lvtx-6k_20210520.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

OF THE SECURITIES EXCHANGE ACT OF 1934

For the month of May 2021

(Commission File No. 001-40241)

 

LAVA Therapeutics N.V.

(Translation of registrant’s name into English)

 

 

Yalelaan 60

3584 CM Ultrecht, The Netherlands

 

(Address of principal executive offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover 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):

    Yes      No  

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):

    Yes      No  

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

    Yes      No  

 

 

 

 

 


 

On May 20, 2021, LAVA Therapeutics N.V. issued its Unaudited Condensed Consolidated Interim Financial Statements as of and for the Three Months Ended March 31, 2021 and associated Management’s Discussion and Analysis of Financial Condition and Results of Operations, copies of which are filed as Exhibits 99.1 and 99.2, respectively, to this Form 6-K, and an associated press release, a copy of which is furnished as Exhibit 99.3 to this Form 6-K.

 

INCORPORATION BY REFERENCE

 

Exhibits 99.1 and 99.2 hereto are hereby expressly incorporated by reference into the registrant’s Registration Statement on Form S-8 File No. 333-242795 and to be a part thereof from the date on which this Report is filed to the extent not superseded by documents or reports subsequently filed with the Securities and Exchange Commission.

 

EXHIBIT LIST

 

Exhibit

 

Description

99.1

 

Unaudited Condensed Consolidated Interim Financial Statements as of and for the Three Months Ended March 31, 2021

99.2

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations as of and for the Three Months Ended March 31, 2021

99.3

 

Press Release dated May 20, 2021

 


 

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, thereto duly authorized.

 

 

 

 

 

LAVA Therapeutics, N.V.

 

(Registrant)

 

 

 

Date: May 20, 2021By:/s/ Stephen Hurly

 

Stephen Hurly

 

Chief Executive Officer

 

 

 

lvtx-ex991_8.htm

Exhibit 99.1

 

 

LAVA THERAPEUTICS NV

INDEX TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

 

 

 

Page

Unaudited Condensed Consolidated Interim Statements of Profit or Loss and Other Comprehensive Income (Loss) for the Three Months Ended March 31, 2021 and 2020

 

2

Unaudited Condensed Consolidated Interim Statements of Financial Position as of March 31, 2021 and December 31, 2020

 

3

Unaudited Condensed Consolidated Interim Statements of Changes in Equity at March 31, 2021 and 2020

 

4

Unaudited Condensed Consolidated Interim Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020

 

5

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

 

6

 

 

 

 

 

 

 

 

 

 

 


 

Condensed Consolidated Interim Statements of Profit or Loss

and Other Comprehensive Income (Loss) for the Three Months Ended March 31

EUR (000’s) (unaudited)

 

 

 

 

 

Three Months Ended March 31,

 

 

 

Notes

 

2021

 

 

2020

 

Revenue

 

 

 

 

 

 

 

 

 

 

Research and license revenue

 

6

 

921

 

 

  —

 

Total revenue

 

 

 

 

921

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

Research and development

 

7

 

 

(15,739

)

 

 

(2,935

)

General and administrative

 

8

 

 

(1,415

)

 

 

(682

)

Total operating expenses

 

 

 

 

(17,154

)

 

 

(3,617

)

 

 

 

 

 

 

 

 

 

 

 

Operating loss

 

 

 

 

(16,233

)

 

 

(3,617

)

Interest expense, net

 

 

 

 

(108

)

 

 

(51

)

Foreign currency exchange loss, net

 

 

 

 

(212

)

 

 

(7

)

Total non-operating expenses

 

 

 

 

(320

)

 

 

(58

)

 

 

 

 

 

 

 

 

 

 

 

Loss before income tax

 

 

 

 

(16,553

)

 

 

(3,675

)

Income tax expense

 

 

 

 

(21

)

 

 

(3

)

Loss for the period

 

 

 

(16,574

)

 

(3,678

)

Foreign currency translation adjustment for the period

 

 

 

 

489

 

 

 

-

 

Total comprehensive loss for the period

 

 

 

(16,085

)

 

(3,678

)

Loss per share, in Euros

 

 

 

 

 

 

 

 

 

 

Loss per share, basic and diluted

 

 

 

(10.19

)

 

(8.22

)

Weighted average common shares outstanding, basic and diluted

 

 

 

 

1,626,598

 

 

 

447,525

 

 

 

 

 

 

2

 


 

Condensed Consolidated Interim Statements of Financial Position

EUR (000’s)

 

 

 

 

 

 

 

March 31,

 

 

December 31,

 

 

 

Notes

 

2021

 

 

2020

 

 

 

 

 

(unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

Non-current assets:

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

 

985

 

 

906

 

Right-of-use assets

 

 

 

 

263

 

 

 

311

 

Deferred tax assets

 

 

 

 

15

 

 

 

 

Non-current assets and security deposits

 

 

 

 

612

 

 

 

626

 

Total non-current assets

 

 

 

 

1,875

 

 

 

1,843

 

Current assets:

 

 

 

 

 

 

 

 

 

 

Trade receivables and other

 

 

 

 

377

 

 

 

929

 

Prepaid expenses and other current assets

 

 

 

 

454

 

 

 

95

 

Deferred offering costs

 

 

 

 

0

 

 

 

661

 

VAT receivable

 

 

 

 

182

 

 

 

274

 

Cash and cash equivalents

 

 

 

 

134,745

 

 

 

12,881

 

Total current assets:

 

 

 

 

135,758

 

 

 

14,840

 

Total assets

 

 

 

137,633

 

 

16,683

 

Equity and Liabilities

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

 

 

Share capital

 

 

 

3,014

 

 

 

Share premium

 

 

 

 

 

 

 

35,159

 

Equity-settled employee benefits reserve

 

 

 

 

1,341

 

 

 

801

 

Foreign currency translation reserve

 

 

 

 

142

 

 

 

(347

)

Additional paid capital

 

 

 

 

154,954

 

 

 

 

Accumulated deficit

 

 

 

 

(45,980

)

 

 

(29,406

)

Total equity

 

 

 

 

113,471

 

 

 

6,207

 

Non-current liabilities

 

 

 

 

 

 

 

 

 

 

Deferred revenue

 

6

 

 

460

 

 

 

1,480

 

Lease liabilities

 

 

 

 

168

 

 

 

221

 

License liabilities

 

5

 

 

4,437

 

 

 

 

Borrowings

 

 

 

 

3,010

 

 

 

2,935

 

Total non-current liabilities

 

 

 

 

8,075

 

 

 

4,636

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

Trade payables and other

 

 

 

 

1,464

 

 

 

760

 

Lease liabilities

 

 

 

 

216

 

 

 

168

 

License liabilities

 

5

 

 

7,636

 

 

 

 

Accrued expenses and other current liabilities

 

 

 

 

3,122

 

 

 

1,362

 

Deferred revenue

 

6

 

 

3,649

 

 

 

3,550

 

Total current liabilities

 

 

 

 

16,087

 

 

 

5,840

 

Total liabilities

 

 

 

 

24,162

 

 

 

10,476

 

Total equity and liabilities

 

 

 

137,633

 

 

16,683

 

 

 

 

 

 

 

 

 

3

 


 

 

Condensed Consolidated Interim Statements of Changes in Equity at Three Months Ended March 31

         EUR (000’s) (unaudited)

 

 

 

 

 

Preference

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note

 

Series A

shares

 

 

Series A

Share

premium

 

 

Series B

shares

 

 

Series B

Share

premium

 

 

Series C

shares

 

 

Series C

Share

premium

 

 

Ordinary

share

shares

 

 

Share

capital

 

 

Equity-

settled

employee

benefits

reserves

 

 

Foreign

currency

translation

reserve

 

 

APIC

 

 

Accumulated

losses

 

 

Total

 

Balance at January 1, 2021

 

 

 

 

1,037,595

 

 

629

 

 

 

3,899,766

 

 

16,001

 

 

 

4,133,805

 

 

18,529

 

 

 

281,775

 

 

0

 

 

801

 

 

(347

)

 

0

 

 

(29,406

)

 

6,207

 

Loss for the period

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16,574

)

 

 

(16,574

)

Share split

 

 

 

 

 

 

 

(124

)

 

 

 

 

 

(468

)

 

 

 

 

 

(497

)

 

 

 

 

 

1,123

 

 

 

 

 

 

 

 

 

(34

)

 

 

 

 

 

 

Issuance of Series C preferred shares, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,945,221

 

 

 

50,581

 

 

 

 

 

 

1,193

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

51,774

 

Repurchase of Series A and common shares

 

 

 

 

(718,250

)

 

 

(349

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(165,750

)

 

 

(106

)

 

 

 

 

 

 

 

 

(4,153

)

 

 

 

 

 

(4,608

)

Conversion of Preference shares

 

 

 

 

(319,345

)

 

 

(156

)

 

 

(3,899,766

)

 

 

(15,533

)

 

 

(14,079,026

)

 

 

(68,613

)

 

 

18,298,137

 

 

 

 

 

 

 

 

 

 

 

 

 

84,302

 

 

 

 

 

 

 

Issuance of common stock in initial public offering, net

 

1,4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,700,000

 

 

 

804

 

 

 

 

 

 

 

 

 

74,839

 

 

 

 

 

 

75,643

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

489

 

 

 

 

 

 

 

 

 

489

 

Share-based compensation expense

 

9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

540

 

 

 

 

 

 

 

 

 

 

 

 

540

 

Balance at March 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

25,114,162

 

 

3,014

 

 

1,341

 

 

142

 

 

154,954

 

 

(45,980

)

 

113,471

 

 

 

 

 

 

 

 

 

Preference

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note

 

Series A

shares

 

 

Series A

Share

premium

 

 

Series B

shares

 

 

Series B

Share

premium

 

 

Series C

shares

 

 

Series C

Share

premium

 

 

Ordinary

share

shares

 

 

Share

capital

 

 

Equity-

settled

employee

benefits

reserves

 

 

Foreign

currency

translation

reserve

 

 

APIC

 

 

Accumulated

losses

 

 

Total

 

Balance at January 1, 2020

 

 

 

 

1,755,845

 

 

10,665

 

 

 

3,899,766

 

 

16,001

 

 

 

 

 

0

 

 

447,525

 

 

0

 

 

324

 

 

0

 

 

0

 

 

(12,179

)

 

5,211

 

Loss for the period

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,678

)

 

 

(3,678

)

Share-based compensation expense

 

9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

152

 

 

 

 

 

 

 

 

 

 

 

 

152

 

Balance at March 31, 2020

 

 

 

 

1,755,845

 

 

1,065

 

 

 

3,899,766

 

 

16,001

 

 

 

 

 

0

 

 

447,525

 

 

0

 

 

476

 

 

0

 

 

0

 

 

(15,857

)

 

1,685

 


4

 


 

 

Condensed Consolidated Interim Statements of Cash Flows for the

Three Months Ended March 31

EUR (000’s) (unaudited)

 

 

 

 

Three Months Ended March 31,

 

 

 

Notes

 

2021

 

 

2020

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

 

 

Loss before income tax

 

 

 

(16,553

)

 

(3,675

)

Adjusted for:

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization of non-current assets

 

 

 

 

58

 

 

 

36

 

Foreign currency exchange loss, net

 

 

 

 

212

 

 

 

 

Non-cash lease amortization

 

 

 

 

48

 

 

 

37

 

Share-based compensation expense

 

9

 

 

540

 

 

 

152

 

Income tax expense

 

 

 

 

(21

)

 

 

(3

)

Changes in working capital:

 

 

 

 

 

 

 

 

 

 

Trade receivables and other

 

 

 

 

552

 

 

 

(173

)

VAT receivable

 

 

 

 

93

 

 

 

41

 

Other assets

 

 

 

 

(357

)

 

 

(56

)

Trade accounts payable and other

 

 

 

 

317

 

 

 

1,580

 

Deferred revenue

 

6

 

 

(921

)

 

 

 

Other liabilities

 

 

 

 

12,432

 

 

 

(168

)

Net cash used in operating activities

 

 

 

 

(3,600

)

 

 

(2,229

)

Cash flows from investing activities

 

 

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

 

 

(137

)

 

 

(121

)

Change in restricted cash

 

 

 

 

 

 

 

(1

)

Net cash used in investing activities

 

 

 

 

(137

)

 

 

(122

)

Cash flows from financing activities

 

 

 

 

 

 

 

 

 

 

Proceeds from initial public offering of shares

 

1,4

 

 

81,865

 

 

 

 

Costs associated with initial public offering of shares

 

1,4

 

 

(3,773

)

 

 

 

Proceeds from Series C preferred financing, net

 

 

 

 

51,774

 

 

 

 

Payment of Series A preferred and common shares repurchased

 

 

 

 

(4,608

)

 

 

 

Proceeds from borrowings

 

 

 

 

74

 

 

 

410

 

Payment of principal portion of lease liabilities

 

 

 

 

(5

)

 

 

(37

)

Net cash provided by financing activities

 

 

 

 

125,327

 

 

 

373

 

Net increase (decrease) in cash and cash equivalents

 

 

 

 

121,590

 

 

 

(1,978

)

Cash and cash equivalents at the beginning of year

 

 

 

12,881

 

 

6,544

 

Effects of exchange rate changes on the balance of cash held in foreign currencies

 

 

 

 

274

 

 

 

 

Cash and cash equivalents at end of the period

 

 

 

134,745

 

 

4,566

 

Supplemental schedule of noncash investing and financing activities:

 

 

 

 

 

 

 

 

 

 

Deferred offering costs in accounts payable and accrued expenses

 

 

 

2,185

 

 

 

 

 


5

 


 

 

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

 

 

Note 1—General Information

 

LAVA Therapeutics NV, together with its subsidiary, is a biotechnology company focused on transforming cancer treatment by developing a platform of novel bispecific antibodies engineered to selectively induce gamma-delta T cell mediated immunity against tumor cells. LAVA Therapeutics NV was incorporated in 2016 and is headquartered in Utrecht, the Netherlands. Unless the context otherwise requires, references to the “Group,” “Company,” “we,” “us” and “our” refer to LAVA Therapeutics NV and its subsidiary.

 

On March 29, 2021, the Company completed an initial public offering (“IPO) of common shares pursuant to its registration statement on Form F-1, as amended File 333-253795 under the symbol “LVTX” in the United States on The Nasdaq Global Select Market (“Nasdaq”).  Pursuant to the registration statement, the Company issued and sold 6,700,000 shares of €0.12 par value common stock at a price of €12.60 or $15.00 per share.  Proceeds from the IPO were approximately $89.0 million after deducting underwriting discounts and commissions of $7.0 million and offering costs of $4.5 million. In March 2021, the Company also received €47.2 million in proceeds from the Series C financing, net of  repurchasing of Series A Preferred and common shares.

 

The Company was incorporated in the Netherlands, with its statutory seat in Utrecht. In connection with becoming a public company, on March 29, 2021 the Company changed its name from “Lava Therapeutics, B.V.” to “Lava Therapeutics N.V.” The address of the Company’s registered office is Yalelaan 60, 3584 CM Utrecht, the Netherlands.

The Audit Committee of the Company’s Board of Directors approved these unaudited condensed consolidated interim financial statements on May 11, 2021.

 

Note 2—Summary of Significant Accounting Policies

 

Basis of Preparation

 

The unaudited condensed consolidated interim financial statements of the Company are prepared in accordance with International Accounting Standard 34, “Interim Financial Reporting.” Certain information and disclosures normally included in the consolidated financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”) have been condensed or omitted. Accordingly, these unaudited condensed consolidated interim financial statements should be read in conjunction with the Company’s annual consolidated financial statements for the years ended December 31, 2020 and 2019 and accompanying notes, which have been prepared in accordance with IFRS as issued by the International Accounting Standards Board, or IASB.

 

The accounting policies applied are consistent with those of the previous financial year. A description of our accounting policies is provided in the Accounting Policies section of the audited consolidated financial statements as of and for the years ended December 31, 2020 and 2019.

 

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates and requires management to exercise its judgment in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the unaudited condensed consolidated interim financial statements are disclosed in Note 3.

 

Cash and Cash Equivalents

 

Cash and cash equivalents in the condensed consolidated interim statements of financial position is comprised of cash at banks and on hand and short-term deposits with a maturity of three months or less, which are subject to an insignificant risk of changes in value.

Our objective in managing our cash resources (cash, cash equivalents and marketable securities) is to preserve principal, achieve liquidity requirements, and safeguard funds. We maintain our cash resources in accordance with our investment policy, which defines allowable investments, specifies credit quality standards and is designed to limit our credit exposure to any single issuer. Cash and cash equivalents include deposits and investments. Marketable securities include commercial paper, treasury bills and securities issued by several public corporations and the Dutch, EU or U.S. Treasury. A minimum of 1-½ times the amount of expected monthly cash outflow must be liquid each business day. Our invested cash resources are deployed to achieve our operating objectives in furthering our programs. We are prohibited from borrowing for investment purposes and from engaging in any non-business related investment activity that would be considered speculative according to the principles of conservative investment management. 

 

6

 


 

 

For the purposes of the condensed consolidated interim statements of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts.

 

Share Split—On March 17, 2021, the Company effected a 221:1 share split of the Company’s issued and outstanding common shares and a proportional adjustment to the existing conversion ratios for the Company’s convertible preferred shares. The par value per share and authorized common and convertible preferred shares were adjusted as a result of the share split. All common shares and common share per share amounts within the financial statements and notes thereto have been adjusted for all periods presented to give effect to this share split, including reclassifying an amount equal to the change in par value of common shares to additional paid-in capital.

 

Automatic Conversion of Preferred Shares – On March 29, 2021, the Company effected an amendment to its Articles of Association, as amended. This amendment eliminated the minimum price per common share for an underwritten public offering that would result in the automatic conversion of all outstanding Series A, Series B, and Series C preferred shares of the Company.

 

There were no new standards, interpretations, or amendments that became effective in the current reporting period which had an impact on the unaudited condensed consolidated interim financial statements. 

 

Note 3—Significant Accounting Judgments, Estimates and Assumptions

 

In the application of our accounting policies, the Company is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

 

Critical judgments made in the process of applying our accounting policies and that have the most significant effect on the amounts recognized in our unaudited condensed consolidated interim financial statements relate to revenue recognition, share-based payments, lease accounting, and to our research and license agreements.

 

The key sources of estimation uncertainty that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year, primarily relate to recognition of accruals for manufacturing and clinical trial activities. No significant adjustments to accruals have been recognized during the first three months of 2021 or 2020, due to conditions that existed at December 31, 2020, or 2019, respectively. Additionally, there have been no changes to the application of significant accounting estimates, and no impairment losses have been recognized during the first three months of 2021 or 2020.

 

The unaudited condensed consolidated interim financial statements do not include all disclosures for critical accounting estimates and judgments that are required in the annual consolidated financial statements and should be read in conjunction with the Company’s audited consolidated financial statements as of and for the years ended December 31, 2020 and 2019.

 

 

Note 4—Initial Public Offering

 

On March 29, 2021, the Company completed an IPO of common shares pursuant to its registration statement on Form F-1, as amended (file 333-253795) under the symbol “LVTX” in the United States on Nasdaq.  Pursuant to the registration statement, the Company issued and sold 6,700,000 shares of €0.12 par value common share at a price of €12.60 or $15.00 per share. Proceeds from the IPO were approximately $89.0 million after deducting underwriting discounts and commissions of $7.0 million and offering costs of $4.5 million.

 

Note 5—License Liabilities

 

On February 25, 2021, the VUmc Agreement was restated, due to the Company’s IPO which triggered a €12.1 million Exit payment. The Exit payment is calculated as the following:

 

 

The Company shall issue common shares equal to €3.1 million divided by the IPO price (€12.60) and €200,000 in cash; and

 

7

 


 

 

 

On each of the first and second anniversary of the IPO, the Company shall pay €4.4 million. Such payment shall be made in cash or common shares, at the election of the Company, valued using the closing price of common shares on the date two trading days prior to the respective anniversary of the intended initial public offering.

 

The €12.1 million Exit payment is recorded as a liability, €4.4 million is classified as non-current liability, and €7.7 million of this liability is classified as a current liability in the unaudited condensed consolidated interim statements of financial position as of March 31, 2021.

 

Note 6—Revenue

 

Research and license revenue

 

In May 2020, the Company entered into the Janssen Agreement. As part of the Janssen Agreement, the Company received a non-refundable upfront payment of €7.4 million, which is being recognized on a straight-line basis over the two-year term of the research activities under agreement. As of March 31, 2021 there was €4.1 million of remaining unearned income related to this payment.

 

The Company’s deferred revenue balance relates to amounts received, but not yet earned under the Janssen Agreement. The following table presents changes in the deferred revenue balance:

 

(euros in thousands)

 

 

Balance at January 1, 2020

€—

 

Deferral of revenue

(7,397)

Recognized during the period

2,367

Balance at December 31, 2020

(5,030)

Recognized during the three months ended

921

Balance at March 31, 2021 (unaudited)

         (4,109)

 

      

        Revenue for the three months ended March 31, 2021 was €0.9 million, which related to the upfront payment. There were no development milestones achieved during the period. No revenue was recognized for the three months ended March 31, 2020.

 

 

Note 7—Research and Development Expenses

 

Research and development expenses for the three-months ending March 31, 2021 and 2020 are as follows (in thousands):

 

 

    

Three Months Ended March 31,

 

 

2021

 

 

2020

Personnel-related expenses

 

857

 

 

363

VUmc license expenses

 

 

12,073

 

 

 

Pre-clinical and clinical trial expenses

 

 

2,307

 

 

 

2,024

Research and development activities expenses

 

 

181

 

 

 

356

Share-based compensation expense

 

 

147

 

 

 

29

Other expenses

 

 

174

 

 

 

163

 

 

15,739

 

 

2,935

8

 


 

 

 

Note 8—General and Administrative Expenses

 

General and administrative expenses for the three-months ending March 31, 2021 and 2020 are as follows (in thousands):

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Personnel-related expenses

 

510

 

 

249

 

Professional and consultant fees

 

 

148

 

 

 

44

 

Facilities, fees and other related costs

 

 

364

 

 

 

266

 

Share-based compensation expense

 

 

393

 

 

 

123

 

 

 

1,415

 

 

682

 

 

Note 9—Share-based awards

 

 

LAVA Therapeutics N.V. has established the 2021 Long-term Incentive Option Plan, as an incentive for all its employees, members of its Board of Directors and select external consultants.  As of March 25, 2021, the 2018 Stock Option Plan and the 2020 U.S. Stock Option Plan ceased to have any future shares available, and the Company established the 2021 Employee Stock Purchase Plan.

 

Stock Options

 

There were 2,183,483 stock options outstanding as of March 31, 2021 at a weighted-average exercise price of €3.33 per share. During the three-months ended March 31, 2021, 493,938 options were granted to employees and directors at a weighted-average exercise price of €10.60 per share.

 

Total compensation cost recognized for all stock option awards for the three-months ending March 31, 2021 and 2020 are as follows (in thousands):

 

 

Three Months Ended March 31,

 

 

2021

 

 

2020

Research and development

 

147

 

 

29

General and administrative

 

 

393

 

 

 

123

 

 

540

 

 

152

 

The fair value of the share options has been measured using the Black-Scholes model. The assumptions used in the measurement of the fair values and the weighted average of the share options granted during the three months ended March 31, 2021:

 

 

 

 

 

 

 

 

Expected annual volatility

 

 

80.10%

 

 

 

Expected life, years

 

 

3.04 – 9.52

 

 

 

Dividend yield

 

 

 

 

 

 

Risk-free interest rate

 

 

(0.53%) - (0.62%)

 

 

 

Weighted average grant date fair value

 

 

7.11

 

 

 

 

The Company estimates volatility based on the historical volatility of its peer group. The unrecognized remaining stock-based compensation balance for shares issued inside of the Plan was approximately $5.0 million as of March 31, 2021 which will be amortized over 1.6 years.

 

Note 10—Share Capital

 

The share capital of LAVA Therapeutics N.V. consists of 25,114,162 outstanding common shares at a nominal value of €0.12 per share.  

 

9

 


 

 

Note 11—Subsequent Events

 

On April 19, 2021, underwriters of the Company’s IPO consummated the exercise of their option to purchase 425,712 common shares from the Company at the price of $15.00 per share resulting in additional IPO proceeds to the Company of $5.9 million after deducting underwriting discounts and commissions of $0.4 million.

 

10

 

lvtx-ex992_7.htm

Exhibit 99.2

 

LAVA THERAPEUTICS, N.V.

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

 

 

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited condensed consolidated interim financial statements, including the notes thereto, included with this report and our Registration Statement on Form F-1 for the years ended December 31, 2020 and 2019. The following discussion is based on our financial information prepared in accordance with International Accounting Standard 34, “Interim Financial Reporting.” Certain information and disclosures normally included in the unaudited condensed consolidated interim financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”) have been condensed or omitted.

 

 

Overview

 

We are a biotechnology company focused on transforming cancer treatment by developing a platform of novel bispecific antibodies designed to selectively induce gamma-delta T cell-mediated immunity against tumor cells. Our approach activates Vγ9Vδ2 T cells, a specific and relatively abundant gamma-delta effector T cell subset, upon cross-linking to a selected tumor target by our bispecific gamma-delta T cell engagers, or gamma-delta bsTCEs. These cells have the natural ability to distinguish tumor cells from healthy cells by sensing certain intracellular metabolites that are enriched in cancer cells. Activated Vγ9Vδ2 T cells are engaged for direct tumor cell killing and, in addition, orchestrate an immunological cascade response that includes activation of innate and adaptive immune cells in the tumor microenvironment. Our preclinical data demonstrate that Vγ9Vδ2 T cell activation and killing of patient-derived tumor cells by our gamma-delta bsTCEs kills patient derived tumor cells is potent and specific thereby providing a significant opportunity to address unmet medical needs, if approved therapeutics to patients. We expect that activation of adaptive immunity by our approach has the potential to provide durable immune responses with the potential of enhancing patient survival. We believe we are the only company developing bispecific gamma-delta T cell engaging antibodies for the treatment of cancer.

 

We were incorporated in February 2016 in the Netherlands. In 2019, we established our wholly-owned U.S. subsidiary, which began business in January 2020. We have not generated any revenue from the sale of products. Since inception, we have incurred losses, including €16.6 million for the three months ended March 31, 2021 and €13.6 million for the year ended December 31, 2020. As of March 31, 2021, we had an accumulated deficit of €46.0 million.

 

Factors affecting our financial condition and Results of Operations

 

Impact from COVID-19 Pandemic

 

Our financial condition and results of operations are affected by continued research and development expenses and the ongoing activities related to the preclinical studies related to our potential product candidates. We are also monitoring the potential impact of the COVID-19 pandemic on our business, operations, financial statements and outlook. To date, we have not experienced any material business disruption as a result of the COVID-19 pandemic.

 

Comparison of the Three Months Ended March 31, 2021 and 2020 (unaudited):

 

Research and license revenue

 

Our research and license revenue increased to €0.9 million for the three months ended March 31, 2021 compared to no such revenue for the three months ended March 31, 2020. Research and license revenue is solely attributable to our collaboration with Janssen Biotech, Inc., which we entered into in May 2020.  In connection with this collaboration, we received a non-refundable upfront payment of €7.4 million that is being recognized on a straight-line basis over the two-year term of the research activities under agreement. As of March 31, 2021, we had €4.1 million of unearned income related to this payment. We may also receive research, development and commercial milestones and tiered royalty payments under the agreement.

 

Research and development expenses

 

Below are our research and development expenses for the three months ended March 31, 2021 and 2020 (in thousands):

 


 

 

 

 

Three Months Ended

March 31,

 

 

 

 

 

 

 

2021

 

 

2020

 

 

Variance

 

Personnel-related cost

 

857

 

 

363

 

 

494

 

Vumc license fees

 

 

12,073

 

 

 

 

 

 

12,073

 

Pre-clinical and clinical trial expenses

 

 

2,307

 

 

 

2,024

 

 

 

283

 

Research and development activities expenses

 

 

181

 

 

 

356

 

 

 

(175

)

Share-based compensation expense

 

 

147

 

 

 

29

 

 

 

118

 

Other expenses

 

 

174

 

 

 

163

 

 

 

11

 

 

 

15,739

 

 

2,935

 

 

12,804

 

 

 

Research and development expenses were €15.7 million for the three months ended March 31, 2021, an increase of €12.8 million, compared to €2.9 million for the three months ended March 31, 2020.  The increase was primarily due to the VUmc license fees of €12.1 million, which are recorded as current and non-current license liabilities in our unaudited condensed consolidated interim statements of financial position. These liabilities represent the Exit payment that we made to VUmc triggered by our initial public offering (“IPO”). Our personnel-related costs increased by €0.5 million due to increased research and development headcount and associated non-cash share-based compensation expense increased by €0.1 million.

 

General and administrative expenses

 

Below are our general and administrative expenses for the three months ended March 31, 2021 and 2020 (in thousands):

 

 

 

Three Months Ended

March 31,

 

 

 

 

 

 

 

2021

 

 

2020

 

 

Variance

 

Personnel-related expenses

 

510

 

 

249

 

 

261

 

Professional and consultant fees

 

 

148

 

 

 

44