non-current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Lease liabilities

 

 

5

 

 

 

1,170,237

 

 

 

1,066,354

 

Other liabilities

 

 

 

 

 

 

37,733

 

 

 

35,019

 

Total non-current liabilities

 

 

 

 

 

 

1,207,970

 

 

 

1,101,373

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Trade and other payables

 

 

5

 

 

 

7,912,503

 

 

 

8,574,244

 

Liabilities from government grants

 

 

5

 

 

 

2,145,135

 

 

 

8,300,000

 

Lease liabilities

 

 

5

 

 

 

370,153

 

 

 

366,171

 

Employee benefits

 

 

 

 

 

 

735,304

 

 

 

1,378,130

 

Other liabilities

 

 

 

 

 

 

130,338

 

 

 

138,206

 

Total current liabilities

 

 

 

 

 

 

11,293,433

 

 

 

18,756,751

 

Total Liabilities

 

 

 

 

 

 

12,501,404

 

 

 

19,858,124

 

TOTAL EQUITY AND LIABILITIES

 

 

 

 

 

 

114,633,041

 

 

 

125,139,120

 

 

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

 

 
4

 

 

InflaRx N.V. and subsidiaries

Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity

for the six months ended June 30, 2022 and 2021

   

(in €, except for share data)

 

Note

 

 

Shares  outstanding

 

 

Issued capital

 

 

Share

premium

 

 

Other capital reserves

 

 

Accumulated deficit

 

 

Other components of equity

 

 

Total equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of January 1, 2022

 

 

 

 

 

44,203,763

 

 

 

5,304,452

 

 

 

280,310,744

 

 

 

30,591,209

 

 

 

(213,975,679)

 

 

3,050,271

 

 

 

105,280,996

 

Loss for the period

 

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(13,536,654)

 

 

-

 

 

 

(13,536,654)

Exchange differences on translation of foreign currency

 

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

5,718,815

 

 

 

5,718,815

 

Total comprehensive loss

 

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(13,536,654)

 

 

5,718,815

 

 

 

(7,817,839)

Equity-settled share-based payments

 

 

8

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,668,481

 

 

 

-

 

 

 

-

 

 

 

4,668,481

 

Balance as of June 30, 2022*

 

 

 

 

 

 

44,203,763

 

 

 

5,304,452

 

 

 

280,310,744

 

 

 

35,259,689

 

 

 

(227,512,333)

 

 

8,769,086

 

 

 

102,131,638

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(20,906,280)

 

 

-

 

 

 

(20,906,280)

Exchange differences on translation of foreign currency

 

 

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,077,397

 

 

 

2,077,397

 

Total comprehensive loss

 

 

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(20,906,280)

 

 

2,077,397

 

 

 

(18,828,883)

Issuance of common shares and warrants

 

 

 

 

 

 

15,610,022

 

 

 

1,873,203

 

 

 

63,269,346

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

65,142,549

 

Transaction costs

 

 

 

 

 

 

-

 

 

 

-

 

 

 

(4,219,222)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(4,219,222)

Equity-settled share-based payments

 

 

8

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,687,779

 

 

 

-

 

 

 

-

 

 

 

2,687,779

 

Share options exercised

 

 

8

 

 

 

347,842

 

 

 

41,741

 

 

 

921,994

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

963,735

 

Balance as of June 30, 2021*

 

 

 

 

 

 

44,186,279

 

 

 

5,302,354

 

 

 

280,261,994

 

 

 

28,946,783

 

 

 

(189,251,900)

 

 

1,649,393

 

 

 

123,609,838

 

*unaudited

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

 

 
5

 

  

InflaRx N.V. and subsidiaries

Unaudited Condensed Consolidated Statements of Cash Flows

for the six months ended June 30, 2022 and 2021

 

(in €)

 

Note

 

 

For the six months ended June 30, 2022

(unaudited)

 

 

For the six months ended June 30, 2021

(unaudited)

 

 

 

 

 

 

 

 

 

Operating activities

 

 

 

 

 

 

 

 

 

Loss for the period

 

 

 

 

 

(13,536,654)

 

 

(20,906,280)

Adjustments for:

 

 

 

 

 

 

 

 

 

 

 

Depreciation & amortization of property and equipment, right-of-use assets and intangible assets

 

 

 

 

 

300,870

 

 

 

337,581

 

Net finance income

 

 

 

 

 

(2,408,345)

 

 

(1,000,217)

Share-based payment expense

 

 

7

 

 

 

4,668,481

 

 

 

2,687,779

 

Net foreign exchange differences

 

 

 

 

 

 

130,347

 

 

 

71,050

 

Changes in:

 

 

 

 

 

 

 

 

 

 

 

 

Financial assets from government grants

 

 

5

 

 

 

(8,260,503)

 

 

-

 

Other assets

 

 

 

 

 

 

611,843

 

 

 

172,001

 

Employee benefits

 

 

 

 

 

 

(640,112)

 

 

(662,388)

Other liabilities

 

 

 

 

 

 

(7,867)

 

 

7,020

 

Liabilities from government grants

 

 

5

 

 

 

(6,154,865)

 

 

-

 

Trade and other payables

 

 

 

 

 

 

(661,741)

 

 

672,727

 

Interest received

 

 

 

 

 

 

631,504

 

 

 

371,665

 

Interest paid

 

 

 

 

 

 

(32,039)

 

 

(5,491)

Net cash used in operating activities

 

 

 

 

 

 

(25,359,081)

 

 

(18,254,553)

Investing activities

 

 

 

 

 

 

 

 

 

 

 

 

Purchase of intangible assets, property and equipment

 

 

 

 

 

 

(9,728)

 

 

(18,734)

Purchase of current financial assets

 

 

 

 

 

 

(47,031,216)

 

 

(27,535,842)

Proceeds from the maturity of financial assets

 

 

 

 

 

 

59,595,044

 

 

 

29,497,122

 

Net cash from investing activities

 

 

 

 

 

 

12,554,101

 

 

 

(1,942,546)

Financing activities

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from issuance of common shares

 

 

6

 

 

 

-

 

 

 

65,142,549

 

Transaction costs from issuance of common shares

 

 

6

 

 

 

-

 

 

 

(4,219,222)

Proceeds from exercise of share options

 

 

7

 

 

 

-

 

 

 

963,735

 

Repayment of lease liabilities

 

 

 

 

 

 

(182,014)

 

 

(183,128)

Net cash from (used in) financing activities

 

 

 

 

 

 

(182,014)

 

 

61,703,934

 

Net decrease increase in cash and cash equivalents

 

 

 

 

 

 

(12,986,995)

 

 

45,391,927

 

Effect of exchange rate changes on cash and cash equivalents

 

 

 

 

 

 

2,153,152

 

 

 

999,820

 

Cash and cash equivalents at beginning of period

 

 

 

 

 

 

26,249,995

 

 

 

25,968,681

 

Cash and cash equivalents at end of period

 

 

5

 

 

 

15,416,152

 

 

 

72,360,428

 

 

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

 

 
6

 

 

InflaRx N.V. and subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

 

Summary of significant accounting policies and other disclosures

 

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 and C5aR technologies to discover and develop first-in-class, potent and specific inhibitors of the complement activation factor known as C5a and its receptor known as C5aR.

 

These consolidated financial statements of InflaRx comprise the Company and its wholly-owned subsidiaries InflaRx GmbH, Jena, Germany and InflaRx Pharmaceutical 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.

 

Basis of preparation

 

These interim condensed consolidated financial statements for the three- and six-month reporting periods ended June 30, 2022 and 2021 have been prepared in accordance with IAS 34 Interim Financial Reporting. These 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, 2021 on Form 20-F.

 

The interim condensed consolidated financial statements were authorized for issue by the Board of Directors on August 4, 2022.

 

The financial statements are presented in Euro (€). Euro is the functional currency of InflaRx GmbH. The functional currency of InflaRx N.V. and InflaRx Pharmaceutical 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, 2021, except for the adoption of new standards effective as of January 1, 2022 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.

 

The following amendments have been adopted effective January 1, 2022 and do not have a material impact on the consolidated financial statements of the Group:

 

 

·

Reference to the Conceptual Framework - Amendments to IFRS 3

 

·

Property, Plant and Equipment: Proceeds before Intended Use- Amendments to IAS 16

 

·

Onerous Contracts - Costs of Fulfilling a Contract -Amendments to IAS 37

 

·

AIP IFRS 9 Financial Instruments - Fees in the ’10 per cent’ 5

 

 
7

 

 

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

 

·

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

 

·

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

 

·

Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice Statement 2

 

Significant events of the quarter and changes in circumstances

 

Russian-Ukraine Conflict

 

The conflict between Russia and Ukraine has resulted, and is expected to further result, in significant disruption, instability and volatility in global markets, as well as higher energy and other commodity prices. Since the Company is not currently conducting any business or receiving any services from vendors located in Russia or Ukraine, it does not expect that the ongoing war will have a direct impact on its operations in the near term. However, the Company may be affected by price increases or certain fiscal policy changes in Germany, where the Company is headquartered, such as new tax legislation, economic sanctions and comparable measures, although at this point, it does not foresee any such macroeconomic changes that are expected to have a direct impact on its business operations.

 

COVID-19 Pandemic

 

The COVID-19 pandemic continues to impact our operations as many governments continue to maintain measures to slow the spread of the outbreak through quarantines, travel restrictions, closure of borders and requiring maintenance of social distancing measures.

 

During the first six months of 2022, the Company has continued to use a hybrid working model that supports a blend of in-office and remote employees, depending on their role and location. Our service providers have continued at regular operational levels, and the recruitment of patients and new clinical trial sites also continued in the first six months of 2022 through the date of issuance of these interim financial statements. Business travel, however, has been significantly reduced and widely replaced by other means of communication, e.g. through video-conferencing.

 

Development programs

 

On May 12, 2022 the Company announced the results of a strategic review of its development programs considering the current financing environment. As a result of this strategic review, the Company decided to halt the clinical development of vilobelimab in HS for the time being. Furthermore, given the resources required and long duration of necessary Phase III studies of vilobelimab in AAV needed to potentially gain regulatory approval in this indication, the Company also decided to halt the clinical development of vilobelimab in AAV for the time being. Moving forward, the development focus will be on the Phase III development of vilobelimab in PG, on gaining regulatory approval for vilobelimab in severe COVID-19 and in starting the clinical development of INF904.

 

On June 29, 2022, the Company announced that vilobelimab has been granted orphan drug designation for the treatment of PG by both the Food and Drug Administration (FDA) in the US and the European Medicines Agency (EMA) in Europe. In addition, the Company reported about a productive end-of-phase II meeting with the FDA related to its plans for a Phase III development program in PG. The FDA indicated its support for a randomized, controlled Phase III development program during the meeting and offered to review the study protocol, recognizing PG as a serious and rare condition. Based on the FDA’s feedback and recommendations, InflaRx is now finalizing the design for a Phase III trial and continues to be in dialogue with the FDA related to this. Subsequently, on July 6, 2022 the Company announced that the FDA has also granted a Fast Track designation to the development of vilobelimab for the treatment of PG.

 

 
8

 

 

Following the encouraging Phase III results from the randomized, placebo-controlled, multi-national PANAMO study in mechanically ventilated severe COVID-19 patients announced on March 31, 2022, on July 26, 2022, InflaRx announced its plans to submit a request for Emergency Use Authorization (EUA), following constructive interactions with the US Food and Drug Administration (FDA) at a recently held Type B meeting. The application for EUA is planned to be submitted by end of Q3 2022. In addition, the Company is in ongoing dialogue with the EMA related to next regulatory steps for vilobelimab in mechanically ventilated severe COVID-19 patients towards a potential filing for approval for this indication.

 

Management changes

 

On June 29, 2022, the Company announced the departure of Mr. Jordan Zwick, its Chief Strategy Officer. Mr. Zwick left InflaRx to pursue other professional opportunities. However, Mr. Zwick agreed to continue to serve as an advisor to the Company.

 

In July, Dr. Korinna Pilz, the Chief Clinical Development Officer informed the Company about her intention to leave InflaRx for personal reasons. The Company subsequently signed a separation agreement with Dr. Pilz, in which the parties mutually agreed that she will continue to provide her services until October 28, 2022. Beyond this date Dr. Pilz will continue to advise us on specific matters on an as needed basis.

 

 

Other income

 

 

 

For the three months ended June 30,

 

 

For the six months ended June 30,

 

(in €)

 

2022

(unaudited)

 

 

2021

(unaudited)

 

 

 

2022 

(unaudited)

 

 

2021

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income from government grants

 

 

14,415,368

 

 

 

-

 

 

 

14,415,368

 

 

 

-

 

Further other incomes

 

 

26,173

 

 

 

15,216

 

 

 

27,767

 

 

 

20,678

 

Total

 

 

14,441,541

 

 

 

15,216

 

 

 

14,443,135

 

 

 

20,678

 

 

Other income increased by €14.4 million. The increase was due to an increase in amounts recognized from grant payments received from the German government.

 

A portion of this increase is attributable to the recognition of €7.1 million, which was initially deferred in Q4 2021 as a liability as, prior to Q2 2022, there was not reasonable assurance as to whether all grant conditions were fulfilled. With receipt in Q2 2022 of a written confirmation from the agency administering the grant on behalf of the German federal government, reasonable assurance of grant conditions being fulfilled was reached. Further, this confirmation amended the grant, including amending the amounts eligible for each of the various cost categories covered by the grant, with no change to the overall grant amount, and amending the timeline during which eligible costs related to the manufacturing process development activities can be incurred. In addition, reimbursable costs incurred during Q1 and Q2 2022, in the amount of €7.3 million, were also recognized as other income in Q2 2022.

 

Going forward, the Company will recognize other income as reimbursable costs under the grant are incurred. Grant payments received for the Company’s pre-payment of goods and services will be recognized as a liability, while reimbursable amounts for costs incurred but not yet claimed for reimbursement will be recorded as other receivables in “Financial assets in government grants.”

 

 
9

 

 

Net financial result

 

The net financial result is comprised of the following items for the three and six months ended June 30:

 

 

 

For the three months ended June 30,

 

 

For the six months ended June 30,

 

(in €)

 

2022

(unaudited)

 

 

2021

(unaudited)

 

 

 

2022

(unaudited)

 

 

2021

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

82,401

 

 

 

35,622

 

 

 

110,362

 

 

 

58,584

 

Financial expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expenses

 

 

(2,243)

 

 

(305)

 

 

(22,102)

 

 

(2,885)

Interest on lease liabilities

 

 

(5,702)

 

 

(2,745)

 

 

(10,429)

 

 

(3,849)

Total

 

 

74,456

 

 

 

32,572

 

 

 

77,831

 

 

 

51,850

 

 

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 June 30,

 

 

For the six months ended June 30,

 

(in €)

 

 

2022

(unaudited)

 

 

2021

(unaudited)

 

 

2022

(unaudited)

 

 

2021

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange result

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange income

 

 

2,947,221

 

 

 

1,635,201

 

 

 

4,057,629

 

 

 

4,092,239

 

Foreign exchange expense

 

 

(1,383,641)

 

 

(2,461,504)

 

 

(1,766,116)

 

 

(3,186,872)

Total

 

 

1,563,580

 

 

 

(826,303)

 

 

2,291,513

 

 

 

905,367

 

 

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.

 

 

 

For the three months ended June 30,

 

 

For the six months ended June 30,

 

(in €)

 

 

2022

(unaudited)

 

 

2021

(unaudited)

 

 

2022

(unaudited)

 

 

2021

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other financial result

 

 

(86,000)

 

 

(5,000)

 

 

39,000

 

 

 

43,000

 

 

 Other financial result includes an allowance for expected credit loss on marketable securities.

 

 
10

 

 

Other assets

 

(in €)

 

As of

June 30, 2022

(unaudited)

 

 

As of

December 31,

2021

 

 

 

 

 

 

 

 

Non-current other assets

 

 

 

 

 

 

Prepaid expense

 

 

341,666

 

 

 

336,566

 

Total

 

 

341,666

 

 

 

336,566

 

Current other assets

 

 

 

 

 

 

 

 

Prepayments on research & development projects

 

 

8,785,786

 

 

 

10,649,174

 

Current tax assets

 

 

1,518,072

 

 

 

1,282,177

 

Prepaid expense

 

 

1,343,166

 

 

 

334,284

 

Other

 

 

1,645

 

 

 

-

 

Total

 

 

11,648,669

 

 

 

12,265,635

 

 

Prepaid expense mainly consisted of prepaid insurance expense.

 

As of June 30, 2022, prepayments on research & development (R&D) projects amounted to €8.8 million compared to €10.6 million as of December 31, 2021, and consisted of prepayments on clinical and R&D material production contracts.

 

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 June 30, 2022 and December 31, 2021:

 

(in €)

 

As of

June 30, 2022

(unaudited)

 

 

As of

December 31,

2021

 

 

 

 

 

 

 

 

Financial assets at amortized cost

 

 

 

 

 

 

Non-current financial assets

 

 

237,412

 

 

 

27,206,990

 

Financial assets from government grants

 

 

8,260,503

 

 

 

-

 

Other current financial assets

 

 

76,804,249

 

 

 

57,162,266

 

Financial liabilities at amortized cost

 

 

 

 

 

 

 

 

Liabilities from government grants

 

 

2,145,135

 

 

 

8,300,000

 

Trade and other payables

 

 

7,912,503

 

 

 

16,874,244

 

Interest bearing loans and borrowings

 

 

2,145,135

 

 

 

-

 

Non-current lease liabilities

 

 

1,170,237

 

 

 

1,066,354

 

Current lease liabilities

 

 

370,153

 

 

 

366,171

 

 

As of June 30, 2022, financial assets from government grants amount to €8.3 million. Thereof €1.6 million are claims for which a request for payment has already been submitted. €6.7 million of the financial assets are claims for eligible costs incurred as of Q2 2022, but for which we expect a request for payment to be submitted in future periods (also see Note 2).

 

As of June 30, 2022, the fair value of current and non-current financial assets (primarily quoted debt securities) amounted to €84.3 million (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.

 

Liabilities from government grants partly comprise funds received for advance payments to third parties. If goods or services from such third parties have not been received, corresponding amounts are not recognized as other income. Our right to retain these funds is contingent on meeting all grant conditions.

 

 
11

 

 

Cash and cash equivalents

 

(in €)

 

As of

June 30, 2022

(unaudited)

 

 

As of

December 31,

2021

 

 

 

 

 

 

 

 

Short-term deposits

 

 

 

 

 

 

Deposits held in U.S Dollars

 

 

3,514

 

 

 

12,584,892

 

Total

 

 

3,514

 

 

 

12,584,892

 

Cash at banks

 

 

 

 

 

 

 

 

Cash held in U.S. Dollars

 

 

13,336,087

 

 

 

7,612,467

 

Cash held in Euro

 

 

2,076,551

 

 

 

6,052,636

 

Total

 

 

15,412,638

 

 

 

13,665,102

 

Total cash and cash equivalents

 

 

15,416,152

 

 

 

26,249,995

 

 

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 a prospectus supplement (Prospectus Supplement) with the SEC relating to an at-the-market program providing for the sale of up to $50.0 million of its common shares over time pursuant to a Sales Agreement with SVB Leerink LLC. 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 a price of $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 of $5.80. 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 (€0.3 million). The warrants were exercisable immediately and expired on March 1, 2022. No warrants were exercised.

 

Share-based payments

 

Equity settled share-based payment arrangements

 

During its historical financing rounds prior to 2016, InflaRx GmbH granted stock 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 under the 2012 Plan

 

2022

 

 

2021

 

Outstanding as of January 1,

 

 

148,433

 

 

 

148,433

 

Exercised during the six months ended June 30

 

 

-

 

 

 

-

 

Outstanding as of June 30,

 

 

148,433

 

 

 

148,433

 

thereof vested

 

 

148,433

 

 

 

148,433

 

 

 
12

 

 

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 under the 2016 Plan

 

2022

 

 

2021

 

Outstanding as of January 1,

 

 

888,632

 

 

 

1,094,852

 

Exercised during the six months ended June 30

 

 

-

 

 

 

(202,020)

Outstanding as of June 30,

 

 

888,632

 

 

 

892,832

 

thereof vested

 

 

888,632

 

 

 

892,832

 

 

In conjunction with the closing of its initial public offering, InflaRx N.V. established a new incentive plan, the 2017 Long-Term Incentive Plan (“LTIP”). The initial maximum number of options to common shares available for issuance pursuant to the LTIP amounted to 2,341,097 common shares.

 

At the annual general meeting on July 16, 2020, the Company’s shareholders approved an amendment to the LTIP with effect from January 1, 2021:

 

 

·

increasing the maximum annual number of options for 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 Board of Directors and the committee administering the LTIP 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 under the LTIP

 

2022

 

 

2021

 

Outstanding as of January 1,

 

 

3,170,046

 

 

 

2,146,478

 

Granted during the six months ended June 30

 

 

1,561,666

 

 

 

870,928

 

Exercised during the six months ended June 30

 

 

-

 

 

 

(145,822)

Forfeited during the six months ended June 30

 

 

(117,259)

 

 

(15,000)

Outstanding as of June 30,

 

 

4,614,453

 

 

 

2,856,584

 

thereof vested

 

 

3,306,162

 

 

 

1,954,858

 

 

On April 13, 2022, following the significant and persistent decrease of the stock price of the Company's common shares during the first half year 2022 and especially after March 31, 2022, the Board of Directors assessed its impact on the value of the options to purchase common shares in the Company's capital awarded under the LTIP and concluded that due to the extraordinary situation and in order to ensure that the options continue to be an appropriate performance incentive for the Company’s management, employees and directors, the exercise price of all outstanding and unexercised options held by active employees or directors of the Company or its affiliates would be adjusted to $1.86 per share.

 

The repricing decision on April 13, 2022 affected the 2016 Plan and the LTIP. 888,632 share options from the 2016 Plan and 4,544,248 share options from the LTIP were affected. The valuation of past grants with the new exercise price of $1.86 resulted in incremental fair values of the outstanding options (i.e., additional compensation expense had to be recognized).

 

 
13

 

 

The number of share options granted during the six months ended June 30, 2022 under the LTIP 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)

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

January 12

 

 

1,516,666

 

 

$3.66

 

 

 

0.9008

 

 

3.30

 

 

$4.13

 

 

 

1.35

 

 

 

5.31

 

 

 

1.57%

January 12

 

 

45,000

 

 

$3.68

 

 

 

0.9008

 

 

3.32

 

 

$4.13

 

 

 

1.35

 

 

 

5.50

 

 

 

1.59%

 

 

 

1,561,666

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The number of share options granted during the six months ended June 30, 2022 under the LTIP, considering the repricing decision on April 13, 2022 was as follows:

 

Share options granted

 

Number

 

 

Fair value per

option

 

 

FX rate as of repricing date

 

 

Fair value per

option

 

 

Share price at repricing date /

Exercise price

 

 

Expected volatility

 

 

Expected life

(midpoint based)

 

 

Risk-free rate

(interpolated, U.S. sovereign strips curve)

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

January 12

 

 

1,516,666

 

 

$1.61

 

 

 

0.9237

 

 

1.49

 

 

$1.86

 

 

 

1.35

 

 

 

4.69

 

 

 

2.6%

January 12

 

 

45,000

 

 

$1.59

 

 

 

0.9237

 

 

1.47

 

 

$1.86

 

 

 

1.35

 

 

 

4.50

 

 

 

2.6%

 

 

 

1,561,666

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Of the 1,561,666 options granted in the six months ended June 30, 2022, 1,362,500 were granted to members of the Executive Management or Board of Directors.

 

Expected dividends are nil for all share options listed above.

 

Share-based payment expense recognized

 

For the six months ended June 30, 2022, the Company recognized €4,668 thousand of share-based payment expense, which included an expense of €651 thousand for the valuation of past grants with the new exercise price as a result of the repricing of options.

 

Protective foundation

 

According to the articles of association of the Company, up to 110,000,000 common 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 require 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 believe 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 cancelled by us.

 

In the three and six months ended June 30, 2022, the Company expensed €15 thousand and €30 thousand, respectively, of ongoing costs to reimburse expenses incurred by the protective foundation.

 

 
14