Investment Plan for Europe – EIB supports Evotec’s innovate strategy with EUR 75m loan
- Release date: 08 September 2017
- Reference: 2017-229-EN
- EIB will provide financing for first-in-class drug discovery projects
- Significantly lower Cost of Capital for translation from academic science to industry
- Funding is supported through the “European Fund for Strategic Investments”, a key element of the “Investment Plan for Europe”
Evotec AG (Frankfurt Stock Exchange: EVT, TecDAX, ISIN: DE0005664809) and the European Investment Bank (“EIB”) announced today that the EIB has granted Evotec an unsecured loan facility of up to € 75 m to support Evotec’s Innovate 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 success-sharing 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.
Supporting EVT Innovate at significantly lower cost of capital
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 organisations. Within its EVT Innovate segment, 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 Innovate 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 EVT Innovate 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 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 honoured 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.”
The transaction has been developed in cooperation with kENUP Foundation, a NGO supporting Innovation in Europe.