Evotec Case

Financing a strategic drug-development pipeline

kENUP develops first large equity-type investment under EFSI - in any industry, and  anywhere in Europe
Evotec AG (Frankfurt Stock Exchange: EVT, TecDAX, ISIN: DE0005664809) and the European Investment Bank (“EIB”) have announced on September 8, 2017 that the EIB has granted Evotec an unsecured loan facility of up to € 75 m to support Evotec’s Innovation strategy. 

The loan agreement is operated under the European Fund of Strategic Investments (“EFSI”). EFSI is an essential pillar of the Investment Plan for Europe (IPE), under which the EIB and the European Commission are working as strategic partners to boost the competitiveness of the European economy. 

The transaction is the first large equity-type investment under EFSI in any industry anywhere in Europe. Furthermore, it represents EFSI’s first contingent investment, whereupon the bank shares the risk of its client’s research & development (R&D) success. 

Cures are still needed for more than 3,000 serious diseases. As a consequence, indirect healthcare costs for treating patients are enormous, especially considering the impact of ageing populations in many countries of the developed world. Hence, the demand for new therapies continues to see steady growth and this requires innovation in drug discovery in a capital-efficient manner as well as through innovative financing models. 

The core of Evotec’s business is research and development to support Pharma and biotech companies, venture capital groups, academic institutions as well as foundations and not-for-profit organizations. Evotec is building a sustainable pipeline of partnered diseases-modifying product opportunities. Its R&D activities are based on cutting-edge science, highest quality drug discovery platforms (e.g. Evotec’s integrated patient-derived induced pluripotent stem cells (“iPSC”) platform) and innovative collaboration models such as the BRIDGE initiatives from Academia to Pharma. Since 2010, Evotec has built a pipeline of over 80 partnered product opportunities through such partnerships, spin-offs or equity investments. These partnerships hold significant upside value for Evotec in terms of development, clinical and commercial milestones, royalties or alternatively equity participations.
The EIB funding specifically supports Evotec’s Innovation strategy through a unique, innovative and flexible financing structure including a moderate reward-sharing component for the EIB. The € 75 m total loan financing will be invested into R&D over a period of four years and will mature seven years after draw down. The long-term character of this financing reduces the cost of capital for innovation substantially. At the same time, it allows Evotec to pursue innovative drug discovery and development paths even more intensively (e.g. orphan drug programmes; invest in certain technologies and platforms), always focusing on disease-modifying treatments for diseases with an urgent unmet medical need. Evotec expects the first investments with this new funding tool already in 2017.

EIB Vice President Ambroise Fayolle, responsible for Germany and EFSI, said: “We are proud to be able to support Evotec in this innovative and competitive strategy. Boosting research and development and standing by European companies is a priority for the EIB. Innovation is a key element for Europe in a global competition, to help secure competitiveness and jobs in the future and achieve sustainable growth.” 

European Commission Vice-President Jyrki Katainen, responsible for Jobs, Growth, Investment and Competitiveness, added: "The development of innovative treatments is a process which requires sustained investment. This is where the Investment Plan can play a role. I am glad that, with today's agreement, the Plan is supporting research which aims to tackle serious illnesses and diseases."

Dr. Werner Lanthaler, Chief Executive Officer of Evotec, commented: “We are honored to be part of the European Investment Plan fund and are pleased with their trust in our innovation strategy. We will remain very focused on our investments and continue to build world-leading R&D efforts. The support of the EIB with the flexibility and innovative financing model will bring down our cost of capital significantly. Adding this new financing tool to the biotech industry is a truly important milestone and will have a real impact for the global Innovation Ecosystem in drug discovery.” 

BiondVax Case

Developing a Universal Flu Vaccine

The European Investment Bank (EIB) and BiondVax Pharmaceuticals Ltd. (NASDAQ: BVXV, TASE: BVXV) have announced on June 19, 2017, that they will join forces on developing the Universal Flu Vaccine candidate M-001. Through the collaboration, EIB is to provide funding up to up to €20 million to BiondVax’s development and manufacturing plans. 

Flu viruses frequently and unpredictably mutate. Since it is impossible to predict future mutations, current flu vaccines may target strains that are not represented in the current wave of influenza. Mainly due to vaccine-virus mismatch, current flu vaccine effectiveness is on average only about 40% in the general population, and in elderly people as low as 9%. In addition, current vaccines take about 4 to 6 months to produce, and a new one must be produced each year. So when a mismatch is identified at the beginning of the flu season, there is insufficient time to make a new vaccine for that specific season. 

The World Health Organization (WHO) reports up to 500,000 annual seasonal flu related deaths, mostly affecting people above 65 years old. Seasonal flu is the 8th leading cause of death in the USA, and it causes high social and economic burdens to patients, their families, and health care providers.

The technology behind BiondVax’s universal flu vaccine candidate was conceptualized in the lab of Professor Ruth Arnon at the Weizmann Institute of Science in Rehovot, State of Israel.
BiondVax’s M-001 vaccine candidate, consisting of nine widely conserved flu epitopes, is designed to protect against current and future, seasonal and pandemic flu strains. Clinical and pre-clinical trials have shown that M-001 is safe and immunogenic and that it has the capacity to enhance and broaden coverage of current flu vaccines. M-001 has also shown potential to improve upon current seasonal flu vaccines, and potential to serve as an immediate effective response to new flu pandemic strains. The vaccine candidate has been tested in a Phase IIb clinical trial in collaboration with UNISEC, which is funded by the EU under the 7th Framework Programme for Research and Technological Development.

EIB support for the development of BiondVax’s Universal Flu Vaccine Candidate should be seen in the context of the Horizon 2020, the EU's Research Programme, in particular the EU Finance for Innovators finance facility "InnovFin Infectious Diseases", which offers bespoke products for financing high-risk projects in the field of infectious diseases.

The EIB-BiondVax non-dilutive financing agreement will be structured as a zero-percent fixed interest loan, available for up to 36 months with a variable remuneration based on royalties of net sales of M-001 following commercialization. Funds will be advanced in three tranches. The tranches are available up to 12, 24, and 36 months following the date of the agreement, and are dependent on achievement of certain specified milestones, with the ultimate milestone including authorization to launch a Phase 3 trial. The tranches are repayable five years after each drawdown. BiondVax retains the option to repay the loan and repurchase the royalties at any time.

Valneva Case

Innovation in 
vaccine developement

Valneva SE, a leading pure play vaccine company, and the European Investment Bank (EIB), the world’s largest multilateral bank, announced on July 12, 2016, that the EIB granted Valneva a €25 million loan facility to support its vaccine R&D activities. 

Valneva plans to use the EIB financing to support the research and development of vaccines including its Lyme Borreliosis vaccine candidate (the only active development program for Lyme Disease in the vaccine industry) which is due to enter Phase I in 2016, and amongst others, further pre-clinical R&D on Zika virus. 

Valneva recently announced the successful generation of a highly purified Zika vaccine candidate, which can now be further tested in animals and potential human studies. 
The €25 million loan, which is offered on favorable terms, may be utilized by Valneva in one or several tranches within a 24-month period. Each credit tranche is repayable at the end of a five-year period starting from the drawing date. The loan will be secured by collateral over Valneva’s material subsidiaries, mainly ranking behind securities in connection with Valneva’s existing asset-based financing.

The EIB loan granted to Valneva is part of the European Horizon 2020 initiative, in particular the "InnovFin MidCap Growth Finance (MGF) - EU Finance for Innovators" programme - which provides customized products for supporting the development of innovative SMEs and midcaps.
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