EMV Capital (AIM:EMVC) CEO Dr Ilian Iliev talked with Proactive about the company's recent acquisition of assets from Destiny Pharma and how the move aligns with its broader investment strategy.
Dr Iliev explained that EMV Capital applied its Venture Build Program to identify, acquire, and rebuild value in the XF-73 drug asset, which had shown promise in phase two clinical trials but had stalled before entering phase three. He said, "We are able to look at opportunities such as the former Destiny Pharma and look at how we can identify, acquire and rebuild value in incredibly valuable assets."
The structure of the deal includes both upfront payments and deferred milestone-based components, aligning long-term incentives with outcomes such as regulatory progress and licensing opportunities. EMV Capital is now preparing to restart the phase three trial for XF-73, focusing on capital efficiency and low cash burn strategies.
Iliev also highlighted the global potential of XF-73 in tackling antimicrobial resistance and hospital-acquired infections, noting that the US market alone includes over two million patients who could benefit. He confirmed that commercialization plans will prioritise the US while also targeting emerging markets through partnerships and joint ventures.
The company's capital-efficient model, he emphasized, enables scaling of high-impact opportunities without excessive dilution to shareholders.
Proactive: Ilian, very good to speak with you. Could you start by telling us what attracted EMV Capital to acquire assets from Destiny Pharma and how they fit into your wider investment strategy?
Dr Ilian Iliev: As you know from other transactions that we've talked about on this program, we have what we think is quite a unique approach that we call the Venture Build Program. It's a multidisciplinary approach combining financial engineering, our ecosystem of investors, and a hands-on, proactive approach of building and rebuilding businesses.
With this lens, we are able to look at opportunities such as the former Destiny Pharma and look at how we can identify, acquire and rebuild value in incredibly valuable assets. In the case of the former Destiny Pharma, what we saw was a really interesting, well-developed asset that had a very promising phase two trial and was getting close to a phase three launch, but it just ran out of steam — ran out of space.
We're familiar with this approach. You'll recall the deep tech recycling transaction we did a few years back. We have the tools to take such situations and transition them to a lower cash burn, what we call a capital-efficient investment approach, and then look to unlock investor value. We continuously look at such opportunities. We did a fair amount of research into this one, and it fit our various criteria.
Proactive: Ilian, the deal involves both upfront cash and deferred milestone payments. Can you explain how this capital-efficient structure benefits EMV Capital and your investors?
Dr Ilian Iliev: Absolutely. It also benefits the beneficiaries of the liquidation process. The way we see it is — these are incredibly valuable assets that have been built over time. In the absence of the sort of approach we bring to the table, they may disappear or go into a big corporate and have limited impact on the economy.
We combine our own efforts and balance sheet where appropriate with the financial support of our investor ecosystem. On the other side, if it's all about cash upfront, right now there’s not going to be that much. However, let’s align our interests in the longer term.
This is really about the impact this drug can have on the healthcare system. The deferred payments approach is linked first to the launch of the phase three trial — which we're going to work on now — the successful completion of the trial, and the potential for licensing fees from another programme that was built by previous management.
Proactive: What are the next steps for advancing XF-73 towards that phase three trial and eventual commercialization?
Dr Ilian Iliev: Very similar to our other companies. Forgive me for comparing a pharma company to a plastics recycling company, but all these businesses that rely heavily on IP and scientific knowledge have a similar capital-to-lifecycle pattern for us.
What we do with our capital-efficient investment approach is ensure a low cash burn while new management looks for ways of unlocking value, reaching the next stage, and assembling the capital package in a minimally dilutive way for shareholders.
In the case of XF-73, we’re now going to work with new management to put together a package, re-engage with regulators, reconstitute the ecosystem with CROs and regulatory consultants — all the usual things — in preparation for the phase three trial, and then look to relaunch that trial in the near future.
Proactive: Maybe touching on impact investment — Ilian, antimicrobial resistance and hospital-acquired infections are areas of global concern. How significant could XF-73 be in addressing these challenges? And what role does EMV Capital aim to play in this market?
Dr Ilian Iliev: I feel very strongly about having a realistic approach around sustainability and impact investment. For us at EMV Capital, impact investment is not about ticking KPIs or submitting questionnaires. It's about real work with real impact with real companies, while looking to provide investor return to our shareholders.
This is a great case. The initial targets from previous market research were absolutely focused on the US market — that’s where the money is. We’re looking at upwards of two million patients in the US who could initially benefit from this drug to prevent and address post-operative infections.
But this is not a US-only problem. It’s absolutely a global issue. The company already has a licence agreement with a Chinese entity focused on emerging markets. While we’ll prioritize the US market — as you must in pharma — we’re also looking at broader commercialization, including emerging markets.
Again, with our capital-efficient investment approach, we can start modestly, work out a business plan, define the right collaborators — whether within the business or via joint ventures and spinouts — and then scale up. We’ve done this several times with our other companies and we’re really excited to apply that here.
Proactive: Ilian, I hope you'll keep us updated with progress on that. Thank you very much for taking the time today.