EIB Support in Life Sciences. Shiva Dustdar Head of Division, Innovation Finance Advisory European Investment Bank BIO-Europe Berlin, 7 November 2017

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1 EIB Support in Life Sciences Shiva Dustdar Head of Division, Innovation Finance Advisory European Investment Bank BIO-Europe Berlin, 7 November 2017

2 EIB at a glance The EU bank: Established in 1958 Shareholders are the 28 EU Member States Around 90% of lending within the EU World s largest International Financial Institution: Largest multilateral lender Largest multilateral capital markets borrower Primarily focused on EU but with large operations outside Total assets in 2016: EUR 573bn Lending volume in 2016: EUR 83.7bn Capital markets funding in 2016: EUR 66.4bn Solid credit fundamentals: AAA-rated by the three major rating agencies Own funds in 2016 of EUR 66.2bn Capital adequacy ratio in 2016 of 26.4% Favourable borrowing conditions passed on to clients Key lending priorities (2016 levels of investments EIB Group): ENVIRONMENT EUR 16.9bn INFRASTRUCTURE EUR 19.7bn 2 INNOVATION EUR 13.5bn SMEs EUR 33.6bn

3 Tech Transfer / VC VC / SME Funds VC / SME Funds PE / MidCap Funds Funding size (EURm) Quasi-equity Co-investments/Direct Equity Access to finance EIB Group Products covering the entire cycle of a company s development Mandates/ SLA Global Loans Intermediaries (Banks) Investment Loans Intermediaries (Funds) Contingent Loans < 25m Second Valley of Death < 10m First Valley of Death Innovation finance gap < 7.5m < 1.0m Seed stage Growth Finance Gap expansion capital EUR 7.5m-25m Pre- seed Startup Emerging Small MidCaps <250 employees MidCaps Large MidCaps 500-3,000 3 Large Caps Stage of development

4 EIB has invested EUR 8.6 billion in Life Sciences over the past 10 years From 2007 to 2017, the Bank s investments in the sector reached EUR 8.6bn, averaging EUR 785m per year EUR 8.43bn used for projects within the EU Remaining EUR 170m for projects mostly in the Mediterranean region or EU accession countries 4

5 InnovFin Programme Overview 5

6 Innovation Finance Advisory (IFA) What do we do? Projects Advisory Advise companies on EIB and other sources of financing Improve bankability/investment readiness Enable earlier/ faster access to finance Funding Infectious Diseases Finance Facility (InnovFin Thematic Product) Projects Advisory Pipeline Development Innovation Finance Advisory Transfer of Lessons Learned Horizontal Activities Investment Platforms Leverage horizontal (market) studies to identify funding gaps Where necessary, recommend internal EIB-managed instruments and/or Investment Platforms (IP) Structure/implement IP that mobilise public/private investors Horizontal Activities Improve framework conditions for financing Develop business case for new financing mechanisms in RDI sectors Prepare studies on increasing effectiveness of financial instruments to address specific sector/rdi policy objectives Funding Gap Analysis (e.g. Study on Access to Finance in Life Sciences) 6 6

7 IFA s portfolio of Horizontal Activities KETs Phase I Key Enabling Technologies IDFF Infectious Diseases Finance Facility RTOs Research and Technology Organisations KETs Phase II Key Enabling Technologies Financing Pan-EU RI Circular Economy Pilot LPA Light Project Advisory Road Transport SET Strategic Energy Technology Bioeconomy Funding Web-Tool 2.0 Agri-Food SME Instrument Digital Economy III Digital Innovation Hubs Innovative Life Science Space Technologies Digital Economy I High Performance Computing & European Science Cloud Digital Economy II Electronic Components & Systems/Photonics Circular Bioeconomy Thematic Investment Platform Dedicated Renewable Energy and CCS Project Development Assistance (NER 300) Approved/ Ongoing Completed 7

8 IFA prepared the ground for Infectious Diseases Financing Facility (IDFF) Project advisory to finance portfolio of TB vaccines Horizontal activity on access-tofinance for ID R&D Development of new InnovFin product, the IDFF Project advisory support to mobilize public and private capital 8

9 How does InnovFin Infectious Diseases work? Direct Lending Up to EUR 75m Projects Broad range of products - standard debt instruments (i.e. senior, subordinated, and mezzanine) to risk sharing instruments (RSL) with forgiveness options EIB can only finance 50% of project costs Comprehensive due diligence (legal, financial, technical, etc.) 9

10 Innovative vaccines and R&D financing Pharma InnovFin Infectious Diseases Review of all Promoter's Infectious Diseases R&D activities Definition of risk-sharing portfolio (entire portfolio or sub-set of the most promising compounds incl. at least 5-10 different streams to diversify risk) 10

11 Which projects can be supported? Eligible Projects Infectious diseases Innovative Vaccines, drugs Medical and diagnostic devices Manufacturing plants Projects which have passed pre-clinical stage and for which clinical validation is needed for further development Loan amount: min EUR 7.5m, max EUR 75m Loan maturity: up to 7 years Currency: EUR and local currency Pricing : commensurate to the risk incurred 11

12 Case Study Da Volterra EIB supports the development of innovative solutions for the prevention and treatment of antibiotic-resistant infections Protecting the Intestinal Microbiota from the Deleterious Effects of Antibiotic Treatments Small Paris-based biopharmaceutical company Developing a new agent designed to prevent Clostridium difficile infections and the emergence of resistant bacteria by protecting intestinal flora from the disruption caused by antibiotic treatment EUR 20m quasi equity operation with the EIB Group Two-tranche disbursement conditional upon operational milestones Signed in July 2017 Supported under InnovFin Infectious Diseases This operation under the InnovFin facility demonstrates the EU's determination to tackle major public health problems. We hope that this loan will help to improve the quality of life of people affected by infectious diseases and reduce the risk of development of antibiotic resistance. Carlos Moedas, European Commissioner for Research, Science and Innovation The EIB loan will provide us with significant additional resources to take forward our research programmes in a critical area, that of serious bacterial infections. This loan will help meet the challenge posed by today s multi-resistant bacteria and multiple infectious risks. Florence Séjourné, CEO of Da Volterra 12

13 Case Study AntibioTx EIB supports Danish biopharmaceutical company in fighting multi-drug resistant bacteria Privately held, clinical stage pharmaceuticals company Headquartered in Denmark Develops novel class of antibiotics with a new mechanism of action to treat bacterial infections and related disorders EUR 20m quasi equity operation with the EIB Group Two-tranche disbursement conditional upon operational milestones Signed in October 2017 Supported under InnovFin EU Finance for Innovators Since the 1970 s only a few new antibiotic classes have been introduced. Therefore we are proud to support AntibioTx clinical development, which we hope will make a difference in fighting multidrug resistant bacteria. EIB Vice-President Alexander Stubb The financing from EIB provides valuable support to the development of our pipeline contributing to our vision to becoming a sustainable innovator of treatment options at the intercept of microbiology and immunology. AntibioTx CEO Rasmus Toft-Kehler 13

14 Case Studies Other equity-type operations Photovoltaics Fibreoptics Software Biotechnology Software Biotechnology Ultracapacitors Germany Spain The Netherlads Ireland Greece NL/DE Estonia 20 million 10 million 7.5 million 20 million 25 million 25 million 15 million 11/09/ /10/ /11/ /12/ /12/ /12/ /02/2017 Grid stabilization Database software Dermathology Molecular diagnostic Software Medical Technology ICT Italy Finland Germany Spain Sweden France Finland 30 million 30 million 20 million 20 million 8 million 20 million 15 million 11/04/ /04/ /05/ /06/ /06/ /07/ /07/2017 ICT Medical Technology Medical Technology Medical Technology Drug Discovery Nutrition 4G deployment Sweden Germany Germany Austria Germany France France 30 million 35 million 30 million 25 million 75 million 30 million 25 million 04/08/ /08/ /08/ /08/ /09/ /09/ /09/

15 Horizontal Activity Example: Life Sciences Scope of work Key findings Medicines London & SEE Companion Diagnostics Bavaria, DE Medical technologies Medical devices Core Focus Limited Assessment Out of Scope Catalonia, ESP Digital products Poland Non-medical tech e.g. Agritech and veterinary products Covered in Phase I Covered in Phase II Three factors underpin the financing challenge: Average investment size is too low There is a lack of follow-on venture capital investment (C-D) preventing SMEs from growing Limited investment forces companies to focus on only one or two lead products at a time Investment periods are too short There is a mismatch between investment periods and product development times There has been a recent emergence of Evergreen funds, however they are few and far between Investment is limited to select therapeutic areas There is a pack mentality where the same small group of investors co-invest in similar TAs Investment flows to therapeutic areas with better exit potential Estimated c. EUR 25-30bn funding gap within innovative life science R&D in the 4 bio-clusters for The report will make specific recommendations to help to address the financing gap

16 Contact Details Shiva Dustdar Head of Division Innovation Finance Advisory Advisory Services Department Phone: (+352) efax: (+352) European Investment Bank 3, rue Jean Monnet L-2180 Luxembourg Alessandro de Concini Innovation Finance Advisory Advisory Services Department Phone: (+352) efax: (+352) European Investment Bank 3, rue Jean Monnet L-2180 Luxembourg Paulina Brzezicka Innovation Finance Advisory Advisory Services Department Phone: (+352) efax: (+352) European Investment Bank 3, rue Jean Monnet L-2180 Luxembourg 16