Exhibit 99.1


Unaudited Interim Condensed Consolidated
Financial Statements
September 30, 2019





November 7, 2019

Management’s Responsibility for Financial Reporting

The accompanying unaudited interim condensed consolidated financial statements of IMV Inc. (the “Corporation”) are the responsibility of management and have been approved by the Board of Directors. The consolidated financial statements have been prepared by management in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. The consolidated financial statements include some amounts and assumptions based on management’s best estimates which have been derived with careful judgment.

In fulfilling its responsibilities, management has developed and maintains a system of internal accounting controls. These controls are designed to ensure that the financial records are reliable for preparation of the consolidated financial statements. The Audit Committee of the Board of Directors reviewed and approved the Corporation’s consolidated financial statements, and recommended their approval by the Board of Directors.

(signed) Frederic Ors (signed) Pierre Labbé”
  Chief Executive Officer   Chief Financial Officer

 





IMV Inc.
Unaudited Interim Condensed Consolidated Statements of Financial Position
As at September 30, 2019 and December 31, 2018
(Expressed in thousands of Canadian dollars except for per share amounts)

 

  September 30,   December 31,  
  2019   2018  
  $   $  
Assets        
Current assets        
Cash and cash equivalents 21,374   14,895  
Amounts receivable 959   1,337  
Prepaid expenses 3,675   2,700  
Investment tax credits receivable 1,349   1,110  
  27,357   20,042  
Property and equipment 2,972   2,883  
  30,329   22,925  
Liabilities        
Current liabilities        
Accounts payable and accrued liabilities 5,876   7,575  
Amounts due to directors 62   49  
Current portion of long-term debt (note 5) 87   81  
Current portion of lease obligation 99   90  
  6,124   7,795  
Lease obligation 1,234   1,308  
Deferred share units (note 4)   1,436  
Long-term debt (note 5) 8,327   8,069  
  15,685   18,608  
Equity 14,644   4,317  
  30,329   22,925  

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

Approved on behalf of the Board of Directors

(signed) “James W. Hall”, Director (signed) “Wayne Pisano”, Director

 





IMV Inc.
Unaudited Interim Condensed Consolidated Statements of Changes in Equity
For the period ended September 30, 2019 and December 31, 2018
(Expressed in thousands of Canadian dollars except for per share amounts)

 

  Share   Contributed              
  Capital   Surplus   Warrants   Deficit   Total  
  $   $   $   $   $  
  (note 6)   (note 7)   (note 8)          
                   
Balance, December 31, 2017 70,113   6,375   674   (70,819 ) 6,343  
Net loss and comprehensive loss for the period       (21,935 ) (21,935 )
Issuance of shares in public offering 14,375         14,375  
Share issuance costs (1,480 )       (1,480 )
Redemption of DSUs, net of applicable taxes 220         220  
Issuance of broker warrants     332     332  
Exercise of warrants 5,480     (591 )   4,889  
Employee share options:                    
Value of services recognized   1,182       1,182  
Exercise of options 1,444   (1,053 )     391  
Balance, December 31, 2018 90,152   6,504   415   (92,754 ) 4,317  
                     
Net loss and comprehensive loss for the period       (18,890 ) (18,890 )
Issuance of shares in public offering 29,456         29,456  
Share issuance costs (2,499 )       (2,499 )
Exercise of warrants 82     (21 )   61  
Warrants expired   62   (62 )    
Deferred share units settled in shares:                    
Reclassification of units to equity-settled   955       955  
Value of services recognized   148       148  
Employee share options:                    
Value of services recognized   1,001       1,001  
Exercise of options 353   (258 )     95  
Balance, September 30, 2019 117,544   8,412   332   (111,644 ) 14,644  

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





IMV Inc.
Unaudited Interim Condensed Consolidated Statements of Loss and Comprehensive Loss
For the three and nine months ended September 30, 2019 and 2018
(Expressed in thousands of Canadian dollars except for per share amounts)

 

  Three months ended Nine months ended
      September 30,       September 30,  
  2019   2018   2019   2018  
  $   $   $   $  
Revenue                
Subcontract revenue 13   6   26   49  
Interest revenue 151   119   405   300  
  164   125   431   349  
Expenses                
Research and development 5,652   3,897   13,467   8,384  
General and administrative 2,635   2,349   6,778   6,281  
Government assistance (606 ) (404 ) (2,093 ) (868 )
Accreted interest (note 5) 379   270   1,169   806  
  8,060   6,112   19,321   14,603  
Net loss and comprehensive loss for the year (7,896 ) (5,987 ) (18,890 ) (14,254 )
Basic and diluted loss per share (0.16 ) (0.14 ) (0.38 ) (0.33 )
Weighted-average shares outstanding 50,615,488   44,923,009   49,324,232   43,342,664  

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





IMV Inc.
Unaudited Interim Condensed Consolidated Statements of Cash Flows
For the nine months ended September 30, 2019 and 2018
(Expressed in thousands of Canadian dollars except for per share amounts)

 

  Nine months ended September 30,
  2019   2018  
  $   $  
Cash provided by (used in)        
Operating activities        
Net loss and comprehensive loss for the year (18,890 ) (14,254 )
Charges to operations not involving cash        

Interest on lease obligation

112   55  

Depreciation of property and equipment

374   205  

Accretion of long-term debt

1,169   806  

Deferred share unit compensation

(332 ) 405  

Stock-based compensation

1,001   835  

Loss on disposal of assets

2    

Revaluation of long-term debt

(840 ) 8  

Net cash flows used by operating activities before changes in non-cash working capital items

(17,404 ) (11,940 )
         
Net change in non-cash working capital balances related to operations        

Decrease (increase) in amounts receivable

378   (396 )

Increase in prepaid expenses

(975 ) (585 )

Increase in investment tax credits receivable

(239 ) (459 )

(Decrease) increase in accounts payable and accrued liabilities

(1,699 ) 1,146  

Increase in amounts due to directors

13   21  
  (19,926 ) (12,213 )
Financing activities        
Proceeds from public offering 29,456   14,375  
Share issuance costs in public offering (2,499 ) (1,148 )
Proceeds from the exercise of stock options 95   388  
Proceeds from the exercise of warrants 61   4,477  
Incentive contribution from lessor   896  
Proceeds from long-term debt   200  
Withholdings on redemption of DSUs   (97 )
Repayment of long-term debt (65 ) (50 )
Repayment of lease obligation (180 ) (14 )
  26,868   19,027  
Investing activities        
Acquisition of property and equipment (463 ) (1,466 )
Proceeds from sale of assets   14  
  (463 ) (1,452 )
Net change in cash and cash equivalents during the period 6,479   5,362  
Cash and cash equivalents – Beginning of period 14,895   14,909  
Cash and cash equivalents – End of period 21,374   20,271  
Supplementary cash flow        
Interest received 405   300  

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





IMV Inc.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
As at September 30, 2019 and December 31, 2018
(Expressed in thousands of Canadian dollars except for per share amounts)

 

1 Nature of operations

IMV Inc. (the “Corporation”, “IMV”) is, through its 100% owned subsidiary, a clinical stage biopharmaceutical company dedicated to making immunotherapy more effective, more broadly applicable, and more widely available to people facing cancer. IMV is pioneering a new class of immunotherapies based on the Corporation’s proprietary drug delivery platform (“DPX”). This patented technology does not release the active ingredients at the site of injection but forces an active uptake and delivery of active ingredients into immune cells and lymph nodes. The Corporation’s first cancer immunotherapy uses survivin based peptides licensed from Merck KGaA, on a worldwide exclusive basis, formulated in DPX (“DPX-Survivac”). DPX-Survivac, has demonstrated the ability to induce prolonged T cell activation leading to tumour regressions in advanced ovarian cancer and is currently being used in clinical trials as a monotherapy and in combination with Merck’s KEYTRUDA® checkpoint inhibitor. The Corporation has one reportable and geographic segment. Incorporated under the Canada Business Corporations Act and domiciled in Dartmouth, Nova Scotia, the shares of the Corporation are listed on the Nasdaq Stock Market and the Toronto Stock Exchange under the symbol “IMV”. The address of its principal place of business is 130 Eileen Stubbs Avenue, Suite 19, Dartmouth, Nova Scotia, Canada.

2 Basis of presentation

The Corporation prepares its unaudited interim condensed consolidated financial statements in accordance with Canadian generally accepted accounting principles as set out in the Chartered Professional Accountants of Canada Handbook – Accounting Part I, which incorporates International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

These unaudited interim condensed consolidated financial statements have been prepared in accordance with IFRS applicable to the preparation of interim financial statements, including IAS 34, International Accounting Standards 34 “Interim Financial Reporting”. Accordingly, certain information normally included in annual audited financial statements prepared in accordance with IFRS, as issued by the IASB, have been omitted or condensed. The unaudited interim condensed consolidated financial statements should be read in conjunction with the Corporation’s annual audited consolidated financial statements for the year ended December 31, 2018.

3 Significant accounting policies, judgements and estimation uncertainty

These unaudited interim condensed consolidated financial statements have been prepared using the same policies and methods as the annual audited consolidated financial statements of the Corporation for the period ended December 31, 2018, with the exception of a change to the accounting policy for Deferred Share Units as described in note 4 of these unaudited interim condensed consolidated financial statements. Refer to note 4 of the Corporation’s annual audited consolidated financial statements for the year ended December 31, 2018 for more information on accounting policies and methods applied.

(2)





IMV Inc.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
As at September 30, 2019 and December 31, 2018
(Expressed in thousands of Canadian dollars except for per share amounts)

 

4 Deferred share units (“DSUs”)

The maximum number of common shares which the Corporation is entitled to issue from Treasury in connection with the redemption of DSUs granted under the DSU Plan is 468,750 common shares.

DSU activity for the nine months ended September 30, 2019 and the year ended December 31, 2018 are as follows:

    September 30,   December 31,  
    2019   2018  
    Number   Number  
  Opening balance 223,604   186,330  
  Granted 100,299   97,072  
  Redeemed   (59,798 )
  Closing balance 323,903   223,604  

As at September 30, 2019, there were 323,903 (2018 - 223,604) DSUs outstanding related to this Plan.

On August 8, 2019 (“the reclassification date”), the the Corporation resolved to settle all future DSU redemptions in shares, instead of cash. All outstanding DSUs are accordingly now considered equity-settled instruments. As a result of this change, the fair value of the DSUs at the reclassification date were reclassified from liabilities to contributed surplus.

The Corporation grants deferred share units (“DSUs”) to members of its Board of Directors (“Board Members”), who are not employees or officers of the Corporation. DSUs cannot be redeemed until the holder is no longer of director of the Corporation. In accordance with the DSU Plan, DSUs for ongoing services are granted quarterly and vest immediately. The Board can also grant DSUs at its discretion, which may vest over time. The value attributable to DSUs is based on the market value at the time of grant and a compensation expense is recognized in general and administrative expenses on the consolidated statement of loss and comprehensive loss in accordance with the vesting terms. At the time of redemption, each DSU may be exchanged for one common share of IMV Inc.

The compensation expense (recovery) at September 30, 2019 was ($332) (2018 - $508 expense), recognized over the vesting period. Vested DSUs cannot be redeemed until the holder is no longer a member of the Board.

Subsequent to the reclassification date, 36,931 equity-settled DSUs were granted to Board Members with a weighted average grant date value per DSU of $3.87. All services received in exchange for the grant of DSUs were measured at their fair values at the time of grant and vest immediately.

(3)





IMV Inc.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
As at September 30, 2019 and December 31, 2018
(Expressed in thousands of Canadian dollars except for per share amounts)

 

5 Long-term debt

 

    September 30,   December 31,  
    2019   2018  
    $   $  
 

Atlantic Canada Opportunities Agency (“ACOA”) Atlantic Innovation Fund interest-free loan with a maximum contribution of $3,786. Annual repayments, commencing December 1, 2008, are calculated as a percentage of gross revenue for the preceding fiscal year, at 2% when gross revenues are less than $5,000 and 5% when gross revenues are greater than $5,000. As at September 30, 2019, the amount drawn down on the loan, net of repayments, is $3,744 (2018 - $3,744).

1,518   1,202  
 

ACOA Atlantic Innovation Fund interest-free loan with a maximum contribution of $3,000. Annual repayments, commencing December 1, 2011, are calculated as a percentage of gross revenue for the preceding fiscal year, at 2% when gross revenues are less than $5,000 and 5% when gross revenues are greater than $5,000. As at September 30, 2019, the amount drawn down on the loan is $2,995 (2018 - $2,995).

1,396   1,034  
 

ACOA Business Development Program, interest-free loan with a maximum contribution of $395, repayable in monthly payments beginning October 2015 of $3 until October 2017 and $6 until September 2022. As at September 30, 2019, the amount drawn down on the loan, net of repayments, is $201 (2018 - $251).

194   238  
 

TNC 120-140 Eileen Stubbs Ltd. (the “Landlord”) loan of $300,000, bearing interest at 8% annum, is repayable in monthly payments beginning upon receipt of the final installment of the loan until May 31, 2028. The loan is made available in three equal installments based on the Corporation meeting certain milestones. As at September 30, 2019, the amount drawn down on the loan is $285 (2018 - $300).

285   300  
 

Province of Nova Scotia “The Province” secured loan with a maximum contribution of $5,000, interest bearing at a rate equal to the Province’s cost of funds plus 1%, compounded semi-annually and payable monthly. The loan is repayable in monthly payments beginning January 1, 2021 of $83 plus interest until December 2025. The Corporation and its subsidiary have provided a general security agreement granting a first security interest in favour of the Province of Nova Scotia in and to all the assets of the Corporation and its subsidiary, including the intellectual property. As at September 30, 2019, the amount drawn down on the loan is $5,000 (2018 - $5,000).

3,813   4,419  
    8,414   8,150  
  Less: Current portion 87   81  
    8,327   8,069  

(4)





5 Long-term debt (continued)

Total contributions received, less amounts that have been repaid as at September 30, 2019, is $15,169 (2018 -$15,234).

Certain ACOA loans and the Province loan require approval by ACOA or the Minister for the Province before the Corporation can pay management fees, bonuses, dividends or other distributions, before there is any change of ownership of the Corporation. The Province loan requires the Corporation to obtain the written consent of the Province prior to the sale, disposal or abandonment of possession of the intellectual property of the Corporation or its subsidiary. If during the term of the Province loan, the head office, research and development facilities, or production facilities of the Corporation are moved from the Province, the Corporation is required to repay 40% of the outstanding principal of the loan.

In June 2019, the Corporation amended its loan agreement with the Province. Previously, the maturity date of the loan was August 9, 2020. The Corporation shall now start repaying the balance of the principal amount on the first day of January 2021, by making 60 monthly principal payments of $83 plus interest from January 2021 to December 2025. The annual interest rate remains at the Province’s cost of funds plus 1%.

In accounting for this change, the Corporation determined, based on industry risk, its own credit risk and the interest rate environment, that the effective interest rate of the loan of 11% remains appropriate. The difference between the carrying value of the loan before the amendment and after the amendment of $840 has been recorded in the statement of loss and comprehensive loss as government assistance.

The Province loan requires certain early repayments if the Corporation’s subsidiary, or the Corporation on a consolidated basis, has cash flow from operations in excess of $1,500. The Province loan also requires repayment of the loan under certain circumstances, such as changes of control, sale or liquidation of the Corporation or the sale of substantially all of the assets of the Corporation.

    September 30,   December 31,  
    2019   2018  
    $   $  
  Balance – Beginning of year 8,150   6,537  
  Borrowings, net of $nil (2018 - $nil) allocated to government assistance   300  
  Accreted interest 1,169   1,385  
  Revaluation of long-term debt (840 )  
  Repayment of debt (65 ) (72 )
  Balance – End of year 8,414   8,150  
  Less: Current portion 87   81  
  Non-current portion 8,327   8,069  

The Corporation is in compliance with its debt covenants.

(5)





IMV Inc.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
As at September 30, 2019 and December 31, 2018
(Expressed in thousands of Canadian dollars except for per share amounts)

 

6 Share capital

Authorized

Unlimited number of common shares and preferred shares, issuable in series, all without par value.

    Number of      
    common shares   Amount  
    #   $  
  Issued and outstanding        
  Balance – December 31, 2017 40,319,941   70,113  
  Issued for cash consideration, net of issuance costs 2,246,094   12,895  
  Stock options exercised 480,754   1,444  
  DSUs redeemed 29,713   220  
  Warrants exercised 2,029,899   5,480  
  Balance – December 31, 2018 45,106,401   90,152  
  Issued for cash, net of issuance costs 5,404,855   26,957  
  Stock options exercised 105,196   353  
  Warrants exercised 14,423   82  
  Balance – September 30, 2019 50,630,875   117,544  

As at September 30, 2019, a total of 2,015,413 shares (2018 - 1,890,539) are reserved to meet outstanding stock options, warrants and deferred share units.

On March 6, 2019, the Corporation completed a public offering, issuing an aggregate of 4,900,000 common shares at a price of $5.45 per common share, raising gross proceeds of $26,705. On March 11, 2019, the underwriters partially exercised their option to purchase common shares, resulting in the issuance of 504,855 common shares of the Corporation at a price of $5.45 per share for additional gross proceeds of approximately $2,751. As a result of the exercise of this option, the Corporation has raised total gross proceeds of approximately $29,456 before deducting the underwriting commissions and offering expenses of $2,499.

On February 15, 2018, the Corporation completed a bought deal public offering of 2,246,094 common shares at a price of $6.40 per common share, for aggregate proceeds of $14,375. Total costs associated with the offering were $1,480, including cash costs for commissions of $863, professional fees and regulatory costs of $285, and 134,766 compensation warrants issued as commissions to the agents valued at $332. Each compensation warrant entitles the holder to acquire one common share of the Corporation at an exercise price of $6.53 for a period of 24 months, expiring on February 15, 2020.

(6)





IMV Inc.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
As at September 30, 2019 and December 31, 2018
(Expressed in thousands of Canadian dollars except for per share amounts)

 

7 Contributed surplus

 

 
    Amount  
    $  
  Contributed surplus    
  Balance – December 31, 2017 6,375  
  Share-based compensation – stock options vested 1,182  
  Stock options exercised (1,053 )
  Balance – December 31, 2018 6,504  
  Share-based compensation    
 

Stock options vested

1,001  
 

Deferred share units vested

148  
 

Reclassification of DSUs (note 4)

955  
  Stock options exercised (258 )
  Warrants expired 62  
  Balance – September 30, 2019 8,412  

Stock options

The fair values of stock options are estimated using the Black-Scholes option pricing model. In the current year, 243,100 stock options (2018 - 619,505) with a weighted average exercise price of $7.39 (2018 - $6.65) and a term of five years (2018 - five years), were granted to employees. The expected volatility of these stock options was determined using historical volatility rates and the expected life was determined using the weighted average life of past options issued. The value of these stock options has been estimated at $909 (2018 - $2,378), which is a weighted average grant date value per option of $3.74 (2018 - $3.84), using the Black-Scholes valuation model and the following weighted average assumptions:

    2019   2018  
  Risk-free interest rate 1.89%   2.02%  
  Expected volatility 64%   77%  
  Expected life (years) 4.2   4.2  
  Forfeiture rate

5%

  5%  

Option activity for the nine months ended September 30, 2019 and the year ended December 31, 2018 was as follows:

    September 30, 2019 December 31, 2018
        Weighted       Weighted  
        average       average  
    Number   exercise price   Number   exercise price  
        $       $  
  Outstanding – Beginning of year 1,474,477   4.12   1,498,052   2.26  
  Granted 243,100   7.39   619,505   6.65  
  Exercised (139,877 )1 2.32   (626,875 )1 2.18  
  Expired (12,500 ) 2.37   (5,569 ) 1.80  
  Forfeited (8,456 ) 7.24   (10,636 ) 4.92  
  Outstanding – End of year 1,556,744   4.79   1,474,477   4.12  

1Of the 139,877 (2018 - 626,875) options exercised, 98,408 (2018 - 443,748) elected the cashless exercise, under which 63,727 shares (2018 - 297,626) were issued. These options would have otherwise been exercisable for proceeds of $229 (2018 - $975) on the exercise date.

(7)





IMV Inc.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
As at September 30, 2019 and December 31, 2018
(Expressed in thousands of Canadian dollars except for per share amounts)

 

7 Contributed surplus (continued)

Stock options (continued)

The weighted average exercise price of options exercisable at September 30, 2019 was $3.24 (2018 - $4.09).

The maximum number of common shares issuable under the Corporation’s stock option plan shall not exceed 4,600,000 inclusive of all shares presently reserved for issuance pursuant to previously granted stock options.

8 Warrants

Warrant activity for the period ended September 30, 2019 and the year ended December 31, 2018 was as follows:

    September 30, 2019 December 31, 2018
        Weighted           Weighted      
        average           average      
        exercise           exercise      
    Number   price   Amount   Number   price   Amount  
        $   $       $   $  
  Opening balance 192,458   5.84   415   2,087,598   2.46   674  
  Granted       134,766   6.53   332  
  Exercised (14,423 ) 4.22   (21 ) (2,029,906 ) 2.41   (591 )
  Expired (43,269 ) 4.22   (62 )      
  Closing balance 134,766   6.53   332   192,458   5.84   415  

The fair values of warrants are estimated using the Black-Scholes option pricing model. There have been no warrants issued to date in 2019. The weighted average assumptions used in the Black-Scholes valuation model for the periods presented were as follows:

    2018  
  Risk-free interest rate 1.84%  
  Expected volatility 68%  
  Expected dividend yield  
  Expected life (years) 2  

(8)





IMV Inc.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
As at September 30, 2019 and December 31, 2018
(Expressed in thousands of Canadian dollars except for per share amounts)

 

9 Financial instruments

Fair value of financial instruments

Financial instruments are defined as a contractual right or obligation to receive or deliver cash on another financial asset.

The following table sets out the approximate fair values of financial instruments as at the consolidated statements of financial position date with relevant comparatives:

    September 30, 2019 December 31, 2018
    Carrying       Carrying      
    value   Fair value   value   Fair value  
    $   $   $   $  
  Cash and cash equivalents 21,374   21,374   14,895   14,895  
  Amounts receivable 612   612   780   780  
  Accounts payable and accrued liabilities 5,858   5,858   7,557   7,557  
  Amounts due to directors 62   62   49   49  
  Long-term debt 8,414   8,414   8,150   8,150  

Assets and liabilities, such as commodity taxes, that are not contractual and that arise as a result of statutory requirements imposed by governments, do not meet the definition of financial assets or financial liabilities and are, therefore, excluded from amounts receivable and accounts payable.

Fair value of items, which are short-term in nature, have been deemed to approximate their carrying value. The above noted fair values, presented for information only, reflect conditions that existed only at September 30, 2019 and December 31, 2018 and do not necessarily reflect future value or amounts which the Corporation might receive if it were to sell some or all of its assets to a willing buyer in a free and open market.

The fair value of the long-term debt is estimated based on the expected interest rates for similar borrowings by the Corporation at the consolidated statements of financial position dates. At September 30, 2019, the fair value is estimated to be equal to the carrying amount.

10 Related party transactions

During the nine months ended September 30, 2019, there were no related party transactions (2018 - $nil).

(9)