Shares Archives - Page 3 of 4

Announcement of Placing

28.6.2022

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA, SINGAPORE, HONG KONG OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE EU REGULATION 596/2014 (“MAR”) AND ARTICLE 7 OF MAR AS INCORPORATED INTO UK DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 (“UK MAR”).

Faron Pharmaceuticals Ltd

(“Faron” or the “Company”)

Announcement of Placing of Newly Issued Treasury Shares to Raise EUR 5 Million and of

PDMR Dealings

Company announcement, 28 June 2022 at 9:00 a.m. EEST/ 7:00 a.m. BST

Inside information

KEY HIGHLIGHTS

The Company has conducted a private placement directed to a limited number of institutional and other investors to raise EUR 5 million.
The Leukemia & Lymphoma Society Therapy Acceleration Program® (LLS TAP) participated in the Placing.
Significant majority of the net proceeds of the Placing will be used for the acceleration of the bexmarilimab clinical development program and manufacturing.
As disclosed in the Company’s full year report on 25 March 2022, total cash and cash equivalents held by the Company as of 31 December 2021 were ca. EUR 6.9 million.
Gross proceeds of the Placing together with other currently confirmed funding, are expected to provide the Company with working capital into Q1 2023.

TURKU, FINLAND / BOSTON, MA – Faron Pharmaceuticals Ltd (First North: FARON, AIM: FARN), a clinical stage biopharmaceutical company focused on building the future of immunotherapy by harnessing the power of the immune system to tackle cancer and inflammation, today announces that it has conducted a placement of 2,006,621 newly issued treasury shares (“Placing Shares”) to raise EUR 5 million before expenses to a limited number of institutional investors and other investors (“Placing”). Upon receipt of these proceeds, the Company expects to have sufficient working capital into Q1 2023.

The Placing was carried out as a private placement by way of a firm placement of Placing Shares to a limited number of institutional and other investors. To implement the Placing, the Board of Directors of Faron (the “Board“) has decided to issue 3,318,421 shares to Faron itself without consideration (“Treasury Shares”) and, subject to the registration of the Treasury Shares, further convey 2,006,621 of such Treasury Shares as Placing Shares to the participating investors. The remaining 1,311,800 Treasury Shares not conveyed to investors, will remain in the Company’s possession. The subscription price per Placing Share corresponds to the volume weighted average price of the Company’s shares on Nasdaq Helsinki First North Growth Market Finland on 27 June 2022, EUR 2.4882 (the “Issue Price“) and the settlement of the Placing (delivery against payment) trades are expected to complete on or around 30 June 2022 and 5 July 2022, respectively. One of the investors participating in the Placing is The Leukemia & Lymphoma Society Therapy Acceleration Program® (“LLS TAP”).

“This fundraise will enable us to accelerate our ambitious bexmarilimab development program, with a specific focus on advancing our combination trials in both solid tumors and hematologic malignancies,” said Dr. Markku Jalkanen, Chief Executive Officer of Faron. “Far too many patients are not benefiting from recently approved treatments because their immune system simply doesn’t recognize and mount a defense against their cancer. By converting highly immunosuppressive M2 macrophages to immune stimulating M1 macrophages, bexmarilimab is capable of igniting an immune response in these patients, which we think will be amplified when used as part of a combination regimen.”

“We are extremely pleased with the results of this Placing, including an investment from The Leukemia & Lymphoma Society Therapy Acceleration Program® (LLS TAP), a funding initiative to accelerate innovative blood cancer therapeutics and change the standard of care in leukemia, lymphoma, and multiple myeloma,” said Toni Hänninen, Chief Financial Officer of Faron. “These funds raised strengthen our balance sheet and will allow us to continue accelerating our bexmarilimab development program, which includes our monotherapy MATINS trial and combination studies in hematologic malignancies and solid tumors.”

“We are excited to invest in and partner with Faron and look forward to leveraging our organization and network to help advance their development of bexmarilimab,” said Lore Gruenbaum, PhD, Vice President, The Leukemia & Lymphoma Society Therapy Acceleration Program® (LLS TAP). “There is a critical need to develop new treatment options for blood cancer patients and novel combination therapies, like those being explored by Faron, are particularly promising because they can work synergistically to not only treat the cancer, but also activate a systemic response by the patient’s own immune system.”

USE OF PROCEEDS

The development of bexmarilimab has advanced significantly over the past 12 – 18 months and the furthering of its development provides an opportunity to build additional value for shareholders. The primary reason for conducting the Placing is to accelerate and expand the clinical development of this drug candidate.

Bexmarilimab

Conclude MATINS trial for FDA EOP Meeting
Progress BEXMAB hematologic combination trial
Initiate BEXCOMBO solid tumor combination trial
Advance Bex CMC commercial scale production

General corporate

Development of Faron’s operational unit in the US
Strengthening of the Company’s balance sheet

DETAILS ON PLACING AND SHARE ISSUES

The Placing is carried out within the authorization granted to the Board by shareholders at the Company’s Annual General Meeting held on 23 April 2021 to issue up to a total of 10,000,000 ordinary shares in the Company, including the right to issue new shares or dispose of the shares in the possession of the Company, in a directed share issue and in deviation from the shareholders’ pre-emptive rights. The Placing is implemented in two phases, each requiring the use of the Board’s share issue authorization, i.e. by the Company first issuing the Treasury Shares to itself without consideration and then immediately conveying up to 2,006,621 of such Treasury Shares as Placing Shares to the participating investors against their payment of the Issue Price. As a result of the Placing, the number of ordinary shares in the Company will increase by 3,318,421 new shares (representing approximately 6 per cent of all the issued shares and votes in the Company immediately prior to the Placing), which are expected to be registered in the Finnish Trade Register on or around 28 June 2022. Following the issuance, the aggregate number of ordinary shares in the Company will be 56,575,453. A further announcement will be made to confirm the registration.

A total of 2,006,621 of these Treasury Shares are further conveyed as Placing Shares to the investors participating in the Placing, with the payment and settlement (delivery against payment of the Issue Price in full) expected to be completed on or about 30 June 2022 and 5 July 2022, respectively. Following, and subject to, the completion of the settlement in full, the Company will hold a total of 1,311,800 Treasury Shares. The number of shares in issue (excluding Treasury Shares), and the figure to be used as the denominator for calculations of interests in the Company’s voting rights, will be 55,263,653.

Upon registration with the Finnish Trade Register and the further conveyance of the Placing Shares to investors, the Placing Shares will rank pari passu in all respects with the existing shares of the Company.

ADMISSION

The Company will make applications for the admission of the Placing Shares (and the remaining Treasury Shares) to trading on First North and AIM with said admissions expected to become effective and trading to commence on or around 29 June 2022 (the “Admissions“).

RELATED PARTY AND PDMR DEALING

Timo Syrjälä, an existing shareholder in the Company, has subscribed for and been allocated 1,355,999 Placing Shares in aggregate (subscribed for by himself and through Acme Investments SPF Sarl (“Acme“), an entity wholly owned by Mr. Syrjälä), for an aggregate subscription value of approximately EUR 3.4 million at the Issue Price. Following the completion of the Placing, Mr. Syrjälä’s total holding in the Company’s shares, which includes his indirect holding through Acme, will be 10,548,498 shares, representing 19.09 per cent of the issued shares and votes of the Company following the Placing. Mr Syrjälä is a “Substantial Shareholder” in the Company for the purposes of the AIM Rules for Companies (the “AIM Rules“). His subscription for Placing Shares pursuant to the Placing is a related party transaction for the purposes of the AIM Rules. The Directors of the Company, all of whom are independent of Mr Syrjälä, having consulted with Cairn Financial Advisers LLP, the Company’s nominated adviser for the purposes of the AIM Rules, consider the terms of the participation by Mr. Syrjälä in the Placing to be fair and reasonable insofar as shareholders are concerned.

In addition, Markku Jalkanen together with his spouse Sirpa Jalkanen, Anne Whitaker and Erik Ostrowski, directors of the Company, as well as Toni Hänninen, CFO of the Company, have subscribed for 40,188, 4,018, 2,009 and 4,018 shares respectively. Their beneficial interests in the issued shares and votes of the Company are set out below:

	Before the Placing			Following the Placing
Director	Number of ordinary shares held	% of total voting rights	Number of Placing Shares subscribed for	Number of ordinary shares held	% of total voting rights
Markku Jalkanen (including spouse Sirpa Jalkanen)	3,251,677	6.11	40,188	3,291,865	5.96
Anne Whitaker	–	–	4,018	4,018	0.01
Erik Ostrowski	–	–	2,009	2,009	0.00
Toni Hänninen	94,697	0.18	4,018	98,715	0.18

The participation of Markku Jalkanen, Anne Whitaker and Erik Ostrowski (“Directors Participation”) in the Placing constitute related party transactions for the purposes of the AIM Rules. The independent directors for the purpose of the Directors Participation, being Dr Frank Armstrong, Dr Gregory Brown, John Poulos and Leopoldo Zambeletti, having consulted with Cairn Financial Advisers LLP, the Company’s nominated adviser for the purposes of the AIM Rules, consider the terms of the Directors Participation in the Placing to be fair and reasonable insofar as shareholders are concerned.

Notification of a Transaction pursuant to Article 19(1) of Regulation (EU) No. 596/2014
1	Details of the person discharging managerial responsibilities/person closely associated
a.	Name	a) Markku Jalkanen b) Anne Whitaker c) Erik Ostrowski d) Toni Hänninen e) Sirpa Jalkanen
2	Reason for notification
a.	Position/Status	Directors
b.	Initial notification/ Amendment	Initial Notification
3	Details of the issuer, emission allowance market participant, auction platform, auctioneer or auction monitor
a.	Name	Faron Pharmaceuticals Oy
b.	LEI	7437009H31TO1DC0EB42
4	Details of the transaction(s): section to be repeated for (i) each type of instrument; (ii) each type of transaction; (iii) each date; and (iv) each place where transactions have been conducted
a.	Description of the financial instrument, type of instrument Identification Code	Ordinary shares ISIN: FI4000153309
b.	Nature of the transaction	Purchase of ordinary shares
c.	Price(s) and volume(s)		Average
			Price(s)	Volume(s)
			a) 2.4882 b) 2.4882 c) 2.4882 d) 2.4882 e) 2.4882	a) 28,132 b) 4,018 c) 2,009 d) 4,018 e) 12,056

d.	Aggregated information – Aggregated Volume – Price	50,233 2.4882
e.	Date of the transaction	27 June 2022
f.	Place of the transaction	Nasdaq First North Growth Market

For more information please contact:

Investor Contact

Faron Pharmaceuticals

Julia Balanova

VP, Investor Relations

julia.balanova@faron.com

investor.relations@faron.com

Phone: +1 (917) 306-6096

Media Contact

Faron Pharmaceuticals

Eric Van Zanten

VP, Communications

eric.vanzanten@faron.com

Phone: +1 (610) 529-6219

Cairn Financial Advisers LLP, Nomad

Sandy Jamieson, Jo Turner

Phone: +44 (0) 207 213 0880

Peel Hunt LLP, Broker

Christopher Golden, James Steel

Phone: +44 (0) 20 7418 8900

Sisu Partners Oy, Certified Adviser on Nasdaq First North

Juha Karttunen

Phone: +358 (0)40 555 4727

Jukka Järvelä

Phone: +358 (0)50 553 8990

Consilium Strategic Communications

Mary-Jane Elliott, David Daley, Lindsey Neville

faron@consilium-comms.com

Phone: +44 (0)20 3709 5700

MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO SUBSCRIBE FOR, OTHERWISE ACQUIRE OR DISPOSE OF ANY SECURITIES IN FARON PHARMACEUTICALS OY (“FARON”) PURSUANT TO THE TRANSACTION REFERRED TO IN THIS ANNOUNCEMENT. THIS ANNOUNCEMENT IS THEREFORE DIRECTED ONLY AT, IN A MEMBER STATE OF THE EUROPEAN ECONOMIC AREA, PERSONS WHO ARE “QUALIFIED INVESTORS” AS DEFINED IN ARTICLE 2(E) OF THE EU PROSPECTUS REGULATION (WHICH MEANS REGULATION (EU) 2017/1129) (THE “PROSPECTUS REGULATION”). THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE OR CONTAIN ANY INVITATION, SOLICITATION, RECOMMENDATION, OFFER OR ADVICE TO ANY PERSON TO SUBSCRIBE FOR, OTHERWISE ACQUIRE OR DISPOSE OF ANY SECURITIES IN FARON OR ANY OTHER ENTITY IN ANY JURISDICTION IN WHICH ANY SUCH OFFER WOULD BE UNLAWFUL.

IN ADDITION, IN THE UNITED KINGDOM, THIS ANNOUNCEMENT IS ONLY DIRECTED AT PERSONS IN THE UNITED KINGDOM THAT ARE QUALIFIED INVESTORS WITHIN THE MEANING OF ARTICLE 2(E) OF THE PROSPECTUS REGULATION AS INCORPORATED INTO UK DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 THAT ARE ALSO (I) INVESTMENT PROFESSIONALS FALLING WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (THE “ORDER”) AND/OR (II) HIGH NET WORTH ENTITIES, AND OTHER PERSONS TO WHOM IT MAY LAWFULLY BE COMMUNICATED, FALLING WITHIN ARTICLE 49(2)(A) TO (E) OF THE ORDER (EACH SUCH PERSON, TOGETHER WITH QUALIFIED INVESTORS AS DEFINED IN THE PROSPECTUS REGULATION, BEING REFERRED TO AS A “RELEVANT PERSON”).

ACCORDINGLY, THIS ANNOUNCEMENT AND ITS CONTENTS MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS ANNOUNCEMENT RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. PERSONS INTO WHOSE POSSESSION THIS ANNOUNCEMENT COMES ARE REQUIRED TO INFORM THEMSELVES ABOUT AND TO OBSERVE ANY SUCH RESTRICTIONS.

THE TRANSACTION REFERRED TO IN THIS ANNOUNCEMENT WOULD BE MADE PURSUANT TO A PRIVATE PLACEMENT EXEMPTION UNDER THE PROSPECTUS REGULATION FROM THE REQUIREMENTS TO PRODUCE A PROSPECTUS UNDER THE PROSPECTUS REGULATION FOR OFFERS OF SECURITIES. FARON HAS NOT TAKEN ANY ACTION, NOR WILL IT TAKE ANY ACTION, TO OFFER ANY OF THE PLACING SHARES THAT ARE TO BE SUBSCRIBED FOR PURSUANT TO THE TRANSACTION REFERRED TO IN THIS ANNOUNCEMENT OR ANY DOCUMENTS RELATING TO THE PLACING TO THE PUBLIC IN FINLAND, SWEDEN, NORWAY OR DENMARK, OR IN ANY OTHER JURISDICTION IN ANY FORM WHICH WOULD CONSTITUTE AN OFFER TO THE PUBLIC.

THIS ANNOUNCEMENT IS NOT FOR PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OF AMERICA. THIS ANNOUNCEMENT IS NOT AN OFFER OF SECURITIES FOR SALE INTO THE UNITED STATES. THE PLACING SHARES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES, AND MAY NOT BE OFFERED, SOLD OR TRANSFERRED, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM THE UNITED STATES EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES. THERE IS NO INTENTION TO REGISTER THE PLACING SHARES IN THE UNITED STATES OR TO MAKE A PUBLIC OFFERING IN THE UNITED STATES. ANY SALE OF THE PLACING SHARES IN THE UNITED STATES WILL BE MADE SOLELY TO “QUALIFIED INSTITUTIONAL BUYERS” AS DEFINED IN RULE 144A IN RELIANCE ON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT.

About Bexmarilimab

Bexmarilimab is Faron’s wholly-owned, investigative precision immunotherapy with the potential to provide permanent immune stimulation for difficult-to-treat cancers through targeting myeloid cell function. A novel anti-Clever-1 humanised antibody, bexmarilimab targets Clever-1 positive (Common Lymphatic Endothelial and Vascular Endothelial Receptor 1) tumour associated macrophages (TAMs) in the tumour microenvironment, converting these highly immunosuppressive M2 macrophages to immune stimulating M1 macrophages. In mouse models, bexmarilimab has successfully blocked or silenced Clever-1, activating antigen presentation and promoting interferon gamma secretion by leukocytes. Additional pre-clinical studies have proven that Clever-1, encoded by the Stabilin-1 or STAB-1 gene, is a major source of T cell exhaustion and involved in cancer growth and spread. Observations from clinical studies to date indicate that Clever-1 has the capacity to control T cell activation directly, suggesting that the inactivation of Clever-1 as an immune suppressive molecule could be more broadly applicable and more important than previously thought. As an immuno-oncology therapy, bexmarilimab has potential as a single-agent therapy or in combination with other standard treatments including immune checkpoint molecules in both solid tumors and hematologic malignancies. Beyond immuno-oncology, it offers potential in infectious diseases, vaccine development and more.

About Faron Pharmaceuticals Ltd.

Faron (AIM: FARN, First North: FARON) is a clinical stage biopharmaceutical company developing novel treatments for medical conditions with significant unmet needs caused by dysfunction of our immune system. The Company currently has a pipeline based on the receptors involved in regulation of immune response in oncology, organ damage and bone marrow regeneration. Bexmarilimab, a novel anti-Clever-1 humanized antibody, is its investigative precision immunotherapy with the potential to provide permanent immune stimulation for difficult-to-treat cancers through targeting myeloid function. Currently in Phase I/II clinical development as a potential therapy for patients with solid tumors and hematologic malignancies, bexmarilimab has potential as a single-agent therapy or in combination with other standard treatments including immune checkpoint molecules. Traumakine is an investigational intravenous (IV) interferon beta-1a therapy for the treatment of acute respiratory distress syndrome (ARDS) and other ischemic or hyperinflammatory conditions. Traumakine is currently being evaluated by the 59th Medical Wing of the US Air Force and the US Department of Defense for the prevention of multiple organ dysfunction syndrome (MODS) after ischemia-reperfusion injury caused by a major trauma. Faron is based in Turku, Finland. Further information is available at www.faron.com.

About The Leukemia & Lymphoma Society and Therapy Acceleration Program® (TAP)
The Leukemia & Lymphoma Society® (LLS) is a global leader in the fight against cancer. The LLS mission is to cure leukemia, lymphoma, Hodgkin’s disease and myeloma, and improve the quality of life of patients and their families. LLS TAP is a strategic initiative that builds business alliances and collaborations with biotechnology companies and academic researchers to identify potential breakthrough therapies with the ability to change the standard of care. LLS TAP funds late-stage preclinical studies, and proof of concept or registrational clinical trials to help advance therapeutics along the drug development and approval pathway. LLS TAP accepts funding applications on a rolling basis from companies with innovative science that has a high potential to improve patient lives. To learn more, visit www.LLS.org/therapy-acceleration-program. Follow LLS on Facebook, Twitter, and Instagram.

IMPORTANT INFORMATION

Market Abuse Regulation

Market soundings, as defined in Regulation (EU) No 596/2014 (“MAR“), were taken in respect of the Placing with the result that certain persons became aware of inside information, as permitted by MAR. That inside information in relation to the Placing is set out in this announcement and has been disclosed as soon as possible in accordance with paragraph 7 of article 17 of MAR. Therefore, those persons that received inside information in such market sounding are no longer in possession of inside information relating to the Company and its securities.

This announcement contains inside information for the purposes of Article 7 of MAR and Article 7 of UK MAR.

MiFID II

Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended (“MiFID II“); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing measures (together, the “MiFID II Product Governance Requirements“), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any “manufacturer” (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, the Placing Shares have been subject to a product approval process, which has determined that the Placing Shares are: (i) compatible with an end target market of: (a) retail investors, (b) investors who meet the criteria of professional clients and (c) eligible counterparties (each as defined in MiFID II); and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the “Target Market Assessment“). Notwithstanding the Target Market Assessment, distributors should note that: the price of the Placing Shares may decline and investors could lose all or part of their investment; the Placing Shares offer no guaranteed income and no capital protection; and an investment in the Placing Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the offer.

Caution regarding forward-looking statements

Certain statements in this announcement are, or may be deemed to be, forward-looking statements. Forward-looking statements are identified by their use of terms and phrases such as ”believe”, ”could”, “should”, “expect”, ”envisage”, ”estimate”, ”intend”, ”may”, ”plan”, ”potentially”, ”will” or the negative of those, variations or comparable expressions, including references to assumptions. These forward-looking statements are not based on historical facts but rather on the Directors’ current expectations and assumptions regarding the Company’s future growth, results of operations, performance, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, business prospects and opportunities. Such forward-looking statements reflect the Directors’ current beliefs and assumptions and are based on information currently available to the Directors.

A number of factors could cause actual results to differ materially from the results and expectations discussed in the forward-looking statements, many of which are beyond the control of the Company. In addition, other factors which could cause actual results to differ materially include the ability of the Company to successfully licence its programmes, risks associated with vulnerability to general economic and business conditions, competition, environmental and other regulatory changes, actions by governmental authorities, the availability of capital markets or other sources of funding, reliance on key personnel, uninsured and underinsured losses and other factors. Although any forward-looking statements contained in this announcement are based upon what the Directors believe to be reasonable assumptions, the Company cannot assure investors that actual results will be consistent with such forward-looking statements. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements. Subject to any continuing obligations under applicable law or any relevant AIM Rule requirements, in providing this information the Company does not undertake any obligation to publicly update or revise any of the forward-looking statements or to advise of any change in events, conditions or circumstances on which any such statement is based.

20220627_FINAL_Placing Announcement

Exercise of options

1.6.2022

Faron Pharmaceuticals Ltd.

(“Faron”)

Exercise of options

Issue of equity

Company announcement, June 1, 2022 at 07:00 am BST / 9:00 am EEST

TURKU, FINLAND / BOSTON, MA – Faron Pharmaceuticals Ltd. (AIM: FARN, First North: FARON), a clinical stage biopharmaceutical company focused on building the future of immunotherapy by harnessing the power of the immune system to tackle cancer and inflammation, announces that it has received notifications from option holders to exercise 2015D options over 25,000 shares in the Company at an exercise price of EUR 1.09 (approx. GBP 0.93) per share under the Company’s 2015 Option Plan (“New Ordinary Shares”). The terms and conditions of the 2015 Option Plan are available on the Company’s website at https://www.faron.com/sites/default/files/Option%20Plan%202015_Terms%20and%20Conditions_20200518.pdf.

Applications have been made to the London Stock Exchange and Nasdaq Helsinki to admit the New Ordinary Shares to trading on AIM and Nasdaq First North Growth Market, respectively. Admission of the New Ordinary Shares is expected to occur on or around June 7, 2022 following issue and registration of the New Ordinary Shares on or around June 6, 2022 (“Registration”). The New Ordinary Shares will rank pari passu with existing ordinary shares.

Faron’s enlarged issued number of shares immediately following Registration will be 53,257,032 ordinary shares with voting rights attached. The Company has no shares in treasury; therefore upon, and subject to, Registration, the total number of voting rights in Faron will be 53,257,032. This figure may be used by shareholders as the denominator for the calculations by which they will determine whether they are required to notify an interest in, or a change to their interest in, the issued shares and votes of the Company.

For more information please contact:

Investor Contact

Faron Pharmaceuticals

Julia Balanova

VP, Investor Relations

julia.balanova@faron.com

investor.relations@faron.com

Phone: +1 (917) 306-6096

Media Contact

Faron Pharmaceuticals

Eric Van Zanten

VP, Communications

eric.vanzanten@faron.com

Phone: +1 (610) 529-6219

Cairn Financial Advisers LLP, Nomad

Sandy Jamieson, Jo Turner

Phone: +44 (0) 207 213 0880

Peel Hunt LLP, Broker

Christopher Golden, James Steel

Phone: +44 (0) 20 7418 8900

Sisu Partners Oy, Certified Adviser on Nasdaq First North

Juha Karttunen

Phone: +358 (0)40 555 4727

Jukka Järvelä

Phone: +358 (0)50 553 8990

Consilium Strategic Communications

Mary-Jane Elliott, David Daley, Lindsey Neville

faron@consilium-comms.com

Phone: +44 (0)20 3709 5700

About Faron Pharmaceuticals Ltd.

Faron (AIM: FARN, First North: FARON) is a clinical stage biopharmaceutical company developing novel treatments for medical conditions with significant unmet needs caused by dysfunction of our immune system. The Company currently has a pipeline based on the receptors involved in regulation of immune response in oncology, organ damage and bone marrow regeneration. Bexmarilimab, a novel anti-Clever-1 humanized antibody, is its investigative precision immunotherapy with the potential to provide permanent immune stimulation for difficult-to-treat cancers through targeting myeloid function. Currently in Phase I/II clinical development as a potential therapy for patients with solid tumors and hematologic malignancies, bexmarilimab has potential as a single-agent therapy or in combination with other standard treatments including immune checkpoint molecules. Traumakine is an investigational intravenous (IV) interferon beta-1a therapy for the treatment of acute respiratory distress syndrome (ARDS) and other ischemic or hyperinflammatory conditions. Traumakine is currently being evaluated by the 59th Medical Wing of the US Air Force and the US Department of Defense for the prevention of multiple organ dysfunction syndrome (MODS) after ischemia-reperfusion injury caused by a major trauma. Faron is based in Turku, Finland. Further information is available at www.faron.com.

Faron Exercise of options 010622

Exercise of options

7.10.2021

Faron Pharmaceuticals Ltd

(“Faron or the “Company”)

Exercise of options

Issue of equity

Company announcement, 7 October 2021 at 02:00 AM (EDT) / 07:00 AM (BST) / 09:00 AM (EEST)

TURKU, FINLAND / BOSTON, MA – Faron Pharmaceuticals Ltd. (AIM: FARN, First North: FARON), a clinical stage biopharmaceutical company, announces that it has received notifications from option holders to exercise B options over 2,000 ordinary shares in the Company at an exercise price of EUR 2.90 (approx. GBP 2.49) and D options over 9,000 shares in the Company at an exercise price of EUR 1.09 (approx. GBP 0.93) per share under the Company’s 2015 Option Plan (“New Ordinary Shares”). The terms and conditions of the 2015 Option Plan are available on the Company’s website: Option Plan 2015.

Applications will be made to the London Stock Exchange and Nasdaq Helsinki to admit the New Ordinary Shares to trading on AIM and Nasdaq First North Growth Market, respectively. Admission of the New Ordinary Shares is expected to occur on or around 15 October 2021 following issue and registration of the New Ordinary Shares on or around 14 October 2021 (“Registration”). The New Ordinary Shares will rank pari passu with existing ordinary shares.

Faron’s enlarged issued number of shares immediately following Registration will be 53,232,032 ordinary shares with voting rights attached. The Company has no shares in treasury; therefore upon, and subject to, Registration, the total number of voting rights in Faron will be 53,232,032. This figure may be used by shareholders as the denominator for the calculations by which they will determine whether they are required to notify an interest in, or a change to their interest in, the issued shares and votes of the Company.

For more information please contact:

Faron Pharmaceuticals Ltd

Dr Markku Jalkanen, Chief Executive Officer

investor.relations@faron.com

Cairn Financial Advisers LLP, Nomad

Sandy Jamieson, Jo Turner

Phone: +44 207 213 0880

Peel Hunt LLP, Broker

Christopher Golden, James Steel

Phone: +44 (0) 20 7418 8900

Sisu Partners Oy, Certified Adviser on Nasdaq First North

Juha Karttunen

Phone: +358 (0)40 555 4727

Jukka Järvelä

Phone: +358 (0)50 553 8990

Consilium Strategic Communications

Mary-Jane Elliott, David Daley, Lindsey Neville

faron@consilium-comms.com

Phone: +44 (0)20 3709 5700

Stern Investor Relations

Julie Seidel

julie.seidel@sternir.com

Phone: +1 (212) 362-1200

About Faron Pharmaceuticals Ltd

Faron (AIM: FARN, First North: FARON) is a clinical stage biopharmaceutical company developing novel treatments for medical conditions with significant unmet needs caused by dysfunction of our immune system. The Company currently has a pipeline based on the receptors involved in regulation of immune response in oncology, organ damage and bone marrow regeneration. Bexmarilimab, a novel anti-Clever-1 humanized antibody, is its investigative precision immunotherapy with the potential to provide permanent immune stimulation for difficult-to-treat cancers through targeting myeloid function. Currently in Phase I/II clinical development as a potential therapy for patients with untreatable solid tumors, bexmarilimab has potential as a single-agent therapy or in combination with other standard treatments including immune checkpoint molecules. Traumakine is an investigational intravenous (IV) interferon beta-1a therapy for the treatment of acute respiratory distress syndrome (ARDS) and other ischemic or hyperinflammatory conditions. Traumakine is currently being evaluated in global trials as a potential treatment for hospitalized patients with COVID-19 and with the 59th Medical Wing of the US Air Force and the US Department of Defense for the prevention of multiple organ dysfunction syndrome (MODS) after ischemia-reperfusion injury caused by a major trauma. Faron is based in Turku, Finland. Further information is available at www.faron.com.

Faron Exercise of options 071021

Registration of Placing Shares

12.2.2021

THIS ANNOUNCEMENT IS ONLY DIRECTED AT PERSONS IN THE UNITED KINGDOM THAT ARE QUALIFIED INVESTORS WITHIN THE MEANING OF ARTICLE 2(E) OF REGULATION 2017/1129/EU AS INCORPORATED INTO UK DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 THAT ARE ALSO (I) INVESTMENT PROFESSIONALS FALLING WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (THE “ORDER”) AND/OR (II) HIGH NET WORTH ENTITIES, AND OTHER PERSONS TO WHOM IT MAY LAWFULLY BE COMMUNICATED, FALLING WITHIN ARTICLE 49(2)(A) TO (E) OF THE ORDER (EACH SUCH PERSON BEING REFERRED TO AS A “RELEVANT PERSON”). ACCORDINGLY, THIS ANNOUNCEMENT AND ITS CONTENTS MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS ANNOUNCEMENT RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. PERSONS INTO WHOSE POSSESSION THIS ANNOUNCEMENT COMES ARE REQUIRED TO INFORM THEMSELVES ABOUT AND TO OBSERVE ANY SUCH RESTRICTIONS.

Faron Pharmaceuticals Oy

(“Faron” or the “Company”)

Registration of Placing Shares with the Trade Register

Capitalised terms used in this announcement have the meanings given to them in the announcement made on 11 February 2021 regarding the proposed issue and placing of new ordinary shares in the Company (the “Launch Announcement“) and the subsequent announcement released at 7.00 a.m. GMT / 9.00 a.m. EET on 12 February 2021 (the “Pricing and Results Announcement”), unless the context provides otherwise.

Company announcement, 12 February 2021 at 3:00 p.m. GMT / 5:00 p.m. EET

TURKU – FINLAND – Faron Pharmaceuticals Oy (First North: FARON, AIM: FARN), the clinical stage biopharmaceutical company, has as previously announced completed the Placing. The Company announced the results of the Placing on 12 February 2021.

A total of 3,521,127 Placing Shares subscribed for in the Placing have been issued and registered in the Trade Register today on 12 February 2021. The Placing Shares confer a right to dividends and other shareholder rights from their registration with the Trade Register. Following the Placing, the aggregate number of ordinary shares in the Company is 50,417,874. One ordinary share entitles to one vote in the general meeting of the Company. The Company holds no treasury shares.

Trading in the Placing Shares is expected to commence on First North and AIM latest on or around 16 February 2021.

For more information please contact:

Faron Pharmaceuticals Oy

Dr Markku Jalkanen, Chief Executive Officer

investor.relations@faron.com

Swedbank AB (publ), Finnish Branch, Financial Adviser

Mika Karikoski (Corporate Finance)

Phone: +358 (0)40 741 6959

Cairn Financial Advisers LLP, Nomad

Sandy Jamieson, Jo Turner, Mark Rogers

Phone: + 44 207 213 0880

Sisu Partners Oy, Certified Adviser on Nasdaq First North

Juha Karttunen

Phone: +358 40 555 4727

Jukka Järvelä

Phone: +358 50 553 8990

Consilium Strategic Communications

Mary-Jane Elliott, David Daley, Lindsey Neville

Phone: +44 (0)20 3709 5700

E-mail: faron@consilium-comms.com

Stern Investor Relations

Julie Seidel, Naina Zaman

Phone: +1 (212) 362-1200

E-mail: julie.seidel@sternir.com

About Faron Pharmaceuticals Ltd

Faron (AIM: FARN, First North: FARON) is a clinical stage biopharmaceutical company developing novel treatments for medical conditions with significant unmet needs. The Company currently has a pipeline based on the receptors involved in regulation of immune response in oncology and organ damage. Bexmarilimab is its investigative precision immunotherapy with the potential to provide permanent immune stimulation for difficult-to-treat cancers through targeting myeloid function. A novel anti-Clever-1 humanised antibody, bexmarilimab targets Clever-1 positive (Common Lymphatic Endothelial and Vascular Endothelial Receptor 1) tumour associated macrophages (TAMs) in the tumour microenvironment, converting these highly immunosuppressive M2 macrophages to immune stimulating M1 macrophages. With the ability to switch immune suppression to immune activation in various conditions, bexmarilimab has potential across oncology, infectious diseases and vaccine development. Currently in phase I/II clinical development as a potential therapy for patients with untreatable solid tumours, bexmarilimab has potential as a single-agent therapy or in combination with other standard treatments including immune checkpoint molecules. Traumakine is an investigational intravenous (IV) interferon beta-1a therapy for the treatment of acute respiratory distress syndrome (ARDS) and other ischemic or hyperinflammatory conditions. In addition to its profound antiviral effect, Traumakine upregulates the cell surface protein Cluster of Differentiation 73 (CD73), an enzyme that suppresses pro-inflammatory responses in endothelial cells. Using an IV administration of interferon beta-1a provides optimal exposure to the lung vasculature, increasing protection against serious lung complications and helping to prevent vascular leakage by enhancing endothelial barrier function. Traumakine is currently being evaluated in global trials as a potential treatment for hospitalised patients with COVID-19. As part of a working relationship established with Faron, the 59th Medical Wing of the US Air Force and the US Department of Defense are also evaluating Traumakine’s role in preventing multiple organ dysfunction syndrome (MODS) after ischemia-reperfusion injury caused by a major trauma. Faron is based in Turku, Finland. Further information is available at www.faron.com.

IMPORTANT INFORMATION

Market Abuse Regulation

Market soundings, as defined in Regulation (EU) No 596/2014 (“MAR“), were taken in respect of the proposed Placing with the result that certain persons became aware of inside information, as permitted by MAR. That inside information in relation to the Placing is set out in this announcement and has been disclosed as soon as possible in accordance with paragraph 7 of article 17 of MAR. Therefore, those persons that received inside information in such market sounding are no longer in possession of inside information relating to the Company and its securities.

MiFID II

Faron Pharmaceuticals Registration of Placing Shares

Proposed Issue and Placing of Shares

11.2.2021

THE PROPOSED TRANSACTION REFERRED TO IN THIS ANNOUNCEMENT WOULD BE MADE PURSUANT TO A PRIVATE PLACEMENT EXEMPTION UNDER THE PROSPECTUS REGULATION FROM THE REQUIREMENTS TO PRODUCE A PROSPECTUS UNDER THE PROSPECTUS REGULATION FOR OFFERS OF SECURITIES. FARON HAS NOT TAKEN ANY ACTION, NOR WILL IT TAKE ANY ACTION, TO OFFER ANY OF THE PLACING SHARES THAT ARE TO BE SUBSCRIBED FOR PURSUANT TO THE TRANSACTION REFERRED TO IN THIS ANNOUNCEMENT OR ANY DOCUMENTS RELATING TO THE PLACING TO THE PUBLIC IN FINLAND, SWEDEN, NORWAY OR DENMARK, OR IN ANY OTHER JURISDICTION IN ANY FORM WHICH WOULD CONSTITUTE AN OFFER TO THE PUBLIC.

THE PLACING SHARES WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES, AND MAY NOT BE OFFERED, SOLD OR TRANSFERRED, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM THE UNITED STATES EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES. THE PLACING SHARES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE US SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY IN THE UNITED STATES, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THE PLACING OR THE ACCURACY OR ADEQUACY OF THIS ANNOUNCEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE IN THE UNITED STATES.

Faron Pharmaceuticals Oy

(“Faron” or the “Company”)

Proposed Issue and Placing of Shares to raise approximately EUR 15 million

Company announcement, 11 February 2021 at 4:30 p.m. GMT / 6:30 p.m. EET

Inside information

TURKU – FINLAND – Faron Pharmaceuticals Oy (First North: FARON, AIM: FARN), the clinical stage biopharmaceutical company, today announces a proposed private placement of new ordinary shares (“Placing Shares”) to raise approximately EUR 15 million before expenses to a limited number of institutional investors (“Placing”). Swedbank AB (publ), Finnish Branch (“Swedbank”) is acting as sole bookrunner and financial adviser to the Company for the Placing in association with Kepler Cheuvreux S.A.

The Placing will be conducted in a private placement by way of an accelerated book-building process in which selected investors may submit bids for the Placing Shares (the “Bookbuild”). The subscription price per Placing Share is to be determined on the basis of the bids received in the Bookbuild. The Bookbuild is expected to commence immediately following this announcement and is expected to end by 9:00 a.m. EET on 12 February 2021 at the latest. The Bookbuild may be discontinued at any time during the book-building process. Following the close of the Bookbuild, the Board of Directors of Faron (the “Board“) will make the decision on the issue of the Placing Shares, including, as applicable, acceptance of the received bids, the number of Placing Shares to be issued and the subscription price per Placing Share (the “Issue Price“). The Company has received non-binding indications of interest from potential investors to subscribe for the Placing Shares under the Placing during a pre-marketing process. In addition, the Company and Swedbank have obtained from the European Innovation Council (EIC) Fund (“EIC”) a binding and irrevocable pre-commitment to subscribe for one third (1/3) of the Placing Shares for an aggregate amount of maximum EUR 10 million and minimum EUR 3 million. EIC’s pre-commitment is subject to certain customary conditions.

As soon as practicable after the close of the Bookbuild, and following receipt of binding commitments from investors, an announcement will be made on the final number of the Placing Shares to be issued and the Issue Price as well as the expected registration date of the Placing Shares.

Further details on the terms and conditions of the Placing are set out below.

The Placing Shares are expected to be issued and admitted to trading on Nasdaq First North Growth Market Finland (“First North”) and AIM (“AIM”) in London as set out below.

KEY HIGHLIGHTS

A proposed private placement to raise approximately EUR 15 million conducted by way of an accelerated book-building, directed to a limited number of institutional and other investors, in which Swedbank uses reasonable endeavours to procure subscriptions for Placing Shares.
EIC has provided a binding and irrevocable pre-commitment to subscribe for one third (1/3) of the Placing Shares for an aggregate amount of maximum EUR 10 million and minimum EUR 3 million, subject to certain conditions.
The net proceeds of the Placing would be primarily used for the expansion of the bexmarilimab clinical development programme and manufacturing. Some proceeds would also be used to support the clinical development of Traumakine^Ò and its new manufacturing process, and in strengthening the balance sheet.
As information not disclosed earlier, the cash balance held by the Company as of 31 December 2020 was ca. €4.1 million.
Swedbank acts as Lead Manager and Sole Bookrunner of the Placing and Financial Adviser to the Company in association with Kepler Cheuvreux.

Dr Markku Jalkanen, Chief Executive Officer of Faron, said: “We have continued to accelerate the clinical development of both of our lead pipeline programs, bexmarilimab and traumakine, over recent months and we are continually gaining valuable insights into these promising immunotherapy candidates. It is a significant achievement to have the support from the European Innovation Council (EIC), firstly in the form of a grant in summer 2020 and now with the pre-commitment, which is EIC’s first investment in a publicly listed company. This fundraise will enable us to continue driving our two clinical programmes forward. I am looking forward to providing further updates over the coming months.”

REASONS FOR THE PROPOSED PLACING

The Faron pipeline has advanced significantly during the last 12-18 months. This pipeline development on both key projects (bexmarilimab and Traumakine) provides an opportunity to build further value for shareholders. The recent external support for Traumakine’s HIBISCUS study from the US Department of Defense (DoD) allows the Company to focus on the design of new pivotal bexmarilimab clinical trials, which could be accelerated with further resources. This additional data generation, especially to support bexmarilimab’s expansion into new combination studies in lung cancer and acute myeloid leukaemia, together with any MATINS study cancer cohorts (hard-to-treat-solid tumours) will allow full realisation of the potential upside connected to these projects. Part of this development includes establishing a Company unit in the US (Boston) to handle the increasing US activities (FDA and clinical site interactions) that the pipeline development requires.

The primary reason for conducting the Placing is to accelerate and expand the clinical development of the Company’s main drug candidates, bexmarilimab and Traumakine (intravenous interferon beta).

Bexmarilimab

testing higher frequency of dosing to investigate potential for enhanced clinical responses;
three new trials to study bexmarilimab treatment in a neoadjuvant setting, in combination with a PD(L)-1 checkpoint inhibitor and in haematological malignancies; and
continuation of the MATINS trial, where five solid tumour cohorts have demonstrated early signs of clinical benefit in the first two stages (Part I and II) of the study.

Traumakine

launch of the phase II/III HIBISCUS study in the US; and
prepararations to expand into additional clinical indications.

General corporate

establishment of an operational unit in the US;
investment in the manufacturing of both bexmarilimab and intravenous interferon beta; and
strengthening of the Company’s balance sheet.

DETAILS OF THE PROPOSED PLACING AND ISSUE OF EQUITY

The proposed Placing is being carried out within the authorisation granted to the Board by shareholders at the Company’s Annual General Meeting held on 18 May 2020 to issue up to a total of 8,650,000 ordinary shares in the Company in a directed share issue and in deviation from the shareholders’ pre-emptive rights. As no shares have been issued within the outstanding authority, the Company may issue up to a maximum of 8,650,000 new ordinary shares pursuant to the Placing, which represents approximately 18.4 per cent of all the issued shares and votes in the Company immediately prior to the Placing.

The Placing, arranged by Swedbank in association with Kepler Cheuvreux, will be conducted in a private placement by way of the Bookbuild, which is an accelerated book-building process in which selected investors may submit bids for the Placing Shares. The Issue Price is to be determined on the basis of the bids received in the Bookbuild. The Bookbuild is expected to commence immediately following this announcement and is expected to end by 9:00 EET a.m. on 12 February 2021 at the latest. The Bookbuild may be discontinued at any time during the book-building process. Following the close of the Bookbuild, the Board will make the decision on the issue of the Placing Shares, including, as applicable, acceptance of the received bids, the number of Placing Shares to be issued and the Issue Price. As soon as practicable after the close of the Bookbuild, receipt of binding commitments from investors and the Board having resolved on carrying out the Placing, an announcement will be made on the final outcome of the Bookbuild and, as applicable, the number of the Placing Shares to be issued and the Issue Price as well as the expected registration date of the Placing Shares.

In connection with the proposed Placing, the Company has entered into a placing agreement with Swedbank (the “Placing Agreement“). Pursuant to the terms of the Placing Agreement, Swedbank has agreed to use its reasonable endeavours to procure the subscription of Placing Shares. In addition, the Company and Swedbank have obtained a binding and irrevocable pre-commitment from EIC to subscribe for one third (1/3) of the total amount of the Placing Shares for an aggregate amount of maximum EUR 10 million and minimum EUR 3 million. EIC’s pre-commitment is subject to certain customary conditions.

The Placing Agreement contains customary warranties and an indemnity from the Company in favour of Swedbank together with provisions which enable Swedbank to terminate the Placing Agreement in certain circumstances before the completion of the Bookbuild and the Board’s resolution on carrying out the Placing, including where there has been a material breach of any of the warranties contained in the Placing Agreement or where there is a material adverse change, e.g., in the business or financial affairs of the Company. The Company has agreed to pay Swedbank certain commissions and fees in connection with the Placing. Pursuant to the terms of the Placing Agreement, Swedbank has agreed to a limited settlement underwriting covering payments of the subscription prices to be made by subscribers of the Placing Shares to the Company upon the Board having resolved on carrying out the Placing after the close of the Bookbuild, on the Issue Price, on approving the binding subscriptions received through the Bookbuild and on confirming such final number of the Placing Shares.

The Placing is conditional upon, inter alia:

· the Placing Agreement having become unconditional in all respects;

· binding commitments being received from investors;

· the Board resolving to carry out the Placing at the Issue Price and the Company and Swedbank entering into a separate pricing agreement confirming the Issue Price and the number of the Placing Shares; and

· the Placing Shares being issued and being registered with the Finnish Trade Register.

In connection with the Placing, Faron has entered into a lock-up undertaking, under which it has, subject to certain exceptions, agreed not to issue or sell any shares in Faron for a period of ninety days after the closing of the Placing.

Subject to all conditions being met, the Placing Shares are expected to be entered in the Finnish Trade Register approximately on 12 February 2021.

ISSUE OF THE PLACING SHARES AND ADMISSION TO TRADING

Subject to all conditions being met and the Placing Shares being subscribed for, the Placing Shares are expected to be issued in one tranche. To the extent shares are subscribed for and subject to all conditions being met, application will then be made for the admission of the Placing Shares to trading on First North and AIM with said admission expected to become effective and trading to commence on or around 16 February 2021 (the “Admission“). The dates above may be subject to change.

A further announcement will be made to confirm the outcome of the Placing (subject to, inter alia, satisfaction of the above conditions) and to confirm the expected timing of issue of the Placing Shares and the Admission.

Upon registration with the Finnish Trade Register, the Placing Shares will rank pari passu in all respects with the existing shares of the Company.

NOTE REGARDING THE COMPANY’S FINANCIAL REPORTING IN 2021

The Company will publish its Financial Statement Release and its Annual Report 2020 (including financial statements) on 25 March 2021.

For more information please contact:

Faron Pharmaceuticals Oy

Dr Markku Jalkanen, Chief Executive Officer

investor.relations@faron.com

Swedbank AB (publ), Finnish Branch, Financial Adviser

Mika Karikoski (Corporate Finance)

Phone: +358 (0)40 741 6959

Cairn Financial Advisers LLP, Nomad

Sandy Jamieson, Jo Turner, Mark Rogers

Phone: + 44 207 213 0880

Sisu Partners Oy, Certified Adviser on Nasdaq First North

Juha Karttunen

Phone: +358 40 555 4727

Jukka Järvelä

Phone: +358 50 553 8990

Consilium Strategic Communications

Mary-Jane Elliott, David Daley, Lindsey Neville

Phone: +44 (0)20 3709 5700

E-mail: faron@consilium-comms.com

Stern Investor Relations

Julie Seidel

Phone: +1 (212) 362-1200

E-mail: julie.seidel@sternir.com

About Faron Pharmaceuticals Ltd

Aboutthe European Innovation CouncilFund

Established in June 2020, the European Innovation Council (“EIC”) Fund is a breakthrough initiative of the Commission to make direct equity and quasi-equity investments (between €500.000 and €15 million) in the capital of start-ups and SMEs. The EIC Fund aims to fill a critical financing gap faced by innovative companies when bringing their technologies to the commercialisation stage. The Fund helps to fill this financing gap at the start-up stage where the EU venture capital market still underperforms compared to the global venture capital market. Its main purpose is not to maximise the return on the investments, but to have a high impact by accompanying companies with breakthrough and disruptive technologies in their growth as patient capital investor.

IMPORTANT INFORMATION

Market Abuse Regulation

This announcement contains inside information for the purposes of Article 7 of MAR and Article 7 of UK MAR.

MiFID II

Caution regarding forward-looking statements

Release

Exercise of options Issue of equity

20.11.2020

Company announcement, 20 November 2020 at 9.00 (EET)

TURKU, FINLAND – Faron Pharmaceuticals Oy (AIM: FARN, First North: FARON), the clinical stage biopharmaceutical company, announces that it has received notifications from option holders to exercise D options over 82,000 ordinary shares in the Company at an exercise price of EUR 1.09 (approx. GBP 0.97) per share under the Company’s 2015 Option Plan (“New Ordinary Shares”). The terms and conditions of the 2015 Option Plan are available on the Company’s website at https://www.faron.com/sites/default/files/Option%20Plan%202015_Terms%20and%20Conditions_20200518.pdf.

Included in the number of New Ordinary Shares are 80,000 D options exercised by Dr Markku Jalkanen, Faron’s CEO.

Applications will be made to the London Stock Exchange and Nasdaq Helsinki to admit the New Ordinary Shares to trading on AIM and Nasdaq First North Growth Market, respectively. Admission of the New Ordinary Shares is expected to occur on or around 1 December 2020 following issue and registration of the New Ordinary Shares on or around 30 November 2020 (“Registration”). The New Ordinary Shares will rank pari passu with existing ordinary shares.

Faron’s enlarged issued number of shares immediately following Registration will be 46,896,747 ordinary shares with voting rights attached. The Company has no shares in treasury; therefore upon, and subject to, Registration, the total number of voting rights in Faron will be 46,896,747. This figure may be used by shareholders as the denominator for the calculations by which they will determine whether they are required to notify an interest in, or a change to their interest in, the issued shares and votes of the Company.

Notification of a Transaction pursuant to Article 19(1) of Regulation (EU) No. 596/2014

Details of the person discharging managerial responsibilities/person closely associated

Name

Markku Jalkanen

Reason for notification

Position/Status

Person discharging managerial responsibilities

Initial notification/Amendment

Initial notification

Details of the issuer, emission allowance market participant, auction platform, auctioneer or auction monitor

Name

Faron Pharmaceuticals Oy

LEI

7437009H31TO1DC0EB42

Details of the transaction(s): section to be repeated for (i) each type of instrument; (ii) each type of transaction; (iii) each date; and (iv) each place where transactions have been conducted

Description of the financial instrument, type of instrument

Identification Code

Options over ordinary shares

ISIN: FI4000153309

Nature of the transaction

Exercise of options made pursuant to the Faron Option Plan 2015 exercisable at €1.09 per ordinary share

Price(s) and volume(s)

Price(s)

Volume(s)

€1.09

80,000

Aggregated information– Aggregated Volume– Price

80,000€1.09

Date of the transaction

19 November 2020

Place of the transaction

Turku, Finland

For more information please contact:

Faron Pharmaceuticals Oy

Dr Markku Jalkanen, Chief Executive Officer

investor.relations@faron.com

Cairn Financial Advisers LLP, Nomad

Sandy Jamieson, Jo Turner, Mark Rogers

Phone: +44 (0)20 7213 0880

Panmure Gordon (UK) Limited, Broker

Rupert Dearden

Phone: +44 (0)20 7886 2500

Sisu Partners Oy, Certified Adviser on Nasdaq First North

Juha Karttunen, Jukka Järvelä

Phone: +358 (0)40 555 4727, +358 (0)50 553 8990

Consilium Strategic Communications

Mary-Jane Elliott, David Daley, Lindsey Neville

Phone: +44 (0)20 3709 5700

Email: faron@consilium-comms.com

Stern Investor Relations

Julie Seidel, Naina Zaman

Phone: +1 (212) 362-1200

Email: faron@sternir.com

About Faron Pharmaceuticals Oy

Release

Exercise of options

24.9.2020

Faron Pharmaceuticals Oy

(“Faron” or the “Company”)

Exercise of options

Issue of equity

Company announcement, 24 September 2020 at 9.15 (EEST)

TURKU, FINLAND – Faron Pharmaceuticals Oy (AIM: FARN, First North: FARON), the clinical stage biopharmaceutical company, announces that it has received notifications from option holders to exercise D options over 15,000 ordinary shares in the Company at an exercise price of EUR 1.09 (approx. GBP 1.00) per share under the Company’s 2015 Option Plan (“New Ordinary Shares”). The terms and conditions of the 2015 Option Plan are available on the Company’s website at https://www.faron.com/sites/default/files/Option%20Plan%202015_Terms%20and%20Conditions_20200518.pdf.

Applications will be made to the London Stock Exchange and Nasdaq Helsinki to admit the New Ordinary Shares to trading on AIM and Nasdaq First North Growth Market, respectively. Admission of the New Ordinary Shares is expected to occur on or around 5 October 2020 following issue and registration of the New Ordinary Shares on or around 2 October 2020 (“Registration”). The New Ordinary Shares will rank pari passu with existing ordinary shares.

Faron’s enlarged issued number of shares immediately following Registration will be 46,814,747 ordinary shares with voting rights attached. The Company has no shares in treasury; therefore upon, and subject to, Registration, the total number of voting rights in Faron will be 46,814,747. This figure may be used by shareholders as the denominator for the calculations by which they will determine whether they are required to notify an interest in, or a change to their interest in, the issued shares and votes of the Company.

For more information please contact:

Faron Pharmaceuticals Oy

Dr Markku Jalkanen, Chief Executive Officer

investor.relations@faron.com

Cairn Financial Advisers LLP, Nomad

Sandy Jamieson, Jo Turner, Mark Rogers

Phone: +44 207 213 0880

Panmure Gordon (UK) Limited, Broker

Rupert Dearden

Phone: +44 207 886 2500

Sisu Partners Oy, Certified Adviser on Nasdaq First North

Juha Karttunen, Jussi Majamaa

Phone: +358 (0)40 555 4727

Consilium Strategic Communications

Mary-Jane Elliott, David Daley, Lindsey Neville

Phone: +44 (0)20 3709 5700

Email: faron@consilium-comms.com

Stern Investor Relations, Inc.

Julie Seidel, Naina Zaman

Phone: +1 (212) 362-1200

Email: faron@sternir.com

About Faron Pharmaceuticals Oy

Option%20Plan%202015_Terms%20and%20Conditions_20200518

Exercise of options

13.5.2020

Faron Pharmaceuticals Oy

(“Faron” or the “Company”)

Exercise of options

Issue of equity

Company announcement, 13 May 2020 at 15.00 (EEST)

TURKU, FINLAND – Faron Pharmaceuticals Oy (AIM: FARN, First North: FARON), the clinical stage biopharmaceutical company, announces that it has received notifications from option holders to exercise D options over 9,000 ordinary shares in the Company at an exercise price of €1.09 per share under the Company’s 2015 Option Plan (“New Ordinary Shares”). The terms and conditions of the 2015 Option Plan are available on the Company’s website at https://www.faron.com/sites/default/files/Faron_Pharmaceuticals_Option_Plan_2015_with_proposed_amendments_2017.pdf.

Applications will be made to the London Stock Exchange and Nasdaq Helsinki to admit the New Ordinary Shares to trading on AIM and Nasdaq First North Growth Market, respectively. Admission of the New Ordinary Shares is expected to occur on or around 25 May 2020 following issue and registration of the New Ordinary Shares on or around 22 May 2020 (“Registration”). The New Ordinary Shares will rank pari passu with existing ordinary shares.

Faron’s enlarged issued number of shares immediately following Registration will be 46,799,747 ordinary shares with voting rights attached. The Company has no shares in treasury; therefore upon, and subject to, Registration, the total number of voting rights in Faron will be 46,799,747. This figure may be used by shareholders as the denominator for the calculations by which they will determine whether they are required to notify an interest in, or a change to their interest in, the issued shares and votes of the Company.

For more information please contact:

Faron Pharmaceuticals Oy

Dr Markku Jalkanen, Chief Executive Officer

investor.relations@faron.com

Panmure Gordon (UK) Limited, Nomad and Broker

Emma Earl, Freddy Crossley (Corporate Finance)

James Stearns (Corporate Broking)

Phone: +44 207 886 2500

Sisu Partners Oy, Certified Adviser on Nasdaq First North

Juha Karttunen, Jussi Majamaa

Phone: +358 (0)40 555 4727

Consilium Strategic Communications

Mary-Jane Elliott, David Daley, Lindsey Neville

Phone: +44 (0)20 3709 5700

E-mail: faron@consilium-comms.com

About Faron Pharmaceuticals Oy

Proposed Placing

21.4.2020

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE EU REGULATION 596/2014.

MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO SUBSCRIBE FOR, OTHERWISE ACQUIRE OR DISPOSE OF ANY SECURITIES IN FARON PHARMACEUTICALS OY (“FARON”) PURSUANT TO THE PROPOSED TRANSACTION REFERRED TO IN THIS ANNOUNCEMENT. THIS ANNOUNCEMENT IS THEREFORE DIRECTED ONLY AT: (A) IN A MEMBER STATE OF THE EUROPEAN ECONOMIC AREA, PERSONS WHO ARE “QUALIFIED INVESTORS” AS DEFINED IN ARTICLE 2(E) OF THE EU PROSPECTUS REGULATION (WHICH MEANS REGULATION (EU) 2017/1129) (THE “PROSPECTUS REGULATION”); AND (B) IN THE UNITED KINGDOM, PERSONS WHO ARE: (I) “INVESTMENT PROFESSIONALS” WITHIN THE MEANING OF ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (THE “ORDER”); (II) PERSONS FALLING WITHIN ARTICLE 49(2)(A) TO (D) (“HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC”) OF THE ORDER; OR (III) PERSONS TO WHOM IT MAY OTHERWISE BE LAWFULLY COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS “RELEVANT PERSONS”). THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE OR CONTAIN ANY INVITATION, SOLICITATION, RECOMMENDATION, OFFER OR ADVICE TO ANY PERSON TO SUBSCRIBE FOR, OTHERWISE ACQUIRE OR DISPOSE OF ANY SECURITIES IN FARON OR ANY OTHER ENTITY IN ANY JURISDICTION IN WHICH ANY SUCH OFFER WOULD BE UNLAWFUL. ACCORDINGLY, THIS ANNOUNCEMENT AND ITS CONTENTS MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS ANNOUNCEMENT RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. PERSONS INTO WHOSE POSSESSION THIS ANNOUNCEMENT COMES ARE REQUIRED TO INFORM THEMSELVES ABOUT AND TO OBSERVE ANY SUCH RESTRICTIONS.

THE PROPOSED TRANSACTION REFERRED TO IN THIS ANNOUNCEMENT WOULD BE MADE PURSUANT TO A PRIVATE PLACEMENT EXEMPTION UNDER THE PROSPECTUS REGULATION FROM THE REQUIREMENTS TO PRODUCE A PROSPECTUS UNDER THE PROSPECTUS REGULATION FOR OFFERS OF SECURITIES. FARON HAS NOT TAKEN ANY ACTION, NOR WILL IT TAKE ANY ACTION, TO OFFER ANY OF THE PLACING SHARES THAT ARE TO BE SUBSCRIBED FOR PURSUANT TO THE TRANSACTION REFERRED TO IN THIS ANNOUNCEMENT OR ANY DOCUMENTS RELATING TO THE PLACING TO THE PUBLIC IN THE UNITED KINGDOM, FINLAND, SWEDEN, NORWAY OR DENMARK, OR IN ANY OTHER JURISDICTION IN ANY FORM WHICH WOULD CONSTITUTE AN OFFER TO THE PUBLIC.

Faron Pharmaceuticals Oy

(“Faron” or the “Company”)

Proposed fundraising of a minimum of approximately €10 million through the issue of new ordinary shares

Proposed broker option to raise up to £2 million

Company announcement, 21 April 2020 at 4.45 p.m. BST/ 6.45 p.m. EEST

Inside information

TURKU – FINLAND– Faron Pharmaceuticals Oy (First North: FARON, AIM: FARN), the clinical stage biopharmaceutical company is pleased to announce a proposed placing of new ordinary shares to raise a minimum of approximately €10 million before expenses (the “Placing“). The Placing is being conducted within the Directors’ existing authority to allot ordinary shares in the capital of the Company (“Ordinary Shares“) for cash on a non-pre-emptive basis.

The Placing will be effected via a proposed private placement of new Ordinary Shares to a limited number of institutional investors in the Nordic region (the “Nordic Placing Shares” and the “Nordic Placing”) and a concurrent proposed private placement of new Ordinary Shares to UK institutional investors (the (“UK Placing Shares” and “UK Placing“). Carnegie Investment Bank AB (“Carnegie“) is acting as sole bookrunner and financial adviser to the Company for the Nordic Placing and Panmure Gordon (UK) Limited (“Panmure Gordon“) is acting as sole bookrunner and corporate broker to the Company in respect of the UK Placing.

Both the Nordic Placing and the UK Placing will be conducted by way of an accelerated bookbuild process, in the Nordic region (“Nordic Bookbuild“) and in the United Kingdom (“UK Bookbuild“) (together the “Bookbuild“) in which selected investors may submit bids for the Nordic Placing Shares or the UK Placing Shares, as applicable (together the “Placing Shares“), and which will be launched immediately following this announcement and is expected to end by 7:00 BST/ 9:00 EEST on 22 April 2020 at the latest.

The subscription price per Nordic Placing Share and UK Placing Share will be determined on the basis of the bids received in the bookbuild process with an Euro issue price for Nordic Placing Shares (“Nordic Issue Price“) and an equivalent Pound Sterling issue price for the UK Placing Shares (based on the prevailing EUR/GBP exchange rate on 20 April 2020) (“UK Issue Price“). The Company has received non-binding indications of interest from potential investors to subscribe for the Placing Shares under the Placing during a pre-marketing process.

The Company has also authorised Panmure Gordon to raise up to a further £2 million before expenses by granting a broker option (the “Broker Option“), (the Broker Option together with the Placing, the “Fundraise“). The Broker Option will be exercisable from announcement of result of the Placing to approximately 13:00 BST/ 15:00 EEST on 22 April 2020. To the extent that the Broker Option is exercised, new Ordinary Shares issued pursuant to the Broker Option (“Option Shares“) will be issued at the UK Issue Price.

As soon as practicable after closing of the Bookbuild, an announcement will be made to confirm the Nordic Issue Price and the equivalent UK Issue Price and the number of Nordic Placing Shares and UK Placing Shares to be issued by the Company (“Result Announcement“). Following the Result Announcement, the final number of UK Placing Shares to be issued under the UK Placing (excluding any Option Shares issued pursuant to the exercise of the Broker Option) will remain subject to and conditional upon, inter alia, legally binding placing letters being received from persons who have submitted bids as part of the UK Bookbuild, and inter alia, the UK Issue Condition as described below. Further details on the terms and conditions of the Nordic Placing and the UK Placing are set out below. The Nordic Placing and the UK Placing are subject to separate placing agreements with the Company and as also described below. It should be noted that neither of those agreements, are conditional on the other save for in respect of a minimum aggregate fundraise of approximately €10 million being achieved across the Nordic Placing and UK Placing.

The Placing Shares and, subject to exercise of the Broker Option, the Option Shares, are expected to be issued and admitted to trading on Nasdaq First North Growth Market Finland (“First North“) and AIM in multiple tranches as set out below. VCT/EIS investors may participate in the UK Placing (excluding the Broker Option).

KEY HIGHLIGHTS

· Proposed Placing with institutional investors for new Ordinary Shares to raise a minimum of approximately €10 million (£8.7 million) in aggregate across the Nordic Placing and UK Placing via the Nordic Bookbuild and UK Bookbuild;

· Broker Option to raise up to £2 million;

· The net proceeds of the proposed Fundraise would be primarily used to commence expansion of the Company’s precision immunotherapy candidate, Clevegen®, into planned additional cancer targets in the Company’s phase I/II Matins trial and expansion of Clevegen manufacturing.

· The net proceeds of the Fundraise will also significantly strengthen the Company’s balance sheet to support the Company during the use of Traumakine ®in the ongoing REMAP-CAP trial to study the effect of interferon beta-1a in COVID-19 and whilst the Company continues its potential licensing discussions for Clevegen and explores third party funding options for Traumakine;

· Cash balance of the Company at 31 December 2020: EUR 7.1 million.

Dr Markku Jalkanen, Chief Executive Officer of Faron, said: “We have made significant clinical progress with both our Clevegen and Traumakine projects during the last 12 months and expect both of them to bring significant value for shareholders during the next 8-12 months. Clevegen has shown very promising clinical response in MATINS Part I stage, which we believe will transform into significant opportunity when the study moves to Part II-III expansion stages. Traumakine, on the other hand, has a new corticosteroid-free setting through the global REMAP-CAP study, which we believe is one of the most important intensive care study of the current pandemic environment.”

REASONS FOR THE PROPOSED FUNDRAISE

The primary reason for conducting the Fundraise is for expansion of the Company’s precision immunotherapy candidate, Clevegen®, into planned additional cancer targets in the Company’s phase I/II Matins trial and expansion of Clevegen manufacturing. The Company announced the completion and headline results of Part I of the Matins trial on 30 March 2020 including confirming that immune activation was observed in all subjects (except patients receiving 0.1 mg/kg) measured following treatment with Clevegen and was observed as increased circulating CD8+ T cells and CD8+/CD4+ ratio, decreased regulatory T-cells (T-regs) or a substantial increase in mobile natural killer (NK) cells in the blood. This activation was dose dependent. 12 patients showed at least a 20 per cent increase in interferon gamma and eight patients a similar increase in IP-10 chemokine production. Interferon gamma is known to restrict cancer growth and IP-10 to attract T-lymphocytes to infiltrate the tumour.

As previously announced and according to the RECIST classification, during Part I of the MATINS trial Clevegen treatment showed a clinical effect of two partial responses and seven cases of stable disease. None of the patients experiencing these effects had received the lowest dose level of 0.1mg/kg, therefore the response rate in Part I was 36 percent (9/25) among 0.3-10 mg/kg dose levels.

Subject to the outcome of the Fundraise, additional cancer types besides colorectal and ovarian to be included in Part II of the MATINS study are expected to be ER-positive breast cancer, hepatocellular carcinoma, cholangiocarcinoma (bile duct cancer) and gall bladder cancer, gastric cancer, cutaneous melanoma, uveal melanoma, and pancreatic ductal adenocarcinoma. Part II is expected to conclude in Q3 2021. The Company is in the process of filing for Breakthrough Therapy status with the FDA and Prime Therapy status with the European Medicines Agency, which if granted, could provide an expedited development and review path.

The anticipated proceeds of the Fundraise will strengthen the Company’s balance sheet as it continues its licensing discussions in respect of Clevegen and seeks third party financing for Traumakine® to allow initiation of a US trial following acceptance by the FDA of the Company’s protocol for a new US Traumakine trial (announced 9 March 2020). As previously announced Traumakine has also recently been included in the approved protocol for the Global Randomized, Embedded, Multifactorial Adaptive Platform Trial for Community-Acquired Pneumonia (“REMAP-CAP”) with Faron providing Traumakine and support to the trial sites. A total of c. 7,000 ICU patients are expected to be recruited into the trial by 2022. REMAP-CAP is a global network of leading experts, institutions and research networks with over fifty sites participating worldwide. The program recruits patients with community-acquired pneumonia, including COVID-19 patients, who require ICU care for the support of organ functions and uses an innovative trial design to efficiently evaluate multiple interventions simultaneously. The Company is exploring options to re-establish future manufacturing of Traumakine.

DETAILS OF THE PROPOSED PLACING AND ISSUE OF EQUITY

The proposed Fundraise is being carried out within the authorisation granted to the Board by shareholders at the Company’s Extraordinary General Meeting held on 25 October 2019 to issue up to a total of 7,871,000 ordinary shares in the Company in a directed share issue and in deviation from the shareholders’ pre-emptive rights. The remaining outstanding authority allows the Company to issue up to a maximum of 3,935,500 new Ordinary Shares pursuant to the Fundraise, which represents 9.1 per cent. of all the issued shares and votes in the Company immediately prior to the Fundraise.

Nordic Placing

The Nordic Placing, arranged by Carnegie, will be conducted in a private placement by way of the Nordic Bookbuild, which is an accelerated book-building process in which selected investors may submit bids for the Nordic Placing Shares. The Nordic Issue Price is to be determined on the basis of the bids received in the Nordic Bookbuild and is expected to be the equivalent Euro price of the UK Issue Price. The Nordic Bookbuild is expected to commence immediately following this announcement and is expected to end by 7:00 BST/ 9:00 EEST on 22 April 2020 at the latest. Carnegie reserves the right to close the Nordic Bookbuild earlier or later without further notice. The Nordic Bookbuild may also be discontinued at any time during the book-building process.

Following the close of the Bookbuild, the Board will make the decision on the issue of the Nordic Placing Shares, including, as applicable, acceptance of the received bids, the number of Nordic Placing Shares to be issued and the Nordic Issue Price and Carnegie will procure binding commitments from Nordic investors prior to announcement of the result of Placing (subject to any outstanding conditions).

In connection with the proposed Nordic Placing, the Company has entered into a placing agreement with Carnegie (the ““Nordic Placing Agreement““). Pursuant to the terms of the Nordic Placing Agreement, Carnegie has agreed to use its reasonable endeavours to procure subscribers for the Nordic Placing Shares. The Nordic Placing Agreement contains customary warranties and an indemnity from the Company in favour of Carnegie together with provisions which enable Carnegie to terminate the Nordic Placing Agreement in certain circumstances before the completion of the Nordic Bookbuild and the Board’s resolution on carrying out the Nordic Placing, including where there has been a material breach of any of the warranties contained in the Nordic Placing Agreement or where there is a material adverse change, e.g. in the business or financial affairs of the Company. The Company has agreed to pay Carnegie certain commissions and fees in connection with the Nordic Placing. Pursuant to the terms of the Nordic Placing Agreement, Carnegie has agreed to a limited settlement underwriting covering payment of the subscription price to be made by subscribers of the Nordic Placing Shares to the Company upon the Board having resolved on carrying out the Nordic Placing after the close of the Bookbuild, at the Nordic Issue Price, on approving the binding subscriptions received through the Nordic Bookbuild and UK Bookbuild and on confirming such final number of Placing Shares to be issued.

The Nordic Placing is conditional upon, inter alia:

· the Nordic Placing agreement having become unconditional in all respects;

· binding commitments being received from investors;

· the Minimum Fundraise Condition being satisfied;

· the Board resolving to carry out the Nordic Placing at the Nordic Issue Price and the Company and Carnegie entering into a separate pricing agreement confirming the Nordic Issue Price and the number of the Nordic Placing Shares; and

· the Nordic Placing Shares being issued and being registered with the Finnish Trade Register.

In connection with the Nordic Placing, Faron has entered into a lock-up undertaking, under which it has, subject to certain exceptions, agreed not to issue or sell any shares in Faron for a period of 180 days after the closing of the Fundraise.

UK Placing and Broker Option

The UK Placing will be conducted by way of an accelerated bookbuild process which will be launched immediately following this announcement. Panmure Gordon is acting as sole bookrunner in relation to the UK Placing. The UK Issue Price is to be determined on the basis of the bids received in the Bookbuild and is expected to be the equivalent Pounds Sterling price of the Nordic Issue Price. It is envisaged that the UK Bookbuild will be closed by 7:00 BST/9:00 EEST on 22 April 2020 at the latest but Panmure Gordon (in conjunction with the Company) reserve the right to close the book earlier or later without further notice. The UK Bookbuild may also be discontinued at any time during the book-building process. Venture capital trust and enterprise investment scheme funds may participate in the UK Placing.

Shortly following the closure of the UK Bookbuild and announcement of the result of the Placing, Panmure Gordon will issue placing letters to those persons who have submitted bids to subscribe for Placing Shares as part of the UK Bookbuild and which will contain the terms and conditions upon which they shall participate in the UK Placing. Accordingly, participation in the UK Placing and the determination of the precise number of UK Placing Shares to be issued under the UK Placing at the UK Issue Price will be conditional upon the receipt of signed placing letters back from potential investors.

In addition, the Company has also granted the UK Broker Option to Panmure Gordon in order to cater for additional demand under the UK Placing. Any Option Shares issued pursuant to the exercise of the Broker Option will be issued on the same terms, and subject to the same conditions, as the UK Placing Shares and the return of signed placing letters corresponding to those Option Shares from relevant investors. The Broker Option is exercisable by Panmure Gordon, at any time from the date of announcement of the result of the Bookbuild to approximately 13.00 BST/ 15.00 EEST on 22 April 2020 in their absolute discretion, following consultation with the Company. However, there is no obligation on Panmure to exercise the Broker Option or to seek to procure subscribers for Option Shares pursuant to the Broker Option. The Broker Option will not qualify for investments made by venture capital trust and enterprise investment scheme funds.

In connection with the proposed UK Placing and the Broker Option, the Company has entered into a placing agreement with Panmure Gordon (the “UK Placing Agreement“). Pursuant to the terms of the UK Placing Agreement, Panmure Gordon has agreed to use its reasonable endeavours to procure placees for the UK Placing Shares. The UK Placing is conditional upon, inter alia:

· the UK Placing Agreement having become unconditional in all respects;

· the Company having performed, in all material respects, its obligations under the UK Placing Agreement and not being in material breach of the UK Placing Agreement;

· legally binding commitments being received (in the form of placing letters) in respect of all of the UK Placing Shares and, to the extent exercised, the Option Shares (the “UK Placee Condition“);

· minimum gross proceeds of €10 million being raised in aggregate under the Nordic Placing and UK Placing (“Minimum Fundraise Condition“); and

· the UK Placing Shares and Option Shares being issued and being registered at the Finnish Trade Register (the “UK Issue Condition“).

The UK Placing Agreement contains customary warranties and an indemnity from the Company in favour of Panmure Gordon together with provisions which enable Panmure Gordon to terminate the UK Placing Agreement in certain circumstances before satisfaction of the UK Issue Condition and the Minimum Fundraise Condition in respect of each stage of the Placing, including where there has been a material breach of any of the warranties contained in the UK Placing Agreement (in the reasonable opinion of Panmure Gordon) or where there is a material adverse change in the business or financial affairs of the Company. The Company has agreed to pay Panmure Gordon certain commissions and fees in connection with the UK Placing. In order to comply with local corporate law in Finland, the UK Issue Condition will be satisfied prior to the admission of the UK Placing Shares to trading on AIM (“UK Admission“). Accordingly, pursuant to the terms of the UK Placing Agreement, Panmure Gordon has agreed to limited settlement underwriting of payment of the subscription price to be made by subscribers of the UK Placing Shares to the Company subject to the Board having resolved to carry out the UK Placing after the close of the Bookbuild at the UK Issue Price and subject to satisfaction of the UK Placee Issue Condition.

ISSUE OF THE PLACING SHARES, OPTION SHARES AND ADMISSION TO TRADING

Subject to all conditions being met and the Placing Shares being subscribed for, the Placing Shares are expected to be issued in multiple tranches in anticipation of allowing investments made by certain venture capital trust and enterprise investment scheme funds, (the “EIS/VCT Investors“) in order to qualify under Venture Capital Trust and Enterprise Investment Scheme rules as part of the UK Placing (excluding the Broker Option) and to facilitate the limited settlement underwriting.

Based on indications of interest received as part of market soundings conducted in relation to the Fundraise then, subject to all conditions being met, UK Placing Shares issued to the EIS/VCT Investors are expected to be allotted and issued first alongside certain Nordic Placing Shares (“First Issue Shares“) followed by the remaining Nordic Placing Shares (“Second Issue Shares“) and then followed by the UK Placing Shares and Option Shares issued to non-EIS/VCT Investors (“Third Issue Shares“). To the extent shares are subscribed for and subject to all conditions being met, application will then be made for the admission of all such Placing Shares to trading on First North and AIM with admission of the First Issue Shares to First North and AIM expected to become effective and dealings to commence on or around 24 April 2020 (“First Admission“); admission of the Second Issue Shares to First North and AIM is expected to become effective and dealings to commence on or around 27 April 2020 (“Second Admission“) and admission of the Third Issue Shares (including any Option Shares to the extent subscribed for) to First North and AIM is expected to become effective and dealings to commence on or around 29 April 2020 (“Third Admission“). (First Admission, Second Admission and Third Admission, together “Admission“). The dates above may be subject to change.

A further announcement will be made to confirm the outcome of the Placing (subject to, inter alia, satisfaction of the UK Issue Condition) and to confirm the expected timing of issue of the Placing Shares and Admission.

Upon registration with the Finnish Trade Register, the Placing Shares will rank pari passu in all respects with the existing shares of the Company.

For more information please contact:

Faron Pharmaceuticals Oy

Dr Markku Jalkanen, Chief Executive Officer

investor.relations@faron.com

Carnegie Investment Bank AB, Financial Adviser

Mika Karikoski (Corporate Finance)

Phone: +358 40 741 6959

Panmure Gordon (UK) Limited, Nomad and Broker

Emma Earl, Freddy Crossley (Corporate Finance)

James Stearns (Corporate Broking)

Phone: +44 207 886 2892

Consilium Strategic Communications

Mary-Jane Elliott, David Daley, Lindsey Neville

Phone: +44 (0)20 3709 5700

E-mail: faron@consilium-comms.com

Sisu Partners Oy, Certified Adviser on Nasdaq First North

Juha Karttunen

Phone: +358 40 555 4727

About Faron Pharmaceuticals Ltd

IMPORTANT INFORMATION

Market Abuse Regulation

Market soundings, as defined in Regulation (EU) No 596/2014 (“MAR“), were taken in respect of the proposed Fundraise with the result that certain persons became aware of inside information, as permitted by MAR. That inside information in relation to the Fundraise is set out in this announcement and has been disclosed as soon as possible in accordance with paragraph 7 of article 17 of MAR. Therefore, those persons that received inside information in such market sounding are no longer in possession of inside information relating to the Company and its securities.

This announcement contains inside information for the purposes of Article 7 of MAR.

MiFID II

Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended (“MiFID II“); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing measures (together, the “MiFID II Product Governance Requirements“), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any “manufacturer” (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, the Placing Shares have been subject to a product approval process, which has determined that the Placing Shares are: (i) compatible with an end target market of: (a) retail investors, (b) investors who meet the criteria of professional clients and (c) eligible counterparties (each as defined in MiFID II); and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the “Target Market Assessment“). Notwithstanding the Target Market Assessment, distributors should note that: the price of the Placing Shares may decline and investors could lose all or part of their investment; the Placing Shares offer no guaranteed income and no capital protection; and an investment in the Placing Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the offer.

Caution regarding forward looking statements

Certain statements in this announcement are, or may be deemed to be, forward looking statements. Forward looking statements are identified by their use of terms and phrases such as ”believe”, ”could”, “should”, “expect”, ”envisage”, ”estimate”, ”intend”, ”may”, ”plan”, ”potentially”, ”will” or the negative of those, variations or comparable expressions, including references to assumptions. These forward looking statements are not based on historical facts but rather on the Directors’ current expectations and assumptions regarding the Company’s future growth, results of operations, performance, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, business prospects and opportunities. Such forward looking statements reflect the Directors’ current beliefs and assumptions and are based on information currently available to the Directors.

A number of factors could cause actual results to differ materially from the results and expectations discussed in the forward looking statements, many of which are beyond the control of the Company. In particular, the early data from initial patients in the MATINS trial may not be replicated in larger patient numbers and the outcome of clinical trials may not be favourable or clinical trials over and above those currently planned may be required before the Company is able to apply for marketing approval for a product. In addition, other factors which could cause actual results to differ materially include the ability of the Company to successfully licence its programmes, risks associated with vulnerability to general economic and business conditions, competition, environmental and other regulatory changes, actions by governmental authorities, the availability of capital markets or other sources of funding, reliance on key personnel, uninsured and underinsured losses and other factors. Although any forward looking statements contained in this announcement are based upon what the Directors believe to be reasonable assumptions, the Company cannot assure investors that actual results will be consistent with such forward looking statements. Accordingly, readers are cautioned not to place undue reliance on forward looking statements. Subject to any continuing obligations under applicable law or any relevant AIM Rule requirements, in providing this information the Company does not undertake any obligation to publicly update or revise any of the forward looking statements or to advise of any change in events, conditions or circumstances on which any such statement is based.

Exchange rate

Unless otherwise specified, this announcement contains certain translations of Euros into amounts in Pounds Sterling for the convenience of the reader based on the exchange rate of €1.00 = £0.87, being the published exchange rate by the European Central Bank at the close of business on 20 April 2020 (the latest practicable date prior to the date of this announcement).

Advisers

Carnegie, a public limited company duly incorporated and validly existing under the laws of Sweden, is acting as Sole Bookrunner and Financial Adviser to the Company and no one else in connection with the Nordic Placing. Accordingly, it will not be responsible to any person other than the Company for providing the regulatory and legal protections afforded to its clients nor for providing advice in relation to the contents of this announcement or any matter, transaction or arrangement referred to in it.

Panmure Gordon (UK) Limited, which is regulated in the UK by the Financial Conduct Authority, is acting as Nominated Adviser, Sole Bookrunner and Corporate Broker to the Company and no one else in connection with the UK Placing. Accordingly, it will not be responsible to any person other than the Company for providing the regulatory and legal protections afforded to its clients nor for providing advice in relation to the contents of this Announcement or any matter, transaction or arrangement referred to in it.

Issue of Equity

6.8.2019

THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE OR CONTAIN ANY INVITATION, SOLICITATION, RECOMMENDATION, OFFER OR ADVICE TO ANY PERSON TO SUBSCRIBE FOR, OTHERWISE ACQUIRE OR DISPOSE OF ANY SECURITIES IN FARON PHARMACEUTICALS OY (“FARON”) OR ANY OTHER ENTITY IN ANY JURISDICTION IN WHICH ANY SUCH OFFER WOULD BE UNLAWFUL.

FARON HAS NOT TAKEN ANY ACTION, NOR WILL IT TAKE ANY ACTION, TO OFFER ANY OF THE SUBSCRIPTION SHARES OR ANY OTHER DOCUMENTS RELATING TO THE SUBSCRIPTION TO THE PUBLIC IN FINLAND, SWEDEN, NORWAY OR DENMARK, OR IN ANY OTHER JURISDICTION IN ANY FORM WHICH WOULD CONSTITUTE AN OFFER TO THE PUBLIC.

NEITHER THE SUBSCRIPTION SHARES NOR THE OPEN OFFER SHARES WILL BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR UNDER THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES, AND MAY NOT BE OFFERED, SOLD OR TRANSFERRED, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM THE UNITED STATES EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES. THERE IS NO PUBLIC OFFERING IN THE UNITED STATES, THE UNITED KINGDOM OR ELSEWHERE. NEITHER THE SUBSCRIPTION SHARES OR THE OPEN OFFER SHARES HAVE BEEN APPROVED OR DISAPPROVED BY THE US SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY IN THE UNITED STATES, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THE SUBSCRIPTION OR THE OPEN OFFER OR THE ACCURACY OR ADEQUACY OF THIS ANNOUNCEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE IN THE UNITED STATES.

Faron Pharmaceuticals Oy

(“Faron” or the “Company”)

Issue of equity

Total Voting Rights

Publication of Open Offer Circular

TURKU – FINLAND, 6 August 2019 – Faron Pharmaceuticals Oy (“Faron”) (AIM: FARN), the clinical stage biopharmaceutical company, is pleased to announce that further to the announcement on 5 August 2019 (“Capital Raising Announcement“), the Subscription Shares have been issued and registered with the Finnish Trade Register, resulting in the issue of 941,840 new ordinary shares in aggregate to raise in aggregate €1.12 million (£1.00 million) before expenses at the Euro Issue Price of €1.19 (£1.06) per share in respect of the Subscription.

Faron’s enlarged issued number of shares following issue of the Subscription Shares is 38,175,734 Ordinary Shares with voting rights attached. The Company has no shares in treasury; therefore the total number of voting rights in Faron is 38,175,734 (the “Enlarged Number of Shares and Votes”). This figure may be used by shareholders as the denominator for the calculations by which they will determine whether they are required to notify an interest in, or a change to their interest in, the Enlarged Number of Shares and Votes of the Company.

Open Offer

Following completion of the Subscription, as noted in the Capital Raising Announcement, in order to provide Shareholders who have not taken part in the Subscription with an opportunity to participate in the proposed issue of New Ordinary Shares, the Company is providing all Qualifying Shareholders with the opportunity to subscribe for an aggregate of up to 1,696,699 Open Offer Shares, to raise up to approximately €2.0 million (£1.8 million) through the Open Offer, on the basis of 2 Open Offer Share for every 45 Existing Ordinary Shares, at the Issue Price (or the Euro Issue Price in respect of Qualifying non-DI Holders) each payable in full on acceptance. Any entitlements to Open Offer Shares not subscribed for by Qualifying Shareholders will be available to Qualifying Shareholders under the Excess Application Facility. Qualifying Shareholders are those shareholders and DI Holders on the register of members of the Company at the Record Date (being 6 August 2019).

The net proceeds of the Open Offer will be used alongside the net proceeds of the Subscription to further the clinical development of Clevegen as outlined in the Capital Raising Announcement. The net proceeds of the Capital Raising (to the extent a significant proportion of the Open Offer Shares are subscribed for) are expected to provide the Company with working capital into early Q1 2020.

A Circular setting out the terms and conditions of the Open Offer and instructions for application under the Open Offer (including the Excess Application Facility) for Qualifying non-DI Holders and Qualifying DI Holders is available on the Company’s website at www.faron.com/investors. Qualifying non-DI Holders are also instructed to refer to the Basic Information Document and Finnish Law Terms and Conditions which are also available on the Company’s website in accordace with Finnish law requirements.

This summary should be read in conjunction with the full text shown below and in the Circular.

For more information please contact:

Faron Pharmaceuticals Oy

Dr Markku Jalkanen, Chief Executive Officer

investor.relations@faron.com

Panmure Gordon (UK) Limited, Nomad and Broker

Emma Earl, Freddy Crossley (Corporate Finance)

James Stearns (Corporate Broking)

Phone: +44 207 886 2500

Consilium Strategic Communications

Mary-Jane Elliott

Phone: +44 (0)20 3709 5700

E-mail: faron@consilium-comms.com

Westwicke Partners, IR (US)

Chris Brinzey

Phone: 01 339 970 2843

E-Mail: chris.brinzey@westwicke.com

About Faron Pharmaceuticals Ltd

Faron (AIM:FARN) is a clinical stage biopharmaceutical company developing novel treatments for medical conditions with significant unmet needs. The Company currently has a pipeline focusing on acute organ traumas, vascular damage and cancer immunotherapy. The Company’s first candidate Traumakine, to prevent vascular leakage and organ failures, has completed a Phase III clinical trial in Acute Respiratory Distress Syndrome (ARDS). An additional European Phase II Traumakine trial is underway for the Rupture of Abdominal Aorta Aneurysm (“RAAA”). Faron’s second candidate Clevegen is a ground breaking early clinical anti-Clever-1 antibody. Clevegen has the ability to switch immune suppression to immune activation in various conditions, with potential across oncology, infectious disease and vaccine development. This novel macrophage-directed immuno-oncology switch called Turn-on-your-Immunity or Turn-It may be used alone or in combination with other immune checkpoint molecules for the treatment of cancer patients. Faron is based in Turku, Finland. Further information is available at www.faron.com

Caution regarding forward looking statements

Certain statements in this announcement, are, or may be deemed to be, forward looking statements. Forward looking statements are identified by their use of terms and phrases such as ”believe”, ”could”, “should”, “expect”, “hope”, “seek”, ”envisage”, ”estimate”, ”intend”, ”may”, ”plan”, ”potentially”, ”will” or the negative of those, variations or comparable expressions, including references to assumptions. These forward looking statements are not based on historical facts but rather on the Directors’ current expectations and assumptions regarding the Company’s future growth, results of operations, performance, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, business prospects and opportunities. Such forward looking statements reflect the Directors’ current beliefs and assumptions and are based on information currently available to the Directors.

A number of factors could cause actual results to differ materially from the results and expectations discussed in the forward looking statements, many of which are beyond the control of the Company. In particular, the early data from initial patients in the MATINS trial may not be replicated in larger patient numbers and the outcome of clinical trials may not be favourable or clinical trials over and above those currently planned may be required before the Company is able to apply for marketing approval for a product. In addition, other factors which could cause actual results to differ materially include the ability of the Company to successfully licence its programmes within the anticipated timeframe or at all, risks associated with vulnerability to general economic and business conditions, competition, environmental and other regulatory changes, actions by governmental authorities, the availability of capital markets or other sources of funding, reliance on key personnel, uninsured and underinsured losses and other factors. Although any forward looking statements contained in this announcement are based upon what the Directors believe to be reasonable assumptions, the Company cannot assure investors that actual results will be consistent with such forward looking statements. Accordingly, readers are cautioned not to place undue reliance on forward looking statements. Subject to any continuing obligations under applicable law or any relevant AIM Rule requirements, in providing this information the Company does not undertake any obligation to publicly update or revise any of the forward looking statements or to advise of any change in events, conditions or circumstances on which any such statement is based.

DEFINITIONS

The following definitions apply throughout this announcement, unless the context requires otherwise:


“Admission”	First Admission or Second Admission as the context requires
“Admission Document”	the Company’s AIM admission document dated 11 November 2015
“AIM”	the AIM market operated by London Stock Exchange
“AIM Rules”	the AIM Rules for Companies as published by the London Stock Exchange from time to time
“Basic Information Document”	the basic information document concerning the Open Offer prepared by the Company in accordance with Finnish law
“Board” or “Directors”	the directors of the Company as at the date of the Ciruclar
“Capital Raising”	the Subscription and the Open Offer, taken together
“Capital Raising Announcement”	the announcement made by the Company through RNS on 5 August 2019 in respect of the Capital Raising
“Company” or “Faron”	Faron Pharmaceuticals Oy, a limited liability company incorporated in Finland with registered number 2068285-4
“CREST”	the relevant system (as defined in the CREST Regulations) in respect of which Euroclear is the operator (as defined in the CREST Regulations), which facilitates the transfer of title to shares in uncertificated form
“CREST sponsor”	a CREST participant admitted to CREST as a CREST sponsor
“DI”	the depository interest representing entitlements to Ordinary Shares
“DI Holders”	the holders of DIs from time to time
“DI Holder Terms and Conditions”	the terms of conditions of the Open Offer applicable to the DI Holders, as set out in Part 3 of the Circular
“EIS”	Enterprise Investment Scheme
“EIS Open Offer Shares”	the Open Offer Shares to be allotted and issued by the Company at the Issue Price, in connection with the Open Offer, which are intended to qualify for EIS Relief
“EIS/VCT Open Offer Shares”	the EIS Open Offer Shares and the VCT Open Offer Shares together
“EIS Relief”	the relief claimed by any holder of EIS Open Offer Shares under Part 5 of the ITA 2007 or exemption or relief available under sections 150A, 150C and Schedule 5B Taxation of Chargeable Gains Act 1992
“enabled for settlement”	in relation to the Open Offer Entitlements and Excess CREST Open Offer Entitlements, enabled for the limited purpose of settlement of claim transactions and unmatched stock event transactions (each as described in the CREST Manual issued by Euroclear)
“Enlarged Share Capital”	the entire issued share capital of the Company as enlarged by the issue of the Open Offer Shares following Second Admission (assuming subscription in full for the Open Offer Shares)
“EU”	the European Union
“Euroclear”	Euroclear UK & Ireland Limited
“Excess Application Facility”	the arrangement pursuant to which Qualifying Shareholders may apply for additional Open Offer Shares in excess of their Open Offer Entitlement in accordance with the DI Holder Terms and Conditions
“Excess CREST Open Offer Entitlements”	in respect of each Qualifying DI Holder who has taken up their Open Offer Entitlement in full, the Excess Open Offer Entitlements credited to his stock account in CREST
“Excess Open Offer Entitlements”	in respect of each Qualifying Shareholder, the entitlement (in addition to his Open Offer Entitlement) to apply for Open Offer Shares pursuant to the Excess Application Facility, subject to the DI Holder Terms and Conditions
“Excess Shares”	Open Offer Shares in addition to the Open Offer Entitlement for which Qualifying Shareholders may apply under the Excess Application Facility
“Ex-entitlement Date”	the date on which the Existing Ordinary Shares are marked “ex” for entitlement under the Open Offer, being 8.00 a.m. on 7 August 2019
“Existing Ordinary Shares”	the 38,175,734 Ordinary Shares in issue (including the Subscription Shares)
“FCA”	the Financial Conduct Authority
“Finnish Law Terms and Conditions”	the terms of the conditions of the Open Offer applicable to the Qualifying non-DI Holders
“First Admission“	Admission of the Subscription Shares to trading on AIM becoming effective in accordance with the AIM Rules, at 8.00 a.m. on 6 August 2019
“HMRC”	Her Majesty’s Revenue and Customs
“ISIN”	International Securities Identification Number
“ITA 2007”	Income Tax Act 2007
“Issue Price”	106 pence (or equivalent Euro Issue Price of €1.19 in respect of the Subscription and Open Offer Shares to be subscribed by Qualifying non-DI Holders) per New Ordinary Share
“New Ordinary Shares”	the Subscription Shares and the Open Offer Shares
“Open Offer”	the conditional invitation made to Qualifying Shareholders to apply to subscribe for the Open Offer Shares at the Issue Price on the terms and subject to the conditions set out in Part 3 of the Circular
“Open Offer Entitlement”	in respect of each Qualifying Shareholder, the entitlement to apply for the number of Open Offer Shares pro rata to their holding of Existing Ordinary Shares pursuant to the Open Offer as described in Part 3 of the Circular
“Open Offer Shares”	up to 1,696,699 new Ordinary Shares being made available to Qualifying Shareholders pursuant to the Open Offer
“Ordinary Shares“	ordinary shares in the capital of the Company from time to time
“Overseas Shareholders”	Shareholders with registered addresses outside the United Kingdom or who are citizens or residents of countries outside the United Kingdom
“Qualifying DI Holders”	holders of DIs in respect of Existing Ordinary Shares in uncertificated form on the register of members of the Company at the Record Date (other than certain Overseas Shareholders)
“Qualifying non-DI Holders”	directly registered holders of Existing Ordinary Shares on the register of members of the Company at the Record Date (other than certain Overseas Shareholders);
“Qualifying Shareholders”	Qualifying DI Holders and Qualifying non-DI Holders
“Receiving Agent”	Computershare
“Record Date”	close of business on 6 August 2019
“Depositary”	Computershare
“Regulatory Information Service”	has the meaning given in the AIM Rules
“Restricted Jurisdiction”	the United States of America, Canada, Australia Japan, The Republic of South Africa, Singapore, Hong Kong and any jurisdiction where the extension or availability of the Open Offer (and any other transaction contemplated thereby) would breach any applicable laws or regulations and “Restricted Jurisdictions” shall mean all of them
“Second Admission”	Admission of the Open Offer Shares to trading on AIM becoming effective in accordance with the AIM Rules, expected to be on or around 28 August 2019
“Shareholders”	the persons who are registered as holders of Ordinary Shares and, for the purpose of the Circular unless specified otherwise, the persons who are registered as DI Holders
“Subscriber”	the persons who have agreed to subscribe for Subscription Shares under the Subscription
“Subscription”	the subscription for the Subscription Shares by the Subscribers, at the Issue Price announced by the Company on 5 August 2019
“Subscription Shares”	the 941,840 new Ordinary Shares which are the subject of the Subscription
“stock account”	an account within a member account in CREST to which a holding of a particular share or other security in CREST is credited
“uncertificated” or “in uncertificated form”	in relation to a share or other security, recorded on the relevant register as being held in uncertificated form in CREST and title to which, by virtue of the CREST Regulations, may be transferred through CREST
“United Kingdom” or “UK”	the United Kingdom of Great Britain and Northern Ireland
“United States”, “United States of America” or “US”	the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia and all areas subject to its jurisdiction
“VCT”	Venture Capital Trust as defined by section 259 ITA 2007
“VCT Open Offer Shares”	the Open Offer Shares to be allotted and issued by the Company at the Issue Price, in connection with the Open Offer, which are intended to qualify for VCT Relief
“VCT Relief”	the relief claimed by any holder of the VCT Open Offer Shares under Part 6 of the ITA 2007 or exemption or relief available under sections 151A, 151B and Schedule 5C Taxation of Chargeable Gains Act 1992 or Chapter 5 of Part 6 of the Income Tax (Trading and Other Income) Act 2005

OPEN OFFER TIMETABLE

Record Date for the Open Offer	Close of business 6 August 2019
Ex-entitlement Date	8:00am 7 August 2019
Open Offer Entitlements credited to CREST stock accounts of Qualifying DI Holders	8:00am 8 August 2019
Recommended last time and date for requesting withdrawal of Open Offer Entitlements from CREST	4:30 p.m. on 19 August 2019
Latest time and date for depositing Open Offer Entitlements into CREST	3:00 p.m. on 20 August 2019
Latest time and date for splitting Application Forms	3:00 p.m. on 21 August 2019
Latest time and date for acceptance of the Open Offer by DI holders through CREST	11:00 a.m. on 22 August 2019
Latest time and date for acceptance of the Open Offer by Non-DI Holders and payment of subscription price for Open Offer Shares	11:00 a.m. on 23 August 2019
Announcement of result of Open Offer	27 August 2019
Issue of the Open Offer Shares	27 August 2019
Admission and commencement of dealings in the Open Offer Shares (Second Admission)	8 a.m. on 28 August 2019
Open Offer Shares credited to CREST members’ account	as soon as possible after 28 August 2019

Notes

(1) References to times in this announcement are to London time (unless otherwise stated).

(2) The dates and timing of the events in the above timetable and in the rest of this announcement are indicative only and may be subject to change.

(3) If any of the above times or dates should change, the revised times and/or dates will be notified by an announcement through RNS.

FURTHER INFORMATION

1. Introduction

On 5 August 2019, the Board announced the results of a Subscription of 941,840 Ordinary Shares at €1.19 (106 pence) per Ordinary Share to raise approximately €1.12 million (£1.0 million) in aggregate before expenses. The Issue Price is at a discount of 11.3 per cent. to the closing middle market price of 119.5 pence per existing Ordinary Share on 2 August 2019 (being the last practicable date prior to the Capital Raising Announcement).

In addition, in order to provide Shareholders who have not taken part in the Subscription with an opportunity to participate in the proposed issue of New Ordinary Shares, the Company is providing all Qualifying Shareholders with the opportunity to subscribe for an aggregate of up to 1,696,699 Open Offer Shares, to raise up to approximately £1.8 million (€2.0 million), on the basis of 2 Open Offer Shares for every 45 Existing Ordinary Shares, at the Issue Price each payable in full on acceptance. The Subscription was not conditional on the Open Offer.

First Admission in respect of the Subscription Shares occurred at 8.00 a.m. on 6 August 2019 and Second Admission in respect of Open Offer Shares validly subscribed for and issued is expected to occur no later than 8.00 a.m. on 28 August 2019 (or such later time and/or date, in each case, as Panmure Gordon and the Company may agree, being no later than 8.00 a.m. on 4 September 2019). The Open Offer is not underwritten and the Subscription is not subject to clawback under the Open Offer.

The Subscription Shares and Open Offer Shares are being issued pursuant to the Company’s existing share authorities granted at the Annual General Meeting held on 28 May 2019.

The purpose of the Circular is to provide Qualifying Shareholders with background to the Capital Raising, the details of the Open Offer, and the terms and conditions applicable to it.

2. Description of Company

Faron is a clinical stage biopharmaceutical company developing novel treatments for medical conditions with significant unmet needs. Faron’s drug development is based on extensive knowledge of receptors involved in regulation of immune responses and vascular dysfunctions. The Company currently has two technology platforms (Clevegen® and Traumakine®) and a pipeline focusing on cancer immunotherapy, acute organ traumas and vascular damage.

The Company’s drug candidate, Clevegen, is an early clinical anti-Clever-1 antibody. The Directors believe that Clevegen has the ability to switch immune suppression to immune activation in various conditions, with potential across oncology, infectious disease and vaccine development. The other candidate is Traumakine, to prevent vascular leakage and organ failures.

Innovations for the business have primarily been sourced from academic institutions including, but not limited to Turku University, Finland. The inventions behind both Traumakine and Clevegen were sourced from scientists working at Turku University (Professor Sirpa Jalkanen, the wife of the Company’s CEO Markku Jalkanen, and Professor Marko Salmi).

The Company is developing its drug candidates through research and discovery, drug development and clinical trials. Discovery and development are guided by top-tier scientists in Faron’s network and the clinical development utilises Company’s in-depth pharmacological knowledge of the drug candidates. The Company aims to accelerate time to market via focusing on rare diseases and/or high unmet medical indications based on its proprietary molecules and IPR. In market access and commercialisation the Company seeks to complementary partner to optimise the usage of resources and to create value. The aim is to gradually build-up integrated global pharma functions

PROGRESS OF CLEVEGEN

In 2019, the Company’s focus has been on the development of Clevegen which is currently undergoing an open label phase I/II MATINS clinical trial. The MATINS study is the first-in-human open label Phase I/II clinical trial with an adaptive design to investigate the safety and efficacy of Clevegen in selected metastatic or inoperable solid tumours. The selected tumours under investigation are cutaneous melanoma, hepatobiliary/hepatocellular, pancreatic, ovarian and colorectal cancer, all known to host a significant number of Clever-1 positive tumour associated macrophages (TAM). All together these five target groups consist of approximately 2 million annual cases worldwide. Cancer patients with high Clever-1 expression are identified with a simple blood myeloid cell staining with Clevegen (“liquid biopsy”).

Clevegen dosing reached its planned maximum of 10mg/kg in mid-June, which has continued to be well tolerated. No dose limiting toxicity (DLT) nor maximally tolerated dose (MTD) has been observed so far. The trial includes an option to administer a 20mg/kg dose, which the Company intends to propose to the trial’s independent data monitoring board.

Of the nine subjects dosed so far in the Clevegen trial, across three clinical trial sites in Finland and the UK, two subjects have shown clinical anti-cancer responses. The first patient, a partial responder with colorectal cancer (“CRC“) whose initial treatment progress was announced on 11 April 2019, showed a continuation of lung metastasis shrinkage according to the latest tumour imaging report at the end of May. The subject’s tumour load marker CEA (carcinogenic embryonal antigen), which measures tumour mass of CRC, has also normalised. A second subject with CRC has shown an initial decrease in CEA (-40%) and tumour stabilization.

The Directors believe that all of the study subjects dosed in the trial have seen a switch in their immune cell profiles following treatment with Clevegen towards increased immune activation. Typically this has been observed by one or more of the following: increased CD8+ cells, an increased in the CD8+/CD4+ ratio, a decrease in regulatory T-cells (T-regs) and a substantial increase in mobile natural killer (NK) cells in the blood. These changes were measurable immediately post-dosing, indicating a dynamic response in the immunological switch to immune-activation after the immunotherapeutic blockade of Clever-1. Data indicates that dose escalation results in prolonged Clever-1 occupancy of the blood monocytes during the first two weeks of the three-week dosing cycle before a decrease to baseline levels prior to the next dosing cycle.

The majority of patients in the trial have received 5-7 different treatment lines prior entering the MATINS study. Faron is investigating why the observed immune activation has not turned into anti-tumour activity in all study subjects but in part, the Company believes the patient’s immune system receiving Clevegen as a last line of therapy could have been adversely affected by the underlying therapies they have received prior to taking part in the MATINS study, as previous chemotherapies can inactivate bone marrow, preventing revitalization of the immune system.

As the trial is an open label study, the Company expects to report findings as the dosing progresses. The planned cohort expansion during Part II of the study will focus on identification of patients who show an increased number of Clever-1 positive circulating monocytes and the safety and efficacy of the treatment. The Company has already announced that CRC has been selected as the first expansion cohort in Part II. Faron also intends, subject to regulatory approval, to amend the MATINS trial to allow inclusion of hormone receptor-positive breast cancer, gastric cancer and uveal melanoma, based on striking translational data on CLEVER-1 positive cancer types and current poor survival rates. Additionally, Faron has recently filed a pre-IND package to the FDA. If accepted, Faron plans to open new sites in the US and facilitate expansion of the CRC cohort as fast as possible. Similarly, Faron is planning to include top cancer centres in France and Spain as the next European countries to join the MATINS trial.

TRAUMAKINE UPDATE

Traumakine has previously undergone two phase III studies for the treatment of ARDS (one of these trials being conducted the Company’s Japanese partner, Maruishi). Topline data from the Company’s Phase III INTEREST trial was announced on 8 May 2018 showing that the trial did not meet its primary endpoint although reduced mortality was seen in a sub-group of patients with a biomarker response (MxA and CD73 induction). Further announcements have since been made (including but not limited to those made on 14 June 2018, 22 October 2018, 5 December 2018 and 14 June 2019) in respect of post-hoc analysis from the INTEREST trial and a follow-up pharmacokinetic/dynamic study in health volunteers (YODA). In particular, post-hoc findings from INTEREST and YODA suggest that concomitant use of corticosteroids and Traumakine appeared to adversely affect both the mortality and biomarker appearance among INTEREST trial patients, indicating corticosteroid interference with Traumakine action. Results from the Japanese Traumakine Phase III trial for ARDS, which also included high levels of concomitant corticosteroid use and which were announced on 29 April 2019, were in line with results from the INTEREST trial.

Interim results of the Company’s Phase II study examining the effect of Traumakine on mortality (predominantly MOF) and pharmacodynamic biomarkers of surgically operated RAAA patients (INFORAAA trial) were announced 26 June 2019. Whilst biomarker (MxA and CD73) responses indicated a good interferon response from Traumakine, unexpectedly, concomitant corticosterone was recorded both in the active (28%) and placebo (30%) treatment arm. While the removal of corticosteroid-treated patients from statistical analysis reduced group sizes and made statistical interim mortality analysis meaningless, a trend toward reduction of mortality was seen in the Traumakine-treated patients who did not receive corticosteroids.

The Company is conducting a full review of all the Traumakine data with key opinion leaders in order to make decisions on Traumakine’s future development (including continuance of the Company’s INFORAAA trial given the unexpected levels of concomitant corticosteroid use seen in the trial to date). The Company is currently in the process of designing a new global Phase III trial for Traumakine treatment (CALIBER) for the treatment of ARDS taking into account the high levels of concomitant used as a standard of care for ARDs and some RAAA patients and is in the process of seeking regulatory feedback on the proposed trial. The Company envisages that further Traumakine trials are likely to be funded through a third party.

CURRENT TRADING

The Company prepares its financial statements in accordance with the International Financial Reporting Standards (IFRS). The Company’s loss for the financial year ended 31 December 2018 was €20.1 million (2017: €21.1 million loss).

The Company’s cash balances were €4.9 million on 31 March 2019, €4.1 million on 31 December 2018, and €9.3 million on 31 December 2017. The Company has implemented a cash preservation program to reduce cash burn and preserve existing resources in order to deliver value to shareholders. The Company’s net assets were €0.7 million on 31 March 2019, €0.4 million on 31 December 2018 and €4.7 million on 31 December 2017.

The Company raised net €15.9 million in February 2018 intended to support preparations for the commercialisation of Traumakine and to advance the clinical development of Clevegen in several indications at the issue price of £8.05 per share. In January 2019, the Company received the fourth and last instalment of the Clevegen Tekes R&D loan of €0.31 million. In March 2019, the Company raised net €2.9 million through placing and subscription at the issue price of €0.702 (60 pence) per share and net €1.3 million in May 2019 at the issue price of €0.7598 (65 pence) per share.

3. Use of Proceeds

The net proceeds of the Capital Raising will primarily be used to fund further clinical development of Clevegen by:

· completing part I of the MATINS trial to determine the maximum tolerated dose and optimal dose for part II, and to initiate cohort expansion in CRC in Q4 2019; and

· providing working capital whilst Faron seeks to negotiate and enter into a licensing agreement in respect of Clevegen in H2 2019.

In addition, the net proceeds of the Capital Raising will be used to fund the commercialisation preparation of Traumakine by seeking scientific advice and regulatory approval for the CALIBER study in H2 2019.

Subject to a significant proportion of the Open Offer Shares being subscribed for (and/or receipt of alternative sources of funding), the Company plans to execute the Company’s plan to include US study sites to MATINS trial for expansion of distinct cancer cohorts in Q4 2019.

The net proceeds of the Subscription are expected to extend the Company’s working capital to the end of Q4 2019 while the proceeds of the Capital Raising (to the extent a significant proportion of the Open Offer Shares are subscribed for) are expected to provide the Company with working capital into early Q1 2020. The Company continues to seek to partner Clevegen (targeting an upfront payment) and while it cannot be guaranteed, the Company hopes to conclude a licencing agreement by the end of 2019. In the meantime, the Company will continue to explore other potential sources of funding.

4. Details of the Subscription

The Company has raised approximately £1.0 million before expenses by way of the issue of 941,840 Subscription Shares pursuant to the Subscription at the Euro Issue Price.

The Subscription Shares were issued and registered with the Finnish Trade Authority on 5 August 2019 and First Admission took place at 8.00 am on 6 August 2019.

The Subscription Shares have been issued free of all liens, charges and encumbrances and will, when issued and fully paid, rank pari passu in all respects with the existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of their issue.

5. Details of the Open Offer

The Company is proposing to raise up to approximately £1.8 million before expenses by the issue of up to 1,696,699 Open Offer Shares under the Open Offer at the Issue Price, payable in full on acceptance. Any entitlements to Open Offer Shares not subscribed for by Qualifying Shareholders will be available to Qualifying Shareholders under the Excess Application Facility.

Qualifying Shareholders should note that the Open Offer is not a rights issue and therefore the Open Offer Shares which Qualifying Shareholders do not apply for will not be sold in the market for the benefit of Qualifying Shareholders who do not apply for Open Offer Shares.

Qualifying Shareholders may apply for Open Offer Shares under the Open Offer at the Issue Price pro rata to their holdings of Existing Ordinary Shares on the Record Date on the basis of:

2 Open Offer Shares for every 45 Existing Ordinary Shares

Entitlements of Qualifying Shareholders will be rounded down to the nearest whole number of Open Offer Shares. Fractional entitlements which would otherwise arise will not be issued to Qualifying Shareholders but will be aggregated and made available under the Excess Application Facility. Not all Shareholders will be Qualifying Shareholders. Shareholders who are located in, or are citizens of, or have a registered office in a Restricted Jurisdiction will not qualify to participate in the Open Offer. The attention of Overseas Shareholders is drawn to paragraph 6 of Part 3 of the Circular.

Subject to availability, the Excess Application Facility enables Qualifying Shareholders to apply for Excess Shares up to the maximum number of Open Offer Shares available less their Open Offer Entitlement, subject to availability. Further details of the Open Offer and the Excess Application Facility are given in Part 3 of the Circular.

Valid applications by Qualifying Shareholders will be satisfied in full up to their Open Offer Entitlements. Applicants can apply for less or more than their entitlements under the Open Offer, but the Company cannot guarantee that any application for Excess Shares under the Excess Application Facility will be satisfied, as this will depend, in part, on the extent to which other Qualifying Shareholders apply for less than or more than their own Open Offer Entitlements. The Company may satisfy valid applications for Excess Shares in whole or in part but reserves the right not to satisfy any application above any Open Offer Entitlement. The Board may scale back applications made in excess of Open Offer Entitlements on such basis as it reasonably considers to be appropriate.

Application has been made for the Open Offer Entitlements and Excess CREST Open Offer Entitlements to be admitted to CREST. It is expected that such Open Offer Entitlements and Excess CREST Open Offer Entitlements will be credited to CREST on 8 August 2019. The Open Offer Entitlements and Excess CREST Open Offer Entitlements will be enabled for settlement in CREST until 11.00 a.m. on 22 August 2019. Applications through the CREST system may only be made by the Qualifying DI Holders originally entitled or by a person entitled by virtue of bona fide market claims. The Open Offer Shares must be paid in full on application. The latest time and date for receipt of CREST applications by DI Holders and payment in respect of the Open Offer is 11.00 a.m. on 22 August 2019.

The Open Offer Shares must be paid for in full on application.

Qualifying DI Holders will receive a credit of Open Offer Entitlements and Excess CREST Open Offer Entitlements to your CREST stock account. Please refer to paragraph 3.4 and paragraphs 3 to 11 of Part 3 of the Circular and also to the CREST Manual for further information on the CREST procedures referred to below. Further details of the Open Offer to Qualifying DI Holders and the terms and conditions on which it is being made, including the procedure for application and payment, are contained in Part 3 of the Circular (DI Holder Terms and Conditions). The Circular sets out the terms and conditions of the Open Offer to Qualifying DI Holders. Qualifying non-DI Holders are instructed to also refer to the Basic Information Document and Finnish Law Terms and Conditions available on the Company’s website at www.faron.com/investors which contain instructions for how Qualifying non-DI Holders can subscribe for Open Offer Shares pursuant to the Open Offer.

If you are electing for EIS Relief or VCT Relief in respect of your application for Open Offer Shares please refer to paragraph 3.4 of Part 3 of the Circular and if your existing Ordinary Shares are registered in a single name, then the Company will use the same information to supply to HMRC. If your Ordinary Shares are registered in joint names or a nominee name, you or the nominee, will need to notify the Company at EIS.investors@faron.com by no later than 11 September 2019 of the registration details required for all of the underlying beneficial holders who wish to receive the EIS tax certificate for use in their tax return along with your contact details. Failure to supply the EIS registration information by the cut-off date will result in no application being made to HMRC for Tax relief on your subscription.

Under the relevant legislation, the maximum amount the Company may raise in any 12-month period by issuing shares to EIS and VCT investors is £10 million. The Company expects all of the Open Offer Shares to be eligible for EIS Relief and VCT Relief to the extent validly subscribed for and subject to the circumstances of individual investors as described in paragraph 6 below. Accordingly, all Open Offer Shares are deemed to be EIS/VCT Open Offer Shares.

EIS income tax relief will only be available to Qualifying DI Holders who hold Existing Ordinary Shares which were acquired pursuant to an EIS compliant issue of shares by the Company. EIS income tax relief is not available for Qualifying DI Holders who subscribe for Open Offer Shares at a time when they hold Existing Ordinary Shares for which EIS Relief has not been claimed.

Qualifying DI Holders must not seek EIS Relief on any Open Offer Shares that are not EIS/VCT Open Offer Shares.

Following Second Admission, the Company will notify Qualifying DI Holders who are VCTs or who stated that they would seek EIS Relief on the number of EIS/VCT Open Offer Shares allocated to them and accordingly upon which Open Offer Shares they may seek such relief.

The Open Offer Shares will be issued free of all liens, charges and encumbrances and will, when issued and fully paid, rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of their issue.

Application will be made to the London Stock Exchange for the admission of the Open Offer Shares to trading on AIM. It is expected that Second Admission will occur, and that dealings in the Open Offer Shares subscribed for pursuant to the Open Offer will commence, at 8.00 a.m. on 28 August 2019, at which time it is also expected that the Open Offer Shares will be enabled for settlement in CREST.

6. Enterprise Investment Scheme and Venture Capital Trust

As of 2 January 2018, HMRC can no longer consider VCT advance assurance applications where the details of the potential qualifying holding are not given.

The Directors believe that all of the Open Offer Shares should be eligible (subject to the circumstances of investors) for tax reliefs under EIS and as a qualifying holder for VCTs (and accordingly all Open Offer Shares are deemed to be “EIS/VCT Open Offer Shares”). The Directors are not aware of any subsequent change in the qualifying conditions or the Company’s circumstances that would prevent the EIS/VCT Open Offer Shares from being eligible VCT and EIS investments on this occasion. However, neither the Directors nor the Company gives any warranty or undertaking that relief will be available in respect of any investment in EIS/VCT Open Offer Shares pursuant to the Circular or the Capital Raising, nor do they warrant or undertake that the Company will conduct its activities in a way that qualifies for or preserves its status.

The Company will, following Second Admission, make an application to HMRC to authorise the Company to deliver certificates under section 204, ITA 2007 in respect of those Open Offer Shares which Qualifying Shareholders have indicated in their USE instruction that they wish to seek EIS Relief on and which have been duly allocated such relief by the Board. Assuming that HMRC gives authorisation to the Company, it will deliver such certificates in respect of such allocations of EIS/VCT Open Offer Shares.

Provided that Qualifying DI Holders and the Company comply with the EIS legislation (Part V, ITA 2007 and sections 150A-C and Schedule 5B of the Taxation of Chargeable Gains Act 1992), which includes a requirement that the EIS Open Offer Shares are held by investors for not less than three years, UK taxpayers should qualify for EIS Relief on their investment in the EIS Open Offer Shares.

As the rules governing EIS Relief and VCT Relief are complex and interrelated with other legislation, if Shareholders or any potential investors are in any doubt as to their tax position, require more detailed information than the general outline above, or are subject to tax in a jurisdiction other than the United Kingdom, they should consult their professional adviser.

7. Overseas Shareholders

The attention of Qualifying Shareholders who have registered addresses outside the United Kingdom, or who are citizens or residents of countries other than the United Kingdom, or who are holding Existing Ordinary Shares for the benefit of such persons (including, without limitation, custodians, nominees, trustees and agents) or who have a contractual or other legal obligation to forward the Circular to such persons, is drawn to the information which appears in paragraph 6 of Part 3 of the Circular.

Qualifying DI Holders who have registered addresses in or who are resident in, or who are citizens of, countries other than the United Kingdom (including without limitation the United States), should consult their professional advisers as to whether they require any governmental or other consents or need to observe any other formalities to enable them to take up their entitlements under the Open Offer.

8. Effect of the Subscription and Open Offer

Upon Second Admission, and assuming full take up of all the Open Offer Shares offered under the Open Offer, the Enlarged Share Capital is expected to be 39,872,433 Ordinary Shares. On this basis, the Open Offer Shares will represent approximately 4.3 per cent. of the Enlarged Share Capital.

9. Risk Factors and Additional Information

The attention of Shareholders is drawn to the risk factors set out in Part 2 and the information contained in Parts 3 to 4 (inclusive) of the Circular, which provide additional information on the Subscription and the Open Offer.

10. Action to be taken

In respect of the Open Offer

Qualifying DI Holder

If you are a Qualifying DI Holder you will receive a credit to your appropriate stock account in CREST in respect of the Open Offer Entitlements representing your entitlement under the Open Offer and Excess CREST Open Offer Entitlements. You should refer to the procedure for application and payment set out in paragraph 3.4 of Part 3 of the Circular.

The relevant CREST instructions must have settled in accordance with the instructions in paragraph 3.4 of Part 3 of the Ciruclar by no later than 11.00 a.m. on 22 August 2019.

EIS Relief will only be available to Qualifying DI Holders who hold Existing Ordinary Shares which were acquired pursuant to an EIS compliant issue of shares by the Company. Qualifying Shareholders who obtained Existing Ordinary Shares on the secondary markets will not be eligible to claim EIS Relief.

Qualifying DI Holders should refer to their CREST sponsors regarding the action to be taken in connection with the Circular and the Open Offer.

Qualifying non-DI Holder

Qualifying non-DI Holders are instructed to also refer to the Basic Information Document and the Finnish Law Terms and Conditions available on the Company’s website at www.faron.com/investors and contain the instructions for how Qualifying non-DI Holders can subscribe for Open Offer Shares pursuant to the Open Offer.