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 August 2023

(Commission File No. 001-40241)


LAVA Therapeutics N.V.

(Translation of registrant’s name into English)


Yalelaan 62

3584 CM Utrecht, The Netherlands

(Address of principal executive office)


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

Form 20-F   Form 40-F  


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such registration statements) and to be a part thereof from the date on which this report is filed, to the extent not superseded by documents or reports subsequently filed or furnished.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 (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 List

Exhibit

    

Description

99.1

Unaudited Condensed Consolidated Interim Financial Statements as of and for the Three and Six Months Ended June 30, 2023 and 2022

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, 2023 and 2022

99.3

Press Release dated August 22, 2023


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

LAVA Therapeutics, N.V.

(Registrant)

Date: August 22, 2023

By:

/s/ Fred Powell

Fred Powell

Chief Financial Officer


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 Condensed Consolidated Interim Financial Statements (unaudited)

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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

    

2023

    

2022

    

2023

    

2022

Revenue from contracts with customers

 

6

$

5,139

$

468

$

6,363

$

1,490

Cost of sales of goods

6

(2,361)

(2,546)

Cost of providing services

6

(27)

(772)

Gross profit

 

2,751

 

468

 

3,045

 

1,490

Operating expenses:

 

  

 

  

 

  

 

  

 

  

Research and development

 

7

 

(12,599)

 

(8,371)

 

(22,542)

 

(15,868)

General and administrative

 

8

 

(3,697)

 

(3,173)

 

(7,587)

 

(7,410)

Total operating expenses

 

  

 

(16,296)

 

(11,544)

 

(30,129)

 

(23,278)

Operating loss

 

  

 

(13,545)

 

(11,076)

 

(27,084)

 

(21,788)

Interest income (expense), net

 

 

698

 

(90)

 

1,315

 

(253)

Foreign currency exchange gain (loss), net

 

 

244

 

3,136

 

(703)

 

4,248

Total non-operating income

 

  

 

942

 

3,046

 

612

 

3,995

Loss before income tax

 

  

 

(12,603)

 

(8,030)

 

(26,472)

 

(17,793)

Income tax expense

 

 

(97)

 

(76)

 

(168)

 

(135)

Loss for the period

 

  

$

(12,700)

$

(8,106)

$

(26,640)

$

(17,928)

Items that may be reclassified to profit or loss

Foreign currency translation adjustment

 

 

(243)

 

(6,659)

 

1,303

 

(8,862)

Total comprehensive loss

 

  

$

(12,943)

$

(14,765)

$

(25,337)

$

(26,790)

Loss per share:

 

  

 

  

 

  

 

  

 

  

Loss per share, basic and diluted

$

(0.48)

$

(0.31)

$

(1.01)

$

(0.70)

Weighted-average common shares outstanding, basic and diluted

 

26,289,087

 

25,780,811

 

26,289,087

 

25,778,190

The accompanying notes are an integral part of the unaudited 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

    

2023

    

2022

Assets

 

  

 

  

 

  

Non-current assets:

 

  

 

  

 

  

Property and equipment, net

 

$

1,905

$

1,432

Right-of-use assets

 

 

1,771

 

651

Other non-current assets and security deposits

 

 

346

 

809

Total non-current assets

 

 

4,022

 

2,892

Current assets:

 

 

  

 

  

Receivables and other

 

 

3,994

 

3,254

Prepaid expenses and other current assets

 

 

1,738

 

4,411

VAT receivable

 

 

383

 

Investments

10

24,797

32,535

Cash and cash equivalents

 

 

87,607

 

100,333

Total current assets

 

 

118,519

 

140,533

Total assets

 

$

122,541

$

143,425

Equity and Liabilities

 

 

  

 

  

Equity:

 

 

  

 

  

Share capital

 

4

$

3,715

$

3,715

Equity-settled employee benefits reserve

 

9

 

12,132

 

8,942

Foreign currency translation reserve

 

 

(11,669)

 

(12,972)

Additional paid-in capital

 

 

194,424

 

194,424

Accumulated deficit

 

 

(134,709)

 

(108,069)

Total equity

 

 

63,893

 

86,040

Non-current liabilities:

 

 

  

 

  

Deferred revenue

 

6

 

35,000

 

35,000

Lease liabilities

 

 

1,316

 

431

Total non-current liabilities

 

 

36,316

 

35,431

Current liabilities:

 

 

  

 

  

Trade payables and other

 

 

5,067

 

3,965

VAT payable

45

Borrowings

4,954

4,640

Lease liabilities

 

 

682

 

379

License liabilities

 

5

 

 

4,732

Accrued expenses and other current liabilities

 

11

 

11,629

 

8,193

Total current liabilities

 

 

22,332

 

21,954

Total liabilities

 

  

 

58,648

 

57,385

Total equity and liabilities

 

  

$

122,541

$

143,425

The accompanying notes are an integral part of the unaudited 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, 2023

 

  

 

26,289,087

$

3,715

$

10,572

$

(11,426)

$

194,424

$

(122,009)

$

75,276

Loss for the period

 

  

 

 

 

 

 

 

(12,700)

 

(12,700)

Foreign currency translation adjustment

 

  

 

 

 

 

(243)

 

 

 

(243)

Share-based compensation expense

 

9

 

 

 

1,560

 

 

 

 

1,560

Balance at June 30, 2023

 

  

 

26,289,087

$

3,715

$

12,132

$

(11,669)

$

194,424

$

(134,709)

$

63,893

Equity-

settled

Foreign

employee

currency

Common

Share

benefits

translation

Accumulated

   

Note

   

shares

   

capital

   

reserves

   

reserve

   

APIC

   

deficit

   

Total

Balance at January 1, 2023

 

  

 

26,289,087

 

$

3,715

$

8,942

 

$

(12,972)

$

194,424

$

(108,069)

$

86,040

Loss for the period

 

  

 

 

 

 

 

(26,640)

 

(26,640)

Foreign currency translation adjustment

 

  

 

1,303

 

1,303

Share-based compensation expense

 

9

 

3,190

 

3,190

Balance at June 30, 2023

 

  

 

26,289,087

$

3,715

$

12,132

$

(11,669)

$

194,424

$

(134,709)

$

63,893

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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

$

6,897

 

$

(8,426)

 

$

192,270

$

(85,984)

$

108,410

Loss for the period

 

  

 

 

 

 

 

 

(8,106)

 

(8,106)

Option Exercise

22,197

3

12

15

Foreign currency translation adjustment

 

 

 

 

(6,659)

 

 

 

(6,659)

Share-based compensation expense

9

 

 

 

378

 

 

 

 

378

Balance at June 30, 2022

 

  

 

25,797,735

 

$

3,656

$

7,275

 

$

(15,085)

 

$

192,282

$

(94,090)

$

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

$

4,829

$

(6,223)

$

192,270

$

(76,162)

$

118,367

Loss for the period

 

  

 

 

 

 

 

 

(17,928)

 

(17,928)

Option Exercise

22,197

3

12

15

Foreign currency translation adjustment

 

 

 

 

(8,862)

 

 

 

(8,862)

Share-based compensation expense

9

 

 

 

2,446

 

 

 

 

2,446

Balance at June 30, 2022

 

  

 

25,797,735

 

$

3,656

$

7,275

 

$

(15,085)

 

$

192,282

$

(94,090)

$

94,038

The accompanying notes are an integral part of the unaudited 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

    

2023

    

2022

Cash flows from operating activities:

 

  

 

  

 

  

Loss before income tax

 

  

$

(26,472)

$

(17,793)

Adjusted for:

 

  

 

  

 

Depreciation and amortization of non-current assets

 

  

 

281

 

210

Foreign currency exchange loss (gain), net

 

  

 

703

 

(4,248)

Depreciation of right-of-use assets

327

132

Share-based compensation expense

 

9

 

3,190

 

2,446

Income tax expense

 

  

 

(168)

 

(135)

Amortization of premium on investments

(888)

239

Changes in working capital:

 

  

 

 

Receivables and other

 

 

(683)

 

(162)

VAT payable

 

  

 

(427)

 

62

Prepaid expenses and other assets

 

 

3,212

 

1,663

Trade accounts payable and other

 

 

1,032

 

238

Deferred offering & financing costs

(122)

Deferred revenue

 

6

 

 

(1,490)

License liabilities

 

  

 

(4,795)

 

(806)

Other liabilities

 

 

3,288

 

2,418

Net cash used in operating activities

 

  

 

(21,400)

 

(17,348)

Cash flows from investing activities:

 

  

 

  

 

  

Purchases of property and equipment

 

 

(724)

 

(347)

Purchases of investments

 

(24,552)

 

(38,611)

Maturities of investments

 

  

 

33,177

 

45,860

Net cash provided by investing activities

 

  

 

7,901

 

6,902

Cash flows from financing activities:

 

  

 

  

 

  

Proceeds from option exercises

15

Proceeds from borrowings

 

 

235

 

410

Payment of principal portion of lease liabilities

 

  

 

(489)

 

(119)

Net cash (used in) provided by financing activities

 

  

 

(254)

306

Net decrease in cash and cash equivalents

 

  

 

(13,753)

 

(10,140)

Cash and cash equivalents at beginning of period

 

100,333

90,869

Effects of exchange rate changes on cash and cash equivalents

 

  

 

1,027

 

(4,862)

Cash and cash equivalents at end of period

 

$

87,607

$

75,867

The accompanying notes are an integral part of the unaudited 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 focused on developing its proprietary Gammabody® platform of bispecific gamma-delta T cell engagers to transform the treatment of cancer. Using its Gammabody platform, the Company is developing a portfolio of novel bispecific antibodies designed to engage and leverage the potency and precision of gamma-delta (gd) T cells to elicit a robust, anti-tumor immune response and improve outcomes for cancer patients. 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 converted from “LAVA Therapeutics, B.V.” to “LAVA Therapeutics N.V.” The address of the Company’s registered office is Yalelaan 62, 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 August 16, 2023.

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” as issued by the International Accounting Standards Board. 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 year ended December 31, 2022 and accompanying notes, which have been prepared in accordance with IFRS as issued by the International Accounting Standards Board and are included on Form 20-F filed by the Company on April 14, 2023.

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, 2022 and 2021, included on Form 20-F filed by the Company on April 14, 2023.

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, 2023 and 2022, and for the three and six months ended June 30, 2023 and 2022 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.

License Revenue

We may enter into collaboration and licensing arrangements for research and development, manufacturing, and commercialization activities with counterparties for the development and

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commercialization of our product candidates. These arrangements may contain multiple components, such as (i) licenses, (ii) research and development activities, and (iii) the manufacturing of certain material. Payments pursuant to these arrangements may include non-refundable and refundable payments, payments upon the achievement of significant regulatory, development and commercial milestones, sales of product at certain agreed-upon amounts, and royalties on product sales.

In determining the appropriate amount of revenue to be recognized as we fulfill our obligations under a collaboration agreement, we perform the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations, including whether they are capable of being distinct; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue as we satisfy each performance obligation.

We must develop estimates and assumptions that require judgment to determine the underlying stand-alone selling price for each performance obligation, which determines how the transaction price is allocated among the performance obligations. The estimation of the stand-alone selling price may include such estimates as forecasted revenues and costs, development timelines, discount rates and probabilities of regulatory and commercial success. We also apply significant judgment when evaluating whether contractual obligations represent distinct performance obligations, allocating transaction price to performance obligations within a contract, determining when performance obligations have been met, assessing the recognition and future reversal of variable consideration and determining and applying appropriate methods of measuring progress for performance obligations satisfied over time.

Revision of immaterial misstatements

During the year ended December 31, 2022, the Company identified misstatements in its historical accounting for share-based compensation expenses in the condensed consolidated interim financial statements for certain prior periods. Management evaluated the misstatements and concluded that they were immaterial, either individually or in the aggregate, to its current or previously issued consolidated financial statements. As a result, certain comparative amounts in the consolidated statements of profit and loss and comprehensive profit and loss, financial position, changes in equity and cash flows have been revised to correct for such immaterial misstatements with respect to share-based compensation expenses. Such revisions and their impact are disclosed more fully in Note 12, “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 at least the next 12 months, be able to realize its assets and discharge its liabilities in the normal course of business.

Through June 30, 2023, the Company has funded its operations with proceeds from sales of equity, 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 condensed consolidated interim statements of profit and loss and comprehensive profit and loss.

As of June 30, 2023, the Company had an accumulated deficit of $134.7 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 $112.4 million as of June 30, 2023 will be sufficient to fund its operating expenses and capital expenditure requirements for at least 12 months following the issuance of these

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condensed consolidated interim 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.

Cash and cash equivalents

Cash and cash equivalents in the condensed consolidated interim statements of financial position are comprised of cash at banks and short-term deposits with a maturity of three months or less, which are subject to an insignificant risk of changes in value. Our cash and cash equivalents are held in multiple currencies, primarily in the Euro and United States (U.S.) dollar. Accordingly, our cash balances may be exposed to foreign currency exchange risk.

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, 2023, 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 profit and loss.

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. These financial assets are subsequently measured at amortized cost, which is, in general, equal to the fair value. 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, investments 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.

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

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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, adjusted for transaction costs.

After initial recognition, borrowings are subsequently measured at amortized cost using the effective interest method, minus transaction costs that are directly attributable to the financial liability. The effective interest method amortization is included in finance costs in the condensed consolidated interim statements of profit and loss and other comprehensive profit and 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.

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 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, accruals for clinical trial expenses, 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 2023 or 2022, due to conditions that existed as of December 31, 2022 or 2021, 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 2023 or 2022.

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, 2022 and 2021.

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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 shares 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 26,289,087 issued and outstanding common shares at a nominal value of $0.14 per share as of June 30, 2023.

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 $13.1 million payment (VUmc payment). The VUmc payment was calculated as the following:

The Company shall issue common shares equal to $3.3 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 $4.8 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 $4.8 million payments became due to VUmc in March 2022 and was settled through the issuance of 491,352 shares of common stock and $2.4 million in cash in August 2022. The second VUmc IPO anniversary payment became due in March 2023 and payment was made in cash in May 2023. As of June 30, 2023 the Company has no further obligations to VUmc.

Note 6—Revenue and cost of sales

Seagen Agreement

In September 2022, the Company entered into an exclusive worldwide license agreement with Seagen, Inc. (Seagen Agreement) to develop, manufacture and commercialize SGN-EGFRd2 (LAVA-1223), an advanced preclinical asset that utilizes LAVA’s proprietary Gammabody technology to target EGFR-expressing solid tumors. Under the terms of the Seagen agreement, the Company received a $50.0 million nonrefundable upfront payment in October 2022 and could receive up to approximately $650.0 million in potential development, regulatory and commercial milestones, and royalties ranging from high single-digit to mid-teen percentages on future sales, within a range of less than 10%. The Seagen agreement also provides Seagen with the opportunity to exclusively negotiate rights to apply LAVA's proprietary Gammabody platform on up to two additional tumor targets.

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The Company is entitled to receive tiered royalties based on commercial sales levels from mid-single to double digit percentages of net sales of licensed products. Seagen has also granted us a one-time option to obtain increased royalties if the Company exercises a buy-up option within a certain amount of time from certain key early clinical data becoming available for the first licensed product. The Company has a specified period of time after notice of such buy-up option to pay Seagen a one-time fee of $35.0 million (buy-up fee). In the event the Company exercises the buy-up option and pays the buy-up fee, it is entitled to receive increased future royalty percentages to a range of low double-digit to high mid-teen percentages on future sales, within a range of less than 10%, and certain future milestones will be decreased by 30%.

Royalties are payable on a licensed product-by-licensed product and country-by-country basis beginning with the first commercial sale of such licensed product in such country of sale and expiring ten years after such sale, subject to specified and capped reductions for the market entry of biosimilar products, loss of patent coverage of licensed products, and for payments owed to third parties for additional rights necessary to commercialize licensed products in the territory.

Under the Seagen Agreement, the Company is also entitled to receive reimbursement of up to $6.5 million for certain agreed to research, manufacturing and supply activities, as well as the transfer of all manufacturing-related know-how and materials, including all CMC documentation, data and processes, to enable the manufacture of licensed compounds and products by Seagen. As of June 30, 2023 a cumulative total of $6.1 million reimbursement revenue was recognized.

The Company determined that the Seagen Agreement and the research, manufacturing and supply activities and materials transfer fall within the scope of IFRS 15, Revenue from Contracts with Customers (IFRS 15). In calculating the transaction price, the Company determined the following four performance obligations under the agreement: (i) provide exclusive license; (ii) provide manufacturing technology transfer activities; (iii) provide initial drug supply; and (iv) research activities, including data and support for regulatory submission.

For the three and six months ended June 30, 2023, no changes were made to the allocation of performance obligations to the purchase price. The Company allocated the transaction price to the performance obligations as of June 30, 2023 as follows:

Revenue Recognized

Revenue Recognized

Cumulative

Transaction

for the three months

for the six months

Revenue Recognized

(in thousands)

    

Price

    

ended June 30, 2023

    

ended June 30, 2023

    

as of June 30, 2023

License

$

50,000

$

$

$

15,165

Manufacturing technology transfer activities

2,167

37

100

2,173

Initial supply

3,583

2,350

3,274

3,274

Research activities

750

10

21

684

Buy-up fee (*)

(35,000)

$

21,500

$

2,397

$

3,395

$

21,296

(*) Buy-up fee remains deferred until option expires or is exercised

No revenue or contract asset was recognized for the three and six months ended June 30, 2022 as the Seagen Agreement was not signed until September 2022. The initial supply revenue recognized during the three and six months ended June 30, 2023 primarily relates to the cost of drug supply provided to Seagen.

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Janssen Agreement

Upfront payment

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 was 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, 2023 and 2022 were zero and $0.5 million, respectively. Revenues for the six months ended June 30, 2023 and 2022 were zero and $1.5 million, respectively. These revenues were only related to the straight-line recognition of the upfront payment. The straight-line method of recognition materially approximates the cost to cost method of revenue recognition. As of June 30, 2023, the Company had no remaining deferred revenue related to this payment.

Milestone payment

In May 2023, a milestone payment of $2.5 million from Janssen was triggered under the terms of the Janssen Agreement following the selection of a candidate novel bispecific antibody to engage gamma-delta T cells to an undisclosed tumor associated antigen for the treatment of cancer. Efforts are underway to advance the candidate towards the clinic. This milestone payment was recognized as revenue in the three months ended June 30, 2023 and the payment of the $2.5 million milestone was received in July 2023. No milestone revenue was recognized in the three and six months ended June 20, 2022.

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)

    

2023

    

2022

    

2023

    

2022

  

Pre-clinical and clinical trial expenses

$

9,086

$

5,474

$

15,643

$

9,983

Personnel-related expenses

1,877

1,498

3,584

2,940

Share-based compensation expense

647

523

1,123

1,202

Facilities and other research and development expenses

 

526

 

371

 

1,220

 

712

Research and development activities expenses

 

463

 

505

 

972

 

1,031

$

12,599

$

8,371

$

22,542

$

15,868

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)

    

2023

    

2022

    

2023

    

2022

Personnel-related expenses

$

1,125

$

1,604

$

2,190

$

2,944

Professional and consultant fees

 

1,002

 

1,001

 

1,780

 

1,734

Share-based compensation expense

913

(145)

2,066

1,244

Insurance, facilities, fees and other related costs

 

657

 

713

 

1,551

 

1,488

$

3,697

$

3,173

$

7,587

$

7,410

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.

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Stock Options

There were 5,632,341 stock options outstanding as of June 30, 2023, at a weighted-average exercise price of $3.91 per share. During the three months ended June 30, 2023, 125,000 options were granted to employees at a weighted-average exercise price of $1.90 per share.

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

Three Months Ended June 30, 

Six Months Ended June 30, 

(in thousands)

    

2023

    

2022

    

2023

    

2022

Research and development

$

647

$

523

$

1,124

$

1,202

General and administrative

 

913

 

(145)

 

2,066

 

1,244

$

1,560

$

378

$

3,190

$

2,446

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:

    

June 30, 2023

Expected annual average volatility

    

88.3%

Expected life, years

 

6.08

Fair value of the common share

$

1.42 - 2.92

Exercise price

$

1.90 - 3.86

Dividend yield

 

Risk-free interest rate

 

3.46% - 4.16%

Weighted average grant date fair value

 

$

2.43

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 $6.2 million as of June 30, 2023, which is expected to amortize over a weighted-average 0.94 years.

Note 10—Investments

Our investments in debt securities consist of investments in 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, 2023, the carrying value of our investments were $24.8 million, which approximates fair value. Given the high quality ratings of these investments in debt securities, we have not recorded an allowance for credit losses as of June 30, 2023.

Note 11—Restructuring

In June 2023, we announced that the ongoing clinical trial of LAVA-051 targeting the CD1d-expressing hematological tumors, multiple myeloma (MM), chronic lymphocytic leukemia (CLL), and acute myeloid leukemia, is no longer recruiting and would be discontinued after no patients remain on treatment. LAVA-051 was being evaluated in an open-label, multi-center Phase 1/2a clinical trial in patients with relapsed or refractory CLL and MM to evaluate the safety, tolerability, pharmacokinetics, pharmacodynamics, immunogenicity, and preliminary anti-tumor activity of LAVA-051. The decision to discontinue LAVA-051’s clinical trial follows a recent review of the competitive landscape that has continued to evolve. The decision was not due to safety concerns. As a result, we accrued an estimated amount of $1.4 million for costs associated with the discontinuation of our clinical trial, contract manufacturing and bioanalytical activities for LAVA-051, that is recorded in accrued expenses and other current liabilities on our condensed consolidated

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interim statements of financial position. The Company reviewed the relevant items of its condensed consolidated interim statements of financial position and did not identify any asset that would be subject to impairment as a result of the discontinuation of the clinical trial of LAVA-051.

In August 2023, we finalized a reduction in workforce of approximately 36% in the U.S and the Netherlands to better align the Company’s resources with the Company’s focus on LAVA-1207 and redesigned focus on research and development.  We estimate that the majority of the charges in connection with the reduction, approximately $0.5 million, will be incurred in the third quarter of fiscal year 2023 and that the implementation of headcount reductions, including cash payments, will be substantially completed by the end of 2023.

Note 12 – Revision of Immaterial Misstatements

In connection with the preparation and review of the Company's consolidated interim and year-end financial statements for December 31, 2022, management identified an immaterial misstatement in our historical financial statements related to the accounting for share-based compensation expenses. We incorrectly computed and recorded the share-based compensation expenses due to an error in the calculation of the expense attribution over the vesting period, resulting in an incorrect and accelerated expense being recorded.

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 the misstatement was not material to the previously issued consolidated financial statements. We adjusted our historical financial statements to revise the immaterial misstatement.

The revision for the share-based compensation expense misstatement did not have an impact on total equity as of June 30, 2023, or any prior periods. As a result of the Company’s immaterial misstatement, net loss for the three and six months ended June 30, 2022 were understated by $0.2 million and less than $0.1 million, respectively, and operating expenses for the three and six months ended June 30, 2022 were understated by $0.2 million and less than $0.1 million, respectively.

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

    

    

Three Months Ended

    

Six Months Ended

June 30, 2022

June 30, 2022

    

    

As reported

Adjustment

    

As revised

    

As reported

Adjustment

    

As revised

(in thousands)

 

 

  

 

  

 

  

 

  

Research and development expenses

 

$

(8,342)

$

(29)

$

(8,371)

$

(15,944)

$

76

$

(15,868)

General and administrative expenses

 

$

(3,016)

$

(157)

$

(3,173)

$

(7,314)

$

(96)

$

(7,410)

Total operating expenses

 

$

(11,358)

$

(186)

$

(11,544)

$

(23,258)

$

(20)

$

(23,278)

Operating loss

 

$

(10,890)

$

(186)

$

(11,076)

$

(21,768)

$

(20)

$

(21,788)

Loss before income tax

 

$

(7,844)

$

(186)

$

(8,030)

$

(17,773)

$

(20)

$

(17,793)

Loss for the period

 

$

(7,920)

$

(186)

$

(8,106)

$

(17,908)

$

(20)

$

(17,928)

Total comprehensive loss

 

$

(14,579)

$

(186)

$

(14,765)

$

(26,770)

$

(20)

$

(26,790)

In the Condensed Consolidated Interim Statements of Financial Position and Changes in Equity, we have revised the following:

    

    

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June 30, 2022

    

As reported

Adjustment

    

As revised

(in thousands)

Equity-settled employee benefits reserve

$

7,645

$

(370)

$

7,275

Accumulated deficit

$

(94,460)

$

370

$

(94,090)

Equity:

$

108,410

$

$

108,410

 

 

  

 

  

In the Condensed Consolidated Interim Statements of Cash Flows, we have revised the following:

    

    

Six Months Ended

June 30, 2022

    

    

As reported

Adjustment

    

As revised

(in thousands)

Loss before income tax

$

(17,773)

$

(20)

$

(17,793)

Share-based compensation expense

$

2,426

$

20

$

2,446

Net cash used in operating activities

$

(17,348)

$

$

(17,348)

Note 13 – Subsequent Event

In August 2023, we finalized a reduction in workforce of approximately 36% in the U.S and the Netherlands to better align the Company’s resources with the Company’s focus on LAVA-1207 and redesigned focus on research and development.  We estimate that the majority of the charges in connection with the reduction, approximately $0.5 million, will be incurred in the third quarter of fiscal year 2023 and that the implementation of headcount reductions, including cash payments, will be substantially completed by the end of 2023.

16


Exhibit 99.2

LAVA THERAPEUTICS, N.V.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

You should read the following management’s 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, as well as our audited consolidated financial statements as of, and for the year ended, December 31, 2022, including the notes thereto, included in our annual report on Form 20-F, filed with the Securities and Exchange Commission on April 11, 2023. 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 consolidated financial statements prepared in accordance with International Financial Reporting Standards (IFRS) have been condensed or omitted. Throughout this management’s discussion and analysis, “we,” us,” “our,” “LAVA,” and the “Company” refer to LAVA Therapeutics N.V. and its consolidated subsidiary, unless the context requires otherwise.

Special Note Regarding Forward-Looking Statements

This management’s discussion and analysis contains statements that constitute forward-looking statements. Many of the forward-looking statements contained in this management’s discussion and analysis can be identified by the use of forward-looking words such as “anticipate,” “believe,” “could,” “expect,” “should,” “plan,” “intend,” “estimate” and “potential,” among others. Forward-looking statements appear in several places in this management’s discussion and analysis and include, but are not limited to, statements regarding our intent, belief or current expectations. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. Such statements are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied in the forward-looking statements due to various important factors, including, but not limited to, those identified under the section titled “Risk Factors” in our annual report on Form 20-F. Forward-looking statements include, but are not limited to, statements about:

our operations as a biotechnology company with limited operating history and a history of operating losses;
our plans to develop and commercialize our product candidates;
the initiation, timing, progress and results of our current and future preclinical studies and clinical trials and our research and development programs, including expectations regarding enrollment in clinical trials;
the number of Vγ9Vδ2-T cells available for engagement by LAVA’s product candidates and the ability to increase those cells, including but not limited to the addition of low-dose interleukin-2 (IL2);
our ability to maintain and establish collaborations or obtain additional funding;
our ability to obtain regulatory approval of our current and future product candidates;
our expectations regarding the safety profile of our product candidates, the potential market size and the rate and degree of market acceptance of our product candidates;
our continued reliance on third parties to conduct clinical trials of our product candidates and manufacture our product candidates for preclinical studies and clinical trials;
our ability to fund our working capital requirements and expectations regarding the sufficiency of our capital resources;
the implementation of our business model and strategic plans for our business and product candidates;

our ability to establish sales, marketing and distribution capabilities;
our ability to enter into and maintain collaborations with third parties for the development or commercialization of our product candidates;
our intellectual property position and the duration of our patent rights;