UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

FORM 6-K


Report of Foreign Private
Issuer Pursuant to Rule
13a-16 or 15d-16 of the
Securities Exchange Act
of 1934
 
October 29, 2020
 
Commission File
Number: 001-38283
 

InflaRx N.V.


Winzerlaer Str. 2
07745 Jena,
Germany
(+49) 3641508180
(Address of principal executive offices)

 
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 ☐
 
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): ☐
 
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): ☐
 
INCORPORATION BY REFERENCE
 
Exhibits 99.1 and 99.2 to this Report on Form 6-K shall be deemed to be incorporated by reference into (i) the registration statement on Form S-8 (Registration Number 333-221656) and (ii) the registration statement on Form F-3 (Registration Number 333-239759) of InflaRx N.V. and to be a part thereof from the date on which this report is filed, to the extent not superseded by documents or reports subsequently filed or furnished.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 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “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 or the Exchange Act.
 
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, in the City of Jena, Germany, October 29, 2020.
 
 
INFLARX N.V.
   
 
By:
/s/ Niels Riedemann
 
Name: Niels Riedemann
 
Title:   Chief Executive Officer

EXHIBIT INDEX
 
Exhibit
Description of Exhibit
   
InflaRx N.V. Unaudited Condensed Consolidated Financial Statements as of and for the Three and Nine Months Ended September 30, 2020
   
InflaRx N.V. Management’s Discussion and Analysis of Financial Condition and Results of Operations
   
InflaRx N.V. Press Release, dated October 29, 2020

 
Exhibit 99.1

INFLARX N.V.
 
UNAUDITED CONDENSED CONSOLIDATED
 
FINANCIAL STATEMENTS – SEPTEMBER 30, 2020
 
These unaudited condensed financial statements are consolidated financial statements for the group consisting of InflaRx N.V. and its wholly-owned subsidiaries InflaRx GmbH, Jena, Germany, and InflaRx Pharmaceutical Inc., Ann Arbor, Michigan, United States (together, the “Group”). The financial statements are presented in Euro (€).
 
InflaRx N.V. is a company limited by shares, incorporated and domiciled in Amsterdam, The Netherlands.
Its registered office and principal place of business is in Germany, Jena, Winzerlaer Str. 2.
 
F-1
INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020
 
Unaudited Condensed Consolidated Financial Statements
 
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2020 and 2019
3
Unaudited Condensed Consolidated Statements of Financial Position as of September 30, 2020 and December 31, 2019
4
Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity for the nine months ended September 30, 2020 and 2019
5
Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019
6
Notes to the Unaudited Condensed Consolidated Financial Statements
7
1.
Net Financial Result
7
2.
Other non-financial assets
7
3.
Financial assets and financial liabilities
8
4.
Cash and cash equivalents
8
5.
Equity
9
6.
Share-based payments
9
(a)
Equity settled share-based payment arrangements
9
(b)
Change in the accounting estimate of the share options expected to vest
11
(c)
Share options exercised
11
(d)
Share-based payment expense recognized
11
7.
Protective foundation
11
8.
Contractual Obligations and Commitments
12
9.
Summary of significant accounting policies and other disclosures
12
(a)
Reporting entity and Group’s structure
12
(b)
Basis of preparation
12
(c)
New and amended standards adopted by the Group
13
(d)
Significant events of the quarter and changes in circumstances
13
(e)
Significant events after the reporting date
14


F-2
InflaRx N.V. and subsidiaries
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss
for the three and nine months ended September 30, 2020 and 2019

         
For the three months ended
September 30,
   
For the nine months ended
September 30,
 
(in €, except for share data)
 
Note
   
2020
(unaudited)
   
2019
(unaudited)
   
2020
(unaudited)
   
2019
(unaudited)
 
                               
Operating Expenses
                             
Research and development expenses
         
(5,246,536
)
   
(13,405,646
)
   
(19,901,661
)
   
(33,598,018
)
General and administrative expenses
         
(1,166,070
)
   
(2,490,245
)
   
(6,057,767
)
   
(9,439,080
)
Total Operating Expenses
         
(6,412,606
)
   
(15,895,891
)
   
(25,959,428
)
   
(43,037,098
)
Other income
         
3,471
     
126,559
     
200,763
     
194,261
 
Other expenses
         
(13
)
   
(838
)
   
(9,184
)
   
(83,907
)
Operating Result
         
(6,409,148
)
   
(15,770,170
)
   
(25,767,849
)
   
(42,926,744
)
Finance income
         
1,325,367
     
2,029,992
     
3,593,803
     
4,527,952
 
Finance expenses
         
(1,775,183
)
   
(761,268
)
   
(2,951,147
)
   
(1,211,366
)
Net Financial Result
   
1
     
(449,816
)
   
1,268,725
     
642,656
     
3,316,586
 
Loss for the Period
           
(6,858,964
)
   
(14,501,446
)
   
(25,125,193
)
   
(39,610,157
)
                                         
Share Information
                                       
Weighted average number of shares outstanding
           
27,733,778
     
25,982,754
     
26,674,233
     
25,970,571
 
Loss per share (basic/diluted)
           
(0.25
)
   
(0.56
)
   
(0.94
)
   
(1.53
)
                                         
Loss for the Period
           
(6,858,964
)
   
(14,501,446
)
   
(25,125,193
)
   
(39,610,157
)
Other comprehensive income (loss) that may be reclassified to profit or loss in subsequent periods:
                                       
Exchange differences on translation of foreign currency
           
(3,022,687
)
   
4,988,141
     
(2,761,792
)
   
5,683,610
 
Total Comprehensive Loss
           
(9,881,651
)
   
(9,513,305
)
   
(27,886,985
)
   
(33,926,548
)

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

[3]
InflaRx N.V. and subsidiaries
Unaudited Condensed Consolidated Statements of Financial Position
as of September 30, 2020 and December 31, 2019

(in €)
 
Note
   
September 30,
2020
(unaudited)
   
December 31,
2019
 
                   
ASSETS
                 
Non-current assets
                 
Property, plant and equipment
         
467,937
     
576,373
 
Right-of-use assets
         
623,452
     
836,924
 
Intangible assets
         
379,811
     
452,400
 
Other assets
   
2
     
385,837
     
452,217
 
Financial assets
   
3
     
272,448
     
272,614
 
Total non-current assets
           
2,129,485
     
2,590,528
 
Current assets
                       
Other assets
   
2
     
3,794,075
     
3,500,884
 
Financial assets
   
3
     
50,563,814
     
82,353,867
 
Cash and cash equivalents
   
4
     
44,834,089
     
33,131,280
 
Total current assets
           
99,191,977
     
118,986,031
 
TOTAL ASSETS
           
101,321,462
     
121,576,558
 
                         
EQUITY AND LIABILITIES
                       
Equity
                       
Issued capital
   
5
     
3,387,410
     
3,132,631
 
Share premium
   
5
     
220,289,876
     
211,006,606
 
Other capital reserves
   
6
     
26,039,651
     
25,142,213
 
Accumulated deficit
           
(159,487,199
)
   
(134,362,006
)
Other components of equity
           
(534,564
)
   
2,227,228
 
Total equity
           
89,695,174
     
107,146,673
 
Non-current liabilities
                       
Lease liabilities
           
123,053
     
330,745
 
Other non-financial liabilities
           
35,488
     
39,013
 
Total non-current liabilities
           
158,541
     
369,758
 
Current liabilities
                       
Trade and other payables
   
3
     
9,998,452
     
12,413,662
 
Lease liabilities
           
511,652
     
515,203
 
Employee benefits
           
799,812
     
975,629
 
Social security, other taxes and other non-financial liabilities
           
121,830
     
105,634
 
Provisions
           
36,000
     
50,000
 
Total current liabilities
           
11,467,747
     
14,060,128
 
Total Liabilities
           
11,626,288
     
14,429,886
 
TOTAL EQUITY AND LIABILITIES
           
101,321,462
     
121,576,558
 

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

[4]
InflaRx N.V. and subsidiaries
Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity
for the nine months ended September 30, 2020 and 2019

(in €, except for share data)
 
Note
   
Shares
outstanding
   
Issued
capital
   
Share
premium
   
Other
capital
reserves
   
Accumulated
deficit
   
Other
components of
equity
   
Total equity
 
                                                 
Balance as of January 1, 2020
         
26,105,255
     
3,132,631
     
211,006,606
     
25,142,213
     
(134,362,006
)
   
2,227,228
     
107,146,673
 
Loss for the period
         
—
     
—
     
—
     
—
     
(25,125,193
)
   
—
     
(25,125,193
)
Exchange differences on translation of foreign currency
         
—
     
—
     
—
     
—
     
—
     
(2,761,792
)
   
(2,761,792
)
Total comprehensive loss
         
—
     
—
     
—
     
—
     
(25,125,193
)
   
(2,761,792
)
   
(27,886,985
)
Contributions
                                                             
Issuance of common shares
   
5
     
1,958,186
     
234,982
     
9,535,961
     
—
     
—
     
—
     
9,770,943
 
Transaction costs
   
5
     
—
     
—
     
(729,841
)
   
—
     
—
     
—
     
(729,841
)
Equity-settled share-based pay-ments
   
6
     
—
     
—
     
—
     
897,438
     
—
     
—
     
897,438
 
Share options exercised
   
6
     
164,974
     
19,797
     
477,149
     
—
     
—
     
—
     
496,946
 
Total Contributions
           
2,123,160
     
254,779
     
9,283,269
     
897,438
     
—
     
—
     
10,435,486
 
Balance as of September 30, 2020
           
28,228,415
     
3,387,410
     
220,289,876
     
26,039,651
     
(159,487,199
)
   
(534,564
)
   
89,695,174
 
                                                                 
Balance as of January 1, 2019
           
25,964,379
     
3,115,725
     
211,021,835
     
18,310,003
     
(81,107,188
)
   
50,196
     
151,390,571
 
Loss for the period
           
—
     
—
     
—
     
—
     
(39,610,157
)
   
—
     
(39,610,157
)
Exchange differences on translation of foreign currency
           
—
     
—
     
—
     
—
     
—
     
5,683,610
     
5,683,610
 
Total comprehensive loss
           
—
     
—
     
—
     
—
     
(39,610,157
)
   
5,683,610
     
(33,926,547
)
Contributions
                                                               
Equity-settled share-based pay-ments
   
6
     
—
     
—
     
—
     
5,689,367
     
—
     
—
     
5,689,367
 
Share options exercised
   
6
     
140,876
     
16,905
     
(15,229
)
   
—
     
—
     
—
     
1,676
 
Total Contributions
           
140,876
     
16,905
     
(15,229
)
   
5,689,367
     
—
     
—
     
5,691,043
 
Balance as of September 30, 2019
           
26,105,255
     
3,132,631
     
211,006,606
     
23,999,370
     
(120,717,345
)
   
5,733,805
     
123,155,067
 

[5]
InflaRx N.V. and subsidiaries
Unaudited Condensed Consolidated Statements of Cash Flows
for the nine months ended September 30, 2020 and 2019

(in €)
 
Note
   
For the nine
months ended
September 30,
2020
(unaudited)
   
For the nine
months ended
September 30,
2019
(unaudited)
 
             
Operating activities
                 
Loss for the period
         
(25,125,193
)
   
(39,610,157
)
Adjustments for:
                     
Depreciation & amortization of property, plant, equipment,   right-of-use assets and intangible assets
         
533,687
     
485,822
 
Net financial result
   
1
     
(642,656
)
   
(3,316,586
)
Share-based payment expense
   
6
     
897,438
     
5,689,367
 
Net foreign exchange differences
           
(869,402
)
   
(345,347
)
Other non-cash adjustments
           
—
     
59,958
 
Changes in:
                       
Other assets
           
(226,811
)
   
(1,233,165
)
Employee benefits
           
(191,042
)
   
(14,316
)
Social security and other current non-financial liabilities
           
13,896
     
(205,175
)
Trade and other payables
           
(2,415,210
)
   
9,859,875
 
Interest received
           
1,238,643
     
1,653,617
 
Interest paid
           
(15,546
)
   
(19,822
)
Net cash used in operating activities
           
(26,802,196
)
   
(26,995,930
)
Investing activities
                       
Purchase of intangible assets, laboratory and office equipment
           
(83,855
)
   
(622,265
)
Purchase of non-current other financial assets
           
—
     
(75,543
)
Purchase of current financial assets
           
(68,169,518
)
   
(42,688,210
)
Proceeds from the maturity of financial assets
           
97,465,290
     
40,539,826
 
Net cash from/ (used in) investing activities
           
29,211,918
     
(2,846,193
)
Financing activities
                       
Proceeds from issuance of common shares
   
5
     
9,770,944
     
—
 
Transaction costs from issuance of common shares
   
5
     
(729,841
)
   
—
 
Proceeds from exercise of share options
   
6
     
496,946
     
1,676
 
Repayment of lease liabilities
           
(275,323
)
   
(209,176
)
Net cash from/ (used in) financing activities
           
9,262,726
     
(207,500
)
Net increase/(decrease) in cash and cash equivalents
           
11,672,447
     
(30,049,623
)
Effect of exchange rate changes on cash and cash equivalents
           
30,362
     
1,673,191
 
Cash and cash equivalents at beginning of period
           
33,131,280
     
55,386,240
 
Cash and cash equivalents at end of period
   
4
     
44,834,089
     
27,009,808
 

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

[6]
InflaRx N.V. and subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements
 
1.
Net Financial Result
 
The net financial result is comprised of the following items for the three and nine months ended September 30:
 
   
For the three months ended
September 30,
   
For the nine months ended
September 30,
 
(in €)
 
2020
(unaudited)
   
2019
(unaudited)
   
2020
(unaudited)
   
2019
(unaudited)
 
                         
Finance income
                       
Foreign exchange income
   
1,230,281
     
1,593,818
     
2,748,961
     
2,222,175
 
Interest income
   
95,086
     
436,174
     
844,842
     
2,305,777
 
Total
   
1,325,367
     
2,029,992
     
3,593,803
     
4,527,952
 
Finance expenses
                               
Foreign exchange expense
   
(1,891,188
)
   
(756,758
)
   
(2,861,894
)
   
(1,191,544
)
Other
   
116,005
     
(4,509
)
   
(89,253
)
   
(19,822
)
Total
   
(1,775,183
)
   
(761,267
)
   
(2,951,147
)
   
(1,211,366
)
Net Financial Result
   
(449,816
)
   
1,268,725
     
642,656
     
3,316,586
 

Interest income results from marketable securities and short-term deposits in U.S. Dollars held by the Company and its subsidiary InflaRx GmbH.
 
Foreign exchange income and expense is mainly derived from the translation of the U.S. Dollar cash, cash equivalents and securities held by InflaRx GmbH.
 
Other finance expenses for the three months ended September 30, 2020 includes a €0.1 million gain from a reduction in the allowance for expected credit loss on marketable securities (2019: €nil). Cumulative net expense from expected credit loss on marketable securities included in other finance expenses amounted to €0.1 million for the nine months ended September 30, 2020 (2019: €nil).
 
2.
Other non-financial assets
 
(in €)
 
As of
September 30,
2020
(unaudited)
   
As of
December 31,
2019
 
             
Non-current other assets
           
Prepaid expense
   
385,837
     
452,217
 
Total
   
385,837
     
452,217
 
Current other assets
               
Prepayments on research & development projects
   
2,195,182
     
698,891
 
Current tax assets
   
1,172,907
     
1,134,968
 
Prepaid expense
   
327,611
     
1,467,936
 
Other
   
98,374
     
199,088
 
Total
   
3,794,075
     
3,500,884
 

Prepaid expense mainly consists of prepaid insurance expense. Total prepaid expense as of September 30, 2020 decreased as compared to December 31, 2019, primarily due to amortization of prepayments of Directors and Officers insurance which is prepaid annually in the fourth quarter of the year.
 
[7]
Prepayments on research & development projects consists of prepayments on clinical and production contracts. Mainly due to our COVID-19 trial and the related CRO contract, prepayments have increased as of September 30, 2020 compared to December 31, 2019.
 
Current tax assets as of September 30, 2020 include tax reclaims because of dividend tax withheld. Such tax is withheld by our banks from securities interest payments, and the Company is reimbursed after filing a tax return.
 
3.
Financial assets and financial liabilities
 
Set out below is an overview of financial assets and liabilities, other than cash and cash equivalents, held by the Group as of September 30, 2020 and December 31, 2019:
 
(in €)
 
As of
September 30,
2020
(unaudited)
   
As of
December 31,
2019
 
             
Financial assets at amortized cost
           
Non-current financial assets
   
272,448
     
272,614
 
Current financial assets
   
50,563,813
     
82,353,867
 
Financial liabilities at amortized cost
               
Trade and other payables
   
9,998,452
     
12,413,662
 
Interest bearing loans and borrowings
               
Non-current lease liabilities
   
123,053
     
330,745
 
Current lease liabilities
   
511,652
     
513,834
 
 
As of September 30, the fair value of current and non-current financial assets (primarily quoted debt securities) amounted to €50,849 thousand (Level 1). The Group’s debt instruments at amortized cost consist solely of quoted securities that are graded in the top investment category (AAA) by credit rating agencies such as S&P Global and, therefore, are considered low credit risk investments.
 
4.
Cash and cash equivalents
 
(in €)
 
As of
September 30,
2020
(unaudited)
   
As of
December 31,
2019
 
             
Short-term deposits
           
Deposits held in U.S. Dollars
   
20,635,701
     
27,803,153
 
Deposits held in Euro
   
8,880,000
     
—
 
Total
   
29,515,701
     
27,803,153
 
Cash at banks
               
Cash held in Euro
   
1,244,166
     
1,211,478
 
Cash held in U.S. Dollars
   
14,074,222
     
4,116,649
 
Total
   
15,318,388
     
5,328,127
 
Total cash and cash equivalents
   
44,834,089
     
33,131,280
 

[8]
5.
Equity
 
On July 7, 2020, the Company filed with the United States Securities and Exchange Commission (SEC) a Form F-3 with respect to the offer and sale of securities of the Company (Registration Statement). The Company also filed with the SEC a prospectus supplement (Prospectus Supplement) relating to an at-the-market program providing for the sales over time of up to $50,000,000 of its common shares pursuant a Sales Agreement with SVB Leerink LLC.
 
As of September 30, 2020, the Company had issued 1,958,186 common shares resulting in €9.0 million in net proceeds to the Company. Following these issuances, the remaining value authorized for sale under the at-the-market program is $38.8 million.
 
6.
Share-based payments
 
(a)
Equity settled share-based payment arrangements

During its historical financing rounds prior to 2016 InflaRx GmbH established equity-settled share-based payment programs. Those InflaRx GmbH options were converted into options for common shares of InflaRx N.V. in November 2017:
 
Number of share options
 
2020
   
2019
 
Outstanding as of January 1,
   
148,433
     
289,309
 
Exercised during the nine months ended September 30
   
—
     
(140,876
)
Outstanding as of September 30,
   
148,433
     
148,433
 
thereof vested
   
148,433
     
148,433
 

Under the terms and conditions of the share option plan 2016 InflaRx GmbH granted rights to subscribe for InflaRx GmbH’s common shares to directors, senior management, and key employees. Those InflaRx GmbH options were converted into options for common shares of InflaRx N.V. in November 2017:
 
Number of share options
 
2020
   
2019
 
Outstanding as of January 1,
   
1,181,484
     
1,181,484
 
Exercised during the nine months ended September 30
   
(86,632
)
   
—
 
Outstanding as of September 30,
   
1,094,852
     
1,181,484
 
thereof vested
   
1,094,852
     
1,181,484
 

In conjunction with the closing of its initial public offering, InflaRx N.V. established a new incentive plan (the “2017 Long-Term Incentive Plan”). The initial maximum number of common shares available for issuance under equity incentive awards granted pursuant to the 2017 Long-Term Incentive Plan equals 2,341,097 common shares.
 
Number of share options
 
2020
   
2019
 
Outstanding as of January 1,
   
2,181,105
     
2,051,009
 
Granted during the nine months ended September 30
   
96,188
     
54,450
 
Exercised during the nine months ended September 30
   
(78,342
)
   
—
 
Forfeited during the nine months ended September 30
   
(181,287
)
   
(58,335
)
Outstanding as of September 30,
   
2,017,664
     
2,047,124
 
thereof vested
   
1,696,066
     
1,173,922
 

[9]
The number of share options granted during the nine months ended September 30, 2020 under the plan was as follows:
 
Share options
granted
 
Number
   
Fair
value
per
option
   
FX rate
as of
grant
date
   
Fair
value
per
option
   
Share price at
grant date /
Exercise price
   
Expected
volatility
   
Expected
life
(midpoint
based)
   
Risk-free rate
(interpolated,
U.S. sovereign
strips curve)
 
2020
                                               
September 18
   
71,186
   
$
4.16
     
0.85
   
€
3.52
   
$
4.83
     
1.35
     
4.77
     
0.36
%
September 18
   
25,002
   
$
4.21
     
0.85
   
€
3.56
   
$
4.83
     
1.35
     
5.02
     
0.39
%
     
96,188
                                                         

Of the 96,188 options granted in the nine months ended September 30, 2020, 50,000 were granted to members of the executive management or Board of Directors. At the meeting on September 18, 2020, the Board also passed a resolution to grant 150,000 options to a member of the executive management upon start of the employment, therefore, these options are deemed granted, as it is defined by IFRS 2, on October 1, 2020 and will be reflected in the financial statements for the year ended December 31, 2020.

Expected dividends are nil for all share options listed above.

The number of share options granted during the nine months ended September 30, 2019 under the plan was as follows:
 
Share options
granted
 
Number
   
Fair
value per
option
   
FX rate
as of
grant
date
   
Fair
value
per
option
   
Share price at
grant date /
Exercise price
   
Expected
volatility
   
Expected
life
(midpoint
based)
   
Risk-free rate
(interpolated,
U.S. sovereign
strips curve)
 
2019
                                               
January 1
   
—
   
$
14.45
     
0.88
   
€
12.69
   
$
26.02
*
   
0.65
     
4.8
     
3.00
%
February 4
   
18,450
   
$
18.17
     
0.87
   
€
15.87
   
$
32.63
*
   
0.65
     
4.9
     
2.60
%
May 14
   
36,000
   
$
22.54
     
0.89
   
€
20.08
   
$
41.39
*
   
0.65
     
4.7
     
2.30
%
Repricing, July 3
   
—
   
$
0.46-$1.08
     
0.89
   
€
0.40-€0.96
   
$
3.35
     
1.35
     
2.3-4.6
     
2.30
%
     
54,450
                                                         

 
* On July 3, 2019, the board approved an amendment of the 2016 Option Plan and the 2017 Long-Term Incentive Plan. Following the amendment, the strike price of all vested and unvested options, other than those held by persons who were not employees or directors at the time of the amendment, was reduced to $3.35 per share.
 
None of the options granted in the nine months ended September 30, 2019 were granted to members of the executive management or Board of Directors.
 
Expected dividends are nil for all share options listed above.

The annual general meeting on July 16, 2020, approved an amendment to the 2017 Long-Term Incentive Plan (LTIP) with effect from January 1, 2021:
 
 
•
increasing the maximum annual number of common shares in the Company’s capital available for issuance under the LTIP, starting on January 1, 2021, to 4% (from 3%) of the Company’s outstanding common shares (determined as of December 31 of the immediately preceding year); and
 
•
removing certain restrictions from the LTIP, which will allow the committee administering the LTIP and the Board to (i) lower the exercise price per share of any options and/or share appreciation rights issued under the LTIP or take any other action treated as a ‘repricing’ of an award and (ii) cancel any option and/or share appreciation rights in exchange for cash or another award granted under the LTIP, in either case, without prior approval of the Company’s shareholders.

[10]
(b)
Change in the accounting estimate of the share options expected to vest

Due to terminations in the third quarter of 2020, effective July 1, 2020, we have revised our assumptions about the number of equity instruments that will vest in future quarters. As a result of this change in estimate, we recognized a benefit of €53.1 thousand in research and development expenses and a benefit of €63.4 thousand in general and administrative expenses in the three months ended September 30, 2020, and we will record €52.7 thousand less expense in research and development expenses and €36.8 thousand less expense in general and administrative expenses from share-based payments in the remaining vesting periods until June 30, 2022.
 
(c)
Share options exercised

In the nine months ended September 30, 2020, 164,974 shares were issued upon the exercise of share options, resulting in proceeds to the Company in the amount of €497 thousand. Of the share options exercised, 86,632 were granted under the 2016 Share Option Plan and 78,342 were granted under the 2017 Long-Term Incentive Plan.
 
In the nine months ending September 30, 2019, 140,876 shares were issued following the exercise of stock options, resulting in proceeds to the Company in the amount of €1.7 thousand. All stock options exercised were granted under the 2012 Stock Option Plan.
 
(d)
Share-based payment expense recognized

For the three and nine months ended September 30, 2020, the Company has recognized €(588) thousand and €897 thousand, respectively, (2019: €1,001 thousand, €5,689 thousand) of share-based payment expense/(benefit) in the statements of operations and comprehensive loss. The gain recognized in the three months ended September 30, 2020 includes an adjustment for forfeited share options.
 
None of the share-based payments awards were dilutive in determining earnings per share due to the Group’s loss position.
 
7.
Protective foundation
 
According to the articles of association of the Company, up to 55,000,000 common shares and up to 55,000,000 preferred shares with a nominal value of €0.12 per share are authorized to be issued. All shares are registered shares. No share certificates shall be issued.
 
In order to deter acquisition bids, the Company`s general meeting of shareholders approved the right of an in-dependent foundation under Dutch law, or protective foundation, to exercise a call option pursuant to the call option agreement, upon which preferred shares will be issued by the Company to the protective foundation of up to 100% of the Company’s issued capital held by others than the protective foundation, minus one share. The protective foundation is expected to enter into a finance arrangement with a bank or, subject to applicable restrictions under Dutch law, the protective foundation may request us to provide, or cause the Company’s subsidiaries to provide, sufficient funding to the protective foundation to enable it to satisfy its payment obligation under the call option agreement.
 
These preferred shares will have both a liquidation and dividend preference over the Company`s common shares and will accrue cash dividends at a pre-determined rate. The protective foundation would be expected to re-quire us to cancel its preferred shares once the perceived threat to the Company and its stake-holders has been removed or sufficiently mitigated or neutralized. We are of the opinion that the call option does not represent a significant fair value based on a Level 3 valuation, since the preference shares are restricted in use and can be can-celled by us as stated above.
 
In the three and nine months ended September 30, 2020, the Company expensed €15 thousand and €45 thousand, respectively, (2019: €18 thousand, €68 thousand) of ongoing costs to reimburse expenses incurred by the protective foundation.
 
[11]
8.
Contractual Obligations and Commitments
 
   
September 30,
2020
   
December 31,
2019
 
   
(in €)
 
Commitments for minimum payments in relation to non-cancellable operating contracts or services:
           
Within one year
   
24,729,914
     
10,602,651
 
After one year but not more than five years
   
17,882,940
     
13,844,857
 
More than five years
   
—
     
—
 
Total
   
42,612,854
     
24,447,508
 

Anticipated future expenses were converted with the exchange rate as of September 30, 2020 (1 Euro = 1.1708 USD), respectively December 31, 2019 (1 Euro = 1.1234 USD).
 
The increase of our contractual commitments within one year compared to December 31, 2019, is mainly caused by the initiation of the Phase III part in Q3-2020 of our adaptive randomized Phase II/III trial in patients with severe COVID-19 induced pneumonia.
 
The Group enters contracts in the normal course of business with CROs and clinical sites for the conduct of clinical trials, professional consultants for expert advice and other vendors for clinical supply manufacturing or other services.
 
9.
Summary of significant accounting policies and other disclosures
 
(a)
Reporting entity and Group’s structure

InflaRx N.V. is a Dutch public company with limited liability (naamloze vennootschap) with its corporate seat in Amsterdam, The Netherlands, and is registered in the Commercial Register of The Netherlands Chamber of Commerce Business Register under CCI number 68904312. The Company’s registered office is at Winzerlaer Straße 2 in 07745 Jena, Germany. Since November 10, 2017, InflaRx N.V.’s common shares have been listed on The NASDAQ Global Select Market under the symbol IFRX.
 
InflaRx is a clinical-stage biopharmaceutical Group focused on applying its proprietary anti-C5a technology to discover and develop first-in-class, potent and specific inhibitors of the complement activation factor known as C5a.
 
These consolidated financial statements of InflaRx comprise the Company and its wholly-owned subsidiaries InflaRx GmbH, Jena, Germany and InflaRx Pharmaceutical Inc., Ann Arbor, Michigan, United States (together referred to as “the Group”).
 
InflaRx GmbH is a clinical-stage biopharmaceutical company founded in 2008. In 2017, InflaRx N.V. became the sole shareholder of InflaRx GmbH through the contribution of the subsidiary’s shares to InflaRx N.V. by its existing shareholders in exchange of new shares issued by InflaRx N.V.
 
(b)
Basis of preparation

These interim condensed consolidated financial statements for the three- and nine-month reporting periods ended September 30, 2020 and 2019 have been prepared in accordance with IAS 34 Interim Financial Reporting. These condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements. Accordingly, this report is to be read in conjunction with the financial statements in our annual report for the year ended December 31, 2019 on Form 20-F.
 
The interim condensed consolidated financial statements were authorized for issue by the board of directors on October 28, 2020.
 
The financial statements are presented in Euro (€). Euro is the functional currency of InflaRx GmbH. The functional currency of InflaRx N.V. and InflaRx Pharmaceutical Inc. is U.S. Dollars. All financial information presented in Euro has been rounded. Accordingly, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that precede them or may deviate from other tables.
 
[12]
The accounting policies adopted are consistent with those followed in the preparation of the Group’s annual consolidated financial statements for the year ended December 31, 2019, except for the adoption of new standards effective as of January 1, 2020 as set out below, and except for the change in the accounting estimate of the share options expected to vest as described above. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.
 
For better clarity, the Group presented right-of-use assets separately from property, plant and equipment in the unaudited condensed consolidated statements of financial position as of September 30, 2020 and reclassified comparatives as of December 31, 2019 accordingly. The Group also renamed some line items in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss, Financial Position and Cash Flows to better reflect their substance.
 
(c)
New and amended standards adopted by the Group

The below listed amendments and interpretations apply for the first time in 2020, but do not have an impact on the condensed consolidated financial statements of the Group:
 
 
•
Conceptual Framework Amendments, References to the Conceptual Framework in IFRS Standards (IFRS 2 Share-Based Payment,  IFRS 3 Business Combinations, IAS 1 Presentation of Financial Statements, IAS 8 Accounting Policies, IAS 34 Interim Financial Reporting, IAS 37 Provisions, Contingent Liabilities and Contingent Assets, IFRIC 12 Service Concession Arrangements, IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments IFRIC 22 Foreign Currency Transactions and Advance Consideration, SIC 32 Intangible Assets — Web Site Costs,), effective as of January 1, 2020
 
•
IFRS 3 Business Combinations, Definition of a business, effective January 1, 2020
 
•
IAS 39 Financial Instruments: Recognition and Measurement, IFRS 7 Financial Instruments Disclosures, IFRS 9 Financial Instruments, Interest Rate Benchmark Reform, effective January 1, 2020,
 
•
IAS 1 Presentation of Financial Statements, IAS 8 Accounting Policies, Definition of Material, as of January 1, 2020

(d)
Significant events of the quarter and changes in circumstances

COVID-19 Pandemic
 
The COVID-19 pandemic, which began in December 2019 has spread worldwide and continues to cause many governments to maintain measures to slow the spread of the outbreak through quarantines, travel restrictions, closure of borders and requiring maintenance of physical distance between individuals.
 
Since the second quarter of 2020 the Company`s employees have been able to work from their home offices or return to the Company’s offices. Our service providers also resumed full operations in the second quarter of 2020, and the recruitment of patients and new clinical trial sites likewise continued in the third quarter.
 
On June 17, 2020, the Company announced interim results from the first 30 patients treated in the adaptive randomized Phase II/III trial in patients with severe COVID-19 induced pneumonia. On September 14, 2020, we announced the initiation of the Phase III part of the study with the first clinical site open for enrollment in the Netherlands.
 
Changes to the Board and Management
 
On July 16, 2020, Jens Holstein resigned as member of the Board and Audit Committee.
 
On July 29, 2020, Mark Kübler was elected to the Audit Committee.
 
Effective July 31, 2020, Jason Marks resigned as Chief Legal Officer and General Counsel.
 
On September 17, 2020, Jordan Zwick was promoted to Senior Vice President, Chief Strategy Officer.
 
[13]
Effective September 30, 2020, Arnd Christ resigned as Chief Financial Officer.
 
(e)
Significant events after the reporting date

Changes to the Management
 
On October 1, 2020, Dr. Thomas Taapken joined InflaRx as Chief Financial Officer.
 

[14]
Exhibit 99.2
 
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
This management’s discussion and analysis is designed to provide you with a narrative explanation of our financial condition and results of operations. We recommend that you read this discussion together with our unaudited condensed consolidated financial statements, including the notes thereto, as of and for the three- and nine-month periods ended September 30, 2020 and 2019 included as Exhibit 99.1 to the Report on Form 6-K to which this discussion is attached as Exhibit 99.2. We also recommend that you read our management’s discussion and analysis and our audited consolidated financial statements for fiscal year 2019, and the notes thereto, which appear in our Annual Report on Form 20-F for the year ended December 31, 2019 (the “Annual Report”) filed with the U.S. Securities and Exchange Commission (the “SEC”). In addition, we recommend that you read any public announcements made by InflaRx N.V.
 
The following discussion is based on our financial information prepared in accordance with IFRS as issued by the IASB, which may differ in material respects from generally accepted accounting principles in the United States and other jurisdictions. We maintain our books and records in euros. Unless otherwise indicated, all references to currency amounts in this discussion are in euros. We have made rounding adjustments to some of the figures included in this discussion and analysis. Accordingly, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that precede them.
 
The following discussion includes forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including but not limited to those described under “Risk factors” in the Annual Report.
 
Unless otherwise indicated or the context otherwise requires, all references to “InflaRx” or the “company,” “we,” “our,” “ours,” “us” or similar terms refer to InflaRx N.V. and its subsidiaries InflaRx GmbH and InflaRx Pharmaceuticals, Inc.
 
Overview
 
We are a clinical-stage biopharmaceutical company focused on applying our proprietary anti-C5a technology to discover and develop first-in-class, potent and specific inhibitors of the complement activation factor known as C5a. C5a is a powerful inflammatory mediator involved in the progression of a wide variety of autoimmune and other inflammatory diseases. Our lead product candidate, IFX-1, is a novel intravenously delivered first-in-class anti-C5a monoclonal antibody that selectively binds to free C5a and has demonstrated disease-modifying clinical activity and tolerability in multiple clinical settings.
 
We have been developing IFX-1 for the treatment of hidradenitis suppurativa (HS), a chronic debilitating systemic inflammatory skin disease. In June 2019, we announced that our Phase IIb clinical trial of IFX-1 in HS did not meet its primary endpoint. On July 18, 2019 we published a post-hoc analysis showing multiple signals of efficacy for the IFX-1 high dose group compared to the placebo group within the initial phase of the SHINE study. On November 6, 2019, we reported additional data from the open label extension (OLE) phase of the international SHINE Phase IIb study. In June 2020, we completed an end of Phase II meeting with the FDA to discuss a Phase III development program for the use of IFX-1 in the treatment of HS.  Additionally, in July 2020, we received scientific advice from the European Medicines Agency (EMA) regarding the Phase III development program for the use of IFX-1 in the treatment of HS. We are currently working diligently to determine the best global clinical development strategy for this indication considering the received feedback from both regulatory authorities.
 
We are also developing IFX-1 in severe COVID-19 induced pneumonia with an adaptive randomized open label multicenter trial in Europe. On June 17, 2020, we announced interim results from the first 30 patients treated in the adaptive randomized Phase II/III trial in patients. On September 14, 2020, we announced the initiation of the Phase III part of the study with the first clinical site open for enrollment in the Netherlands.
 
We intend to develop IFX-1 and other proprietary antibodies and molecules, and evaluate other technologies as well, to address a wide array of complement-mediated and other diseases with significant unmet needs, including Anca associated vasculitis, or AAV, a rare, life-threatening autoimmune disease, Pyoderma Gangraenosum, or PG, a rare inflammatory skin disorder and indications in oncology and potentially other indications and diseases.
 
II-1
Since our inception in December 2007, we have devoted substantially all of our resources to establishing our company, raising capital, developing our proprietary anti-C5a technology, identifying and testing potential product candidates and conducting clinical trials of our lead product candidate, IFX-1. To date, we have no regulatory approved products for commercial use, have not generated any revenue and have financed our operations primarily through public offerings and private placements of our stock as well as other income from various grants. As of September 30, 2020, we had raised an aggregate of approximately €215.8 million, comprised of €49.2 million in net proceeds from a follow-on public offering in May 2018, €81.8 million in net proceeds from our initial public offering, €74.0 million in gross proceeds from private placements of our securities, €9.0 million in net proceeds from an at-the-market program and €1.75 million in payments in connection with various grants. On July 7, 2020, the Company filed with the United States Securities and Exchange Commission (SEC) a Form F-3 with respect to the offer and sale of securities of the Company (Shelf Registration Statement). The Company also filed with the SEC a prospectus supplement (Prospectus Supplement) relating to an at-the-market program providing for the sales of our stock over time of up to $50.0 million of its common shares pursuant to a Sales Agreement with SVB Leerink LLC. As of September 30, 2020, the Company had issued 1,958,186 common shares resulting in €9.0 million in net proceeds to the Company. Following these issuances, the remaining value authorized for sale under the at-the-market program is $38.8 million. As of September 30, 2020, we had cash and cash equivalents of €44.8 million and financial assets of €50.8 million. As of September 30, 2020, we had an accumulated deficit of €159.5 million. We have incurred significant net operating losses in every year since our inception and expect to continue to incur net operating losses for the foreseeable future. Our net losses may fluctuate significantly from quarter to quarter and year to year.
 
We anticipate that our expenses might increase in the next years if and as we:
 

•
continue to develop and conduct clinical trials with respect to our lead product candidate, IFX-1, including in connection with the evaluation of any additional clinical development in HS, in connection with the ongoing Phase II clinical trials in AAV and PG as well as planned Phase II studies in oncology and an ongoing Phase III trial in severe COVID-19 induced pneumonia;
 

•
initiate and continue research, preclinical and clinical development efforts for any future product candidates, including IFX-2;
 

•
actively seek to identify additional research programs and additional product candidates;
 

•
seek regulatory and marketing approvals for our product candidates that successfully complete clinical trials, if any;
 

•
establish sales, marketing, distribution and other commercial infrastructure in the future to commercialize various products for which we may obtain marketing approval, if any;
 

•
require the manufacture of larger quantities of product candidates for clinical development and, potentially, commercialization;
 

•
collaborate with strategic partners to optimize the manufacturing process for IFX-1 and IFX-2;
 

•
maintain, expand and protect our intellectual property portfolio;
 

•
hire and retain additional personnel, such as clinical, quality control and scientific personnel;
 

•
our use of share-based employee retention instruments that may involve significant future expense; and
 

•
add operational, financial and management information systems and personnel, including personnel to support our product development and help us comply with our obligations as a public company.
 
II-2
Our expenses in any quarter may not be indicative of our expenses in future periods, and in particular we expect that our expenses, and therefore our net losses, could vary depending on the going forward strategy relating to the clinical development of IFX-1 in HS, AAV, PG, COVID-19 and additional indications as well as any potential addition of a technology platform or asset.
 
We do not expect to generate revenue from product sales unless and until we successfully complete development and obtain regulatory approval for a product candidate, which we expect will take a number of years and is subject to significant uncertainty. If we obtain regulatory approval for any product candidate, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution. Accordingly, we may seek to further fund our operations through public or private equity or debt financings or other sources, including strategic collaborations. We may, however, be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. Our failure to raise capital or enter into such other arrangements as and when needed, would have a negative impact on our financial condition and our ability to develop IFX-1 or any additional product candidates.
 
Recent Developments
 
In June 2020, we completed an end of Phase II meeting with the FDA to discuss a Phase III development program for the use of IFX-1 in the treatment of HS. During the course of the meeting, the FDA agreed to key proposals to support a BLA submission, including aspects of the Phase III trial design, IFX-1 dosing, target study population, and the nonclinical and clinical pharmacology data packages. As part of the Phase III design, the Company proposed using the International Hidradenitis Suppurativa Severity Score (IHS4) as the primary efficacy endpoint. While the FDA did not agree that the IHS4 score is fit for purpose as a primary efficacy endpoint, the FDA recommended that the Company obtain HS patient input to help determine the validity of the IHS4 score. The FDA also indicated a reasonable primary endpoint would be the Hidradenitis Suppurativa Clinical Response Score 50 (HiSCR). InflaRx is now assessing different strategies for a potential pathway to regulatory approval for IFX-1 in the United States and plans to keep engaging with the FDA on next steps. Additionally, the Company requested scientific advice from the European Medicines Agency (EMA) about the European pathway for regulatory approval and received feedback in July 2020. Although the EMA noted certain considerations regarding the Company’s proposal, the EMA acknowledged that HiSCR response does not account for the clinical relevance of a reduction in draining fistulas and the effort to construct a new endpoint that better captures these changes was endorsed in principle.  According to the EMA, although HiSCR was used as an endpoint in previous studies, IHS4 could be an appropriate tool to evaluate the efficacy of a novel compound in HS. The Company is working diligently to address the additional feedback received from the EMA and analyzing the most appropriate strategy for its Phase III development in Europe.
 
On June 17, 2020, the Company announced interim results from the first 30 patients treated in the adaptive randomized Phase II/III trial in patients with severe COVID-19 induced pneumonia. The Phase II part of the study evaluated IFX-1 treatment plus best supportive care compared to best supportive care alone for up to 28 days. Relative change in the oxygenation index at day 5 showed no differences between treatment groups. However, IFX-1 treatment was associated with a lower 28-day all-cause mortality when compared to the best supportive care group, along with trends in disease improvement, as evidenced by fewer patients experiencing renal impairment assessed by estimated glomerular filtration rates, more patients showing reversal of blood lymphocytopenia and a greater lowering of lactate dehydrogenase concentrations. In IFX-1-treated patients, pulmonary embolisms reported as serious adverse events were lower compared to the best supportive care arm. Also, a temporary increase of D-dimer levels, as potential expression of induction of blood clot lysis, was detected in the first days after initiation of IFX-1 treatment. The data was published in The Lancet Rheumatology on September 29, 2020. On September 14, 2020, the Company announced the start of the 360-patient global Phase III part of the Phase II/III trial with the initiation of the first clinical site in the Netherlands. In parallel, the German regulatory authority, the Paul-Ehrlich-Institute (PEI) also approved the Phase III clinical trial in Germany.  Additional sites in the US, EU, South America and other countries are planned. The primary endpoint of the study is 28-day all-cause mortality; key secondary endpoints will include assessment of organ support and disease improvement. An interim analysis is planned after enrollment of 180 patients, with a potential for an early stop for efficacy or futility. We expect enrollment of the first 180 patients by the end of the first quarter of 2021.
 
II-3
During the third quarter the Phase IIa open label trial of IFX-1 in PG continues to enroll patients in the higher dose groups. Additional clinical trial sites continue to be opened to support enrollment. Results from the higher dose groups are expected in 2021.
 
In the US IXPLORE clinical Phase II study of IFX-1 in AAV, all patients have completed treatment.  Data is expected in the first half of 2021. In the European Phase II IXCHANGE trial, Part 2 continues to enroll patients, with approximately half of the targeted 25 patients enrolled. Final results are expected in 2021.
 
During the third quarter the Company has advanced its preparatory activities for the Phase IIa oncology program, with expected initiation in the first half of 2021.
 
Research and Development Expenses
 
Research and development expenses have consisted principally of:
 

•
expenses incurred under agreements with contract research organizations, or CROs, contract manufacturing organizations, or CMOs, consultants and independent contractors that conduct research and development, preclinical and clinical activities on our behalf;
 

•
employee-related expenses, including salaries, benefits and share-based compensation expense based upon employees’ role within the organization; and
 

•
professional legal fees related to the protection and maintenance of our intellectual property.
 
We anticipate that our total research and development expenses in 2020 might decrease compared to 2019, due to lower contribution of expenses from the Phase IIb clinical development of IFX-1 in HS in 2020 since this study was completed in 2019. This reduction in expenses from the HS program was only partially offset by additional expenses incurred in the COVID-19 trial which was initiated in 2020. Our research and development expenses primarily relate to the following key programs:
 

•
IFX-1. We expect our expenses associated with IFX-1 will further increase in the remainder of 2020, compared to the level on September 30, 2020, as we will conduct the Phase III study in COVID-19, evaluate initiating a Phase III study in HS, conduct our Phase II clinical program of IFX-1 in patients with AAV and our Phase II clinical trial program in patients with PG and plan to initiate a Phase II clinical program in cancer along with potentially additional indications. In addition, we are also incurring expenses related to the manufacturing of clinical trial material and by investigating commercial scale production options.
 

•
IFX-2.  We are continuing preclinical development of IFX-2, expenses for which mainly consist of salaries, costs for preclinical testing conducted by CROs and costs for the production of preclinical material.
 

•
Other development programs. Our other research and development expenses relate to our preclinical studies of other product candidates and discovery activities, expenses for which mainly consist of salaries, costs for production of preclinical compounds and costs paid to CROs.
 
In 2019, we incurred €44.6 million of research and development expenses. For the nine months ended September 30, 2020 and 2019, we incurred research and development expenses of €19.9 million and €33.6 million, respectively. The principal driver of the decrease in our research and development expenses was primarily due to no contribution of expense in the period from the Phase IIb clinical development of IFX-1 in HS since this study was completed in 2019 offset by the COVID-19 trial expenses. Our research and development expenses may vary substantially from period to period based on the timing of our research and development activities, including due to timing of clinical trial initiation and potential enrollment. Overall, research and development expenses are expected to increase over time as we advance the clinical development of IFX-1 and IFX-2 and further advance the research and development of our preclinical product candidates.
 
II-4
We expense research and development costs as incurred. We recognize costs for certain development activities, such as preclinical studies and clinical trials, based on an evaluation of the progress to completion of specific tasks. We use information provided to us by our vendors such as patient enrollment or clinical site activations for services received and efforts expended. Research and development activities are central to our business model.
 
The successful development of our product candidates is highly uncertain. At this time, we cannot reasonably estimate the nature, timing and estimated costs of the efforts that will be necessary to complete the development of, or the period, if any, in which material net cash inflows may commence from, any of our product candidates. For a discussion of our other key financial statement line items, please see “Management’s discussion and analysis of financial condition and results of operations—Financial operations overview” in the Annual Report.
 
Results of Operations
 
The information below was derived from our condensed consolidated financial statements included elsewhere herein. The discussion below should be read along with these condensed consolidated financial statements, and it is qualified in its entirety by reference to them.
 
Comparison of the Three Months Ended September 30, 2020 and 2019
 
   
Three Months Ended September 30,
 
(in €)

 
2020
   
2019
   
Change
 
Operating Expenses
                 
Research and development expenses

   
(5,246,536
)
   
(13,405,646
)
   
(8,159,110
)
General and administrative expenses
   
(1,166,070
)
   
(2,490,245
)
   
(1,324,175
)
Total Operating Expenses

   
(6,412,606
)
   
(15,895,891
)
   
(9,483,285
)
Other income
   
3,471
     
126,559
     
123,088
 
Other expenses

   
(13
)
   
(838
)
   
(825
)
Operating Result
   
(6,409,148
)
   
(15,770,170
)
   
(9,361,022
)
Finance income

   
1,325,367
     
2,029,992
     
704,625
 
Finance expenses
   
(1,775,183
)
   
(761,268
)
   
1,013,915
 
Net Financial Result

   
(449,816
)
   
1,268,725
     
1,718,541
 
Loss for the Period
   
(6,858,964
)
   
(14,501,446
)
   
(7,642,482
)
Exchange differences on translation of foreign currency

   
(3,022,687
)
   
4,988,141
     
8,010,828
 
Total Comprehensive Loss
   
(9,881,651
)
   
(9,513,305
)
   
368,346
 

Research and Development Expenses
 
   
Three Months Ended September 30,
 
(in €)

 
2020
   
2019
   
Change
 
Third-party expenses
   
4,299,075
     
11,305,208
     
(7,006,133
)
Personnel expenses

   
822,757
     
1,787,984
     
(965,227
)
Legal and consulting fees
   
46,517
     
109,904
     
(63,387
)
Other expenses

   
78,187
     
202,550
     
(124,363
)
Total Research and development expenses
   
5,246,536
     
13,405,646
     
(8,159,110
)

We use our employee and infrastructure resources across multiple research and development programs directed toward developing IFX-1 and IFX-2. We manage certain activities such as contract research and manufacturing of IFX-1 and our discovery programs through our third-party vendors.
 
Research and development expenses incurred for the three months ended September 30, 2020 decreased over the corresponding period in 2019 by €8.2 million. This decline was primarily due to lower contribution of expense in the period from the Phase IIb clinical development of IFX-1 in HS since this study was completed in 2019, offset by the COVID-19 trial expenses. These two factors led to €5.6 million of lower manufacturing costs which significantly contributed to an overall decline in third-party expenses of €7.0 million. The €0.9 million decrease in personnel expenses was mainly related to equity-settled share-based compensation.
 
II-5
General and Administrative Expenses
 
   
Three Months Ended September 30,
 
(in €)

 
2020
   
2019
   
Change
 
Personnel expenses
   
72,862
     
1,679,433
     
(1,606,571
)
Legal, consulting and audit fees

   
403,491
     
210,694
     
192,797
 
Other expenses
   
689,717
     
600,119
     
89,598
 
Total General and administrative expense

   
1,166,070
     
2,490,245
     
(1,324,175
)

General and administrative expenses decreased by €1.3 million to €1.2 million for the three months ended September 30, 2020, from €2.5 million for the three months ended September 30, 2019. This decrease is attributable to lower expenses from equity-settled share-based compensation recognized in personnel expenses (€1.5 million). Additionally, legal, consulting and other expenses increased by €0.3 million to €1.1 million for the three months ended September 30, 2020, from €0.8 million for the three months ended September 30, 2019. In 2020, cost increases mainly resulted from higher D&O insurance and legal expenses.
 
Net financial result
 
   
Three Months Ended September 30,
 
(in €)

 
2020
   
2019
   
Change
 
Finance income
                 
Foreign exchange gains

   
1,230,281
     
1,593,818
     
(363,537
)
Interest income
   
95,086
     
436,174
     
(341,088
)
Total

   
1,325,367
     
2,029,992
     
(704,625
)
Finance expenses
                       
Foreign exchange losses

   
(1,891,188
)
   
(756,758
)
   
(1,134,430
)
Other
   
116,005
     
(4,509
)
   
120,514
 
Total

   
(1,775,183
)
   
(761,267
)
   
(1,013,916
)
Net Financial Result
   
(449,816
)
   
1,268,725
     
(1,718,541
)

Net financial result decreased by €1.7 million to €(0.4) million for the three months ended September 30, 2020, from €1.3 million for the three months ended September 30, 2019. This decrease is mainly attributable to higher foreign exchange losses, which increased by €1.1 million and lower foreign exchange gains of €0.4 million while interest on marketable securities declined by €0.3 million. Other finance expenses for the three months ended September 30, 2020 include a €0.1 million gain from a reduction in the allowance for expected credit loss on marketable securities.
 
Comparison of the Nine Months Ended September 30, 2020 and 2019
 
   
Nine Months Ended September 30,
 
(in €)

 
2020
   
2019
   
Change
 
Operating Expenses
                 
Research and development expenses

   
(19,901,661
)
   
(33,598,018
)
   
(13,696,357
)
General and administrative expenses
   
(6,057,767
)
   
(9,439,080
)
   
(3,381,313
)
Total Operating Expenses

   
(25,959,428
)
   
(43,037,098
)
   
(17,077,670
)
Other income
   
200,763
     
194,261
     
(6,502
)
Other expenses

   
(9,184
)
   
(83,907
)
   
(74,723
)
Operating Result
   
(25,767,849
)
   
(42,926,744
)
   
(17,158,895
)
Finance income

   
3,593,803
     
4,527,952
     
934,149
 
Finance expenses
   
(2,951,147
)
   
(1,211,366
)
   
1,739,781
 
Net Financial Result

   
642,656
     
3,316,586
     
2,673,930
 
Loss for the Period
   
(25,125,193
)
   
(39,610,157
)
   
(14,484,964
)
Exchange differences on translation of foreign currency

   
(2,761,792
)
   
5,683,610
     
8,445,402
 
Total Comprehensive Loss
   
(27,886,985
)
   
(33,926,548
)
   
(6,039,563
)

II-6
Research and Development Expenses
 
   
Nine Months Ended September 30,
 
(in €)

 
2020
   
2019
   
Change
 
Third-party expenses
   
15,838,505
     
27,342,367
     
(11,503,862
)
Personnel expenses

   
3,130,305
     
5,084,462
     
(1,954,157
)
Legal and consulting fees
   
639,578
     
441,155
     
198,423
 
Other expenses

   
293,273
     
730,033
     
(436,761
)
Total Research and development expenses
   
19,901,661
     
33,598,018
     
(13,696,357
)

We use our employee and infrastructure resources across multiple research and development programs directed toward developing IFX-1 and IFX-2. We manage certain activities such as contract research and manufacturing of IFX-1 and our discovery programs through our third-party vendors.
 
Research and development expenses incurred for the nine months ended September 30, 2020 decreased over the corresponding period in 2019 by €13.7 million. This decline was primarily due to lower contribution of expense in the period from the Phase IIb clinical development of IFX-1 in HS since this study was completed in 2019, offset by the COVID-19 trial expenses. These two factors led to €6.6 million of lower manufacturing costs, which contributed to an overall decline in third-party expenses of €11.5 million. The €2.0 million decrease in personnel expenses is mainly related to equity-settled share-based compensation.
 
General and Administrative Expenses
 
   
Nine Months Ended September 30,
 
(in €)

 
2020
   
2019
   
Change
 
Personnel expenses
   
2,881,445
     
5,878,393
     
(2,996,948
)
Legal, consulting and audit fees

   
915,818
     
1,607,720
     
(691,902
)
Other expenses
   
2,260,504
     
1,952,967
     
307,537
 
Total General and administrative expense

   
6,057,767
     
9,439,080
     
(3,381,313
)

General and administrative expenses decreased by €3.4 million to €6.1 million for the nine months ended September 30, 2020, from €9.4 million for the nine months ended September 30, 2019. This decrease is largely attributable to lower expenses associated with equity-settled share-based compensation recognized in personnel expenses (€3.0 million). Furthermore, legal, consulting and other expenses decreased by €0.4 million to €3.2 million for the nine months ended September 30, 2020, from €3.6 million for the nine months ended September 30, 2019. In 2019, consulting expenses were higher due to a one-time strategic project in June 2019. Other expenses in 2020 include increased D&O insurance costs compared to the respective nine month period in 2019.
 
Net financial result
 
   
Nine Months Ended September 30,
 
(in €)

 
2020
   
2019
   
Change
 
Finance income
                 
Foreign exchange gains

   
2,748,961
     
2,222,175
     
526,786
 
Interest and other finance income
   
844,842
     
2,305,777
     
(1,460,935
)
Total

   
3,593,803
     
4,527,952
     
(934,149
)
Finance expenses
                       
Foreign exchange losses

   
(2,861,894
)
   
(1,191,544
)
   
(1,670,350
)
Other
   
(89,253
)
   
(19,822
)
   
(69,431
)
Total

   
(2,951,147
)
   
(1,211,366
)
   
(1,739,781
)
Net Financial Result
   
642,656
     
3,316,586
     
(2,673,930
)

Net financial result decreased by €2.7 million to €0.6 million for the nine months ended September 30, 2020, from €3.3 million for the nine months ended September 30, 2019. This decrease is mainly attributable to higher foreign exchange losses, which increased by €1.7 million partially compensated with foreign exchange gains (€0.5 million) while interest on marketable securities declined by €1.5 million.
 
II-7
Liquidity and Capital Resources
 
Since inception, we have incurred significant operating losses. For the nine months ended September 30, 2020, we incurred a net loss of €25.1 million. To date, we have financed our operations primarily through the sale of our securities. As of September 30, 2020, we had cash and cash equivalents of €44.8 million, plus financial assets of €50.8 million. Our cash and cash equivalents primarily consist of bank deposit accounts and fixed U.S. Dollar term deposits. Our quoted debt securities have AAA credit ratings.
 
Cash Flows
 
The table below summarizes our consolidated statement of cash flows for the nine months ended September 30, 2020 and 2019:
 
   
Nine Months Ended September 30,
 
(in €)

 
2020
   
2019
 
Net cash used in operating activities
   
(26,802,196
)
   
(26,995,930
)
Net cash from/ (used in) investing activities

   
29,211,918
     
(2,846,193
)
Net cash from/ (used in) financing activities
   
9,262,726
     
(207,500
)
Cash and cash equivalents at the beginning of the period
   
33,131,280
     
55,386,240
 
Exchange gains on cash and cash equivalents
   
30,362
     
1,673,191
 
Cash and cash equivalents at the end of the period

   
44,834,089
     
27,009,808
 

Net Cash used in Operating Activities
 
The use of cash in all periods resulted primarily from our net losses, adjusted for non-cash charges and changes in components of working capital.
 
Net cash used in operating activities decreased to €26.8 million in the nine months ended September 30, 2020, from €27.0 million in the nine months ended September 30, 2019. The decrease of cash expenses, such as third-party expenses for manufacturing and clinical trials for our lead program IFX-1 was nearly offset by €12.3 million lower payments on trade liabilities in the nine months ended September 30, 2019.
 
Net Cash from Investing Activities
 
Net cash from investing activities increased by €32.1 million in the nine months ended September 30, 2020 mainly due to higher repayments from matured marketable securities in the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019.
 
Net Cash from/ (used in) Financing Activities
 
Net cash from financing activities increased by €9.5 million in the nine months ended September 30, 2020, due to €9.0 million net proceeds from the issuance of common shares under an at-the-market program and the exercise of share options, resulting in proceeds to the Company in the amount of €0.5 million.
 
Funding Requirements
 
We anticipate that our expenses increase in the next years in connection with our ongoing activities. In particular, we anticipate that we will continue and complete Phase II clinical trials in AAV and PG, continue planning Phase II clinical development in oncology, we may start Phase III clinical development in HS and we will continue to run the Phase III clinical trial in COVID-19.  Additionally, we may pursue additional indications as well. We also want to continue preclinical development of IFX-2. We plan to initiate new research and preclinical development efforts and we may seek marketing approval for any product candidates that we successfully develop and where we receive approval. If we commence a Phase III clinical development program with IFX-1 in HS, additional costs in connection with such development will be incurred. In addition, if we obtain marketing approval for any of our product candidates, we expect to incur significant commercialization expenses related to establishing sales, marketing, distribution and other commercial infrastructure to commercialize such products. Furthermore, we expect to incur additional costs associated with operating as a public company. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce, or eliminate our research and development programs or future commercialization efforts. We believe that our existing cash and cash equivalents and financial assets will enable us to fund our operating expenses and capital expenditure requirements under our current business plan for at least the next 24 months.
 
II-8
Until such time, if ever, that we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, debt financings, royalty-based financings, future collaborations, strategic alliances, and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the interest of our current shareholders will be diluted, and the terms of these securities may include voting or other rights that adversely affect your rights as a common shareholder. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends. If we raise funds through additional collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us.
 
For more information as to the risks associated with our future funding needs, see “Risk factors” in the Annual Report.
 
Off-Balance Sheet Arrangements
 
As of September 30, 2020, and during the periods presented, we did not have any off-balance sheet arrangements other as described under “Management’s discussion and analysis of financial condition and results of operations—Off-balance sheet arrangements” in the Annual Report.
 
Contractual Obligations and Commitments
 
   
September 30, 2020
   
December 31, 2019
 
   
(in €)
 
Commitments for minimum payments in relation to non-cancellable operating contracts or services:
           
Within one year
   
24,729,914
     
10,602,651
 
After one year but not more than five years
   
17,882,940
     
13,844,857
 
More than five years
   
—
     
—
 
Total
   
42,612,854
     
24,447,508
 

Anticipated future expenses were converted with the exchange rate as of September 30, 2020 (1 Euro = 1.1708 USD), respectively December 31, 2019 (1 Euro = 1.1234 USD).
 
The increase of our contractual commitments within one year compared to December 31, 2019, is mainly caused by the initiation of the Phase III part in Q3-2020 of our adaptive randomized Phase II/III trial in patients with severe COVID-19 induced pneumonia.
 
The Group enters contracts in the normal course of business with CROs and clinical sites for the conduct of clinical trials, professional consultants for expert advice and other vendors for clinical supply manufacturing or other services.
 
Quantitative and Qualitative Disclosures about Market Risk
 
During the nine months ended September 30, 2020, there were no significant changes to our quantitative and qualitative disclosures about market risk from those reported in “Management’s discussion and analysis of financial condition and results of operations–Quantitative and qualitative disclosures about market risk” in the Annual Report.
 
II-9
Critical Judgments and Accounting Estimates
 
There have been no material changes to the significant accounting policies and estimates described in “Management’s discussion and analysis of financial condition and results of operations—Critical judgments and accounting estimates” in the Annual Report.
 
JOBS Act Exemptions
 
On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for an “emerging growth company.” As an emerging growth company, we are not required to provide an auditor attestation report on our system of internal controls over financial reporting. This exemption will apply for a period of five years following the completion of our initial public offering or until we no longer meet the requirements of being an “emerging growth company,” whichever is earlier. We would cease to be an emerging growth company if we have more than $1.07 billion in annual revenue, have more than $700 million in market value of our common shares held by non-affiliates as of the specified testing date or issue more than $1.0 billion of non-convertible debt over a three-year period.
 
Cautionary Statement Regarding Forward Looking Statements
 
This discussion contains forward-looking statements that involve substantial risks and uncertainties. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “estimate,” “believe,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions intended to identify statements about the future. These statements speak only as of the date of this discussion and involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements include, without limitation, statements about the following:
 

•
our operation as a development stage company with limited operating history and a history of operating losses; as of September 30, 2020, our accumulated deficit was €159.5 million;
 

•
the timing, progress and results of clinical trials of IFX-1 and any other product candidates, including statements regarding the timing of initiation and completion of studies or trials and related preparatory work, the period during which the results of the trials will become available, the costs of such trials and our research and development programs generally;
 

•
the timing of any submission of filings for regulatory approval of IFX-1 or any other product candidate, and the timing of and our ability to obtain and maintain regulatory approval of IFX-1 for any indication;
 

•
our ability to leverage our proprietary anti-C5a technology to discover and develop therapies to treat complement-mediated autoimmune and inflammatory diseases;
 

•
our ability to protect, maintain and enforce our intellectual property protection for IFX-1 and any other product candidates, and the scope of such protection;
 

•
whether the FDA, EMA or comparable foreign regulatory authority will accept or agree with the number, design, size, conduct or implementation of our clinical trials, including any proposed primary or secondary endpoints for such trials;
 

•
the success of our future clinical trials for IFX-1 and any other product candidates and whether such clinical results will reflect results seen in previously conducted preclinical studies and clinical trials;
 

•
our expectations regarding the size of the patient populations for, market opportunity for and clinical utility of IFX-1 or any other product candidates, if approved for commercial use;
 
II-10

•
our manufacturing capabilities and strategy, including the scalability and cost of our manufacturing methods and processes and the optimization of our manufacturing methods and processes, and our ability to continue to rely on our existing third-party manufacturers for our planned future clinical trials;
 

•
our estimates of our expenses, ongoing losses, future revenue, capital requirements and our needs for or ability to obtain additional financing;
 

•
our expectations regarding the scope of any approved indication for IFX-1;
 

•
our ability to defend against costly and damaging liability claims resulting from the testing of our product candidates in the clinic or, if, approved, any commercial sales;
 

•
our ability to commercialize IFX-1 or our other product candidates;
 

•
if any of our product candidates obtain regulatory approval, our ability to comply with and satisfy ongoing obligations and continued regulatory overview;
 

•
our ability to comply with enacted and future legislation in seeking marketing approval and commercialization;
 

•
our future growth and ability to compete, which depends on our retaining key personnel and recruiting additional qualified personnel;
 

•
our competitive position and the development of and projections relating to our competitors in the development of C5a inhibitors or our industry;
 

•
our expectations regarding the time during which we will be an emerging growth company under the JOBS Act or a foreign private issuer; and
 

•
other risk factors discussed under “Risk factors” in the Annual Report.
 
Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. You should refer to the “ITEM 3. KEY INFORMATION: - D. Risk factors” section of the Annual Report for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. As a result of these factors, we cannot assure you that the forward-looking statements in this discussion will prove to be accurate. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise. You should, however, review the factors and risks and other information we describe in the reports we will file from time to time with the SEC after the date of this discussion.
 

II-11
Exhibit 99.3


InflaRx Reports Q3 2020 Financial & Operating Results
 
•
Initiated Phase III part of the Phase II/III adaptive, randomized, controlled trial in patients with severe COVID-19 induced pneumonia
•
Published encouraging data from Phase II part of COVID-19 trial in The Lancet Rheumatology
•
Announced leadership team additions
•
Cash, cash equivalents and financial assets of approximately €95.7 million as of September 30, 2020
 
Jena, Germany, October 29, 2020 – InflaRx (Nasdaq: IFRX), a clinical-stage biopharmaceutical company developing anti-inflammatory therapeutics by targeting the complement system, announced today financial results for the three and nine months ended September 30, 2020.
 
“With cases of COVID-19 on the rise throughout the world, there remains an urgent need to find safe and efficacious treatments for critically ill patients. Thus, we are highly focused on advancing our ongoing Phase III trial with IFX-1 in patients with severe COVID-19 induced pneumonia,” said Prof. Niels C. Riedemann, Chief Executive Officer and Founder of InflaRx. “In addition, we are continuing to move forward IFX-1 in development for important inflammatory indications, including hidradenitis suppurativa, pyoderma gangraenosum and ANCA-associated vasculitis, all disease areas where patients are in need of better treatment options.”

Corporate and R&D Highlights
 
•
Leadership appointments: In September 2020, InflaRx announced the appointment of Thomas Taapken, Ph.D. as Chief Financial Officer, and Jordan Zwick was promoted to the newly created position of Chief Strategy Officer.
•
IFX-1 in COVID-19 induced pneumonia: In September 2020, InflaRx announced the start of the global Phase III part of its Phase II/III trial with IFX-1 in severe COVID-19 induced pneumonia with the initiation of the first clinical site in the Netherlands. In parallel, the German regulatory authority, the Paul-Ehrlich-Institut (PEI), approved the Phase III clinical trial in Germany. The trial is currently enrolling, and patients are undergoing treatment.

The randomized, double-blinded and placebo-controlled Phase III part of the Phase II/III trial is planned to enroll approximately 360 early intubated, critically ill patients with COVID-19 induced pneumonia across sites in the US, EU, South America and other regions. Patients are being randomized 1:1 to receive either IFX-1 or placebo; all patients will receive standard of care. The primary endpoint is 28-day all-cause mortality; key secondary endpoints will include assessment of organ support and disease improvement. An interim analysis is planned after enrollment of 180 patients, with a potential for an early stop for efficacy or futility.
Also in September, encouraging data from the Phase II part of the study were published in the peer-reviewed journal, The Lancet Rheumatology.


•
IFX-1 in Hidradenitis Suppurativa (HS): The Company is assessing different strategies for a potential pathway to regulatory approval for IFX-1 in the United States and plans to engage with the Food & Drug Administration (FDA) on next steps. In Europe, InflaRx is working diligently to address the feedback received in Scientific Advice from the European Medicines Agency (EMA) and analyzing the strategy for its Phase III development program for the use of IFX-1 in the treatment of HS.
•
IFX-1 in Pyoderma Gangraenosum (PG): The Phase IIa open label trial continues to enroll patients in the higher dose groups. Additional clinical trial sites continue to be opened to support enrollment. Results from the higher dose groups are expected in 2021.
•
IFX-1 in ANCA-associated vasculitis (AAV): In the US IXPLORE study, all patients have completed treatment.  Data is expected in the first half of 2021. In the European Phase II IXCHANGE trial, Part 2 continues to enroll patients, with approximately half of the targeted 25 patients enrolled.  Final results are expected in 2021.
•
IFX-1 in oncology: Activities are ongoing for the Phase IIa oncology program, with expected initiation in the first half of 2021.

Financial highlights – Q3 2020
 
Research and development expenses incurred for the nine months ended September 30, 2020 decreased over the corresponding period in 2019 by €13.7 million. This decline was primarily due to lower contribution of expense in the period from the Phase IIb clinical development of IFX-1 in HS since this study was completed in 2019, offset by the COVID-19 trial expenses. These two factors led to €6.6 million of lower manufacturing costs which contributed to an overall decline in third-party expenses of €11.5 million. The €2.0 million decrease in personnel expenses is mainly caused by equity-settled share-based compensation.
 

General and administrative expenses decreased by €3.4 million to €6.1 million for the nine months ended September 30, 2020, from €9.4 million for the nine months ended September 30, 2019. This decrease is largely attributable to lower expenses associated with equity-settled share-based compensation recognized in personnel expenses (€3.0 million). Furthermore, legal, consulting and other expenses decreased by €0.4 million to €3.2 million for the nine months ended September 30, 2020, from €3.6 million for the nine months ended September 30, 2019. In 2019, consulting expenses were higher due to a one-time strategic project in June 2019. Other expenses in 2020 include increased D&O insurance costs compared to the respective nine month period in 2019.
 
Net financial result decreased by €2.7 million to €0.6 million for the nine months ended September 30, 2020, from €3.3 million for the nine months ended September 30, 2019. This decrease is mainly attributable to higher foreign exchange losses, which increased by €1.7 million partially compensated with foreign exchange gains (€0.5 million) while  interest on marketable securities declined by €1.5 million.
 
Net loss for the nine months ended September 30, 2020 was €25.1 million, compared to €39.6 million for the nine months ended September 30, 2019. On September 30, 2020, the Company’s total funds available were approximately €95.7 million, composed of cash and cash equivalents (€44.8 million) and financial assets (€50.8 million).
 
Net cash used in operating activities decreased to €26.8 million in the nine months ended September 30, 2020, from €27.0 million in the nine months ended September 30, 2019. The decrease of cash expenses, such as third-party expenses for manufacturing and clinical trials for our lead program IFX-1 was nearly offset by €12.3 million lower payments on trade liabilities in the nine months ended September 30, 2019.
 
Additional information regarding these results and other relevant information is included in the notes to the unaudited Condensed Consolidated Financial Statements as of September 30, 2020, as well as the financial statements as of December 31, 2019 in “ITEM 18. Financial statements,” which is included in InflaRx’s Annual Report on Form 20-F as filed with the U.S. Securities and Exchange Commission (SEC).
 

InflaRx N.V. and subsidiaries
Unaudited Condensed Consolidated Statements of Operations and
Comprehensive Loss for the three and nine months ended September 30, 2020 and 2019
 
   
For the three months ended
September 30,
   
For the nine months ended
September 30,
 
(in €, except for share data)
 
2020
(unaudited)
   
2019
(unaudited)
   
2020
(unaudited)
   
2019
(unaudited)
 
                         
Operating Expenses
                       
Research and development expenses
   
(5,246,536
)
   
(13,405,646
)
   
(19,901,661
)
   
(33,598,018
)
General and administrative expenses
   
(1,166,070
)
   
(2,490,245
)
   
(6,057,767
)
   
(9,439,080
)
Total Operating Expenses
   
(6,412,606
)
   
(15,895,891
)
   
(25,959,428
)
   
(43,037,098
)
Other income
   
3,471
     
126,559
     
200,763
     
194,261
 
Other expenses
   
(13
)
   
(838
)
   
(9,184
)
   
(83,907
)
Operating Result
   
(6,409,148
)
   
(15,770,170
)
   
(25,767,849
)
   
(42,926,744
)
Finance income
   
1,325,367
     
2,029,992
     
3,593,803
     
4,527,952
 
Finance expenses
   
(1,775,183
)
   
(761,268
)
   
(2,951,147
)
   
(1,211,366
)
Net Financial Result
   
(449,816
)
   
1,268,725
     
642,656
     
3,316,586
 
Loss for the Period
   
(6,858,964
)
   
(14,501,446
)
   
(25,125,193
)
   
(39,610,157
)
                                 
Share Information
                               
Weighted average number of shares outstanding
   
27,733,778
     
25,982,754
     
26,674,233
     
25,970,571
 
Loss per share (basic/diluted)
   
(0.25
)
 

€(0.56
)
   
(0.94
)
 

€(1.53
)
                                 
Loss for the Period
   
(6,858,964
)
   
(14,501,446
)
   
(25,125,193
)
   
(39,610,157
)
Other comprehensive income (loss) that may be reclassified to profit or loss in subsequent periods:
                               
Exchange differences on translation of foreign currency
   
(3,022,687
)
   
4,988,141
     
(2,761,792
)
   
5,683,610
 
Total Comprehensive Loss
   
(9,881,651
)
   
(9,513,305
)
   
(27,886,985
)
   
(33,926,548
)


InflaRx N.V. and subsidiaries
Unaudited Condensed Consolidated Statements of Financial Position
as of September 30, 2020 and December 31, 2019
 
in €
 
September 30,
2020
(unaudited)
   
December 31,
2019
 
             
ASSETS
           
Non-current assets
           
Property, plant and equipment
   
467,937
     
576,373
 
Right-of-use assets
   
623,452
     
836,924
 
Intangible assets
   
379,811
     
452,400
 
Other assets
   
385,837
     
452,217
 
Financial assets
   
272,448
     
272,614
 
Total non-current assets
   
2,129,485
     
2,590,528
 
Current assets
               
Other assets
   
3,794,075
     
3,500,884
 
Financial assets
   
50,563,814
     
82,353,867
 
Cash and cash equivalents
   
44,834,089
     
33,131,280
 
Total current assets
   
99,191,977
     
118,986,031
 
TOTAL ASSETS
   
101,321,462
     
121,576,558
 
                 
EQUITY AND LIABILITIES
               
Equity
               
Issued capital
   
3,387,410
     
3,132,631
 
Share premium
   
220,289,876
     
211,006,606
 
Other capital reserves
   
26,039,651
     
25,142,213
 
Accumulated deficit
   
(159,487,199
)
   
(134,362,006
)
Other components of equity
   
(534,564
)
   
2,227,228
 
Total equity
   
89,695,174
     
107,146,673
 
Non-current liabilities
               
Lease liabilities
   
123,053
     
330,745
 
Other non-financial liabilities
   
35,488
     
39,013
 
Total non-current liabilities
   
158,541
     
369,758
 
Current liabilities
               
Trade and other payables
   
9,998,452
     
12,413,662
 
Lease liabilities
   
511,652
     
515,203
 
Employee benefits
   
799,812
     
975,629
 
Social security, other taxes and other non-financial liabilities
   
121,830
     
105,634
 
Provisions
   
36,000
     
50,000
 
Total current liabilities
   
11,467,747
     
14,060,128
 
Total Liabilities
   
11,626,288
     
14,429,886
 
TOTAL EQUITY AND LIABILITIES
   
101,321,462
     
121,576,558
 


InflaRx N.V. and subsidiaries
Unaudited Condensed Consolidated Statements of Changes in Shareholders’
Equity for the nine months ended September 30, 2020 and 2019
 
(in €, except for share data)
 
Issued
capital
   
Share
premium
   
Other
capital
reserves
   
Accumulated
deficit
   
Other
components
of equity
   
Total
equity
 
                                     
Balance as of January 1, 2020
   
3,132,631
     
211,006,606
     
25,142,213
     
(134,362,006
)
   
2,227,228
     
107,146,673
 
Loss for the period
   
—
     
—
     
—
     
(25,125,193
)
   
—
     
(25,125,193
)
Exchange differences on translation of foreign currency
   
—
     
—
     
—
     
—
     
(2,761,792
)
   
(2,761,792
)
Total comprehensive loss
   
—
     
—
     
—
     
(25,125,193
)
   
(2,761,792
)
   
(27,886,985
)
Contributions
                                               
Issuance of common shares
   
234,982
     
9,535,961
     
—
     
—
     
—
     
9,770,943
 
Transaction costs
   
—
     
(729,841
)
   
—
     
—
     
—
     
(729,841
)
Equity-settled share-based payments
   
—
     
—
     
897,438
     
—
     
—
     
897,438
 
Share options exercised
   
19,797
     
477,149
     
—
     
—
     
—
     
496,946
 
Total Contributions
   
254,779
     
9,283,269
     
897,438
     
—
     
—
     
10,435,486
 
Balance as of September 30, 2020
   
3,387,410
     
220,289,876
     
26,039,651
     
(159,487,199
)
   
(534,564
)
   
89,695,174
 
                                                 
Balance as of January 1, 2019
   
3,115,725
     
211,021,835
     
18,310,003
     
(81,107,188
)
   
50,196
     
151,390,571
 
Loss for the period
   
—
     
—
     
—
     
(39,610,157
)
   
—
     
(39,610,157
)
Exchange differences on translation of foreign currency
   
—
     
—
     
—
     
—
     
5,683,610
     
5,683,610
 
Total comprehensive loss
   
—
     
—
     
—
     
(39,610,157
)
   
5,683,610
     
(33,926,547
)
Contributions
                                               
Equity-settled share-based payments
   
—
     
—
     
5,689,367
     
—
     
—
     
5,689,367
 
Share options exercised
   
16,905
     
(15,229
)
   
—
     
—
     
—
     
1,676
 
Total Contributions
   
16,905
     
(15,229
)
   
5,689,367
     
—
     
—
     
5,691,043
 
Balance as of September 30, 2019
   
3,132,631
     
211,006,606
     
23,999,370
     
(120,717,345
)
   
5,733,805
     
123,155,067
 


InflaRx N.V. and subsidiaries
Unaudited Condensed Consolidated Statements of Cash Flows for the nine
months ended September 30, 2020 and 2019
 
in €
 
For the nine
months ended
September 30,
2020
(unaudited)
   
For the nine
months ended
September 30,
2019
(unaudited)
 
             
Operating activities
           
Loss for the period
   
(25,125,193
)
   
(39,610,157
)
Adjustments for:
               
Depreciation & amortization of property, plant, equipment,   right-of-use assets and intangible assets
   
533,687
     
485,822
 
Net financial result
   
(642,656
)
   
(3,316,586
)
Share-based payment expense
   
897,438
     
5,689,367
 
Net foreign exchange differences
   
(869,402
)
   
(345,347
)
Other non-cash adjustments
   
—
     
59,958
 
Changes in:
               
Other assets
   
(226,811
)
   
(1,233,165
)
Employee benefits
   
(191,042
)
   
(14,316
)
Social security and other current non-financial liabilities
   
13,896
     
(205,175
)
Trade and other payables
   
(2,415,210
)
   
9,859,875
 
Interest received
   
1,238,643
     
1,653,617
 
Interest paid
   
(15,546
)
   
(19,822
)
Net cash used in operating activities
   
(26,802,196
)
   
(26,995,930
)
Investing activities
               
Purchase of intangible assets, laboratory and office equipment
   
(83,855
)
   
(622,265
)
Purchase of non-current other financial assets
   
—
     
(75,543
)
Purchase of current financial assets
   
(68,169,518
)
   
40,539,826
 
Proceeds from the maturity of financial assets
   
97,465,290
     
(42,688,210
)
Net cash from/ (used in) investing activities
   
29,211,918
     
(2,846,193
)
Financing activities
               
Proceeds from issuance of common shares
   
9,770,944
     
—
 
Transaction costs from issuance of common shares
   
(729,841
)
   
—
 
Proceeds from exercise of share options
   
496,946
     
1,676
 
Repayment of lease liabilities
   
(275,323
)
   
(209,176
)
Net cash from/ (used in) financing activities
   
9,262,726
     
(207,500
)
Net increase/(decrease) in cash and cash equivalents
   
11,672,447
     
(30,049,623
)
Effect of exchange rate changes on cash and cash equivalents
   
30,362
     
1,673,191
 
Cash and cash equivalents at beginning of period
   
33,131,280
     
55,386,240
 
Cash and cash equivalents at end of period
   
44,834,089
     
27,009,808
 


About IFX-1:
 
IFX-1 is a first-in-class monoclonal anti-human complement factor C5a antibody, which highly and effectively blocks the biological activity of C5a and demonstrates high selectivity towards its target in human blood. Thus, IFX-1 leaves the formation of the membrane attack complex (C5b-9) intact as an important defense mechanism, which is not the case for molecules blocking the cleavage of C5. IFX-1 has been demonstrated to control the inflammatory response driven tissue and organ damage by specifically blocking C5a as a key “amplifier” of this response in pre-clinical studies. IFX-1 is believed to be the first monoclonal anti-C5a antibody introduced into clinical development. Approximately 300 people have been treated with IFX-1 in clinical trials, and the antibody has been shown to be well tolerated. IFX-1 is currently being developed for various indications, including Hidradenitis Suppurativa, ANCA-associated vasculitis, Pyoderma Gangraenosum and COVID-19 pneumonia.
 
About InflaRx N.V.:
 
InflaRx (Nasdaq: IFRX) is a clinical-stage biopharmaceutical company focused on applying its proprietary anti-C5a technology to discover and develop first-in-class, potent and specific inhibitors of C5a. Complement C5a is a powerful inflammatory mediator involved in the progression of a wide variety of autoimmune and other inflammatory diseases. InflaRx was founded in 2007, and the group has offices and subsidiaries in Jena and Munich, Germany, as well as Ann Arbor, MI, USA. For further information please visit www.inflarx.com.
 
Contacts:
 
InflaRx N.V.

Jordan Zwick – Chief Strategy Officer
Email: jordan.zwick@inflarx.de
Tel: +1 917-338-6523
 
MC Services AG

Katja Arnold, Laurie Doyle, Andreas Jungfer
Email: inflarx@mc-services.eu
Europe: +49 89-210 2280
US: +1-339-832-0752
 

FORWARD-LOOKING STATEMENTS
 
This press release contains forward-looking statements. All statements other than statements of historical fact are forward-looking statements, which are often indicated by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “believe,” “estimate,” “predict,” “potential” or “continue” and similar expressions. Forward-looking statements appear in a number of places throughout this release and may include statements regarding our intentions, beliefs, projections, outlook, analyses and current expectations concerning, among other things, our ongoing and planned preclinical development and clinical trials; the impact of the COVID-19 pandemic on the Company; the timing and our ability to commence and conduct clinical trials; potential results from current or potential future collaborations; our ability to make regulatory filings, obtain positive guidance from regulators, and obtain and maintain regulatory approvals for our product candidates; our intellectual property position; our ability to develop commercial functions; expectations regarding clinical trial data; our results of operations, cash needs, financial condition, liquidity, prospects, future transactions, growth and strategies; the industry in which we operate; the trends that may affect the industry or us and the risks, uncertainties and other factors described under the heading “Risk Factors” in InflaRx’s periodic filings with the Securities and Exchange Commission. These statements speak only as of the date of this press release and involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Given these risks, uncertainties and other factors, you should not place undue reliance on these forward-looking statements, and we assume no obligation to update these forward-looking statements, even if new information becomes available in the future, except as required by law.