On November 21, 2023 Inventiva (Euronext Paris and Nasdaq: IVA) (the "Company"), a clinical-stage biopharmaceutical company focused on the development of oral small molecule therapies for the treatment of patients with non-alcoholic steatohepatitis ("NASH") and other diseases with significant unmet medical needs, reported financial information for the nine months ended September 30, 2023 (Press release, Inventiva Pharma, NOV 21, 2023, View Source [SID1234637902]).

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Key Financial Results

As of September 30, 2023, the Company’s cash and cash equivalents amounted to €43.8 million, short-term deposits to 0.03 million2, and long-term deposit to €5.0 million3, compared to €86.7 million, €1.0 million and €0.7 million as of December 31, 2022, respectively.

The decrease in cash and cash equivalents and short-term and long-term deposits between September 30, 2023 and December 31, 2022 is mainly due to increased cash used in operating activities and reflects the 2023 planned and continued acceleration of clinical development activities mostly driven by costs associated with the NATiV3 Phase III clinical trial of lanifibranor in NASH, and, to a lesser extent, with the LEGEND Phase IIa combination trial with lanifibranor and empagliflozin in patients with NASH and type 2 diabetes ("T2D"). This decrease is partially offset by the financing announced August 31, 20235.

Following the financing of €35.7 million (gross amount) consisting of a reserved capital increase and the issuance of royalty certificates announced by the company on August 31,20235, recorded by a decision of the Chairman and recorded by a decision of the Chairman and Chief Executive Officer on September 5, 2023 ("August Capital Increase"), and the receipt of the $10 million upfront payment from Hepalys Pharma, Inc. in October 2023, the Company believes, taking into account its current cost structure and forecast expenditure commitments, that its cash, cash equivalents and deposits should be sufficient to fund its operations until the beginning of the second quarter of 2024.

In addition, the Company expects to meet the financial conditions for the disbursement of the second tranche of €25 million of the loan granted by the European Investment Bank ("EIB") by the end of 2023 if it receives the anticipated $3 million milestone payment from Sino Biopharm, through its subsidiary Chia Tai Tianqing Pharmaceutical Group Co., Ltd. ("CTTQ"), upon the enrollment of the first patient in China in the ongoing pivotal Phase III clinical trial, NATiV3 (which is expected by the end of 2023). Considering its current cost structure and forecast expenditure commitments, the Company estimates that, including the anticipated CTTQ milestone payment and disbursement of the second tranche of €25 million of the EIB loan, the Company’s cash, cash equivalents and deposits would allow the Company to fund its operations until the beginning of the third quarter of 20244.

Net cash used in operating activities amounted to (€69.0) million in the first nine months of 2023, compared to (€40.1) million for the same period in 2022. R&D expenses for the first nine months of 2023 were up 86 % compared to the same period in 2022. This increase is in line with the clinical development activities planned in 2023.

Net cash used in investing activities for the first nine months of 2023 amounted to (€3.5) million, compared to (€0.4) million for the same period of 2022. The change is mostly due to the change in deposits between both periods.

Net cash provided by financing activities for the first nine months of 2023 amounted to €30.2 million, compared to net cash provided by financing activities of €13.1 million for the same period of 2022. The increase is mainly due to the 35.7 million (gross proceeds) of the August Capital Increase. The net cash generated in financing activities in 2022 was mainly driven by the equity raised through the Company’s at-the-market program for approximately €9.4 million (gross proceeds) in June 2022, and three loan agreements with a syndicate French banks for a total amount of €5.3 million entered into in the first half of 2022. In the first nine months of 2023, the net cash used from financing activities was mainly due to loan reimbursement and medical imaging equipment debt rents.

Over the first nine months of 2023, the Company recorded a negative exchange rate effect on cash and cash equivalents of (€0.7) million, compared to a positive effect of €2.1 million for the same period of 2022, due to the evolution of EUR/USD exchange rate.

Revenues

The Company’s revenues for the first nine months of 2023 amounted to €1.9 million, stable from the first six months of 2023, compared to €0.1 million for the same period in 2022. The increase over the 2022 period is mainly due to the receipt of the first regulatory milestone payment of $2.0 million from CTTQ in July 2023. The milestone payment was triggered in May 2023 after CTTQ received the Investigational New Drug ("IND") approval from the Chinese National Medical Products Administration ("NMPA") to initiate the clinical development in mainland China of lanifibranor in NASH.

On September 20, 2023, the Company announced that it entered into an exclusive licensing agreement with Hepalys Pharma, Inc., a company formed by Catalys Pacific, to develop and commercialize Inventiva’s proprietary drug candidate, lanifibranor, for the treatment of NASH and potentially other metabolic diseases in Japan and South Korea. Inventiva has exercised the option to acquire 30% of the shares Hepalys Pharma for the price of 300 yen. Pursuant to the terms of this licensing agreement, Inventiva received a $10 million upfront payment from Hepalys Pharma Inc. in October 2023, and will be eligible to receive up to $231 million in milestone payments if certain clinical, regulatory and commercial conditions are met. Subject to regulatory approval, Inventiva will additionally have the right to receive tiered royalties from mid double digits to low twenties based on net sales of lanifibranor in Japan and South Korea, if approved. Under IFRS 15, the above upfront milestone is expected to be recorded in Q4 2023, after the know-how and IP transfer in progress are fully completed.