Abivax announces successful oversubscribed €49.2 million crossover financing with top-tier U.S. and European biotech investors

• This financing was subscribed by new and existing U.S. and European biotech investors, led by TCGX, with the participation from Venrock Healthcare Capital Partners, Deep Track Capital, Sofinnova Partners, Invus and Truffle Capital
• Proceeds to be primarily used for further advancing the obefazimod global phase 3 clinical study program in ulcerative colitis, expanding the cash runway to the end of Q1 2023
• The funding consists of a €46.2 million reserved equity capital increase and a €2.9 million issuance of royalty certificates

PARIS, FRANCE, September 2nd, 2022 – 7.30 a.m. (CEST) – Abivax (Euronext Paris: FR0012333284 – ABVX) (the “Company”), a phase 3 clinical-stage biotechnology company harnessing the immune system to develop novel treatments for inflammatory diseases, viral diseases and cancer, today announces the successful completion of an oversubscribed €49.2 million financing with high-quality U.S. and European biotech specialist investors, led by TCGX, with participation from Venrock Healthcare Capital Partners, Deep Track Capital, Sofinnova Partners, Invus, and Truffle Capital through the completion of two transactions: (i) a reserved capital increase of approximately €46.2 million through the issuance of 5,530,000 newly-issued shares with a nominal value of €0.01 per share (the “New Shares”), representing 33% of its current share capital, at a subscription price of €8.36 per share (the “Capital Increase”) and (ii) the issuance of royalty certificates (the “Royalty Certificates”) for an amount of €2.9 million (together with the Capital Increase, the “Transaction”).

Prof. Hartmut J. Ehrlich, M.D., CEO of Abivax said: “We are excited to announce the successful completion of Abivax’s oversubscribed capital increase, along with the issuance of royalty certificates that jointly amount to €49.2 million. With these new financial resources, we will pursue the Company’s strategic priority to conduct and timely complete our late-stage global clinical phase 3 program of obefazimod for the treatment of ulcerative colitis. Following the compelling results of the previous obefazimod maintenance studies in UC, we are confident to confirm its excellent safety and efficacy profile in the upcoming phase 3 induction and maintenance studies. There is still a very high need for novel therapeutic management options that offer a constant and long-lasting improvement of the quality of life of patients suffering from chronic inflammatory diseases. Abivax is highly committed to fully exploit the anti-inflammatory potential of our lead compound obefazimod across different indications, starting with moderate to severe ulcerative colitis.”

Didier Blondel, CFO of Abivax, added: “We are pleased that Abivax could attract new top-tier US biotech investors, TCGX, Venrock and Deep Track Capital, as well as our existing US and European biotech investors, for the capital increase and royalty certificates. The commitment of these investors, especially considering the currently very challenging financing environment, is an important confirmation of the potential of obefazimod in ulcerative colitis and the entire chronic inflammatory disease field. Based on our current assumptions, our cash runway has been extended until end of Q1 2023. We will make targeted use of these financial resources, mainly for the conduct and completion of our phase 3 clinical program in order to provide obefazimod as a long-lasting and effective treatment to patients in need and to maximize shareholder value. We are committed to completing this funding in due course through additional non-dilutive and dilutive financial resources in order to secure the full financing of our UC phase 3 program.”

Reasons for the issuance and use of the net proceeds of the Transaction, equal to €46 million

The planned use of the net proceeds of the Transaction is, based on the Company’s current plans, as follows (on an indicative basis):

• Launch and continuation of the clinical programs of obefazimod (ABX464), the Company’s lead product in advanced development:
  • For ulcerative colitis (UC): continuation of the phase 2a and phase 2b maintenance studies and continuation of the global pivotal phase 3 program, which was initiated in the first half of 2022. The phase 3 program will combine two induction studies and one single maintenance study, involving a total of 1,200 patients and over 600 clinical study sites, mainly in North America, Europe and Asia. The first patient is expected to be enrolled into the phase 3 program during September 2022;
  • For rheumatoid arthritis (RA): continuation and completion of the phase 2a maintenance study; and
  • Continuation of the R&D work on obefazimod.

Close to 80% of the net proceeds of the Transaction will be allocated to the development of obefazimod as per the above (and primarily for the phase 3 program).

• Financing of R&D and working capital and other general purposes of the Company, for around 8% of the proceeds; and
• Redemption of (and payment of amounts payable pursuant to) existing indebtedness, for around 12% of the proceeds (approx. EUR 5.5M split between EUR 4.8M paid under the Kreos loans and EUR 0.7M paid under the OCEANE convertible bonds).

The Company expects that the proceeds from the Transaction will provide the Company with financial resources to fund its operations through Q1 2023, based on a prioritization of its UC program.

The additional cash needs of the Company (prior to the Transaction) for the upcoming 12-month period amount to approximately EUR 100M, i.e., EUR 54M, in addition to the net proceeds of the Transaction of EUR 46M.

To cover these additional cash needs, the Company is evaluating various different financing tools, both dilutive and non-dilutive. In particular the Company has initiated discussions with lenders with the aim of securing in the short term a mix of dilutive and non-dilutive financings for an additional amount of up to EUR 50M.

The Company may consider further equity financing.

In the absence of the required financing, the Company will review cost-cutting measures which could entail postponing or suspending some of its programs.

The total costs of the phase 3 UC program until the end of 2024, which is the expected date of the results of the two phase 3 induction studies, is estimated by the Company to amount to EUR 200M. Therefore, an additional non-dilutive and/or dilutive financing of EUR 154M is required to complement the EUR 46M proceeds of the Transaction.

Key characteristics of the Transaction

Capital increase

The New Shares are being issued through a capital increase, without existing shareholders’ preferential subscription rights, reserved to a specified category of investors (investors investing in the pharma sector) pursuant to the 19th resolution of the Annual General Shareholders’ Meeting held on June 9, 2022.

In accordance with the Board of Directors’ internal rules, the representatives of Truffle Capital, Sofinnova Partners and of Santé Holding, as well as Mr. Philippe Pouletty, did not participate in the deliberations of the Board of Directors authorizing the Capital Increase.

The number of ordinary shares to be subscribed, the subscription price and the list of investors that may subscribe were decided by the Company’s Chief Executive Officer (Directeur Général), in accordance with a sub-delegation granted by the Company’s Board of Directors on August 31, 2022.

The subscription price of the New Shares was set at EUR 8.36, i.e. with a 9.6% premium to the last closing price (as of September 1, 2022).

Funds managed by Truffle Capital, which held a 30.5% stake in the Company, subscribed to the Capital Increase for an amount of EUR 1.6M corresponding to 197,000 New Shares. After the Capital Increase, funds managed by Truffle Capital will hold 23.8% of the share capital of the Company.

Sofinnova Partners, which held a 11.6% stake in the Company, subscribed to the Capital Increase for an amount of EUR 4.9M corresponding to 584,000 New Shares. After the Capital Increase, Sofinnova Partners will hold 11.3% of the share capital of the Company.

Santé Holding, which held a 3.6% stake in the Company, subscribed in the Capital Increase for an amount of EUR 0.8M corresponding to 101,000 New Shares. After the Capital Increase, Santé Holding will hold 3.2% of the share capital of the Company.

Settlement and delivery of the New Shares is expected to occur on or around September 7, 2022. Upon delivery, the New Shares will be fungible with the Company’s existing shares.

The New Shares will be admitted to trading on Euronext Paris with ticker symbol ABVX on September 7, 2022, and bear ISIN FR0012333284.

Royalty Certificates

The Royalty Certificates are being issued pursuant to a decision of the board of directors of the Company held on August 31, 2022, in accordance with the provisions of Article L. 228-36-A of the French Commercial Code to the same investors as the ones who participated in the Capital Increase.

The Royalty Certificates give right to their holders to royalties equal to 2% of the future net sales of obefazimod (worldwide and for all indications) as from the commercialization of such product. The amount of royalties that may be paid under the Royalty Certificates is capped at EUR 172M. The Royalty Certificates do not have any additional financial rights besides the right to royalties referred to above. In particular, the Royalty Certificates do not grant any financial rights on any other products that may be developed by the Company beyond obefazimod.

The subscription price for the Royalty Certificates has been set by the Company at €2.9 million and has been calculated based on impact of the underlying royalties on the net present value (NPV) of obefazimod evaluated at 1.6% by the Company. The NPV calculations depend strongly on assumptions made by the Company with regards to the chances of success of its studies, the commercialization calendar of obefazimod, the market size addressed by obefazimod, the market share of the product and the actualization rate (set at 14% by the Company). The NPV allocated to the Royalty Certificates has been subject to adjustments to reflect the discount which exists between the NPV of the Company’s program and their valuation by the market as reflected by the Company’s share price after taking into account the completion of the Transaction.

The Royalty Certificates have a term of 15 years and do not provide for an accelerated repayment in case of change of control. The Company may at any time reimburse in full the Royalty Certificates by paying an amount equal to the cap of EUR 172M minus any royalties paid prior to such reimbursement. The Royalty Certificates are subject to a one-year lock-up after which they will become freely transferable (in whole, but not in part). The Royalty Certificates will not be listed and will not be assigned an ISIN.

Lock-up agreements

In the context of the Capital Increase, the Company has agreed to a lock-up undertaking on the issuance or sale of shares or of securities giving access to the share capital, for a period of 90 calendar days, subject to certain customary exceptions or waiver.

The Company’s board members and key officers who own shares of the Company have agreed to a lock-up undertaking on the sale of shares or of securities giving access to the share capital, for a period of 90 calendar days, subject to certain customary exceptions or waiver.

Investors participating in the Capital Raise have agreed to a one (1) year lock-up on the New Shares subject to certain customary exceptions or waiver.

Impact of the Capital Increase on the share capital

Following settlement and delivery, the New Shares will represent 24.8% of the share capital of the Company and the Company’s total share capital will be EUR 223,131.85 divided into 22,313,185 shares.

For illustration purposes, a shareholder holding 1% of the Company’s share capital prior to the Capital Increase, will hold 0.75% of the Company’s share capital upon completion of the Capital Increase (or 0.69% on a fully-diluted basis).

For more details, see the full press release on the Abivax website, in addition to a prospectus linked to the transactions.