On January 10, 2024 Inventiva (Euronext Paris and Nasdaq: IVA) (the "Company"), a clinical-stage biopharmaceutical company focused on the development of oral small molecule therapies for the treatment of patients with non-alcoholic steatohepatitis ("NASH") and other diseases with significant unmet medical needs, reported the drawdown of the second tranche of €25 million of the unsecured loan agreement executed with the European Investment Bank ("EIB") on May 16, 2022 (the "Finance Contract") with a maturity date on or about January 18, 2027 (Press release, Inventiva Pharma, JAN 10, 2024, View Source [SID1234639186]). The disbursement of the second tranche is expected to occur on or about January 18, 2024. On January 4, 2024, and in accordance with the Finance Contract, the Company issued 3,144,654 warrants to EIB.
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Jean Volatier, Deputy Chief Executive Officer and Chief Financial Officer of Inventiva, stated: "The drawdown of this second tranche of €25 million was triggered by the accomplishment of key milestones by Inventiva, and allows us to further finance our pivotal Phase III clinical trial evaluating our lead compound, lanifibranor, in NASH. Inventiva is a leader in drug development for the treatment of NASH and the financial support provided by the EIB through a facility loan totaling €50 million is a testament to the important work of Inventiva in the field. We are truly thankful for the support provided by the EIB."
As previously announced, the Finance Contract provides funding in two tranches of €25 million, each subject to the completion of certain conditions precedent.
After the drawdown of the first tranche in December 20222, the Company was eligible to access the second tranche of €25 million if it met certain conditions precedent described below. Following the achievement of those conditions, the Company decided to draw on the second tranche to reinforce its financial position. The Company intends to use the proceeds to fund part of its pivotal NATiV3 Phase III clinical trial evaluating lanifibranor in patients with NASH and estimates that, including this second tranche of €25 million of the EIB loan, its cash, cash equivalents and deposits would allow the Company to fund its operations as currently planned until the beginning of the third quarter of 20241.
This second tranche carries a 7% interest capitalized annually, has a maturity of 3 years from the disbursement date and a repayment in fine. As a result, the Company expects to repay this tranche in early 20273, after the anticipated publication of the results of the NATiV3 Phase III trial evaluating lanifibranor in patients with NASH which is expected to take place in the first half of 2026. The disbursement of this second tranche was subject to, among other conditions, (i) the full drawdown of the first tranche, (ii) the receipt by the Company from the date of the Finance Contract of an aggregate amount of at least €70 million (inclusive of the €18 million that were a condition for the disbursement of the first tranche), paid either in exchange for shares of the Company, or through upfront or milestone payments, (iii) an out-licensing, partnership or royalty transaction with an upfront payment of at least €10 million, (iv) operational criteria based on patient enrollment and number of sites activated in the Company’s NATiV3 Phase III clinical trial of lanifibranor in patients with NASH and (v) the Company issuing warrants to EIB in accordance with the terms and conditions of the warrant agreement entered into on July 1, 2022.
On January 4, 2024, the Company issued 3,144,654 warrants to EIB, in accordance with the terms of the 6th resolution of the combined general meeting of shareholders of January 25, 2023, and Article L.225-138 of the French Commercial Code, as a condition to the drawdown of the second tranche. This represents approximately 6.08% of the Company’s current outstanding share capital4.
The exercise price of the warrants issued in connection with the second tranche is equal to €3.95 and corresponds to 95% of the volume-weighted average price of the Company’s shares on the regulated market of Euronext Paris during the last trading session preceding the decision to issue the warrants (i.e. January 3, 2024).
Pursuant to the previously disclosed warrant agreement, the warrants have a maturity of twelve years and shall be exercisable following the earliest to occur of (i) the maturity date of the first tranche (i.e. on December 8, 2026), (ii) a change of control event, (iii) an event of default under the Finance Contract, or (iv) a repayment demand by EIB under the Finance Contract. The warrants will automatically be deemed null and void if not exercised within the twelve-year period.
EIB has a put option which may require the Company to repurchase all or part of the unexercised warrants then exercisable at their intrinsic value (subject to a cap equal to the amount drawn under the Finance Contract) under certain circumstances (for example, in the event of a change of control of the Company or on the maturity date of the first tranche or in the event of default). The Company (or a substitute third party) has a call option to require EIB to sell all shares and other securities of the Company in certain circumstances, including the warrants, to the Company, subject to certain terms and conditions. In addition, the Company has a right of first refusal to buy-back all warrants offered for sale to a third party, subject to certain terms and conditions.
On the basis of the 3,144,654 new shares of the Company issuable upon exercise of the warrants issued in connection with the drawdown of the second tranche at an exercise price of €3.95 per new share, the Company could potentially receive gross proceeds of up to €12,421,383. There is no assurance that EIB will exercise any or all of the warrants or that the Company will receive any proceeds from the exercise of the warrants.