EIC Fund backs Xenothera to advance antibody therapy against SARS-CoV-2

On 29 June 2021 the European Innovation Council Fund announced it would finance the development of a novel COVID-19 therapeutic being developed by French biotech Xenothera. The public announcement frames the package as part of the EIC’s effort to scale breakthrough innovations in Europe. The communication states the transaction consists of a direct equity investment of roughly €10 million by the EIC Fund alongside a grant of €2.16 million awarded through the EIC Accelerator programme. The headline rounded the total to €12 million.

What Xenothera is proposing and how the treatment works

Xenothera’s lead candidate, XAV-19, is described by the company and the EIC as an antibody treatment against SARS-CoV-2 based on a patented production technology. The therapy is built on polyclonal antibodies rather than a single monoclonal antibody. The developers and the EIC position this as a potentially complementary approach to vaccines and monoclonal therapeutics.

Company materials available outside the EIC release also describe Xenothera’s platform as ‘glyco-humanized’, a term used to indicate modifications intended to make animal-derived antibodies more compatible with the human immune system. That technology claim raises typical questions for regulators about immunogenicity and safety which Xenothera has been addressing in its preclinical and toxicology packages.

Regulatory status and what EMA advice means

The European Innovation Council release notes that XENOTHERA received Rapid Scientific Advice from the European Medicines Agency related to market authorisation and that the Committee for Medicinal Products for Human Use globally endorsed the company’s approach, including the quality of XAV-19 and the validity of preclinical and toxicology data. It also says the CHMP endorsed the overall clinical development plan. These are material regulatory milestones but important caveats apply.

Regulators typically require robust, well controlled clinical trials and consistent manufacturing evidence before they will grant a market authorisation. For antibody therapies the EMA will pay particular attention to neutralisation data, breadth of activity across variants, safety in humans, and manufacturing controls that ensure product consistency.

Why the EIC Fund invested and how the financing works

The EIC Fund’s stated goal is to provide patient capital to high risk high impact deep tech and health companies and to combine grant financing with equity to bridge financing gaps that private markets may avoid. The Xenothera transaction is an example of this blended financing model where a grant from the EIC Accelerator supports development activities and an equity check from the EIC Fund helps unlock further private investment and scale manufacturing or trials.

In publicity around the deal Commissioner Mariya Gabriel framed the investment as an example of the EU backing innovators tackling the pandemic and referenced a larger EIC equity effort announced around that time. Public sector equity in health can accelerate development but it also places public institutions in a role that requires oversight and careful management of conflicts of interest and public expectations.

Scientific and commercial challenges that remain

Public announcements of early stage regulatory advice and financing milestones are useful signals but they do not eliminate the core scientific, clinical and commercial risks. For a therapeutic like XAV-19 those risks include demonstrating clear clinical benefit in controlled trials, ensuring manufacturing can be scaled with high quality and consistency, securing supply chain inputs, defending against viral variants, and finding a clear market niche given the presence of vaccines, antiviral small molecules and monoclonal antibody products.

Competition and market dynamics are also relevant. By mid 2021 multiple monoclonal antibody treatments had emergency or conditional use authorisations in several jurisdictions and small molecule antivirals were under development. A new entrant needs not only to clear regulatory hurdles but also to justify clinical and economic value compared with existing alternatives.

What this means for the EU innovation ecosystem

The transaction highlights how the EIC apparatus tries to combine public grant support with public equity as a policy tool to nurture European deep tech and life science companies. The EIC Fund’s investments are intended to keep technologies and scaleup activity within Europe. That objective sits alongside broader policy aims to improve Europe’s strategic autonomy in health technologies and to reduce the innovation divide across member states.

A pragmatic note is warranted. Public funding can accelerate progress but it also exposes taxpayers to downside risk if projects fail. For the EIC Fund to be effective at scale it must generate additional private investment around its portfolio companies and support credible pathways to market. Each portfolio exit or failure will provide operational lessons for how the EIC mixes grant and equity in strategic sectors such as health.

Next steps for Xenothera and timelines to watch

Based on the company and EIC statements, the equity and grant financing are intended to support Xenothera through further development steps. The clear milestones to monitor are progression through clinical trial phases, EMA interactions that move from scientific advice to regulatory submissions, the outcome of pivotal efficacy studies, and any announcements about manufacturing scale up or co-investors joining the round. None of those steps are guaranteed and timelines for therapeutic approvals in infectious disease frequently extend as more data is required.

Conclusion

The EIC Fund’s involvement with Xenothera is a concrete example of EU instruments moving from grant support towards equity to accelerate promising technologies. The funding may help the company address near term development and commercialisation hurdles. At the same time the scientific and regulatory path for antibody therapeutics is demanding, particularly for polyclonal products. The EMA advice and CHMP commentary are encouraging steps but they do not equate to market authorisation. Observers should treat the milestone as a cautious positive signal while monitoring forthcoming clinical results, manufacturing scale up and the ability to attract follow on private capital.

Key documents and references

Primary information came from the European Innovation Council news release of 29 June 2021 describing the EIC Fund investment in Xenothera and the EIC Accelerator grant award. Additional context about the EIC Fund structure and typical financing ranges is derived from EIC public materials explaining the Fund and the Accelerator programme.