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  • The European Investment Bank and GeNeuro SA, through its research and development subsidiary GeNeuro Innovation SAS in Lyon, France, have announced the signature of a loan for a total amount of €25 million.
  • The first tranche of €7 million, available immediately, will support the phase 2 clinical trial for long COVID. The other tranches of €10 million and €8 million will be used to prepare and launch phase 3.
  • With the inclusion of the first €7 million tranche, GeNeuro’s cash visibility will be extended to the third quarter of 2024.
  • Backed by the European Union’s new long-term InvestEU programme, the financing highlights the EIB’s commitment to tackling long COVID, a major public health problem affecting millions of people worldwide.

GeNeuro, a biopharmaceutical company developing novel treatments for neurodegenerative and autoimmune diseases such as multiple sclerosis (MS), amyotrophic lateral sclerosis (ALS) and the severe consequences of COVID-19 (PASC, post-COVID or long COVID), today announced the signature of a credit agreement with the European Investment Bank (EIB) for a total amount of up to €25 million, supported by the InvestEU programme.

Jesús Martin-Garcia, chief executive officer of GeNeuro, said: “We would like to thank the EIB for this support for GeNeuro’s personalised medicine approach against neuropsychiatric syndromes that are affecting millions of people who have had COVID. This support demonstrates the authorities’ growing concern about this serious public health problem. The first €7 million of this financing will contribute to the development of the phase 2 clinical study for long COVID, the first results of which should be available by the end of this year.”

EIB Vice-President Ambroise Fayolle said: “After having supported the prophylactic vaccines and treatments for acute cases, this EIB financing for GeNeuro will foster the development of treatments for long COVID. GeNeuro is one of the very first biotech beneficiaries of the European Union’s new InvestEU programme, which provides the EIB with additional resources. This transaction complements the series of COVID-19-related syndromes being addressed by innovative European biotech companies that have benefited from EIB support through its venture debt programme.”

GeNeuro launched a phase 2 trial at the end of 2022 that is evaluating the clinical efficacy of a six-month treatment with temelimab, the anti-W-ENV antibody developed by GeNeuro to improve cognitive impairment and fatigue in long COVID patients who test positive for the presence of the W-ENV protein in their blood. The W-ENV protein was observed in more than 25% of patients with persistent symptoms after having had COVID. If the current clinical trial is successful, this personalised medicine approach could offer a therapeutic solution to the millions of patients affected by long COVID. 

Principal terms and conditions of the credit agreement

The €25 million credit facility is divided into three tranches: €7 million for the first tranche (tranche A), €10 million for the second tranche (tranche B) and €8 million for the third tranche (tranche C). The disbursement of each tranche, including the first disbursement of tranche A, is subject to certain conditions. The main ones are detailed below.

Tranche A:

  • Issue of warrants with the EIB relating to tranche A.

Tranche B:

  • Full run of tranche A
  • Issue of the warrants relating to tranche B
  • Positive results from the phase 2b clinical trial for long COVID
  • €30 million in cash, in the form of equity, licensing revenues or customer advances.

Tranche C:

  • Full run of tranche B
  • Issue of the warrants relating to tranche C
  • Production contracts with two companies specialised in contract manufacturing
  • Enrolment of the first patient in a phase 3 clinical trial for long COVID, or conditional marketing authorisation of temelimab in this indication granted by Swissmedic, the European Medicines Agency (EMA) or the US Food and Drug Administration (FDA)
  • €30 million in cash (in addition to the €30 million for tranche B) in the form of equity, licensing revenues or customer advances.

The three tranches will be available for 36 months from the signature of the financing agreement.

The credit agreement will have a fixed annual interest rate of 2% for each tranche as well as a declining capitalised interest rate per tranche (7% for tranche A, 5% for tranche B and 2.5% for tranche C), with a maturity of five years for each tranche. This interest will be capitalised annually. It will be payable at maturity and incorporated in the nominal amount of the loan, and will therefore bear interest.

In certain circumstances, the credit may be partially or fully repaid in advance for a fee, at the request of GeNeuro or the EIB following certain prepayment events. These include a change in control or in the management of GeNeuro.

Subject to certain conditions, if standard events of default occur (such as payment default, misrepresentation or cross default), the EIB may require GeNeuro to immediately repay all or part of the outstanding loan or cancel any undisbursed portion.

Terms and conditions of the warrant agreement that could lead to potential dilution

The credit agreement is supplemented by a warrant agreement between GeNeuro SA and the EIB, representing 2.4% of GeNeuro SA’s diluted share capital for tranche A, 2.0% for tranche B, and 1.3% for tranche C. Taking into account the stock options existing today, if tranche A of the warrants were issued today under the currently proposed conditions, the potential dilution represented by the underlying shares would be approximately 2.5% of GeNeuro’s current share capital.

The warrants will have a maturity of seven years, renewable once. Each warrant will entitle the EIB to acquire one common share of GeNeuro SA in exchange for the exercise price (subject to anti-dilution provisions). The exercise price for each warrant will be equal to 95% of the volume-weighted average of the price of the company’s ordinary shares over the last 20 trading days preceding the decision of the competent body of the company to issue such warrants. As soon as the warrants become exercisable, the EIB will have a put option to request GeNeuro SA to repurchase all or part of the exercisable but not yet exercised warrants at their intrinsic value.

Background information

About the European Investment Bank (EIB)

The European Investment Bank (EIB), established by the Treaty of Rome in 1958, is the European Union’s long-term financing institution. Its shareholders are the 27 EU Member States. Its mission is to contribute to the integration, balanced development and economic and social cohesion of the European Union. It borrows large volumes of funds on the capital markets and lends them on very favourable terms to support projects furthering EU policy objectives.

The EIB is working to put the European Union at the forefront of the next wave of innovation, especially in the health sector. In response to the COVID-19 health crisis, it released more than €6 billion for investments in the health sector to support medical infrastructure, additional research activities, and the development of vaccines and treatments. As the EU climate bank, the EIB is one of the main providers of finance in the green transition towards a more sustainable, low-carbon growth model.

About InvestEU

The InvestEU programme provides the European Union with crucial long-term financing by mobilising significant public and private funds to support a sustainable recovery. It helps generate additional investments in line with key European priorities, such as the European Green Deal, the digital transition and support for SMEs. The InvestEU programme brings together a multitude of EU financial tools to support investment by making project financing simpler, more efficient and more flexible.

The programme builds on the success of the previous Investment Plan for Europe, also known as the Juncker Plan (which invested more than €500 billion between 2015 and 2021). It consists of three elements: the InvestEU Fund, the InvestEU Advisory Hub and the InvestEU Portal. The InvestEU Fund is implemented through various financial partners, most notably the EIB. They will invest in projects using the EU budget guarantee of €26.2 billion to mobilise at least €372 billion of additional investment.

About GeNeuro

GeNeuro’s mission is to harness the biology of human endogenous retroviruses (HERVs) to develop safe and effective treatments for patients by neutralising the causative factors encoded by HERVs, which represent 8% of human DNA. GeNeuro is headquartered in Geneva, Switzerland, and has research and development facilities in Lyon, France. It has the rights to 17 patent families protecting its technology.