Inventiva Secures €20.1M in Funding to Advance NASH Treatment

 Inventiva (NASDAQ:IVA) ("Inventiva" or the "Company"), a clinical-stage biopharmaceutical company focused on the development of oral small molecule therapies for the treatment of patients with metabolic dysfunction-associated steatohepatitis ("MASH"), also known as non-alcoholic steatohepatitis ("NASH"), and other diseases with significant unmet medical needs, today announced the issuance of royalty certificates (the "Royalty Certificates") subscribed by Samsara BioCapital, BVF Partners, NEA, Sofinnova, and Yiheng, for an amount of approximately €20.1 million  (the "Transaction").

Frederic Cren, Chairman, Chief Executive Officer, and cofounder of Inventiva stated: "Besides extending our cash runway, this agreement demonstrates the commitment from our key shareholders to continue the development of lanifibranor. We are also pleased to have gained the interest and support of Samsara BioCapital, a leading U.S. specialized fund. With this transaction completed, we continue to focus on advancing the development of lanifibranor, one of the most promising drugs in MASH/NASH, and we are pursuing our evaluation of strategic and financing options to fully support its development."

Reasons for the issuance and use of the proceeds of the Transaction

The Company intends to use approximately 95% of the net proceeds from the Transaction to continue the NATiV3 Phase III trial of lanifibranor in MASH/ NASH ("NATiV3") and the remainder for general corporate purposes.

Before giving effect to the Transaction and the cash preservation measures implemented by the Company with its creditors, considering the Company's cost structure and forecasted expenditures, the Company estimated that its cash, cash equivalents and deposits allowed the Company to fund its operations as planned until the beginning of the third quarter of 2024. As of June 30, 2024, the Company's cash and cash equivalents are estimated (non-audited) to be €10.1 million, compared with €9.6 million, €0.1 million2 of short-term deposits and €10 million3 of long-term deposits as of May 31, 2024.

Considering its current cost structure and forecasted expenditures and including the proceeds of approximately €20.1 million from the issuance of the Royalty Certificates and the cash preservation measures in the short term set up by the Company with its creditors, the Company estimates that its cash, cash equivalents and deposits should allow the Company to fund its operations through September 2024. These factors raise substantial doubt regarding the Company's ability to continue as a going concern beyond the end of September 2024.

The Company explored a variety of options, including the issuance of debt, equity and other instruments, prior to deciding to enter into the Transaction. In order to finance its activities beyond the end of September 2024, the Company will need to raise additional funds, and it is continuing to actively review potential financing (including debt, equity and equity-linked or other instruments) and strategic options.

Main characteristics of the Transaction

The Royalty Certificates are being issued pursuant to a decision of Board of Directors on July 16, 2024, in accordance with the provisions of Article L. 228-36-A of the French Commercial Code (Code de commerce) to one new investor and existing shareholders.

The Royalty Certificates give the holders thereto the right to an annual payment of royalties (the "Royalties") equal to 3% of the future net sales of lanifibranor (the "Product"), if any, beginning on the fiscal year following the start of the sales of the Product following the potential granting of the market authorization (Autorisation de mise sur le marché) for the Product in (i) the United States of America or (ii) the countries of the European Union or (iii) the United Kingdom, whichever occurs the first.

The Royalty Certificates do not have any additional financial rights besides the right to payment of Royalties referred to above. Specifically, the Royalty Certificates do not grant any financial rights on any other products that may be developed by the Company beyond lanifibranor.

The subscription price for the Royalty Certificates is €20.1 million and has been calculated taking into account the net present value ("NPV") of expected cash flows related to the Royalty Certificates and the current financial position of the Company. The NPV calculation depends strongly on assumptions made by the Company with regards to the chances of success of its studies, the commercialization calendar of lanifibranor, the market size addressed for lanifibranor, the market share of the product and the discount rate. In the process of setting the discount rate, the Company analyzed the expected cash flow derived from its business plan as regards to its market capitalization.

The Royalty Certificates have a term of 14 years following their issuance and do not provide for an accelerated repayment in case of change of control. The Company may at any time repurchase in full the Royalty Certificates by paying a price to be agreed between the Company and the holders of the Royalty Certificates. The Company may also redeem the Royalty Certificates from each holder, subject to offering such redemption to every holders. Lastly, the Company has a pre-emptive right in the event of the sale of Royalty Certificates by a holder.

The holders of Royalty Certificates are subject to a 6-month lock-up period after which the Royalty Certificates will become freely transferable (in whole or in part, provided that the transfer involves a minimum number of 10 Royalty Certificates) only pursuant to an exemption from the registration requirements of the U.S. Securities Act of 1933, as amended, (the "Securities Act")and to qualified investors pursuant to Article 2(e) of Regulation (EU) 2017/1129. The Company will have a preemptive right on any transfer of Royalty Certificates.

Settlement and delivery of the Royalty Certificates is expected to occur on July 22, 2024. The Royalty Certificates will not be listed on any stock exchange and will not be assigned an ISIN. The closing of the Transaction is subject to the satisfaction of customary closing conditions.

It is reminded that these Royalty Certificates are independent from the royalty certificates issued in August 2023, and do not have the same characteristics (see the Company's press release published on August 31, 2023) (the "2023 Royalty Certificates").

The Royalty Certificates will be issued in a private placement exempt from registration under the Securities Act and have not been, and will not be, registered under the Securities Act, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

The issue and subscription of the Royalty Certificates will not result in any change in the shareholder structure (for a description of the share capital, please refer to section 6.1.1 of the Company's 2023 Universal Registration Document dated April 3, 2024).