First half of 2017: delivering key clinical data and strengthening the pipeline

• Cash, cash equivalents and financial assets* for the Company amounted to €204.1m (million euros) as of June 30, 2017
• Significant clinical progress within the period:
  
  • Dose-escalation data of the ongoing Phase I trial evaluating IPH4102 showed a favorable safety profile and promising clinical activity
  • Expansion of a Phase I/II trial evaluating lirilumab, conducted by Bristol-Myers Squibb, including a randomized cohort exploring Opdivo with or without lirilumab in squamous cell carcinoma of the head and neck
• Clinical-stage pipeline further strengthened with the acquisition of IPH5401, a first-in-class anti-C5aR antibody, from Novo Nordisk A/S (closed in July 2017)
• Innate Pharma continues to advance its balanced portfolio of innovative partnered and proprietary immuno-oncology programs in line with its strategy to become a fully-integrated biopharmaceutical company

Innate Pharma SA (the 'Company' - Euronext Paris: FR0010331421 - IPH) today reports its consolidated financial results for the first half of 2017. The summary of the condensed half-year consolidated financial statements is attached to this press release.

During the period, Innate Pharma has continued to make significant progress across its portfolio of first-in-class clinical antibodies designed to harness the innate immune system.

In June 2017, Innate Pharma presented results from the dose-escalation part of the Phase I trial evaluating IPH4102 at the ICML**. The data reported suggest that IPH4102 is well tolerated and shows promising signs of clinical activity in elderly and heavily pretreated patients with advanced cutaneous T-cell lymphomas (CTCL), which is an orphan disease, mostly with Sézary syndrome, a subtype with high unmet medical need. Innate Pharma is currently working on the next steps of the clinical development plan for IPH4102 and will present updated data of the ongoing Phase I trial at the EORTC CLTF*** meeting in London in October.

In March, the protocol of the ongoing Phase I/II study evaluating lirilumab, led by Bristol-Myers Squibb, was amended and expanded to include additional cohorts of Opdivo (nivolumab) plus lirilumab in solid tumors, including a cohort exploring Opdivo with or without lirilumab in squamous cell carcinoma of the head and neck (SCCHN) and initial testing of the triplet combination of Opdivo, Yervoy (ipilimumab) and lirilumab in solid tumors.

Finally, in June, Innate Pharma entered into an agreement with Novo Nordisk A/S granting the Company full worldwide exclusive rights to develop and commercialize a first-in-class clinical-stage anti-C5aR antibody, now called IPH5401. IPH5401 complements Innate Pharma's current clinical-stage immuno-oncology pipeline and reinforces the Company's position in the field of tumor microenvironment beyond the adenosine pathway. Innate plans to start clinical trials with IPH5401 in oncology in 2018.

Mondher Mahjoubi, Chief Executive Officer of Innate Pharma, commented: 'We are continuing to leverage our deep scientific expertise in innate immunity to build a fully-integrated biopharmaceutical company with a growing portfolio of first-in-class programs. We have made great progress across key programs during the first half of 2017. The data presented for IPH4102 give us confidence to move this proprietary product into the next stage of clinical development. Moreover, I am proud that we could significantly strengthen our pipeline through the acquisition of IPH5401 from Novo Nordisk A/S and we look forward to advancing this first-in-class asset into the clinic in 2018.'

Financial highlights of the first half of 2017:

The key elements of Innate Pharma's financial results for the first half of 2017 are as follows:

• Cash, cash equivalents and financial assets (current and non-current) amounting to €204.1m (million euros) as of June 30, 2017 (€230.7m as of December 31, 2016).
  
  • Financial liabilities amounted to €4.7m, including €3.5m of non-current liabilities (€5.3m as of December 31, 2016, including €4.1m of non-current liabilities).
• Revenue and other income amounting to €21.3m (€20.7m for the first half of 2016). This amount results from licensing revenue (€15.6m) and from research tax credit (€5.7m).
  
  • Revenue related to the licensing agreements mainly results from phasing of initial payment received by Innate Pharma in the context of the agreement signed in April 2015 with AstraZeneca/MedImmune.
• Operating expenses amounting to €39.5m (€23.6m for the first half of 2016), of which 80% are related to research and development.
  
  • The variance of the research and development costs (€31.6m compared to €20.3m for the first half of 2016) mainly results from higher subcontracting costs, which increased by €5.9m to €16.8m. This increase was mainly driven by the IPH4102 Phase I and other programs which are in IND-enabling studies.
• A net loss for the first half of 2017 amounting to €23.4m (€3.2m for the first half of 2016).

The table below summarizes the IFRS consolidated financial statements for the six-month period ended June 30, 2017, including 2016 comparative information.