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 September 2022

(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  


LAVA Therapeutics, N.V.

Exhibits 99.1 and 99.2 to this Report on Form 6-K shall be deemed to be incorporated by reference into the registration statement on Form S-8 (File no. 333-256655) and registration statement on Form F-3 (File no. 333-264246) of LAVA Therapeutics N.V. (including any prospectuses forming a part of such registration statements) and to be a part thereof from the date on which this report is filed, to the extent not superseded by documents or reports subsequently filed or furnished.

Exhibit 99.3 to this Report on Form 6-K is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (Exchange Act), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act.

RISK FACTORS

Our business faces significant risks. You should carefully consider all of the information set forth in this report and in our other filings with the United States Securities and Exchange Commission, or the SEC. Our business, financial condition, results of operations and growth prospects could be materially adversely affected by any of these risks. This report also contains forward-looking statements that involve risks and uncertainties. Our results could materially differ from those anticipated in these forward-looking statements, as a result of certain factors including the risks described in our other SEC filings.

EXHIBIT LIST

Exhibit

    

Description

99.1

Unaudited Condensed Consolidated Interim Financial Statements as of and for the Three and Six Months Ended June 30, 2022 and 2021

99.2

Management’s Discussion and Analysis of Financial Condition and Results of Operations as of and for the Three and Six Months Ended June 30, 2022 and 2021

99.3

Press Release dated September 13, 2022


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: September 13, 2022

By:

/s/ Stephen Hurly

Stephen Hurly

Chief Executive Officer and Director


Table of Contents

Exhibit 99.1

LAVA THERAPEUTICS N.V.

INDEX TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

Page

Condensed Consolidated Interim Statements of Loss and Comprehensive Loss (unaudited)

2

Condensed Consolidated Interim Statements of Financial Position (unaudited)

3

Condensed Consolidated Interim Statements of Changes in Equity (unaudited)

4

Condensed Consolidated Interim Statements of Cash Flows (unaudited)

6

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

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LAVA Therapeutics N.V.

Condensed Consolidated Interim Statements of Loss

and Comprehensive Loss

(in thousands, except share and per share amounts) (unaudited)

    

    

    

Three Months Ended

    

Six Months Ended

June, 30

June 30, 

    

Notes

    

2022

    

2021

    

2022

    

2021

Revenue:

 

  

 

  

 

  

 

  

 

  

Research and license revenue

 

6

$

468

$

1,080

$

1,490

$

2,189

Total revenue

 

  

 

468

 

1,080

 

1,490

 

2,189

Operating expenses:

 

  

 

  

 

  

 

  

 

  

Research and development

 

7

 

(8,342)

 

(4,895)

 

(15,944)

 

(23,607)

General and administrative

 

8

 

(3,016)

 

(2,764)

 

(7,314)

 

(4,491)

Total operating expenses

 

  

 

(11,358)

 

(7,659)

 

(23,258)

 

(28,098)

Operating loss

 

  

 

(10,890)

 

(6,579)

 

(21,768)

 

(25,909)

Interest expense, net

 

 

(90)

 

(187)

 

(253)

 

(316)

Foreign currency exchange gain (loss), net

 

 

3,136

 

(1,239)

 

4,248

 

(922)

Total non-operating income (expenses)

 

  

 

3,046

 

(1,426)

 

3,995

 

(1,238)

Loss before income tax

 

  

 

(7,844)

 

(8,005)

 

(17,773)

 

(27,147)

Income tax expense

 

 

(76)

 

(32)

 

(135)

 

(55)

Loss for the year

 

  

$

(7,920)

$

(8,037)

$

(17,908)

$

(27,202)

Foreign currency translation adjustment

 

  

 

(6,659)

 

1,648

 

(8,862)

 

569

Total comprehensive loss

 

  

$

(14,579)

$

(6,389)

$

(26,770)

$

(26,633)

Loss per share:

 

  

 

  

 

  

 

  

 

  

Loss per share, basic and diluted

 

$

(0.31)

$

(0.31)

$

(0.69)

$

(1.99)

Weighted-average common shares outstanding, basic and diluted

 

  

 

25,780,811

 

25,523,501

 

25,778,190

 

13,641,062

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

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LAVA Therapeutics N.V.

Condensed Consolidated Interim Statements of Financial Position

(in thousands) (unaudited)

June 30, 

December 31, 

    

Notes

    

2022

    

2021

Assets

 

  

 

  

 

  

Non-current assets:

 

  

 

  

 

  

Property and equipment, net

 

$

1,432

$

1,445

Right-of-use assets

 

 

365

 

501

Other non-current assets and security deposits

 

  

 

718

 

796

Total non-current assets

 

  

 

2,515

 

2,742

Current assets:

 

  

 

  

 

  

Receivables and other

 

  

 

525

 

363

Prepaid expenses and other current assets

 

 

981

 

2,568

Deferred financing costs

 

  

 

262

 

VAT receivable

 

 

309

 

371

Investments

10

34,847

42,334

Cash and cash equivalents

 

 

75,867

 

90,869

Total current assets

 

  

 

112,791

 

136,505

Total assets

 

  

$

115,306

$

139,247

Equity and Liabilities

 

  

 

  

 

  

Equity:

 

  

 

  

 

  

Share capital

 

11

$

3,656

$

3,653

Equity-settled employee benefits reserve

 

  

 

7,645

 

5,219

Foreign currency translation reserve

 

  

 

(15,085)

 

(6,223)

Additional paid-in capital

 

 

192,282

 

192,270

Accumulated deficit

 

  

 

(94,460)

 

(76,552)

Total equity

 

  

 

94,038

 

118,367

Non-current liabilities:

 

  

 

  

 

  

Lease liabilities

 

 

213

 

320

License liabilities

 

5

 

 

5,028

Borrowings

 

 

4,329

 

4,284

Total non-current liabilities

 

  

 

4,542

 

9,632

Current liabilities:

 

  

 

  

 

  

Trade payables and other

 

 

2,930

 

2,553

Lease liabilities

 

 

288

 

261

License liabilities

 

5

 

9,251

 

5,028

Deferred revenue

 

6

 

 

1,527

Accrued expenses and other current liabilities

 

 

4,257

 

1,879

Total current liabilities

 

  

 

16,726

 

11,248

Total liabilities

 

  

 

21,268

 

20,880

Total equity and liabilities

 

  

$

115,306

$

139,247

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

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Table of Contents

LAVA Therapeutics N.V.

Condensed Consolidated Interim Statements of Changes in Equity

(in thousands, except share amounts) (unaudited)

Equity-

settled

Foreign

employee

currency

Common

Share

benefits

translation

Accumulated

   

Note

   

shares

   

capital

   

reserves

   

reserve

   

APIC

   

deficit

   

Total

Balance at March 31, 2022

 

  

 

25,775,538

$

3,653

$

7,452

$

(8,426)

$

192,270

$

(86,540)

$

108,409

Loss for the period

 

  

 

 

 

 

 

 

(7,920)

 

(7,920)

Option exercises

22,197

3

12

15

Foreign currency translation adjustment

 

  

 

 

 

 

(6,659)

 

 

 

(6,659)

Share-based compensation expense

 

9

 

 

 

193

 

 

 

 

193

Balance at June 30, 2022

 

  

 

25,797,735

$

3,656

$

7,645

$

(15,085)

$

192,282

$

(94,460)

$

94,038

Equity-

settled

Foreign

employee

currency

Common

Share

benefits

translation

Accumulated

   

Note

   

shares

   

capital

   

reserves

   

reserve

   

APIC

   

deficit

   

Total

Balance at January 1, 2022

 

  

 

25,775,538

 

$

3,653

$

5,219

 

$

(6,223)

$

192,270

$

(76,552)

$

118,367

Loss for the period

 

  

 

 

 

 

 

(17,908)

 

(17,908)

Option exercises

22,197

3

12

15

Foreign currency translation adjustment

 

  

 

(8,862)

 

(8,862)

Share-based compensation expense

 

9

 

2,426

 

2,426

Balance at June 30, 2022

 

  

 

25,797,735

$

3,656

$

7,645

$

(15,085)

$

192,282

$

(94,460)

$

94,038

    

Equity-

settled

Foreign

employee

currency

Common

Share

benefits

translation

Accumulated

   

Note

   

shares

   

capital

   

reserves

   

reserve

   

APIC

   

deficit

   

Total

Balance at March 31, 2021

 

  

 

25,114,162

$

3,558

$

1,564

$

(1,661)

$

182,772

$

(52,972)

$

133,261

Loss for the period

 

  

 

 

 

 

 

 

(8,037)

 

(8,037)

Issuance of Greenshoe common stock

425,712

61

5,877

5,939

Issuance of VUmc common stock

235,664

34

3,621

3,656

Foreign currency translation adjustment

 

 

 

 

1,648

 

 

 

1,648

Share-based compensation expense

9

 

 

 

1,023

 

 

 

 

1,023

Balance at June 30, 2021

 

  

 

25,775,538

 

$

3,653

$

2,587

 

$

(13)

 

$

192,270

$

(61,009)

$

137,489

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Table of Contents

   

   

   

   

   

   

   

   

   

   

Equity-

   

   

   

   

Preference

settled

Foreign

Series A

Series B

Series C

employee

currency

Series A

Share

Series B

Share

Series C

Share 

Common

Share

benefits

translation

Accumulated

Note

shares

premium

shares

premium

shares

premium

shares

capital

reserves

reserve

APIC

deficit

Total

Balance at January 1, 2021

 

  

 

1,037,595

 

$

722

 

3,899,766

 

$

18,340

 

4,133,805

 

$

22,026

 

281,775

$

$

922

$

(582)

$

$

(33,807)

$

7,621

Loss for the period

 

  

 

 

 

 

 

 

 

 

 

 

 

 

(27,202)

 

(27,202)

Share split

(143)

(536)

(589)

1,308

(40)

Issuance of Series C preferred shares, net

 

 

 

 

9,945,221

 

60,373

 

 

1,425

 

 

 

 

 

61,798

Repurchase of Series A and common shares

(718,250)

 

(400)

 

 

 

 

 

(165,750)

 

(122)

 

 

 

(4,760)

 

 

(5,282)

Conversion of Preference shares

(319,345)

(179)

(3,899,766)

(17,804)

(14,079,026)

(81,810)

18,298,137

99,793

Issuance of common stock in initial public offering, net

6,700,000

947

87,779

88,726

Issuance of Greenshoe common stock

425,712

61

5,877

5,939

Issuance of VUmc common stock

235,664

34

3,621

3,656

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

569

 

 

 

569

Share-based compensation expense

9

 

 

 

 

 

 

 

 

 

1,665

 

 

 

 

1,665

Balance at June 30, 2021

 

  

 

$

 

$

 

 

$

 

25,775,538

 

$

3,653

$

2,587

 

$

(13)

 

$

192,270

$

(61,009)

$

137,489

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

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LAVA Therapeutics N.V.

Condensed Consolidated Interim Statements of Cash Flows

(in thousands) (unaudited)

Six Months Ended June 30, 

    

Notes

    

2022

    

2021

Cash flows from operating activities:

 

  

 

  

 

  

Loss before income tax

 

  

$

(17,773)

$

(27,147)

Adjusted for:

 

  

 

  

 

Depreciation and amortization of non-current assets

 

  

 

210

 

148

Foreign currency exchange (gain) loss, net

 

  

 

(4,248)

 

922

Depreciation and amortization of right-of-use assets

 

 

132

 

115

Share-based compensation expense

 

9

 

2,426

 

1,665

Income tax expense

 

  

 

(135)

 

(56)

Amortization of premium on investments

239

Changes in working capital:

 

  

 

  

 

Receivables and other

 

 

(162)

 

712

VAT receivable

 

  

 

62

 

20

Prepaid expenses and other assets

 

 

1,663

 

(4,835)

Trade accounts payable and other

 

 

238

 

1,232

Deferred offering & financing costs

(122)

1,623

Deferred revenue

 

6

 

(1,490)

 

(2,189)

License liabilities

 

  

 

(806)

 

14,448

Other liabilities

 

 

2,417

 

307

Net cash used in operating activities

 

  

 

(17,348)

 

(13,034)

Cash flows from investing activities:

 

  

 

  

 

  

Purchases of property and equipment

 

 

(347)

 

(174)

Purchases of investments

 

(38,611)

 

Maturities of investments

 

  

 

45,860

 

Net cash provided by (used in) investing activities

 

  

 

6,902

 

(174)

Cash flows from financing activities:

 

  

 

  

 

  

Proceeds from option exercises

15

Proceeds from common shares from initial public offering, net

 

1.4

 

 

94,189

Proceeds from Series C financing, net

 

  

 

 

61,798

Payment of Series A preferred and common shares repurchased

 

  

 

 

(5,167)

Proceeds from borrowings

 

 

410

 

394

Payment of principal portion of lease liabilities

 

  

 

(119)

 

(108)

Net cash provided by financing activities

 

  

 

306

151,105

Net (decrease) increase in cash and cash equivalents

 

  

 

(10,140)

 

137,897

Cash and cash equivalents at the beginning of period

 

90,869

15,818

Effects of exchange rate changes

 

  

 

(4,862)

 

(1,038)

Cash and cash equivalents at end of period

 

$

75,867

$

152,677

Supplemental schedule of noncash operating and financing activities:

 

  

 

 

  

Issuance of 235,664 common shares to VUmc in lieu of payment for license liabilities

$

$

3,569

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

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LAVA Therapeutics N.V.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

Note 1—General Information

LAVA Therapeutics N.V., together with its subsidiary, is a clinical-stage immuno-oncology company utilizing its proprietary Gammabody™ platform to develop a portfolio of bispecific gamma delta T cell engagers for the potential treatment of solid tumors and hematological malignancies. The company’s innovative approach utilizes bispecific antibodies engineered to selectively kill cancer cells via the triggering of Vγ9Vδ2 T cell antitumor effector functions upon cross-linking to tumor-associated antigens. LAVA Therapeutics N.V. was incorporated in 2016 and is headquartered in Utrecht, the Netherlands. Unless the context otherwise requires, references to the “Company,” “we,” “us” and “our” refer to LAVA Therapeutics N.V. and its subsidiary.

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 Company’s common shares are listed for trading under the symbol “LVTX” on The Nasdaq Global Select Market.

The Audit Committee of the Company’s Board of Directors approved these unaudited condensed consolidated interim financial statements on September 12, 2022.

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, 2021 and 2020 and accompanying notes, which have been prepared in accordance with IFRS as issued by the International Accounting Standards Board.

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, 2021 and 2020.

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. The interim financial data as of June 30, 2022 and for the three and six months ended June 30, 2022 and 2021 are unaudited. In the opinion of management, the interim financial data includes all adjustments, consisting only of normal recurring adjustments, necessary to a fair statement of the results for the interim periods.

Revision of immaterial misstatements

During the period ended June 30, 2022, the Company identified misstatements in its accounting for foreign currency translations in the condensed consolidated interim financial statements as of and for the three and six months ended June 30, 2021. Management evaluated the misstatements and concluded that they were immaterial, either individually or in the aggregate, to its current or previously issued consolidated

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financial statements. As a result, certain comparative amounts in the condensed consolidated interim statements of loss and comprehensive loss, financial position, changes in equity and cash flows have been revised to correct for such immaterial misstatements with respect to foreign currency translations. Such revisions and their impact are disclosed more fully in Note 11, “Revision of Immaterial Misstatements.”

Going concern

These condensed consolidated interim financial statements have been prepared by management on the assumption that the Company will be able to continue as a going concern, which presumes that the Company will, for the foreseeable future, be able to realize its assets and discharge its liabilities in the normal course of business.

Through June 30, 2022, the Company has funded its operations with proceeds from sales of equity financings, collaboration and licensing agreements, government grants and borrowings under various agreements. Since its inception, the Company has incurred recurring net losses. The Dutch Research and Development Act (WBSO) provides compensation for a part of research and development wages and other costs through a reduction in payroll taxes. WBSO grant amounts are offset against wages and salaries and included in research and development expenses in the consolidated statements of loss and comprehensive loss.

As of June 30, 2022, the Company had an accumulated deficit of $94.5 million. The Company expects to continue to generate operating losses in the foreseeable future. The Company expects that its cash, cash equivalents and investments of $110.7 million as of June 30, 2022 will be sufficient to fund its operating expenses and capital expenditure requirements for at least twelve months following the issuance of these financial statements. Accordingly, the condensed consolidated interim financial statements have been prepared on a going concern basis.

Until we can generate sufficient product revenue to finance our cash requirements, which we may never do, we expect to finance our future cash needs through a combination of public or private equity offerings, debt financings, collaborations, strategic alliances, licensing arrangements and other marketing or distribution arrangements. Disruptions in the financial markets in general may make equity and debt financing more difficult to obtain and may have a material adverse effect on our ability to meet our fundraising needs. If we are unable to obtain sufficient funding in a timely manner or on commercially acceptable terms, we may have to delay, reduce the scope of, or eliminate one or more of our operating activities, and consider other cost reduction initiatives, such as downsizing our operations or withholding initiation or expansion of clinical trials or research. In addition, in the event we are not able to generate sufficient funds, we may be unable to continue as a going concern and our business, financial condition and/or results of operations could be materially and adversely affected and could reduce the price of our common shares and we may ultimately go into insolvency. In addition, any perceived or actual inability by us to finance our clinical development activities and other business activities may cause the market price of our common shares to decline.

COVID-19

In March 2020, the COVID-19 virus caused a worldwide pandemic. Although the short- and long-term effects of this pandemic are unknown, the Company’s business operations have been impacted by the pandemic. To date these impacts have not been significant to our operations. These have, or may in the future, impact:

availability of supplies and equipment for our laboratories;
availability of staff;
start dates and recruitment in our clinical trials due to risks of opening and available resources at clinical sites;
availability of study drug; and

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fundraising and access to the capital markets.

Management closely monitors the situation and, to its best ability, is focusing on mitigating measures and contingency plans to limit and prevent any potential impact on our business operations as much as possible.

Our financial condition and results of operations are most affected by our capital resources, continued research and development expenses and general and administrative expenses. Although the COVID-19 pandemic has impacted the timing of onboarding investigational sites and enrolling patients in our ongoing Phase 1/2a clinical trial for LAVA-051 and LAVA-1207, to date we have not experienced any material business disruption or impact to our condensed consolidated financial statements as a result of the COVID-19 pandemic.

Cash and cash equivalents

Cash and cash equivalents in the condensed consolidated interim statements of financial position are 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 investments) is to preserve principal, achieve liquidity requirements, safeguard funds and optimize investment performance. 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 money market funds. Investments include United States (U.S.) Treasury bills and agency debt obligations, securities issued by public corporations and Dutch, European Union, and other municipal debt obligations. 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.

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.

Investments

As of June 30, 2022, we have determined that we have the intent and ability to hold all investments in debt securities until maturity. Accordingly, all investments are recorded at amortized cost on our condensed consolidated interim statements of financial position, with the amortization of bond premiums or discounts and earned interest income recorded in our condensed consolidated interim statements of loss.

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.

Financial instruments

(i)Financial assets

The Company’s financial assets are comprised of cash and cash equivalents, investments, trade and other receivables, security deposits and other current and non-current assets. All financial assets are recognized initially at fair value plus transaction costs that are attributable to the acquisition of the financial asset. Purchases and sales of financial assets are recognized on the settlement date; the date that the Company receives or delivers the asset. The Company classifies its financial assets primarily as cash and cash equivalents and receivables. Receivables are non-derivative financial assets, with fixed or determinable payments that are not quoted in an active market. They are included in current assets.

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Financial assets are derecognized when the rights to receive cash flows from the asset have expired, or the Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full.

(ii)Financial liabilities

The Company’s financial liabilities are comprised of trade and other payables, lease liabilities, and borrowings. All financial liabilities are recognized initially at fair value.

After initial recognition, borrowings are subsequently measured at amortized cost using the effective interest method. The effective interest method amortization is included in finance costs in the consolidated statements of loss and other comprehensive loss.

Payables and borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

Financial liabilities are derecognized when the obligation under the liability is discharged, canceled, or expires.

(iii)Fair value measurements

The Company does not hold any financial assets and financial liabilities other than those measured at amortized cost. Management assessed that the carrying values of the Company’s financial assets and financial liabilities measured at amortized cost are a reasonable approximation of their fair values.

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 which 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 six months of 2022 or 2021, due to conditions that existed as of December 31, 2021 or 2020, respectively. Additionally, there have been no changes to the application of significant accounting estimates, and no impairment losses have been recognized during the first six months of 2022 or 2021.

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, 2021 and 2020.

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Note 4—Equity

On March 29, 2021, the Company completed an initial public offering (IPO) of common shares in the U.S. pursuant to its registration statement on Form F-1, as amended (File No. 333-253795). Pursuant to the registration statement, the Company issued and sold 6,700,000 shares of $0.14 par value common stock at a price of $15.00 per share. Net proceeds from the IPO were approximately $88.7 million after deducting underwriting discounts and commissions of $7.0 million and offering costs of $4.5 million.

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.

In March 2021, the Company also received $56.6 million in proceeds from the Series C financing, net of repurchasing Series A Preferred shares and common shares. Prior to the IPO in March 2021, all outstanding series of preferred shares were converted to common shares.

The share capital of LAVA Therapeutics N.V. consisted of 25,797,735 outstanding common shares at a nominal value of $0.14 per share as of June 30, 2022.

Note 5—License Liabilities

On February 25, 2021, the license and assignment agreement with Stichting VUmc (VUmc) was restated, due to the Company’s IPO which triggered a $12.5 million payment (VUmc payment). The VUmc payment was calculated as the following:

The Company shall issue common shares equal to $3.1 million divided by the IPO price and pay $0.2 million in cash, which was executed and paid in 2021; and
On each of the first and second anniversary of the IPO, the Company shall pay $4.6 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 IPO.

The first of the $4.6 million payments became due to VUmc in March 2022 and will be settled through the issuance of 491,352 shares of common stock and $2.3 million in cash, that was paid in August 2022. The VUmc IPO anniversary payments are classified as a current liability in the unaudited condensed consolidated interim statements of financial position as of June 30, 2022.

Note 6—Revenue

Research and License Revenue

In May 2020, the Company entered into a research collaboration and license agreement (Janssen Agreement) with Janssen Biotech, Inc. (Janssen). As part of the Janssen Agreement, the Company received a non-refundable upfront payment of $8.0 million, which is being recognized on a straight-line basis over the two-year term of the research activities under the agreement. Revenues for the three months ended June 30, 2022 and 2021 were $0.5 million and $1.1 million, respectively. Revenues for the six months ended June 30, 2022 and 2021 were $1.5 million and $2.2 million, respectively. All revenues are related to the upfront payment. The straight-line method of recognition materially approximates the cost to cost method of revenue recognition. As of June 30, 2022, we had no remaining unearned income related to this payment. Revenue for the three and six months ended June 30, 2021 have been revised for certain immaterial misstatements relating to foreign currency translation. Further information regarding the misstatements and related revision is included in Note 11 - Revision of Immaterial Misstatements.

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Note 7—Research and Development Expenses

Research and development expenses were as follows:

Three Months Ended June 30, 

Six Months Ended June 30, 

(in thousands)

    

2022

    

2021

    

2022

    

2021

  

Pre-clinical and clinical trial expenses

$

5,474

$

2,670

$

9,983

$

5,458

Personnel-related expenses

1,498

1,247

2,940

2,217

Research and development activities expenses

 

505

 

491

 

1,031

 

749

Share-based compensation expense

494

229

1,278

364

Facilities and other research and development expenses

 

371

 

259

 

712

 

477

VUmc license expenses

 

 

 

 

14,342

$

8,342

$

4,896

$

15,944

$

23,607

Note 8—General and Administrative Expenses

General and administrative expenses were as follows:

Three Months Ended June 30, 

Six Months Ended June 30, 

(in thousands)

    

2022

    

2021

    

2022

    

2021

  

Personnel-related expenses

$

1,604

$

731

$

2,944

$

1,375

Professional and consultant fees

 

1,000

 

503

 

1,734

 

990

Insurance, facilities, fees and other related costs

 

713

 

735

 

1,488

 

825

Share-based compensation expense

(301)

795

1,148

1,301

$

3,016

$

2,764

$

7,314

$

4,491

Note 9—Share-based Awards

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 Long-Term Incentive Option Plan (the Plan) for all its employees, members of the Board of Directors and select external consultants.

Stock Options

There were 3,498,174 stock options outstanding as of June 30, 2022, at a weighted-average exercise price of $4.48 per share. During the six months ended June 30, 2022, 450,208 options were granted to employees at a weighted-average exercise price of $5.36 per share. During the six months ended June 30, 2022, 22,197 stock options were exercised and 420,470 stock options were forfeited at a weighted-average exercise price of $0.76 and $9.14 per share, respectively.

Total compensation cost recognized for all stock option awards was as follows:

Three Months Ended June 30, 

Six Months Ended June 30, 

(in thousands)

    

2022

    

2021

    

2022

    

2021

Research and development

$

494

$

229

$

1,278

$

364

General and administrative

 

(301)

 

795

 

1,148

 

1,301

$

193

$

1,024

$

2,426

$

1,665

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 current quarter:

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June 30, 2022

Expected annual average volatility

    

83,43%

Expected life, years

 

6,08

Dividend yield

 

Risk-free interest rate

 

1.65% - 2.86%

Weighted average grant date fair value

 

$

3,82

The Company estimates volatility based on the historical volatility of its peer group. The unrecognized remaining stock-based compensation balance for shares issued from all option plans was approximately $3.9 million as of June 30, 2022, which is expected to amortize over a weighted-average 0.96 years.

Note 10—Investments

Our investments in debt securities consist of investments in highly-rated corporate bonds and U.S. Treasury securities, with maturities ranging from three months to one year. All of these investments are classified as held to maturity and recorded in current assets on our condensed consolidated interim statements of financial position at amortized cost. As of June 30, 2022, the carrying value of our investments each were $34.8 million, which approximates fair value.

All investments in corporate debt securities have investment-grade credit quality indicators as published by Moody’s and Standard & Poor’s (S&P). As of June 30, 2022, our investments in debt securities had credit quality indicators ranging from A3 – AAA as published by Moody’s, and A- – AAA as published by S&P. U.S. Treasury securities are backed by the U.S. government. Given the high quality ratings of these investments in debt securities, we have not recorded an allowance for credit losses as of June 30, 2022.

Note 11 – Revision of Immaterial Misstatements

In connection with the preparation and review of the Company's condensed consolidated interim financial statements for the three and six months ended June 30, 2022 and 2021, management identified certain immaterial misstatements in our historical financial statements primarily related to the accounting for foreign currency exchange gains and losses associated with cash balances held in USD at LAVA Therapeutics, N.V. with a functional currency of Euro. We incorrectly computed and recorded the foreign exchange gain (loss) from our USD cash account in a Euro functional entity as foreign currency translation adjustment instead of foreign currency gain (loss). We also previously reported research and license revenue at the incorrect exchange rate. In accordance with the guidance set forth in Securities and Exchange Commission (SEC) Staff Accounting Bulletin (SAB) 99, Materiality, and SEC SAB 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financials, the Company concluded these misstatements were not material to the previously issued condensed consolidated interim financial statements. We are revising our historical financial statements to revise the immaterial misstatements.

The revision for the foreign currency exchange misstatements did not have an impact on comprehensive loss or total equity as of and for the three and six months ended March 31, 2022, or any prior periods. As a result of these immaterial misstatements, net loss for the three and six months ended June 30, 2021 were understated by $1.1 million and $0.5 million, respectively, and research and license revenue for the three and six months ended June 30, 2021 was understated by $0.1 million and $0.2 million, respectively. In addition to the revisions relating to foreign currency translation, the revisions also reflect the previously identified reclassification of insurance from research and development expenses to administrative expenses of $0.6 million for both the three and six months ended June 30, 2021.

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In the Condensed Consolidated Interim Statement of Loss and Comprehensive Loss, we have revised the following:

    

    

Three Months Ended

    

Six Months Ended

June 30, 2021

June 30, 2021

    

    

As reported

Adjustment

    

As revised

    

As reported

Adjustment

    

As revised

(in thousands)

 

 

  

 

  

 

  

 

  

Research and license revenue

 

$

1,000

$

80

$

1,080