Hervé Brailly - Chairman & CEO Catherine Moukheibir - Senior Advisor of Finance.

Michael Schmidt - Leerink Partners Steve Chesney - Goldman Sachs Sebastien Malafosse - Oddo Securities Ram Narayanan - Citi.

Ladies and gentlemen, welcome to the Innate Pharma Conference Call. I’ll now hand over to Mr. Hervé Brailly, CEO, to review the Full Year 2014 Financial Results with you. Sir, please go ahead..

Thank you. Good afternoon, everyone in Europe, and good morning for those in the U.S. I’m Hervé Brailly, CEO and co-founder of Innate Pharma. I have with me today Catherine Moukheibir from the Executive Board in-charge of finance. I am pleased to welcome you to today’s conference call to discuss our financial results for the full-year 2014.

Just let me remind you that this presentation will contain forward-looking statements. Although the company believes its expectations are based on reasonable assumptions, these forward-looking statements are subject to various risks and uncertainties. Please refer to the Risk Factors outlined in the company’s regulatory filings.

So first, I will give you an overview of the progresses we have made this year, and Catherine will further comment on the financial results. And after that, we’ll open to questions. In 2014, we have progressed on all our strategic actions.

We have strengthened our pipeline with the acquisition of a new first-in-class Phase II antibody IPH2201, anti-NKG2A.

We have advanced the development of our blood candidates with the progression and broadening of the clinical program of lirilumab, which is partnered with Bristol-Myers Squibb, the beginning of the Phase II program of IPH2201 and the preclinical development of IPH4102 and further down the road of IPH43.

Lastly, we’ve made progress in technology development. Regarding the different programs, first we ended the year with two first-in-class checkpoint inhibitors in Phase II, which as you know in this space of immuno-oncology, is quite a unique situation. Lirilumab, the anti-KIR, partnered to Bristol-Myers Squibb this summer.

We have completed the enrollment of the EffiKIR Phase II trial, testing lirilumab as a single-agent for the maintenance of elderly patients having achieved complete remission suffering from acute myeloid leukemia. There were now three DSMB meetings reviewing the Phase II data. The last one took place in October.

On all those DSMB meetings recommended continuation of trial as planned. The next DSMB meeting will take place next month in March. As you know, there will be no interim analysis for efficacy on results on the primary efficacy endpoint, leukemia-free survival. We do confirm that they are expected by the end of 2015.

In October, the exploratory clinical program for lirilumab was extended in hemato-oncology with two new combinations. One exploring the combination of lirilumab on elotuzumab in multiple myeloma, based on preclinical data demonstrating our synergistic effect that are been published the year before.

And another trial, exploring the combination of lirilumab and nivolumab in various hematological malignancies. In December, the enrollment for the trial exploring the combination of lirilumab and ipilimumab was stopped during dose escalation. There was no safety issues leading to this decisions.

Patients still on the treatment are in active follow-up will continue as planned in the study protocol. So all in all, there are now four trials ongoing, which will deliver activity that are investigating different setting from rationales in more than 10 different tumor types.

The rationale of NK cell enhancement is tested with lirilumab as a single-agent for the control of residual disease in acute myeloid leukemia, which is both proven trial but also providing - addressing a very clear medical need that might provide a clear path to registration.

Enhancement of immunogenicity is tested with lirilumab in combination with the T-cell checkpoint inhibitor in solid and liquid tumors, and eventually the enhancement of antibody-dependent cellular cytotoxicity or certain mechanism of action is tested with lirilumab in multiple myeloma.

We are confident that with this program, the potential of lirilumab is now broadly explored with addressing all three envisioned mechanism of action, and 2015 will be a very important year to deliver the first key data for this program, and of course we’ll have more data going onward. Now with respect to IPH2201.

We’ve been able to bring a newly acquired program to first patients in Phase II in only nine months after acquisition of the right each one of execution perspective is I do believe quite an impressive performance. In December 2014, we opened the first trial of the Phase II program, the first patient was treated.

This trial test of IPH2201, anti-NKG2A, is a single-agent in a pre-op setting, prior to surgeries in neo-adjuvant treatment in a trial that took 43 newly diagnosed head and neck patient. I’d like to emphasize that this pre-operative setting allows to test IPH2201 and the actions of any compounding factor.

Patients will be their own controlling and we look at responses at eight weeks after four doses of IPH2201.

Furthermore on that also, the major interest of having these pre-surgery, pre-op setting, we will have access to tumor samples, before and after treatment the enrollment of surgery that provides the opportunity to look at the NKG2A positive effects cells on the exploration of the ligand HLA-E and many other biological parameters, providing a lot of valuable information for the mechanism of action of this first-in-class agent.

The trail takes place at the Charité Comprehensive Cancer Center Hospital in Berlin, Germany, which actually is the center where the Phase I trial of the anti-NKG2A was performed. Other centers would be added after the first running parts of the trial, which will recruit six patients.

We do believe that IPH2201 is a non-key anti-NKG2A checkpoint inhibitor, which has a unique potential. Since that different mechanism of action, it’s been actually enhance both NK cells but also effect the T-cells - CD8 T-cells that infiltrate the tumor.

Therefore pointing to a benefit/risk ratio in a way that it potentially accumulates cells which are engaged in an active time spotted response to the tumor.

Lastly, we have the biomarkers, the expression of HLA-E on tumor cells is very useful for the exploratory development, and further down the road, it could be used as an eligibility criteria for patient in later stage of development.

We are very enthusiastic about this agent, and we are indeed working in full speed to start new trails and get activity that are probably starting 2016 onwards. With respect to our next clinical compound, this is IPH4101. We do plan to start clinical trials to have this compound development in 2015.

It is actually a compound that has been fully developed in-house. As a reminder, this is a cytotoxic antibody IgG1, which targets KIR3DL2, an antigen which is expressed on a very tiny subset of CD40 cells in the patient and selectively expressed on cutaneous T-cell lymphoma subset.

It could therefore be the very first cytotoxic agent in this disease which is of very high medical need. Lastly, brief comments on our discovery activities that are in Innate’s pipeline. We have continued progress. We are working on the number of undisclosed first-in-class targets.

And the one we have announced is IPH43, which targets MICA, MICB, that’s the one of the ligand of NKG2D. We now have humanized antibody candidate which have been tested with the purpose of validating one candidate for further development to enter regulatory preclinical studies.

We do expect to reach this stage of having a clinical development candidate before the end of 2015.

We also published a number of interesting data on our ADG site-specific conjugation technology, demonstrating that this site-specification conjugation technology can allow to reach an improved therapeutic index compared to conventional site-specific conjugation technologies.

Before I leave the floor to Catherine to comment on our results, I would like to give you a quick look into 2015. That’s going to be very important year for Innate Pharma with the results of the first trial for lirilumab.

We are expecting to see EffiKIR data for the Phase II acute myeloma leukemia follow-up, single-agent by the end of this year and we do confirm this timeline. We are also expecting that the Phase I trial of lirilumab in combination with nivo will read out in 2015.

We’ve worked to broaden our pipeline and now give Innate Pharma multiple chances to create value in the mid-term.

The broadening of lirilumab exploratory program goes as well into new direction with the new focus in hematology with the opening of new trials and will continue to build for the future and start new trials for IPH2201, as well as IPH4102. I will move back over to Catherine Moukheibir to run through our financial results for the first half of 2014..

Thank you, Hervé Brailly. So now for the discussion of the numbers which you have seen published this morning and their relevance for Innate. The first number is the cash position at the end of the year.

So EUR 69.2 million net at the end of December 2014, essentially coming on the strength of the capital increase, which brought in EUR 50 million in June 2014. What the EUR 69 million mean, is that we are funded till the end of 2017 on the basis of the programs that Hervé has just described.

So the entire company minus liri, which doesn’t cost us anything anymore, as well the other thing it means is that most of this money goes to 2201, the program with NKG2A to four clinical trials that we have started this year. What the second number to look at is the debt. The debt is EUR 4.2 million versus EUR 4.8 million last year in 2013.

What the difference means is simply depreciation, repayment of the debt. There is no new debt being taken on by Innate, which is simply the lease of the facility which is running down as planned, no new items. In terms of revenue. Revenue and other income have gone down to EUR 7.6 million versus EUR 16.7 million in 2013.

This is simply an accounting artifact, as you know the source of our revenue continues to be simply two things. One, partner income. In this case, the partner is the upfront from BMS which was recognized over a number of years on the schedule mimicking the rate of drawdown of the work that was planned to be done.

That part has gone down from, for example, EUR 12.5 million in 2013 to just under EUR 1 million in 2014. So that is where the big chunk of the decline in revenue for 2014 was. And the other source of income is of course the research tax credit that French government financing to at the rate of 30% of our research expenditure conducted in Europe.

That has gone up from EUR 4 million to EUR 6.7 million, reflecting the increase in R&D spend over the year. So revenue for Innate, unfortunately will continue to be on a non-comparable basis year-on-year, non-recurring basis simply because the source is not driven by anything that we can throw and then say regular income stream.

That is likely to remain certainly for the next couple of months anyway, then we’ll see what happens. Operating expenses have also increased very much. They’ve gone from EUR 19 million to EUR 28 million in 2014. The good news is that the justification for the employees continues to be the R&D programs.

So 80% of all of our expenses continued to be in R&D and that reflects the fact that we are starting further clinical trials and that we have leased up the clinical organization among others, fuelling the year 2014. So we now have an organization that is essentially fully staffed going forward.

So the operating loss for 2014 was nearly EUR 20 million, EUR 19.6 million at the end of ’14 as a result of all these movements. The concomitant element with the capital increase of the month of June is that the shareholding structure of Innate has also changed significantly during the year.

To-date we believe that we have about 40% of our shareholding abstracting from BPI and Novo in the hands of U.S. specialist investors. The June capital increase also serve the entry of European specialist investors into the Innate stock for the first time in a long time. And as a result, the French re-trade share has gone down to somewhere around 15%.

So no more than that. So we feel that we now have a shareholding structure with liquidity and volume that reflects a good situation for a European biotech playing in this space and we will continue to reinforce our efforts in that area. That is for the financial highlights.

In terms of details, if you see on Page 2 of the press release that was sent to you, the key numbers continue to be the movement in the research tax credit. We expect the 30% to continue to apply going forward.

You may wonder what the share of profit/loss of associates and joint-ventures as EUR 170,000 is? That is simply the part sale of the equity of Innate Pharma in Platine Pharma Services, which in the company that we have created separately to provide services, which we have now partly sold to another player, a specialist in the field in the U.S.

and France. So that is the amount that is referenced to this particular sale.

Another interesting element that happened in December 2014 is the inclusion of Innate Pharma in December in what is the index called the SBF 120 Index, which is a French index of 120 quoted companies based on certain categorization, free flow and liquidity criteria, which simply means that we are now included in another French index, which allows other firms to come in and raise the visibility of the company among another group of investors, which is all to the good.

Those are the highlights of the numbers for 2014. I will be very happy to take any questions you have on this or anything else..

Than you, Catherine. I will now hand over to the operator for questions..

Thank you sir. [Operator Instructions] We have a question from Michael Schmidt from Leerink Partners. Please go ahead..

Hi there. Thanks for taking my questions. Hervé, I have one on IPH2201. I was wondering if support of investigator sponsored studies is something that you are contemplating as a way - as a cost efficient way to spot and the indications that are being studied.

And then for lirilumab, I was wondering if you could comment on the Phase I combination study with nivo. It looks like the study is enrolling patients. How far along is the study? And number three, I was wondering if you have submitted any abstracts to ASCO and if so, what to expect in terms of have there? Thank you..

Thank you, Michael. It’s pleasure. First, the support of investigator sponsored trial. Yes, indeed we do believe this is very interesting opportunity to expand an exploratory program. We have a number of discussions to this direction and also big initiatives there in North America revolving the testing of immuno-oncology agents.

So nothing that we have communicated up to now, but definitely we share your view that this is the possibility on the scheme that is well being explored, as soon and of course as we have established the safety of the current profile of the agent, which as far as IPH2201 is concerned, we feel very comfortable with. So therefore, yes [ph].

Second question is the Phase I regarding the nivolumab/lirilumab combination. So the dose escalation has been currently completed there. We had reached the maximum dose for both agents on - as you know, it’s BMS in-charge of this trial and communicate the corresponding data.

But what we can tell is that we are under way as well as for having the cohort fully recruited at this maximum dosage and then BMS will communicate in due time on this trials. For your third question is the abstract to ASCO regarding the liri program, this is in the hand of - the communication is in the hand of BMS.

So this is rather a question for BMS now. On our side, regarding the IPH22 and other programs, we are more in the mood of communicating on the technical data. So if there is communication on this program which is in its early stage, launching of the Phase II program, you might expect to see they are probably in other talks..

Okay, great. Thank you very much, and congrats on a great 2014..

Thank you Michael..

Thank you. We have the next question from Steve Chesney from Goldman Sachs. Please go ahead..

Yes, good afternoon. Thanks for taking my question. Just to kind of follow-on the nivo/liri combination trial questions.

I mean, do you have any sense for how Bristol wants to communicate these results? Do you think they have a preference for top line press release, or do you think that they’re going to hold back and do this in the form of an abstract at a medical conference? And then the second question as it relates to that in Phase I combination trial is - I mean what should we - how should we be kind of looking at this in terms of the rebound and what would you guys consider a win for the trial? And then finally, given the recent initiation of additional lirilumab clinical trials and the impending rebound from two of the studies this year, do you have any greater visibility on additional milestones from Bristol? And then just around that, if you have any kind of qualitative commentary on sort of the top line and OpEx outlook for 2015, that’d be very helpful.

Thank you..

Thank you, Steve, for all those question which conformantly are question which are mostly directed to BMS, and I’m afraid to say that, but as you know in the context of very fierce competition in this field of immuno-oncology now, we see that the big firms are quite reluctant to communicate early on in the program.

We haven't seen this year to have announcement of start of large trials before the initial trial in the same indication has been published. So we are in a bit a peculiar situation where communication which is handled by our senior partner is we have a limited, if no control over it.

That being said, since we were not far from completion of recruitment of this trial, it’s not unlikely that we heard from BMS regarding the results either top line or next steps possibly for the nivo/lirilumab trial.

It might even be situation where we hear about the next steps without having heard about the detail that are in any conference [ph] or abstract.

So I’m afraid that has notified all your questions, yes, of course - yes regarding the milestone payments, obviously we have milestones attached towards the significant progress in the development of the programs, the details of the milestones have not been communicated, but we’ve told the market that those milestones were approved pre-commercials, so that’s $430 million in total as to registration.

And obviously a fraction of that is attached to significant progresses in the program. So we might expect that if we have the initiation of next step in clinical development, there might be some financial counterpart for Innate..

Okay, thanks.

And then just any other comments on kind of top line and operating expenses for 2015?.

No, that is one thing I didn’t say, Steve. Unlike previous years, we don’t know what the breakdown in terms of cash burn is going to be in each of ’15, ’16 and ’17 because it would depend largely on the rate of initiation recruitment and conduct on these trials that we are bearing internally on our own.

All I know is - and what I can tell you with confidence is that three-year horizon, full-year ’15 to end of ’17, is covered in terms of what the expected costs of these four trials for NKG2A and whatever advancements we make with 41, plus the discovery and the rest of the organization, without taking into account anything that might show up from milestones.

Okay? But I cannot today anticipate if you want to, what the ’15 cash burn will be compared to the ’14 or to the ’16. I would like to be able to come back to maybe at the half-year 2015 when we have greater visibility on how the trial initiation recruitment is going, if that’s okay..

Okay. Great. Thanks very much..

Thank you. We have next question from Sebastien Malafosse from Oddo. Please go ahead..

Yes, hi. Good afternoon. Thank you for taking my question.

Actually I am very interested to know what is your opinion regarding the changes in the clinical program for lirilumab that were made by BMS last year, first on the combo with ipilimumab, what is your feeling on the reason why BMS has stopped the trial? You said that it’s not for safety reasons.

So is it for efficacy reason or any other reason at all? And second on the new trial that was announced head-to-head trial versus urelumab. So it means that at some point BMS will be in the position to maybe make a choice whether in favor of lirilumab or urelumab. So what is again your feeling about this new trial that was announced? Thank you..

Okay. First question, lirilumab, ipilimumab trial. And indeed in November/December, early December, we announced that the recruitment was stopped, which by the way doesn’t mean that the trial is stopped, but the recruitment is on hold. I think that answer to your question is exactly in this sentence. Indeed there was no safety trials.

There are very few patients - safety problems, sorry. There were very few patients being recruited, like six patients out of 22. So nothing in dose escalation that allows for a conclusion for efficacy.

For sure then that is pure speculation, but recruiting a combination that comprise [indiscernible] which from a safety standpoint is not exactly the same profile as PD-11. The PD-1 is available, but it might be more attractive for our patients and for investigators to direct patients to combination that comprise the [indiscernible].

So in fact I would like also to emphasis that on this respect we have new recruitment issue with the nivo/liri trial, which is ongoing at very good base. So I have nothing to comment any more. Maybe BMS would provide more details on that. But again I reemphasize that there was no safety concern there on that.

Obviously efficacy could not be evaluated on this very small heterogeneous [ph] subset of operation. Now your second question relates to the combination of agents. The lirilumab plus elotuzumab trial which has two arms, that’s liri plus elotuzumab and also we have liri plus urelumab.

This trial is not by design - it’s not designed to provide any significant data with respect to the comparison of these two agents in terms of neither efficacy nor tolerance. It’s designed to provide for both combination element of safety, and element of possibly efficacy signals, though this is not primary endpoint there.

So well, let's say to move forward in the development with more informed critical set of information. So it was a randomized to ensure certain level of [indiscernible] population, but it’s not dimension, it’s not designed to compare head-to-head both agents. So which by the way act to different mechanism.

Lirilumab as shown on in our paper to have blood paper directly enhances the effect function of NK cells, which are the main factors for ADCC. Urelumab works through slightly different mechanism involve being also the release of certain cytokines in the environment.

So we are looking forward to having data on hopefully to see the translation in clinics of what we’ve seen in different model that makes a very strong case for the combination of lirilumab. One of type of antibody, elotuzumab being one of this..

Okay. Thank you very much..

Thank you. We have a next question from Ram Narayanan from Citi. Please go ahead..

Hi there. Thank you very much for taking my question. I’ve got three questions. Clearly liri is having the second coming in myeloma in combination.

So I just wanted to get a sense of where do you think liri might fit in, given so much is happening in that space? Is it as an immune doublet with the PD1 or 4-1BB, or is it more in combination with anti-CD38 antibody? So any thoughts that you can share there. The second question on the dose selection for IPH2201.

I see that there is a dose escalation run-in in the ongoing head and neck study.

I’m just curious as to how confident are you that you have the right dose for IPH2201 in oncology? And lastly, can you confirm, yes or no is fine, whether you have any discussions with other companies, other immuno-oncology companies for partnering on IPH22201 or any other assets? And better are you open to non-exclusive licensing agreements with individual PD1 sponsors?.

So three slightly different questions. Thank you, Ram, for those questions. The first one, liri in multiple myeloma. I think it’s too early to talk about positioning that further down the road when we get a sense of efficacy.

The only point that I would like to mention is that of course the mechanism of action of synergistic effects with IgG1 antibody would also work in other antibodies than the elotuzumab on specifically that’s also relevant for CD38 as quite interesting response that come out with the CD38, especially that also in the [indiscernible] BMS because that’s definitely BMS has had let's make our senior partner make the decision probably next step of the product.

Now about dosing of IPH2201 in oncology. Yes, we do believe that we have selected dosage that’s the 10 mgs per kilo which is far the level where you have the full residual situation as shown in the Phase I.

So we have a margin that takes into account the fact that yes, there might be issues in the pharmacokinetic associated with reaching the solid tumor tissue in contrast with mechanism of action where you have soluble site for the pharmacological action, which is readily accessibly from the blood stream.

So with 10 mgs per kilogram, we do believe - and that’s going to be reached after run-in which is 4 mgs per kilogram. So we can push that - probably speaking to do this condition. And we do target 10 mgs per kilo. We do not expect any tolerance issue there since we have the Phase I data.

On the Phase I data, as you heard that the highest situation of the receptor, there is no issue with tolerance. So relative [ph] the situation of the receptor, we go a bit higher than with the Phase I trial. That’s the first I can tell for the dosing of the IPH22.

Now your third question is the broadest, the partnering strategy, non-exclusive or exclusive partnering strategy. Yes, we do see non-industry a number of strategic agreement that provide companies access to asset that can be developed in the context of combination trials.

Indeed with the thing that is - this is one of the interesting means to develop combinations provided of course there is no strength attached with in a way create liability probably or notably immuno-oncology effects. But that said, that’s certainly a very interesting route to pursue.

That said again, we have no plan that comprise for IPH2201, and both monotherapy and also on combination trials, but there are also given the mechanism of action targeting both T cells - CD8 T-cells and NK cells.

A number of exciting combinations that could be tested, in fact the space of opportunities that you might explore with the anti-NKG2A is very broad on non-extremely partnering in terms of new one of the interesting means to extract some of the value exploring some combination that makes sense with this mechanism of action..

Thank you..

Thank you, Ram..

Operator:.

So if no other question, let's close this annual conference call with our annual results. Thanks again for your interest in Innate Pharma. And of course we will be pleased to relay in terms of the next important news on hopefully 2015 will be a very interesting year with a rich news for Innate Pharma. Thanks for your attention and have a great day.

Bye..

Thank you. Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect..