Evelo Biosciences Closes $25.5 Million Private Placement

Restructures and reduces secured debt with Horizon Technology Finance Corporation
Appoints two new members and decreases size of Board of Directors

CAMBRIDGE, Mass., July 12, 2023 (GLOBE NEWSWIRE) -- Evelo Biosciences, Inc. (Nasdaq:EVLO) (the “Company” or “Evelo”), a clinical stage biotechnology company developing a novel platform of orally delivered inflammation-resolving medicines acting on the small intestinal axis (SINTAX), today announces that it closed the previously announced private placement, resulting in gross proceeds of approximately $25.5 million from the sale of 11,025,334 shares of its common stock at a purchase price of $2.31 per share. The offering was led by Evelo’s founder, Flagship Pioneering, with participation from other existing and new investors. Net proceeds from the private placement will be used to fund completion of the Company’s ongoing Phase 2a trial of EDP2939 in moderate psoriasis, to pay down approximately $5 million of debt and for general corporate purposes.

Simba Gill, Ph.D., Evelo’s Chief Executive Officer, said, “We are pleased to secure this financing which provides cash runway past our upcoming Phase 2a trial readout of EDP2939 in moderate psoriasis, expected early in the fourth quarter of this year. EDP2939 is our next-generation product targeting the small intestinal axis (SINTAX) which builds on the previously reported positive Phase 2 dose ranging study of our first generation product (EDP1815) in mild to moderate psoriasis. We believe EDP2939 has the potential for greater activity versus EDP1815, given that it is a purified and higher concentration microbial extracellular vesicle based product which is delivered in a faster release capsule and which better targets the upper part of the small intestine. EDP2939 has the potential, if approved, to be a foundational product for the global treatment of mild and moderate psoriasis patients. Positive Phase 2 data in the ongoing study could also open up potential in other Th17 inflammatory diseases, including many types of arthritis, inflammatory bowel disease and other chronic inflammatory diseases.”

In conjunction with the financing, the Company restructured its existing secured debt with Horizon Technology Finance Corporation (“Horizon”). The principal balance of the loan was reduced by $10 million with the Company paying down $5 million of the loan and Horizon converting $5 million of the loan into equity (at the same price per share as that paid by investors in the private placement). Evelo has agreed to pay down up to an additional $10 million of the loan and Horizon has agreed to convert up to an additional $10 million of the loan to equity, in each case concurrent with future equity financings of the Company.