Innocoll 6-K Innocoll AG Announces Second Quarter 2015 Financial and Operating Results and Updates Late-Stage Product Portfolio Progress

Exhibit 99.2

INNOCOLL AG

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS (UNAUDITED)

Thousands of Euros (except share and share data)	Notes		Three months ended 06/30/2015			Three months ended 06/30/2014			Six months ended 06/30/2015			Six months ended 06/30/2014
Revenue		4	€	569		€	1,316		€	1,185		€	2,601
Cost of sales				(1,168	)		(1,391	)		(2,534	)		(2,943	)
Gross loss				(599	)		(75	)		(1,349	)		(342	)
Research and development expenses		5		(4,439	)		(539	)		(9,210	)		(1,047	)
General and administrative expenses		6		(3,547	)		(2,689	)		(6,343	)		(4,791	)
Other operating (expense)/income - net		7		-			(39	)		-			42
Loss from operating activities - continuing operations				(8,585	)		(3,342	)		(16,902	)		(6,138	)
Finance expense		8		(16,132	)		(10,617	)		(13,189	)		(12,250	)
Other income/(expense)				-			75			(1	)		75
Loss before income tax				(24,717	)		(13,884	)		(30,092	)		(18,313	)
Income tax				(24	)		(66	)		(55	)		(86	)
Loss for the period - all attributable to equity holders of the Company			€	(24,741	)	€	(13,950	)	€	(30,147	)	€	(18,399	)
Other comprehensive income:
Currency translation adjustment				181			(38	)		(397	)		(43	)
Total comprehensive loss for the period			€	(24,560	)	€	(13,988	)	€	(30,544	)	€	(18,442	)
Basic and diluted loss per share (euro)		9	€	(15.0	)	€	(79.2	)	€	(19.1	)	€	(170.7	)

INNOCOLL AG

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

at June 30, 2015 (unaudited) and December 31, 2014

Thousands of Euros	Notes		06/30/2015			12/31/2014
			(unaudited)
Assets
Property, plant and equipment		10	€	1,840		€	1,238
Total non-current assets				1,840			1,238
Inventories		11		1,318			1,118
Trade and other receivables		12		3,552			761
Cash and cash equivalents				46,697			45,616
Total current assets				51,567			47,495
Total assets			€	53,407		€	48,733
Equity
Share capital				1,727			1,503
Share premium				136,154			122,084
Capital contribution				723			723
Other reserves				12,415			12,415
Currency translation reserve				(1,019	)		(622	)
Accumulated share compensation reserve				6,213			5,149
Accumulated deficit				(136,865	)		(106,718	)
Total equity attributable to equity holders of the company				19,348			34,534
Liabilities
Warrant liability		14		24,498			7,239
Defined pension liability				62			61
Total non-current liabilities				24,560			7,300
Trade and other payables		13		7,184			5,055
Deferred income		4		2,307			1,835
Current taxes payable				8			9
Total current liabilities				9,499			6,899
Total liabilities				34,059			14,199
Total equity and liabilities			€	53,407		€	48,733

See accompanying notes to unaudited condensed consolidated interim financial information.

INNOCOLL AG

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

at June 30, 2015

Thousands of Euros	Share capital		Share premium		Capital contribution		Other reserves			Currency translation reserve			Share compensation reserve		Accumulated deficit			Total
Balance at January 1, 2014	€	39	€	7,074	€	723	€	10,642		€	1		€	-	€	(86,052	)	€	(67,573	)
Total comprehensive income		-		-		-		-			(43	)		-		(18,401	)		(18,444	)
Share based payment		-		-		-		-			-			1,687		-			1,687
Equity arising on convertible debt		-		-		-		1,773			-			-		-			1,773
Conversion of preference into ordinary shares		841		72,194		-		-			-			-		-			73,035
Issue of ordinary shares		39		3,654		-			-		-			-		-			3,693
Balance at June 30, 2014	€	919	€	82,922	€	723	€	12,415		€	(42	)	€	1,687	€	(104,453	)	€	(5,829	)
Balance at January 1, 2015		1,503		122,084		723		12,415			(622	)		5,149		(106,718	)		34,534
Total comprehensive loss		-		-		-		-			(397	)		-		(30,147	)		(30,544	)
Share based payment		-		-		-		-			-			1,064		-			1,064
Issue of ordinary shares net of issue costs		224		14,070		-		-			-			-		-			14,294
Balance at June 30, 2015	€	1,727	€	136,154	€	723	€	12,415		€	(1,019	)		6,213	€	(136,865	)	€	19,348

See accompanying notes to unaudited condensed consolidated interim financial information.

INNOCOLL AG

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)

for the six months ended June 30, 2015 and 2014

Thousands of Euros	Six months ended 06/30/2015			Six months ended 06/30/2014
Operating activities loss for the period		(30,147	)		(18,399	)
Adjustments for:
Finance expense		13,189			12,250
Depreciation/impairment of property, plant & equipment		153			137
Income tax expense		55			86
Loss/(profit) on the sale of fixed assets		1			(75	)
Share based payment		1,064			`1,601
Foreign exchange (gains)/losses		(226	)		10
Operating cash outflows before movements in working capital		(15,911	)		(4,390	)
(Increase)/decrease in inventory		(200	)		580
(Increase) in trade and other receivables		(2,791	)		(1,126	)
Increase in trade and other payables		2,129			2,174
Increase/(decrease) in deferred income and defined benefit pension liability		473			(623	)
Income taxes paid		(56	)		(86	)
Net cash used in operating activities		(16,356	)		(3,471	)
Cash flows from investing activities:
Purchases of property, plant and equipment		(756	)		(293	)
Interest received		(5	)		-
Proceeds on sale of fixed assets		-			75
Net cash used in investing activities		(761	)		(218	)
Cash inflows from financing activities:
Proceeds from issue of shares net of issue costs		14,294			12,497
Net cash inflows from financing activities		14,294			12,497
Net (decrease)/increase in cash and cash equivalents		(2,823	)		8,808
Cash and cash equivalents at the beginning of the period		45,616			2,692
Effect of foreign exchange rate changes		3,904			33
Cash and cash equivalents at the end of the period	€	46,697		€	11,533

See accompanying notes to unaudited condensed consolidated interim financial information.

INNOCOLL AG

NOTES TO THE CONDENSED CONSOLIDATED INTERIM

FINANCIAL INFORMATION

(UNAUDITED)

1   Reporting entity

Innocoll AG, a German stock corporation, is a global, commercial stage, specialty pharmaceutical company, with late stage development programs targeting areas of significant unmet medical need.

2   Basis of preparation

The condensed interim consolidated financial information are for the three months and six months ended June 30, 2015 and are presented in euro (‘€’). They do not include all of the information required in annual financial statements prepared in accordance with IFRSs, and should be read in conjunction with the consolidated financial statements for the year ended December 31, 2014.

The interim financial statements have been approved for issue by the Supervisory Board on August 13^th, 2015.

Correction of comparatives

During the three months ended September 30, 2014 the company identified and corrected an amount of €0.3m relating to share issuance costs that resulted in a decrease of general and administrative expense and a decrease in share premium that would have been recorded during the three months ended March 31, 2014. The adjustment was made in the nine months ended September 30, 2014 and management has deemed that the adjustment was not material to the quarter or six months ended June 30, 2014.

In evaluating whether the company’s previously issued consolidated financial statements were materially misstated, the company considered the guidance in “IAS 8 Accounting policies, changes in accounting estimates and errors” and the company concluded that correction of the prior period amount was not material individually or in the aggregate to the quarter or six months ended June 30, 2014.

3   Summary of significant accounting policies

The accounting policies applied in this interim financial information is the same as those applied in the group’s consolidated financial information as at and for the year ended December 31, 2014.

4   Segmental reporting

The entire group’s revenue is derived from one operating segment which can be spread among five geographical regions. The group principally sells four products; CollatampG® globally outside of the United States, Septocoll®within Europe and the Middle East, CollaGUARD® within Europe, the Middle East and Asia and RegenePro® within the United States. The results of the group are reported on a consolidated basis to the chief operating decision maker of the group, the chief executive officer. There are no reconciling items between the group’s reported income statement and statement of financial position and the results and financial position, respectively, of the above segment.

The majority of the product revenue for the three months ended June 30, 2015 of €0.6 million, relates to sales of CollatampG®. The group receives a contractually agreed percentage of the net in-market sales of CollatampG® from one of its customers which distributes the product. This is recognized in two parts; the first amount is recognized for the manufacture and sale of product at the point of sale; and the final amount when the product is sold.

As of June 30, 2015, the group had deferred income in the amount of €2.3 million relating to upfront payments in the amount of €0.8 million in respect of Septocoll® customers, €1.1m in respect of its CollaGUARD® customers with the remaining €0.4 million relating to its RegenePro® customer. Innocoll expects to deliver products to these customers in 2015 and in 2016 in settlement of these advance payments.

As mentioned above, the group has determined that all revenue is derived from one business segment. The supervisory board has reviewed the impact of IFRS 8 “Operating Segments” on the financial statements with the above in mind. Given that the group only has one business segment, the supervisory board has concluded that it is not necessary to show the full requirements of the standard within this note as the key information is displayed in other areas of the financial information.

INNOCOLL AG

NOTES TO THE CONDENSED CONSOLIDATED INTERIM

FINANCIAL INFORMATION - (Continued)

(UNAUDITED)

4   Segmental reporting (continued)

The distribution of revenue by customers’ geographical area was as follows:

Thousands of Euros	Three months ended 06/30/15		Three months ended 06/30/14		Six months ended 06/30/15		Six months ended 06/30/14
Europe		526		1,277		1,125		2,555
US		8		2		19		9
Asia		35		37		41		37
Gross revenue		569		1,316		1,185		2,601

5   Research and development expenses

Thousands of Euros	Three months ended 06/30/15		Three months ended 06/30/14		Six months ended 06/30/15		Six months ended 06/30/14
Employee compensation		494		358		925		725
External clinical research costs		3,765		88		7,948		130
General operating costs		180		93		337		192
Total research and development expenses		4,439		539		9,210		1,047

Research and development expenses include labor, materials and direct overheads associated with the various research programs.

6   General and administrative expenses

Thousands of Euros	Three months ended 06/30/15		Three months ended 06/30/14		Six months ended 06/30/15		Six months ended 06/30/14
Employee compensation		1,469		672		2,193		1,258
Depreciation		79		52		153		62
Share based payment		517		1,118		1,064		1,601
Other		1,482		847		2,933		1,870
Total general and administrative expenses		3,547		2,689		6,343		4,791

7   Other operating expense - net

Thousands of Euros	Three months ended 06/30/15		Three months ended 06/30/14		Six months ended 06/30/15		Six months ended 06/30/14
Impairment of property, plant and equipment		-		38		-		75
Compensation for amendments to supply agreement		-		-		-		(118	)
Other expense		-		1		-		1
Total other operating expense		-		39		-		(42	)

INNOCOLL AG

NOTES TO THE CONDENSED CONSOLIDATED INTERIM

FINANCIAL INFORMATION - (Continued)

(UNAUDITED)

8   Finance expense

Thousands of Euros	Three months ended 06/30/15			Three months ended 06/30/14			Six months ended 06/30/15			Six months ended 06/30/14
Interest on convertible preferred shares		-			1,427			-			3,064
Fair value expense on warrants		14,420			9,272			17,259			9,272
Foreign exchange loss/(gain)		1,684			(82	)		(4,074	)		(87	)
Interest received		(106	)		-			(130	)		-
Other expense		134			-			134			1
Total finance expense		16,132			10,617			13,189			12,250

9   Loss per share

The weighted average number of ordinary shares (denominator - basic) amounted to 1,655,403 for the three months ended June 30, 2015 (three months ended June 30, 2014: 176,083).

The basic loss per share for the three months ended June 30, 2015 was €15.0 (three months ended June 30, 2014: €79.2).

The weighted average number of ordinary shares (denominator - basic) amounted to 1,579,757 for the six months ended June 30, 2015 (six months ended June 30, 2014: 107,796).

The basic loss per share for the six months ended June 30, 2015 was €19.1 (loss for the six months ended June 30, 2014: €170.7).

	Three months ended 06/30/2015			Three months ended 06/30/2014			Six months ended 06/30/2015			Six months ended 06/30/2014
Numerator  - Thousands of Euros:
Net loss  - basic and diluted		(24,741	)		(13,950	)		(30,147	)		(18,399	)
Denominator - number of shares:
Weighted-average shares outstanding -  basic and diluted		1,655,403			176,083			1,579,757			107,796
Loss per share:
Basic and diluted		(15.0	)		(79.2	)		(19.1	)		(170.7	)

INNOCOLL AG

NOTES TO THE CONDENSED CONSOLIDATED INTERIM

FINANCIAL INFORMATION - (Continued)

(UNAUDITED)

9   Loss per share (continued)

The tables below include a reconciliation of the Company’s GAAP results to non-GAAP results.

For the three months ended June 30, 2015 the reconciliation primarily relates to non-cash expense in the amount of €0.5 million with respect to share-based compensation and €14.4 million with respect to fair value expense on warrants. On a non-GAAP-basis, the net loss for the three months ended June 30, 2015 was €9.8 million, or €5.9 per share, compared to €3.6 million, or €20.2 per share for the three months ended June 30, 2014.

For the six months ended June 30, 2015 the reconciliation primarily relates to non-cash expenses in the amount of €1.1 million with respect to share-based compensation and €17.3 million with respect to fair value expense on warrants. On a non-GAAP-basis, the net loss for the six months ended June 30, 2015 was €11.8 million, or €7.5 per share, compared to €7.5 million, or €69.8 per share for the six months ended June 30, 2014.

	Three months ended 06/30/2015			Three months ended 06/30/2014			Six months ended 06/30/2015			Six months ended 06/30/2014
Numerator for non-GAAP loss per share- Thousands of Euros:
Net loss  - basic and diluted		(24,741	)		(13,950	)		(30,147	)		(18,399	)
Share based payments		517			1,118			1,064			1,601
Fair value expense on warrants		14,420			9,272			17,259			9,272
Non-GAAP net loss - basic		(9,804	)		(3,560	)		(11,824	)		(7,526	)
Denominator - number of shares:
Weighted-average shares outstanding – basic and diluted		1,655,403			176,083			1,579,757			107,796
Loss per share:
Basic and diluted		(5.9	)		(20.2	)		(7.5	)		(69.8	)

INNOCOLL AG

NOTES TO THE CONDENSED CONSOLIDATED INTERIM

FINANCIAL INFORMATION - (Continued)

(UNAUDITED)

10   Property, plant and equipment

Thousands of Euros	Leasehold  improvements		Plant &  machinery		Furniture  & fittings			Total
Cost
Balance January 1, 2015		937		11,489		1,679			14,105
Additions		47		614		95			756
Disposals		-		-		(110	)		(110	)
Balance June 30, 2015		984		12,103		1,664			14,751
Depreciation
Balance January 1, 2015		519		10,736		1,612			12,867
Depreciation charge for period		31		111		11			153
Depreciation on disposals		-		-		(109	)		(109	)
Balance June 30, 2015		550		10,847		1,514			12,911
Net book value
At June 30, 2015		434		1,256		150			1,840

Thousands of Euros	Leasehold improvements		Plant & machinery			Furniture & fittings		Total
Cost
Balance January 1, 2014		673		11,102			1,657		13,432
Additions		-		287			6		293
Disposals		-		(236	)		-		(236	)
Balance June 30, 2014		673		11,153			1,663		13,489
Depreciation
Balance January 1, 2014		479		10,615			1,606		12,700
Depreciation charge for period		8		52			2		62
Impairment charge for period		-		75			-		75
Disposals		-		(236	)		-		(236	)
Balance June 30, 2014		487		10,506			1,608		12,601
Net book value
At June 30, 2014		186		647			55		888

INNOCOLL AG

NOTES TO THE CONDENSED CONSOLIDATED INTERIM

FINANCIAL INFORMATION - (Continued)

(UNAUDITED)

10   Property, plant and equipment (continued)

Thousands of Euros	Leasehold  improvements		Plant &  machinery			Furniture  & fittings		Total
Cost
Balance January 1, 2014		673		11,102			1,657		13,432
Additions		264		623			22		909
Disposals		-		(236	)				(236	)
Balance December 31, 2014		937		11,489			1,679		14,105
Depreciation
Balance January 1, 2014		479		10,615			1,606		12,700
Depreciation charge for year		40		202			6		248
Impairment charge for year		-		155			-		155
Disposals		-		(236	)		-		(236	)
Balance December 31, 2014		519		10,736			1,612		12,867
Net book value
At December 31, 2014		418		753			67		1,238

11   Inventories

Thousands of Euros	06/30/2015		12/31/2014
Raw materials		613		511
Work in progress		628		505
Finished goods		77		102
Total inventories		1,318		1,118

The replacement cost of inventory does not differ materially from its carrying value. The impairment provision against inventory amounted to €0.5 million (2014: €0.6 million).

12   Trade and other receivables

Thousands of Euros	06/30/2015		12/31/2014
Trade receivables, net		362		326
Sales taxes receivable		220		159
Prepaid expenses and other current assets		2,970		276
Total trade and other receivables		3,552		761

The impairment provision against trade receivables amounted to €0.04 million at June 30, 2015 (2014: €0.04 million).

13   Trade and other payables

Thousands of Euros	06/30/2015		12/31/2014
Trade payables		4,552		2,525
Accrued expenses		2,632		2,530
Total trade and other payables		7,184		5,055

INNOCOLL AG

NOTES TO THE CONDENSED CONSOLIDATED INTERIM

FINANCIAL INFORMATION - (Continued)

(UNAUDITED)

14    Warrant liability

All options to investors have been classified as a liability due to certain provisions pursuant to which the exercise price of the options may be reduced in the event that the company issues or sells any of its ordinary shares at a price per share less than the exercise price in effect immediately prior to such issue or sale. Pursuant to a notarial deed entered into on June 16, 2014 the shareholders of Innocoll GmbH agreed to amend and terminate all preference, redemption and cumulative dividend rights by converting all preferred shares into ordinary shares of Innocoll GmbH, which had the effect of increasing the value of the ordinary shares and the options.  On July 3 2014, Innocoll GmbH transformed into a German stock corporation Innocoll AG, and Innocoll AG subsequently entered into an amended and restated Option Agreement with the option holders on July 10, 2014.   The options issued by Innocoll AG have an initial expiration date of June 15, 2019, subject to possible extension for an additional 54 month period subject to a shareholder resolution.  Innocoll AG issued ADS in its initial public offering priced on July 24, 2014 at a price of $9.00 per ADS, or the equivalent of €88.52 per ordinary share.  This resulted in the reduction of the exercise price from €100.00 per ordinary share to €88.52 per ordinary share pursuant to the above-described exercise price adjustment provision.  A follow on offering in April 2015 was also priced at $9 and therefore the exercise price of the options remains unaffected. In addition, as Innocoll AG is a public company post the completion of its initial public offering, the shareholder resolution required for the term extension is uncertain, therefore the expiration date for purposes of valuation is assumed to be June 15, 2019.  As a result of the above described provisions and events, the option liability has been valued at €24.5 million as of June 30, 2015 as compared to €7.2 million as of December 31, 2014.    

15    Capital Commitments

In June, 2015 the Company entered a lease for a building beside its Saal, Germany manufacturing facility. Prior to the lease commencing the Landlord is to carry out reconstruction work on the building. The Company has committed to contribute €0.5 million to the cost of the reconstruction.

16    Post balance sheet event

There have been no significant post balance sheet events.

INNOCOLL AG

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS (UNAUDITED)

CONVENIENCE TRANSLATION INTO US DOLLARS

Thousands of US Dollars, converted at a rate of $1.1189 per euro (except for share and share data)	Three Months Ended 06/30/15			Six Months Ended 06/30/15
Revenue	$	637		$	1,326
Cost of sales		(1,307	)		(2,835	)
Gross loss		(670	)		(1,509	)
Research and development expenses		(4,967	)		(10,305	)
General and administrative expenses		(3,969	)		(7,097	)
Other operating expense - net		-			-
Loss from operating activities - continuing operations		(9,606	)		(18,911	)
Finance expense		(18,050	)		(14,757	)
Other income		-			(1	)
Loss before income tax		(27,656	)		(33,669	)
Income tax		(27	)		(62	)
Loss for the period - all attributable to equity holders of the Company		(27,683	)		(33,731	)
Other comprehensive income:
Currency translation adjustment		203			(444	)
Total comprehensive loss for the period		(27,480	)		(34,175	)
Basic and diluted loss per share (USD)		(16.7	)		(21.4	)

INNOCOLL AG

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

CONVENIENCE TRANSLATION INTO US DOLLARS

at June 30, 2015 (unaudited)

Thousands of US Dollars, converted at a rate of $1.1189 per euro	06/30/2015
	(unaudited)
	($’000)
Assets
Property, plant and equipment	$	2,059
Total non-current assets		2,059
Inventories		1,475
Trade and other receivables		3,974
Cash and cash equivalents		52,249
Total current assets		57,698
Total assets		59,757
Equity
Share capital		1,932
Share premium		152,343
Capital contribution		809
Other reserves		13,891
Currency translation reserve		(1,140	)
Accumulated share compensation reserve		6,952
Accumulated deficit		(153,138	)
Total equity attributable to equity holders of the company		21,649
Liabilities
Warrant liability		27,411
Defined pension liability		69
Total non-current liabilities		27,480
Trade and other payables		8,038
Deferred income		2,581
Current taxes payable		9
Total current liabilities		10,628
Total liabilities		38,108
Total equity and liabilities	$	59,757

INNOCOLL AG

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)

CONVENIENCE TRANSLATION INTO US DOLLARS

for the six months ended June 30, 2015

Thousands of US Dollars, converted at a rate of $1.1189 per euro	Six  months ended 06/30/2015
	($’000)
Operating activities loss for the period	$	(33,731	)
Adjustments for:
Finance expense		14,757
Depreciation/impairment of property, plant & equipment		171
Income tax expense		62
Loss on the sale of fixed assets		1
Share based payment		1,191
Foreign exchange gains		(253	)
Operating cash outflows before movements in working capital		(17,802	)
Increase in inventory		(224	)
Increase in trade and other receivables		(3,123	)
Increase in trade and other payables		2,382
Increase in deferred income and defined benefit pension liability		529
Income taxes paid		(63	)
Net cash used in operating activities		(18,301	)
Cash flows from investing activities:
Purchases of property, plant and equipment		(846	)
Interest received		(6	)
Proceeds on sale of fixed assets		-
Net cash used in investing activities		(852	)
Cash inflows from financing activities:
Proceeds from issue of shares- net of issue costs		15,994
Net cash inflows from financing activities		15,994
Net decrease in cash and cash equivalents		(3,159	)
Cash and cash equivalents at the beginning of the period		51,040
Effect of foreign exchange rate changes		4,368
Cash and cash equivalents at the end of the period	$	52,249