Director/PDMR Shareholding

Faron Pharmaceuticals Ltd

(“Faron” or the “Company”)

Director/PDMR Shareholding

 Shares used for collateral of a personal bank loan of the Director

TURKU – FINLAND, 4 April 2017 – Faron Pharmaceuticals Ltd (“Faron”) (LON: FARN), the clinical stage biopharmaceutical company, announces that on 30 March 2017 Dr Juho Jalkanen, a Non-Executive Director of Faron, pledged 55,000 ordinary shares of the Company (“Ordinary Shares”) held by him, as collateral for a personal bank loan provided to Dr Jalkanen (“Collateral Shares”).   Dr Jalkanen’s total holding in the Company, including that of his family, continues to be 1,082,570 ordinary shares (including the Collateral Shares).

For more information please contact:

Faron Pharmaceuticals Ltd.
Dr Markku Jalkanen, Chief Executive Officer
E-mail: investor.relations@faron.com 

Consilium Strategic Communications
Mary-Jane Elliott, Chris Welsh, Lindsey Neville
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

Cairn Financial Advisers LLP, Nominated Adviser
Emma Earl, Tony Rawlinson, Rebecca Anderson 
Phone: +44 207 213 0880 

Panmure Gordon (UK) Limited, Joint Broker
Freddy Crossley, Duncan Monteith (Corporate Finance)
Tom Salvesen (Corporate Broking)
Phone: +44 207 886 2500

Whitman Howard Limited, Nominated Broker (UK)
Ranald McGregor-Smith, Francis North
Phone: +44 207 659 1234

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 lead candidate Traumakine, to prevent vascular leakage and organ failures, is currently the only treatment for Acute Respiratory Distress Syndrome (ARDS) undergoing Phase III clinical trials.  There is currently no approved pharmaceutical treatment for 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 pre-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 Tumour Immunity Enabling Technology (“TIET”) 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.faronpharmaceuticals.com

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

Juho Jalkanen

2

Reason for notification

a.

Position/Status

None-executive director

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

 Shares used for collateral of a personal bank loan of the Director

c.

Price(s) and volume(s)

Price(s)

Volume(s)

 535 pence

55,000

d.

Aggregated information

– Aggregated Volume

– Price

55,000

GBP294,250.00

e.

Date of the transaction

30 March 2017

f.

Place of the transaction

Turku

Final Results 2016

Faron Pharmaceuticals Ltd

(“Faron” or the “Company”)

Final Results for the year ended 31 December 2016

TURKU – FINLAND, 29 March 2017 Faron Pharmaceuticals Ltd (“Faron”) (LON: FARN), the clinical stage biopharmaceutical company, today reports its full year audited results for the year ended 31 December 2016.

The 2016 Annual Report and Accounts become available in mid-April in digital form on the Company’s website together with the invitation to the Annual General Meeting (AGM).

HIGHLIGHTS

OPERATIONAL:                  

Traumakine®

·      Pivotal, pan-European, Phase III INTEREST trial for the treatment of Acute Respiratory Distress Syndrome (“ARDS”), has continued to progress as planned.

·      Maruishi, Faron’s Japanese licensing Partner, reported top line results from its Phase II safety study which indicated there were no safety concerns and, similarly to Faron’s phase I/II UK study, also showed reduction of 28-day mortality.

·      Initiation of Maruishi’s own pivotal Phase III study in Japan which aims to recruit 120 severe and moderate ARDS patients split between treatment and placebo arms.

·      Initiated filing of a clinical trial application (CTA) for the use of Traumakine in a second indication for the prevention of mortality among operated RAAA (Rupture of Abdominal Aorta Aneurysm) patients.

·      Filed patent application in Finland for the intravenous formulation of interferon-beta and received a first allowance letter from the Finnish Patent Authorities indicating potential success in Europe and USA.

·      Entered into licensing agreement with Pharmbio Koreo Inc (Pharmbio) for the commercialisation of Traumakine in Korea and received a signing fee of €750,000.

Clevegen®

·      Established production clones for the humanised, and de-immunised, monoclonal antibody FP-1305 with Faron’s technology partner, Selexis.

·      Entered into a collaboration agreement with Abzena Corp (LSE: ABZA) to establish large scale GMP manufacturing for Clevegen.

·      Filed two new patent applications to seek further protection for Clevegen. If successful, Clevegen will be protected for the next 20 years.

·      Expansion of Clevegen’s use to include removal of local immune suppression around tumors (TIET), chronic infections (CIRT) and vaccination sites (VRET).

FINANCIAL

·      Raised total equity of €9.3 million (net €8.5 million) by issuing 3,200,000 new ordinary shares at a price of 250 pence per share. The proceeds are being used to fund Traumakine US safety trials (INTRUST), Clevegen pre-clinical and clinical development to Phase I/II for lead indication of hepatocellular carcinoma (HCC) and the RAAA European clinical development to Phase II (INFORAAA trial), as well as further R&D and operational expenses.

·      Generated €1.2 million (2015: €0.5 million) revenues mainly from sales of active pharmaceutical ingredient (API) and sales of medical products for trials. The €0.7 million licence agreement cash signing fee from Pharmbio was recorded as advance payment. In addition, the Company recorded grant income of €1.7 million (2015: €0.7 million) from the EU FP7 grant.

·      Drew down €0.6 million of a €1.5 million R&D loan granted by Tekes in 2015 to progress the Clevegen programme.

·      On 31 December 2016, the Company held cash balances of €11.5 million (2015: €11.1million).

·      Operating loss for the financial year ended 31 December 2016 was €9.3 million (2015: €6.2 million loss).

·      Net assets on 31 December 2016 were €10.9 million (2015: €11.2 million).

POST-PERIOD END HIGHLIGHTS

·      On 9 February 2017, announced a third IDMC recommendation to continue the Phase III INTEREST trial as planned and also confirmed the expected read-out from the trial to be in H2 2017.

·      On 20 February 2017, announced recruitment of the first patient in the Traumakine INFORAAA trial for the prevention of multi-organ failure and patient mortality after surgical repair of a RAAA.

·      On 1 March 2017, announced the successful raise of approximately €5.8 million before expenses from the placing of 1,422,340 ordinary shares at a price of 350 pence per share.

Commenting on the results, Dr Markku Jalkanen, CEO of Faron, said:

“Faron’s mission is to develop new treatments in genuine areas of unmet medical need. 2016 was an important year of progress for Faron, during which we sucessfully achieved all of the major goals set out at the time of our IPO in 2015, with a lower cash burn than anticipated. This was due, in part, to our effective use of grant funding (being non-dilutive financing) to continue our exciting development programmes. 2017 will be a pivotal year for Faron as we await results from our Phase III INTEREST trial, which if favourable, will pave the way for the launch of our first commercial product Traumakine, for the treatment of ARDS. We also look forward to making significant progress with our exciting immune switch candidate, Clevegen,  which we hope to see move into the clinic during 2017. None of this would be possible without the support of our highly motivated and skilled staff, and supportive shareholders, who I would like to thank on the behalf of the management team and Board.”

For more information, please contact:

Faron Pharmaceuticals Oy

Dr Markku Jalkanen, Chief Executive Officer

investor.relations@faronpharmaceuticals.com 

Consilium Strategic Communications

Mary-Jane Elliott, Chris Welsh, Lindsey Neville

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

Cairn Financial Advisers LLP, Nominated Adviser

Emma Earl, Tony Rawlinson, Rebecca Anderson

Phone: +44 207 213 0880

Panmure Gordon (UK) Limited, Joint Broker

Freddy Crossley, Duncan Monteith (Corporate Finance)

Tom Salvesen (Corporate Broking)

Phone: +44 207 886 2500

Whitman Howard Limited, Nominated Broker (UK)

Ranald McGregor-Smith, Francis North

Phone: +44 207 659 1234

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 lead candidate Traumakine, to prevent vascular leakage and organ failures, is currently the only treatment for Acute Respiratory Distress Syndrome (ARDS) undergoing Phase III clinical trials.  There is currently no approved pharmaceutical treatment for 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 pre-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 Tumour Immunity Enabling Technology (“TIET”) 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.faronpharmaceuticals.com

Annual Results Statement

Introduction

Overview of the Company

Faron 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. 

Strategy

Faron’s strategy is to maximise the potential of its pipeline of drug candidates and to progress the development of its lead product Traumakine. Faron targets several endothelial molecules involved in the maintenance of the endothelial barrier which is a thin layer or membrane of cells that lines blood and lymphatic vessels to separate blood content from tissues. The Company believes that the control of these molecules provides a unique way to treat many life-threatening conditions with high unmet medical needs. Faron collaborates with its strategic partners in research, manufacturing and drug development to bring new pharmaceutical products to market in a timely and cost-effective manner and has formed a core team of leading scientists in capillary biology and diseases arising from vascular leakage. The Company has established links with leading laboratories and clinics based at Turku University in Finland, University College London and other institutions.

To date, Faron has operated on a relatively low cost basis by employing only key members of staff and outsourcing where possible. Typically, all development work up to the proof-of-concept stage of drug development is carried out in the innovators’ laboratories.  The Company outsources all of its manufacturing activities in relation to its products to third parties and collaborates with Contract Research Organisations (CROs) to carry out the clinical development programmes. Faron monitors and evaluates potential commercial opportunities for its established drug candidates, such as Traumakine and Clevegen and its technologies, as and when they arise and will consider how best to crystallise as much value as possible for Shareholders, which may include holding rights in main territories for as long as it is feasible, or, in certain circumstances, up to the marketing stage.

Chairman’s Statement

2016 was an important year for Faron. The highly experienced management team has made significant progress with Traumakine and Clevegen during its first full financial year following the successful AIM listing on the London Stock Exchange in November 2015.

The Company’s novel therapies, Traumakine and Clevegen, have been developed from a thorough and deep scientific knowledge and understanding of endothelial barrier function and control, and both products are delivering exciting data.

Faron’s lead drug candidate, Traumakine, continues to recruit patients into the pivotal, pan-European Phase III INTEREST trial, which is due to report the critical end points (e.g. mortality difference between placebo and active treatment) in the second half of 2017. We believe that Traumakine, as the only product in late stage clinical development for the treatment of ARDS, represents a significant opportunity to treat patients with this serious condition.

The Company also believes that Traumakine could have applications across other serious indications and in early 2017, recruited the first patient in a phase II trial (INFORAAA) assessing Traumakine for the prevention of Multi-Organ Failure (MOF) and patient mortality after surgical repair of a RAAA. RAAA is a medical emergency with no known treatment and an overall mortality of 30 to 50% for post-operative refusion injury for RAAA patients.

Faron’s second product, its pre-clinical immunotherapy candidate, Clevegen, causes conversion of the immune environment around a tumour from immune suppressive to immune stimulating by reducing the number of tumour-associated macrophages (TAMs). Recent developments in the exciting field of cancer immunotherapy have been well documented with a number of important indications of clinical success. We believe that Clevegen is well differentiated from other immunotherapies through its specific targeting of M2 TAMs which facilitate tumour growth, while leaving intact the M1 TAMs that support immune activation against tumours. In July, we were pleased to enter an agreement with Abzena for the manufacture of Clevegen for use in primate toxicity and Phase I/II clinical studies.

The Company is well funded, having secured €9.3 million in a private placing in September 2016 and a further €5.8 million in February 2017. Both placements were executed at a premium to the Company’s share price, which indicates the level of confidence our investors, both new and established, have in our products, our strategy and the ability of our management to deliver.

Faron’s key focus for 2017 will be to prepare the business for the anticipated commercial launch of Traumakine in the event of a positive European Phase III data readout and prepare for the commencement of a Phase II safety trial in the US, whilst also continuing the pre-clinical and planned early-stage clinical development of Clevegen.

As ever the Board will continue to look for opportunities to deliver and enhance value to our Shareholders as well as patients who will benefit from the new drugs Faron is developing.

The Board recognises the efforts of the management team to deliver the successes achieved in 2016 and is grateful to the investigators and patients who are part of our clinical trials.

We look forward to an exciting 2017 with continued support from shareholders as we progress our exciting products, Traumakine and Clevegen.

Dr Frank M Armstrong – Chairman

March 28, 2017

Chief Executive Officer’s Review and Operational Review

When Faron listed on the London Stock Exchange’s AIM in November 2015, the Company had ambitions to deliver on its promises and exceed expectations. Faron has so far achieved its stated goals and with a lower than anticipated cash burn.  We expect this momentum to continue into the coming year and our focus remains stronger than ever.

We have complemented our funds raised at IPO with additional successful equity finance rounds (September 2016 and February 2017) in order to expand our pipeline development to new indications and territories, as well as broadening our institutional shareholder base.

Traumakine Development

Our lead drug, Traumakine, progressed as planned to the full scale Phase III trial (INTEREST) during 2016 for the treatment of ARDS. ARDS is a severe, life-threatening medical condition characterised by widespread capillary leakage and inflammation in the lungs, most often as a result of sepsis, pneumonia or significant trauma. Currently there are no pharmacological treatments for ARDS, an orphan disease with a 30-45% mortality rate. Traumakine has been granted Orphan Drug Designation in Europe which allows a period of 10 years of market exclusivity following marketing approval by the European Medicines Agency. The Phase III INTEREST trial is being led by Professor Geoff Bellingan from University College London Hospital and Professor Marco Ranieri from the University of Rome. Subject to the successful completion of the Phase III INTEREST trial in the second half of 2017 and achievement of regulatory approvals, Traumakine will potentially be the first effective, mechanistically-targeted, disease-specific pharmacotherapy for ARDS patients and has the potential to revolutionalise intensive care practices.

To date, Faron has entered into agreements with three pharmaceutical companies to carry out the clinical development and commercialisation of Traumakine in Japan, Greater China and Korea. Faron owns the intellectual property and marketing rights in respect of Traumakine in all other territories.

Our Japanese licensing partner, Maruishi Pharmaceutical Co., Ltd announced similar positive results from its Phase II Japanese study for Traumakine. Based on these results Maruishi is now conducting a pivotal phase III trial in Japan according to the advice from the Japanese FDA (PMDA).

Faron continued out-licensing of Traumakine in Asia signing a profit sharing agreement with PharmBio, a Korean pharmaceutical company, on rights to develop and commercialise Traumakine in Korea. Faron received a signing fee of €750,000, with additional milestones and royalty payments agreed.

Parallel to completion of the European Phase III study, Faron plans to commence a Phase II US safety study (INTRUST) with Traumakine in H2 2017, which is expected to take 12 months to complete. The timing of this planned trial remains subject to regulatory approvals, with a pre-IND FDA meeting targeted to occur in mid 2017. Faron is currently in the process of establishing the trial structure and is recruiting PI’s, IDMC, sites and CROs in the US.

Clevegen Development

One of Faron’s key areas of focus is to develop a cancer treatment that supports the hosts’ immune defences against tumours, as these are often suppressed in cancer patients. Faron’s second most advanced drug development project, Clevegen, revolves around Clever-1, a cell surface molecule involved in cancer growth and spread. The active pharmaceutical ingredient of Clevegen is a humanised anti-Clever-1 antibody.

Faron has an agreement with Geneva based Selexis to prepare high yield production clones for Clevegen (FP-1305) which was successfully completed in mid 2016. In order to obtain GMP grade antibodies, Faron contracted Abzena to build a manufacturing process for Clevegen, allowing Faron to design a final primate tox study and plan human clinical studies in several cancer groups. Abzena informed the Company at the end of 2016 that the selected clones produce more than 5 g/l, which is widely considered a commercially feasible level.

During 2016, Faron has utilised €0.8 million of the €1.5 million loan funding from Tekes, the Finnish Funding Agency for Innovation, to progress the preclinical development of Clevegen. The funding is a government loan which covers 50% of the budgeted cost of the preclinical development of Clevegen.

Upcoming Newsflow

The Board anticipates the following pipeline progress during 2017:

Traumakine:

·      Read-out for the pan-European phase III trial (INTEREST) results (all-cause mortality at day 28) during H2 2017.

·      Advanced advice from IDMC (Independent Data Monitoring Committee) on the INTEREST study is expected in May 2017. Faron recently received the third recommendation from IDMC for the trial to continue without any modifications.

·      The Company has established a manufacturing plan to build its stocks of Traumakine. Subject to a positive outcome of the INTEREST study, having manufacturing in place should facilitate the application process for market approval of Traumakine.

·      The Company plans to commence a Phase II US safety study (INTRUST) with Traumakine in H2 2017. It is expected that the full study will take 12-15 months to get to D28 and D90 all cause mortality data. Timing remains subject to regulatory approvals with a pre-IND FDA meeting targeted to occur in mid 2017.

·      The Company currently expects recruitment in the Japanese Phase III pivotal study for the treatment of ARDS with Traumakine, run by its Japanese licensing partner Maruishi Pharmaceutical Co., to progress towards completion during 2017.

·      Interim results from the 160 patient Traumakine clinical study (INFORAAA) for the treatment of patients with rupture of acute abdominal aorta (RAAA), which began recruiting in February 2017, is expected in 12 to 18 months. The aim of this trial is to reduce mortality in operated RAAA patients, which normally varies from 30 to 50% of all patients surgically operated on. The INFORAAA study will also assist in the design of Traumakine trials for single organ failures.

Clevegen:

·      Subject to access of Clevegen’s active pharmaceutical incredient (FP-1305), Faron has contracted a toxicological pre-clinical study for Clevegen to start in mid 2017.

·      The Company expects to file the first CTA with the UK regulatory authorities (MHRA) in late 2017 / early 2018 and this study is expected to provide enough safety data for acceptance of the CTA. The first, and primarily safety focused clinical trial is expected to be conducted with liver cancer patients at the Birmingham University Liver Cancer Centre and is expected to continue into a Phase II study via an adapted trial design for HCC patients to recognise early efficacy signals.

·      The second set of clinical cancer trials will be conducted in parallel with the HCC trial in Scandinavia with melanoma, pancreas and ovarian cancer patients.

Commerical:

·      Faron is exploring various commercial opportunities while continuing to develop the pipeline with the existing resources.

Financial Review

Key Performance Indicator

Faron is a late clinical stage drug development company with limited recurring sales and thus the primary Key Performance Indicators (KPIs) followed by the Board focus on cash balances and other related information. During 2016, the Company had a net increase in cash flow of €0.4 million despite significant investments in R&D. This was mainly due to successful fundraising and stronger than expected revenues and other operating income. The Board will consider the appropriateness of monitoring additional KPIs as the Company’s operations advance.

Revenue and Other Operating Income

The Company’s revenue was €1.2 million for the year ended 31 December 2016 (2015: €0.5 million), which comprised of sale of excess API material and sales of IMP -material. The €0.7 million licence agreement cash signing fee from Korean license partner PharmBio was recorded as advance payment. The Company also recorded €1.7 million (2015: €0.7 million) of other operational income. This comprised of income recognised from the European Commission FP7 grant in support of the Traumakine programme as well as a grant component from public loans.

Research and development costs

The R&D costs  increased by €5.6 million (141%) ftom €4.0 million to €9.6 million. This was mainly due to the INTEREST -trial which recruited its first patient very late 2015 and was in full capacity during 2016. Also Clevegen development entered into a more active phase. The third contributer to the R&D cost increase was preparatory work for eventual Traumakine launch including ramp-up of production of API.   

Share-based Compensation

As part of the IPO process, a number of options were awarded to Directors and key personnel. This had no cash impact on the results for the year, however, accounting standards require this share based compensation to be recognised in the Consolidated Statement of Comprehensive Income, resulting in a charge of €0.5million (2015: €0.5 million).

Taxation

The Company’s tax credit for the fiscal year 2016 can be recorded only after the Finnish tax authorities have approved the tax report and confirmed the amount of tax-deductible losses for 2016. The total amount of cumulative tax losses carried forward approved by tax authorities on 31 December 2016 was €13.9 million (2014: €5.7 million). These losses can be utilised during the years 2019 to 2025 by offsetting them against profits. In addition, Faron has €2.8 million research and development costs incurred in the financial years 2010 and 2011 that have not yet been deducted in its taxation. This amount can be deducted over an indefinite period at the Company’s discretion.

Losses

Loss before income tax was €9.3 million (2015: €6.2 million). Net loss for the year was €9.2 million (2015: €6.2 million), representing a loss of €0.39 per share (2015: €0.30 per share) (adjusted for the changes in share capital).

Cash Flows

The Company was able to maintain a positive net cash inflow of €0.4 million for the year ended 31 December 2016, compared to a positive net cash inflow of €10.8 million for the previous year. Cash used for operating activities increased by €1.3 million to €8.5 million for the year, compared to €7.1 million for the year ended 31 December 2015. This increase was driven by a €5.6 million (142%) increase in research and development investments, and was offset by a €1.7 million (142%) increase in income and a €0.9 million (29%) reduction in administrative costs.

Net cash inflow from financing activities €9.0 million (2015: €18.1 million) mainly due to the receipt of net proceeds of €8.5 million from an equity placing completed in September 2016.

Financial Position

As at 31 December 2016, total cash and cash equivalents held were €11.5 million (2015: €11.1 million). This excludes the funds raised in the financing round announced on 1 March 2017.

Headcount

Average headcount of the Company for the year was 10 (2015: 6). The increase in headcount is attributable to the commencement of the Phase III INTEREST trial.

Shares and Share Capital

Using the authorisations granted at the Annual General Meeting held on 26 May 2016, on 23 September 2016, the number of ordinary shares in issue increased to 26,311,704 following the issue of 3,200,000 new ordinary shares at a subscription price of £2.50 per share. The subscription price was credited in full to the Company’s reserve for invested unrestricted equity, and the share capital of the Company was not increased.

Based on a resolution of the Extraordinary General Meeting held on 15 September 2015, the Company adopted the 2015 Share Option Plan. On 21 November 2016 the Company announced that the Board of Directors had granted 400,000 options under the plan to directors, management and employees of the Company. The directors options are detailed in Directors´ Remuneration Report set out in the Annual Report and Accounts.

Money Raised to Date

To date, the Company has been funded with a total of approximately €44 million, made up of a combination of equity, debt and grant funding, which has been used to develop the Company’s products and intellectual property. The Company has also generated cash revenues of €4.5 million to date through the receipt of milestone payments pursuant to certain of its licensing arrangements and the sale of surplus raw materials.


Summary and Outlook

2016 was an important year of progress for Faron during which we sucessfully achieved all of the major goals set out at the time of our IPO in 2015 with less cash burn than anticipated.

2017 will be a pivotal year for Faron as we await results from our Phase III INTEREST trial, which if favourable will pave the way for the launch of our first commercial product Traumakine, for the treatment of acute organ failures. We also look forward to making significant progress with our exciting immuno-oncology candidate, Clevegen, which we intend to progress into the clinic during 2017-18. The Board looks forward to the coming period with great confidence. 

ANNUAL RESULTS

Statement of comprehensive income

Year ended

31 Dec
2016

Year ended

31 Dec
2015

€’000

€’000

Stated in Euro

Revenue

 1 153

 520

Cost of sales

 – 

(25)

Gross profit

 1 153

 496

Other operating income

 1 742

 701

Administrative expenses

(2 161)

(3 061)

Research and development expenses

(9 592)

(3 971)

Operating result

(8 858)

(5 835)

Financial income

 0

 0

Financial expenses

(361)

(311)

Net financial costs

(361)

(311)

Loss before income taxes

(9 219)

(6 146)

Income tax expense

(75)

(42)

Total comprehensive income
for the financial year

(9 294)

(6 188)

Total comprehensive income,
attributable to:

Equity holders of the Company

(9 294)

(6 188)

Loss per share attributable to
equity holders of the Company

Basic and diluted loss per share, euro

(0,39)

(0,30)

Balance sheet

31 Dec
2016

€’000

31 Dec
2015

€’000

Stated in Euro

Assets

Non-current assets

Property, plant and equipment

 21

 28

Intangible assets

 933

 1 001

 954

 1 029

Current assets

Inventories

 1 451

 649

Trade and other receivables

 3 404

 2 074

Cash and cash equivalents

 11 478

 11 068

 16 333

 13 791

Total assets

 17 287

 14 821

Equity and liabilities

Capital and reserves attributable to equity holders of the Company

Share capital

 2 691

 2 691

Unregistered share capital

 – 

 – 

Reserve for invested non-restricted equity

 34 006

 24 533

Retained earnings

(25 814)

(16 046)

Total equity

 10 884

 11 178

Non-current liabilities

Interest-bearing financial liabilities

 2 033

 1 446

 2 033

 1 446

Current liabilities

Interest-bearing financial liabilities

 93

245 

Non-interest-bearing financial liabilities

 1 874

436

Other current liabilities

 2 403

 1 517

 4 371

 2 197

Total liabilities

 6 404

 3 643

Total equity and liabilities

 17 287

 14 821

Statements of cash flows

Year Ended

 31 Dec
2016

€’000

Year Ended

 31 Dec
2015

€’000

Stated in Euro

Cash flow from operating activities

Loss(-) / profit(+) attributable to equity holders
of the Company

(9 294)

(6 188)

Adjustments for

Depreciation and amortisation

 168

 184

Financial items

 361

 298

Income taxes

 75

 42

Non-cash items (write-off R&D)

 – 

 78

Non-cash items (options granted)

 480

 474

Change in net working capital:

Trade and other receivables

(1 330)

(2 035)

Inventories

(802)

 50

Trade and other current liabilities

 2 325

 278

Interest and other financial costs paid

(361)

(285)

Interest and other financial income received

 0

 0

Income taxes paid

(75)

(42)

Net cash used in / from operating activities  (A)

(8 452)

(7 146)

Cash flow from investment activities

Investments in machinery and equipment and intangible assets

(92)

(107)

Net cash from/used in investing activities (B)

(92)

(107)

Cash flow from financing activities

Proceeds from issue of share capital/issue

 8 519

 18 080

Proceeds from issue of convertible notes

Proceeds from current borrowings

(151)

 – 

Proceeds from non-current borrowings

 587

 – 

Repayment of current borrowings

 – 

 – 

Net cash used in financing activities (C)

 8 955

 18 080

Net increase(+) / decrease (-) in cash and cash equivalents (A+B+C)

 410

 10 827

Cash and cash equivalents at 1 January

 11 068

 242

Cash and cash equivalents at 31 December

 11 478

 11 068

Statement of changes in equity

In thousands of euro

Share capital

Un-registered share capital

Reserve for invested non-restricted equity

Retained earnings

Total equity

Balance at 31 December 2014

 2 691

 – 

 6 453

(10 332)

(1 188)

Total comprehensive income
for the financial year 2015

(6 188)

(6 188)

 – 

Transactions with equity holders of
the Company

 – 

    Share base payment

 474

 474

Increase of share capital

 – 

 19 261

 – 

 19 261

Transaction costs on share capital issued

(1 181)

(1 181)

Conversion of convertible notes

 – 

 – 

 – 

 – 

 – 

 18 080

(5 714)

 12 366

Balance at 31 December 2015

 2 691

 – 

 24 533

(16 046)

 11 178

Total comprehensive income
for the financial year 2016

(9 294)

(9 294)

 – 

Transactions with equity holders of
the Company

 – 

    Share base payment

 480

 480

Increase of share capital

 – 

 9 330

 – 

 9 330

Transaction costs on share capital issued

(811)

(811)

Conversion of convertible notes

 – 

 – 

 – 

 – 

 – 

 8 519

(8 814)

 (295)

Balance at 31 December 2016

 2 691

 – 

 33 052

(24 860)

 10 884

NOTES TO THE ANNUAL RESULTS

For the year ended 31 December 2016

Note 1            Basis of preparation

The audited financial information set out herein does not constitute statutory accounts as defined in Finnish Accounting Act. The financial information presented here for the year ended 31 December 2016 has been extracted from the Group’s audited financial statements which were approved by the Board of Directors on 28 March 2017 and which are available on the Company’s website.

These are Faron’s third full year financial statements prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (and as published by the International Accounting Standards Board (IASB) and in force as at 31 December 2016. In the EU IFRS are standards and their interpretations adopted in accordance with the procedure laid down in regulation (EC) No 1606/2002 of the European Parliament and of the Council. Faron has consistently applied these policies to all the years presented, unless otherwise stated. The Company has not applied any standard, interpretation or amendment thereto before its effective date.

Faron’s date of transition to IFRS is 1 January 2014. The Company has applied IFRS 1 First-time Adoption of International Financial Reporting Standards in preparing these financial statements. Until 31 December 2013 Faron’s separate financial statements have been prepared in accordance with Finnish Accounting Standards (FAS).

The financial statements are prepared under the historical cost convention, except as disclosed in the accounting policies below.

The financial year of Faron is the calendar year ending 31 December. The figures in the financial statements are presented in thousands of euro unless otherwise stated. All figures presented have been rounded, and consequently the sum of individual figures may deviate from the presented aggregate figure.

The Company has not had any other comprehensive income in those years presented in these financial statements.

Faron’s financial statements are prepared on a going concern basis. It is the intention of the Company to continue the development of the products to the point where they can be either licensed at attractive terms to internationally active pharmaceutical companies who have the means to further develop these products, or to develop the products in-house until receipt of marketing approval from the relevant regulatory agencies. After such approval, Faron would either seek to form partnerships with global, regional or local pharmaceutical companies that have the necessary marketing and distribution capabilities and resources or take the approved product to the markets itself. In the case of partnership, Faron would typically grant geographically limited licenses to products in exchange for contractually agreed payments, license fees and royalties on future product sales. In some cases, one element of such agreements may include a collaboration in which Faron will also receive funding for R&D services provided at a cost plus basis. In case of choosing to market the product itself, Faron would need to secure necessary funding to cover the costs of taking the product through the approval, pricing and regional registering process in addition to required marketing costs. In absence of collaboration agreement such funding would mainly come in form of equity funding.

In addition to its normal R&D and corporate activities, Faron seeks, as a clinical stage drug discovery and development company, to advance the development of its lead compounds through clinical trials. The Company conducts these either together with development partners or by itself. In both cases these activities require substantial amounts of funds. Faron primarily relies upon financing its activities through equity financing, license agreements, and public R&D loans and grants.

The preparation of financial statements under IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the end of the reporting period as well as the reported amounts of income and expenses during the reporting period. These estimates and assumptions are based on historical experience and other justified assumptions that are believed to be reasonable under the circumstances at the end of the reporting period and the time when they were made. Although these estimates are based on management’s best knowledge of current events and actions, actual results may ultimately differ from those estimates. The estimates and underlying assumptions are reviewed on an on-going basis and when preparing financial statements. Changes in accounting estimates may be necessary if there are changes in the circumstances on which the estimate was based, or as a result of new information or more experience. Such changes are recognised in the period in which the estimate is revised.

Note 2            Share Based Payments

Share-based incentive programmes under which board members and employees have the option to purchase shares in the Company (equity-settled share-based payment arrangements) are measured at the equity instrument’s fair value at the grant date.

The cost of equity-settled transactions is determined by the fair value at the date of grant using the Black-Scholes valuation model. The cost is recognised together with a corresponding increase in equity over the period in which the performance and service conditions are fulfilled, the vesting period. The fair value determined at the grant date of the equity-settled share-based payment is expensed on a straight line basis. No expense is recognised for grants that do not ultimately vest.

See Note 13 for more details.

Note 3            Intangible assets

Faron’s intangible assets include patents and internally developed intellectual property (“documentation-related assets”). An intangible asset is recognised only if it is probable that the future economic benefits attributable to the asset will flow to Faron and the cost of the asset can be measured reliably. All other expenditure is expensed as incurred. These intangible assets are initially recognised at cost. Cost comprises the purchase price and all costs directly attributable to bringing the asset ready for its intended use. Subsequently intangible assets are carried at cost less amortisation and any accumulated impairment losses.

Internally generated intangible assets arising from development are recognised if, and only if, all the criteria for recognition are fulfilled:

it is technically feasible to complete the intangible asset so that it will be available for use;

there is an ability to use or sell the intangible asset;

it can be demonstrated how the intangible asset will generate probable future economic benefits,adequate technical, financial and other resources to complete the development and to use or sell the intangible asset are available; and

the expenditure attributable to the intangible asset during its development can be reliably measured.

The internally developed documentation asset is related to the re-development of the active pharmaceutical ingredient, (“API”) (“API documentation”). The development activities and documentation relate to stability testing of a drug substance, that is sellable as such, but the usage value of which improves as the prolonged stability is proven and documented. In addition to its own use, Faron may also, for a fee, license the documentation to companies that can utilise documentation in their own drug candidate approval and registration documentation. Provision of such access does in no way limit Faron’s ability to use the documentation in its own application processes or ability to give such access to additional users.

Intangible assets are amortised over their expected or known useful lives on a straight-line basis beginning from the point they are available for use. The estimated useful life is the lower of the legal duration and the economic useful life. The estimated useful lives of intangible assets are regularly reviewed. The estimated useful life for intangible assets is currently 10 years. The effect of any adjustment to useful lives is recognised prospectively as a change of accounting estimate. Intellectual property-related costs for patents are part of the expenditure for the research and development projects.

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each financial year.

Internal research costs are those costs incurred for the purpose of gaining new scientific or technical knowledge and understanding. Such costs are always expensed as incurred. Internal development costs are those costs incurred for the application of research findings or other knowledge to plan and develop new products for commercial production. As the drug product development projects undertaken by Faron are subject to technical feasibility, regulatory approval and other uncertainties, these criteria are considered to be met only after Faron has filed its submission to the regulatory authority for final approval after which all subsequent development costs will be capitalised. Before this trigger point all drug product related development costs are typically expensed as incurred. Faron has not capitalised any drug product related development expenditure as the related criteria have not been met yet. Development costs expensed in prior financial years are not capitalised at a later date.

Note 4            Government grants

Faron has received government grants from the EU (Commission’s FP7 programme). Grants from governments or similar organisations to support certain projects are accounted for as grants related to income. They are initially recognised at their fair value. Those grants are deferred and recognised in the income statement over the period necessary to match them with the costs that they are intended to compensate, when management has reasonable assurance that the grant will be received and Faron will comply with the conditions attached to that grant. Such grants are presented as other operating income.

If, at the balance sheet date, grant conditions are believed to be fulfilled and the related grant payments are outstanding, grant receivables are shown in the balance sheet.

Note 5            Currency risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument, e.g. a trade receivable, will fluctuate because of changes in foreign exchange rates.

Faron’s functional currency is the euro and Faron is exposed to foreign exchange risk arising from currency exposure, currently mainly with respect to the Japanese Yen and pound sterling. The Company receives foreign currency payments from one of its licence partners Maruishi (based in Japan) in Japanese Yen. However, the impact of the foreign exchange risk arising from the Yen exposure is not considered significant in average.

Due to the commencement of the Phase III clinical trials with a UK based Clinical Research Organisation as main service provider, the Company’s’ pound denominated expenses and trade payables have become significant. The Company converts most of the pound denominated equity funding proceeds into euros immediately after such funding, but holds a sizeable amount of pounds on its pound sterling bank accounts. This forms a natural hedge against Euro-pound sterling exchange rate changes, as the funds held in pounds roughly match with the estimated pound expenses during 2017. As a result of the sizeable pound sterling holdings, the depreciation of pound sterling against Euro had a negative effect on the financial statements. As the exchange rate may move also to other direction during 2017, the management believes that natural hedge strategy best protects the Company from adverse exchange rate changes and this protection overweighs short term currency rate losses.

2016

2015

€ ‘000

€ ‘000

Note 6  Other operating income

Grants from EU

Grant component of government loans

1 502

237

701

Other items

4

 –

Total other operating income

 1 742

 701

In 2012 the European Commission awarded a €5,963 thousand grant to the Faron network (“Consortium”) to support the FP-1201-lyo clinical phase III programme (“Traumakine”). The Consortium consists of the European Commission as a granting agency, Faron as a coordinator and three other participating partners of the Traumakine programme; University College London Hospital (UCLH), University Sapienza Roma and University of Turku. The first pre-payment for the Consortium under the grant was received in 2013, amounted to €2,299 thousand, and Faron recognised €660 thousand as other operating income. The second Consortium pre-payment, €1,018 thousand was received at the end of 2014 and Faron recognised €111 thousand as other operating income. In 2015, Faron recognised €701 thousand as other operating income.The third pre-payment, €1,781 thousand was received in 2016, and Faron recognised €1,502 thousand as other operating income. In conjunction to each pre-payment Faron has forwarded each Consortium member their respective shares of pre-payments.

Faron draw down first instalments of its third Tekes loan during 2016. As this occured after the date to transition to IFRS (i.e. after 1 January 2014) and therefore it is treated according to IAS 20 and IAS 39.  The benefit of a government loan with a below market rate interest is treated as a government grant and accounted for in accordance with IAS 20. The loan component is recognised and measured in accordance with IAS 39 initially at fair value and subsequently at amortised cost over the loan period by using the effective interest method. The benefit of the below market rate is measured as the difference between the initial carrying value of the loan, i.e. the fair value, and the proceeds received from the government. Government grants are recognised in profit or loss on a systematic basis over the periods in which the entity recognises as expenses the related costs for which the grants are intended to compensate. Thus the grant component of €237 thousand is recorded in 2016 in Other operating income.

The Other items are €4 thousand legal costs returned to the Company.

Note 7  Financial income and expenses

Faron has received three goverment loans for research and development purposes with below-market interest rate from Tekes (The Finnish Funding Agency for Technology and Innovation). Two of theses loans were drawn down before the date to transition to IFRS (i.e. prior to 1 January 2014). Thus, based on the exemption under IFRS 1, Faron has measured the government loans using the previous FAS carrying amount as the carrying amount of the loan. Subsequently, both loans are carried at amortised cost using the effective interest rate. The total loan periods are 10 years from the draw-down. The interest rate for these loans is the base rate set by the Finnish Ministry of Finance less 1%, however, the interest rate will not fall below a 1% minimum. Repayment of these loans shall be initiated after 5 years, thereafter loan principals shall be paid back in equal installments over the remaining loan period. In certain circumstances Tekes may, at its own discretion, extend the loan terms, convert the loans into capital loans or exempt the Company from repayment following the general terms of the loans. The loans do not include any covenants. The Company has negotiated with Tekes four years extension to the first loan and an equal postponement of the installments and a years extension to the first loan and an equal postponement of the installments. Therefore the first instalment of the first loan is due in April 2018 and for the second loan in February 2019.

Other significant financial expense items are the exchange rate losses when transfering GBP to Euro, when issuing the new shares entering London stock exchange, expenses on loan guarantees, interest on convertible loans and credit limit interest from bank.  

Financial income

2016

     (€,000)

2015

(€ ,000)

     Interest from bank balances

0

0

Interest from account receivables

 0

 0

Total financial income

 0

 0

Financial expenses

Interest on government loans (Tekes)

(19)

(18)

Interest on bank loans

(5)

(19)

Interest on accounts payables

(1)

(1)

Exchange rate losses

(333)

(247)

Bank guarentee costs and provisions

(2)

(9)

Other financial expenses

(1)

(17)

Total financial expenses

(361)

(311)

Total financial income and expenses

(361)

(311)

Note 8    Income taxes

Withholding tax

(75)

(42)

Total income taxes

(75)

(42)

Taxes paid in the year ended 31 December 2015 and 2016 relate to milestone payment from Maruishi and signing fee from PharmBio.

Reconciliation of effective tax rate

The Finnish corporate tax rate applied was 20%.

Loss before income tax

(9 294)

(6 188)

Tax using Faron’s domestic corporate tax rate

 1 859

 1 238

Current-year losses for which no deferred tax asset
is recognised

(1 859)

(1 238)

Taxes in the income statement

 – 

 – 

Items for which Faron has not recognised a deferred tax asset

R&D expenses not yet deducted in taxation1

   2 816

 2 816

The tax losses carried forward approved by tax authorities2

 13 928

5 434

Deductible temporary differences for which
no deferred asset have been recognised

16 744

 8 250

1) Faron has incurred research and development costs in the financial years ended 31 December 2010 and 2011 that have not yet been deducted in its taxation. The amount can be deducted over an indefinite period with amounts that the Company may freely decide.

2) These losses expire over the years 2019 to 2025. The amount presented for the year ended 31 December 2016 does not include the deductible temporary difference arisen from the net loss for the financial year 2016 as the related loss has not yet been approved by tax authorities by the time of preparation of these financial statements.

The related deferred tax assets have not been recognised in the balance sheet due to the uncertainty as to whether they can be utilised.

Note 9   Loss per share

Basic

Basic loss per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year.

Loss attributable to equity holders of the Company
(€ ,000)

        (9 294)

(6 188)

Weighted average number of ordinary shares in issue

 23 979 650

20 686 854

Basic (and dilutive) loss per share, €

          (0,39)

(0,30)

Weighted-average number of ordinary shares

Issued ordinary shares at 1 January

 23 111 704

15 456 250

Effect of shares issued

      867 945

  5 230 604

Weighted-average number of ordinary shares at 31 December

 23 979 650

20 686 854

Diluted

Diluted loss per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares.

Loss attributable to equity holders of the Company
(€ ,000)

          (9 294)

(6 188)

Interest adjustment

 –       9 

9 

Convertible loan interest adjusted loss attrib to equity holders (€ ,000)

      (9 294)

(6 179)

Diluted weighted average number of ordinary shares in issue

      23 979 650

20 686 854

Basic loss per share, €

            (0,39)

(0,30)

Weighted-average number of ordinary shares

Issued ordinary shares at 1 January

 23 111 704

15 456 250

Effect of shares issued

      867 945

5 230 604

Weighted-average number of ordinary shares at 31 December

 23 979 650

20 686 854

Dilution effect of convertible loans’

                 – 

Diluted weighted-average number of ord. shares at 31 December

 23 979 650

20 686 854

2016

2015

€ ‘000

€ ‘000

Note 10 Equity and reserves

Number of shares (pcs)

Share capital  (1,000 €)

Reserve for invested non-restricted equity (1,000 €)

Total  (1,000 €)

In issue at 1 January 2013

1 453 380

1 296

5 328

6 624

Conversion of convertible notes to shares

3 688

120

0

120

Issued for merger consideration

1 000 000

0

0

0

Cancelled in merger

-1 000 000

0

0

0

31 December 2013

1 457 068

1 416

5 328

6 744

Share issues,
issued for cash

35 424

1 275

0

1 275

Issue of convertible equity instrument

0

0

1 126

1 126

Warrants issue

53 133

0

0

0

 31 December 2014

1 545 625

2 691

6 453

9 144

Share base payments

0

0

0

Convertible issue

78 166

0

Share issues for cash

302 764

5 050

5 050

Total

1 926 555

0

Split 1:10

19 265 550

0

Emission of new shares

3 846 154

13 030

13 030

 31 December 2015

23 111 704

2 691

24 533

27 224

Share base payments

0

0

0

Emission of new shares

3 200 000

8 519

8 519

 31 December 2015

26 311 704

2 691

33 052

35 743

Faron Pharmaceuticals Ltd. has one class of shares. The shares amounted to 23,111,704 at 1 January 2016. The following increases were made during 2016:

a) by a resolution of a Board Meeting held on 21 September 2016 made pursuant to an authority granted to the Board of Directors at the Annual General Meeting held on 26 May 2016, the Company resolved to issue a total of 3,200,000 Ordinary Shares.


The company was listed on the London Stock Exchange in November 2015. The share has no nominal value. Each share entitles the holder to one vote at the Annual General Meeting. All shares entitle holders to an equal dividend.

At the 31 December 2016 Faron’s share capital, entered in the Finnish trade register, amounted to € 2,691 thousand. The number of Ordinary Shares at 31 December 2016 was 26,311,704.

Details on the management shareholding are disclosed in Note 13. Transactions with Related Parties. 

Nature and purpose of reserves

Share capital

The subscription price of a share received by the company in connection with share issues is recorded to the share capital, unless it is provided in the share issue decision that a part of the subscription price is to be recorded in the fund for invested non-restricted equity. The proceeds received by Faron from the conversion of the convertible bonds have been credited to share capital.

Fund for invested non-restricted equity

The fund for invested non-restricted equity includes other equity investments, for which part of the subscription price of the shares according to the related decision is not to be credited to the share capital and issuance of convertible capital loans.


Faron has not paid any dividends over the years.

Note 11   Current receivables

(€,000)

2016

2015

Trade receivables

 579

 37

Prepayments

 1 250

 1 248

Accrued items

134

 17

Other receivables

 1 441

 772

Total trade and other receivables

 3 404

 2 074

The majority of prepayments relate to the Clinical Service Agreement with the clinical research organisation (CRO), which is the main service provider for the INTEREST -study. The other receivables consist mainly of the EU FP7 grant income as described in Note 4.

Note 12  Financial liabilities and other liabilities

(€ ,000)

Non-current financial liabilities and other liabilities

Interest-bearing financial liabilities

Tekes loan

2 033

1 446

Convertible notes

Total non-current financial liabilities

2 033

1 446

Other non-current liability

Total other non-current liabilities

Total non-current liabilities

2 033

1 446

Current financial liabilities and other liabilities

Interest-bearing financial liabilities

  Convertible notes

Goverment loans (current portion)

93

245

Bank overdraft facility

 93

 245 

Non-interest-bearing financial liabilities

Trade payables

 1 874

 436

 1 874

 436

Other liabilities

Prepayments

 1 718

 973

Accrued expenses

 620

 515

Other liabilities

 65

 29

 2 403

 1 517

Total current financial liabilities and other liabilities

 4 371

 2 197

The item “Prepayments” above comprises portions of the awarded EU grant, received in 2013 and 2014. For further information, see Note 6. Other operating income.

For the years 2015 and 2016 the major item under “Accrued expenses” are personnel related (short-term employee benefits).

2016

2015

Note 13   Transactions with related parties

Related parties of the Company

Faron’s related party comprise of the following:

Ÿ A&B (HK) Company Limited, an investment company existing under the laws of Hong Kong having significant influence in Faron Pharmaceuticals Oy, given their shareholding of 12.9%, as at 31 December 2016.

Ÿ Marko Salmi, a private person having significant influence over Faron Pharmaceuticals Oy, given his shareholding of 12.9%, as at 31 December 2016.

Ÿ Board of Directors; and

Ÿ the Company’s key management personnel (see below)

Faron had no interests in other entities at the end of the reporting periods presented in these financial statements.

Transactions with related parties

Faron has not carried out any transactions with related parties in the financial years presented in these financial statements, except that the former parent company of Faron Pharmaceuticals Ltd., Faron Holding Ltd., merged into its subsidiary Faron Pharmaceuticals Ltd. on 31 December 2013.

Key management personnel

The Company’s key management personnel consist of the following:

members of the Board of Directors

Management Team comprising: CEO Markku Jalkanen, PhD; VP Ilse Piippo, MD, MSc (Pharm), Operations director. Mikael Maksimow, PhD, Medical director Matti Karvonen, MD, PhD and CFO Yrjö Wichmann, MSc (Econ)

Remuneration of key management personnel*

Salaries and other short-term employee benefits

 832

 769

Share based payment

 274

 33

Post-employment benefits
(defined contribution plans)

 – 

Total

 1 106

 802

Remuneration to the Board of Directors **

Salaries and other short-term benefits

 258

 124

Share based payment

 38

 155

Total

 296

 279

*Presented information for the Management Includes the executive directors of the Board

**Presented information for the Board includes only non-executive directors.

Management and Board shareholding

Management* shareholding, 31 December 2016

Number of shares (pcs)

2,965,170

Shareholding, percentage

11.3 %

Board** shareholding, 31 December 2016

(excluding the shareholding of CEO and CFO)

Number of shares (pcs)

1,607,489

Shareholding, percentage

6.1 %

Total number of shares outstanding
at 31 December 2016 (pcs)

26,311,704

*Presented information for the Management Includes the executive directors of the Board

**Presented information for the Board includes only non-executive directors.

Holding(s) in Company

RNS Number : 6032A
Faron Pharmaceuticals Oy
27 March 2017
 
TR-1: NOTIFICATION OF MAJOR INTEREST IN SHARESi

 

1. Identity of the issuer or the underlying issuer
of existing shares to which voting rights are
attached:
ii

Faron Pharmaceuticals Oy

2 Reason for the notification (please tick the appropriate box or boxes):

An acquisition or disposal of voting rights

X

An acquisition or disposal of qualifying financial instruments which may result in the acquisition of shares already issued to which voting rights are attached

An acquisition or disposal of instruments with similar economic effect to qualifying financial instruments

An event changing the breakdown of voting rights

Other (please specify):

3. Full name of person(s) subject to the
notification obligation:
iii

City Financial Investment Company Limited, acting as Investment Manager and Authorised Corporate Director of the City Financial Absolute Equity Fund

4. Full name of shareholder(s)
 (if different from 3.):iv

BNY Mellon Trust and Depositary as Trustee to the City Financial Absolute Equity Fund

5. Date of the transaction and date on
which the threshold is crossed or
reached:
v

21 March 2017

6. Date on which issuer notified:

24 March 2017

7. Threshold(s) that is/are crossed or
reached:
vi, vii

5%

8. Notified details:

A: Voting rights attached to shares viii, ix

Class/type of
shares


if possible using
the ISIN CODE

Situation previous
to the triggering
transaction

Resulting situation after the triggering transaction

Number
of
Shares

Number
of
Voting
Rights

Number
of shares

Number of voting
rights

% of  voting rights x

Direct

Direct xi

Indirect xii

Direct

Indirect

FI4000153309

1,440,530

1,440,530

1,140,530

1,140,530

0

4.11%

0

B: Qualifying Financial Instruments

Resulting situation after the triggering transaction

Type of financial
instrument

Expiration
date
xiii

Exercise/
Conversion Period
xiv

Number of voting
rights that may be
acquired if the
instrument is
exercised/ converted.

% of voting
rights

C: Financial Instruments with similar economic effect to Qualifying Financial Instruments xv, xvi

Resulting situation after the triggering transaction

Type of financial
instrument

Exercise price

Expiration date xvii

Exercise/
Conversion period
xviii

Number of voting rights instrument refers to

% of voting rights xix, xx

Nominal

Delta

Total (A+B+C)

Number of voting rights

Percentage of voting rights

1,140,530

4.11%

9. Chain of controlled undertakings through which the voting rights and/or the
financial instruments are effectively held, if applicable:
xxi

The voting rights are managed and controlled by City Financial Investment Company Limited, Investment manager and ACD to the City Financial Absolute Equity Fund.

Proxy Voting:

10. Name of the proxy holder:

11. Number of voting rights proxy holder will cease to hold:

12. Date on which proxy holder will cease to hold voting rights:


13. Additional information:

14. Contact name:

Ben Ellenbogen

15. Contact telephone number:

0207 451 9600


This information is provided by RNS
The company news service from the London Stock Exchange
 

END

 
 

HOLMMGZFRNKGNZG

Holding(s) in Company

RNS Number : 7446Y
Faron Pharmaceuticals Oy
07 March 2017
 
TR-1: NOTIFICATION OF MAJOR INTEREST IN SHARES

 

1. Identity of the issuer or the underlying issuer
of existing shares to which voting rights are
attached:

Faron Pharmaceuticals Oy

2. Reason for the notification (please tick the appropriate box or boxes):

An acquisition or disposal of voting rights

An acquisition or disposal of qualifying financial instruments which may result in the acquisition of shares already issued to which voting rights are attached.

An acquisition or disposal of instruments with similar economic effect to qualifying financial instruments

An event changing the breakdown of voting rights

Yes

Other (please specify):

3. Full name of person(s) subject to the
notification obligation:

Legal & General Group Plc (L&G)

Legal & General (Unit Trust Managers) Limited (UTM)

4. Full name of shareholder(s)
 (if different from 3.):

N/A

5. Date of the transaction and date on
which the threshold is crossed or
reached:

03 March 2017

6. Date on which issuer notified:

07 March 2017

7. Threshold(s) that is/are crossed or
reached:

UTM (Below 5%)

8. Notified details:

A: Voting rights attached to shares

Class/type of
shares


if possible using
the ISIN CODE

Situation previous
to the triggering
transaction

Resulting situation after the triggering transaction

Number
of
Shares

Number
of
Voting
Rights

Number
of shares

Number of voting
rights

% of  voting rights

Direct

Indirect

Direct

Indirect

ORD NPV

1,365,000.00

 Below 5%

 Below 5%

 Below 5%

B: Qualifying Financial Instruments

Resulting situation after the triggering transaction

Type of financial
instrument

Expiration
date

Exercise/
Conversion Period

Number of voting
rights that may be
acquired if the
instrument is
exercised/ converted.

% of voting
rights

C: Financial Instruments with similar economic effect to Qualifying Financial Instruments

Resulting situation after the triggering transaction

Type of financial
instrument

Exercise price

Expiration date

Exercise/
Conversion period

Number of voting rights instrument refers to

% of voting rights

Nominal

Delta

Total (A+B+C)

Number of voting rights

Percentage of voting rights

 UTM

(Below 5%)

9. Chain of controlled undertakings through which the voting rights and/or the
financial instruments are effectively held, if applicable:

Legal & General Group Plc (Direct and Indirect) (Group)  ( 1,565,000 – 5.64%= Total Position)

Legal & General Investment Management (Holdings) Limited (LGIMH) (Direct and Indirect)  ( 1,565,000 – 5.64%= Total Position)

Legal & General Investment Management Limited (Indirect) (LGIM) ( 1,565,000 – 5.64%= Total Position)

Legal & General (Unit Trust Managers) Limited (Below 5% = UTM)

Legal & General Group Plc (Direct) (L&G) ( Below 3% = LGAS, & PMC)

Legal & General Investment Management (Holdings) Limited (Direct) (LGIMHD)

Legal & General Insurance Holdings Limited (Direct) (LGIH) (LGAS)

Legal & General Assurance (Pensions Management) Limited  (PMC)

Legal & General Assurance Society Limited  (LGAS)

Proxy Voting:

10. Name of the proxy holder:

N/A

11. Number of voting rights proxy holder will cease
to hold:

N/A

12. Date on which proxy holder will cease to hold
voting rights:

N/A


13. Additional information:

Notification using the total voting rights figure of  27,734,044

14. Contact name:

Victoria Davies (LGIM)

15. Contact telephone number:

029 2035 4147


This information is provided by RNS
The company news service from the London Stock Exchange
 

END

 
 

HOLKMGGFGNMGNZM

Notice of Full Year Results

Faron Pharmaceuticals Oy

(“Faron” or the “Company”)

Notice of Full Year Results

TURKU – FINLAND, 7 March 2017 – Faron Pharmaceuticals Ltd (“Faron”) (LON: FARN), the clinical stage biopharmaceutical company, will be announcing its full year audited results for the year ended 31 December 2016 on Wednesday 29 March 2017.

Dr Markku Jalkanen, Chief Executive Officer, and Yrjö Wichmann, Chief Financial Officer, will host a presentation and conference call for analysts at 11.00am BST on the day of the results at the offices of Consilium Strategic Communications, 41 Lothbury, London, EC2R 7HG.

– END –

For more information, please contact:

Faron Pharmaceuticals Oy

Dr Markku Jalkanen, Chief Executive Officer

investor.relations@faronpharmaceuticals.com

Consilium Strategic Communications

Mary-Jane Elliott, Chris Welsh, Lindsey Neville

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

Cairn Financial Advisers LLP, Nominated Adviser

Emma Earl, Tony Rawlinson, Rebecca Anderson

Phone: +44 207 213 0880

Panmure Gordon (UK) Limited, Joint Broker

Freddy Crossley, Duncan Monteith (Corporate Finance)

Tom Salvesen (Corporate Broking)

Phone: +44 207 886 2500

Whitman Howard Limited, Nominated Broker (UK)

Ranald McGregor-Smith, Francis North

Phone: +44 207 659 1234

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 lead candidate Traumakine, to prevent vascular leakage and organ failures, is currently the only treatment for Acute Respiratory Distress Syndrome (ARDS) undergoing Phase III clinical trials.  There is currently no approved pharmaceutical treatment for 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 pre-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 Tumour Immunity Enabling Technology (“TIET”) 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.faronpharmaceuticals.com

Holding(s) in Company

RNS Number : 4778Y
Faron Pharmaceuticals Oy
03 March 2017
 

TR-1: NOTIFICATION OF MAJOR INTEREST IN SHARESi

1. Identity of the issuer or the underlying issuer
of existing shares to which voting rights are
attached:
ii

Faron Pharmaceuticals Oy

2 Reason for the notification (please tick the appropriate box or boxes):

An acquisition or disposal of voting rights

Yes

An acquisition or disposal of qualifying financial instruments which may result in the acquisition of shares already issued to which voting rights are attached

An acquisition or disposal of instruments with similar economic effect to qualifying financial instruments

An event changing the breakdown of voting rights

Other (please specify):

3. Full name of person(s) subject to the
notification obligation:
iii

City Financial Investment Company Limited, acting as Investment Manager and Authorised Corporate Director of the City Financial Absolute Equity Fund

4. Full name of shareholder(s)
 (if different from 3.):iv

BNY Mellon Trust and Depositary as Trustee to the City Financial Absolute Equity Fund

5. Date of the transaction and date on
which the threshold is crossed or
reached:
v

2.3.2017

6. Date on which issuer notified:

2.3.2017

7. Threshold(s) that is/are crossed or
reached:
vi, vii

4%,5%

8. Notified details:

A: Voting rights attached to shares viii, ix

Class/type of
shares


if possible using
the ISIN CODE

Situation previous
to the triggering
transaction

Resulting situation after the triggering transaction

Number
of
Shares

Number
of
Voting
Rights

Number
of shares

Number of voting
rights

% of  voting rights x

Direct

Direct xi

Indirect xii

Direct

Indirect

FI4000153309

1,000,000

1,000,000

1,429,000

1,429,000

0

5.15%

0

B: Qualifying Financial Instruments

Resulting situation after the triggering transaction

Type of financial
instrument

Expiration
date
xiii

Exercise/
Conversion Period
xiv

Number of voting
rights that may be
acquired if the
instrument is
exercised/ converted.

% of voting
rights

C: Financial Instruments with similar economic effect to Qualifying Financial Instruments xv, xvi

Resulting situation after the triggering transaction

Type of financial
instrument

Exercise price

Expiration date xvii

Exercise/
Conversion period
xviii

Number of voting rights instrument refers to

% of voting rights xix, xx

Nominal

Delta

Total (A+B+C)

Number of voting rights

Percentage of voting rights

1,429,000

5.15%

9. Chain of controlled undertakings through which the voting rights and/or the
financial instruments are effectively held, if applicable:
xxi

The voting rights are managed and controlled by City Financial Investment Company Limited, Investment manager and ACD to the City Financial Absolute Equity Fund.

Proxy Voting:

10. Name of the proxy holder:

11. Number of voting rights proxy holder will cease
to hold:

12. Date on which proxy holder will cease to hold
voting rights:


13. Additional information:

14. Contact name:

Chris Sturdee

15. Contact telephone number:

0207 451 9600


This information is provided by RNS
The company news service from the London Stock Exchange
 

END

 
 

HOLGMGGFMFGGNZM

Result of Placing & Subscription & Issue of Equity

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, THE REPUBLIC OF IRELAND, NEW ZEALAND OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.

Faron Pharmaceuticals Oy

(“Faron” or the “Company”)

Results of Placing and Subscription
and

Issue of Equity

Successful over-subscribed fundraising of £5.0 million through a Placing and Subscription

TURKU – FINLAND, 11.30 A.M. GMT, 1 March 2017 – Faron Pharmaceuticals Oy (“Faron” or “Company”) (LON: FARN), the clinical stage biopharmaceutical company, is pleased to announce that, following the announcement on 28 February 2017, the proposed Placing and Subscription has been subscribed in full, in fulfilment of the Placee Condition, and all subscription monies have now been received by the Company. Pursuant to the Placing and Subscription, the Company is raising approximately £5.0 million before expenses by way of the Placing of 1,362,340 Placing Shares and the Subscription of 60,000 Subscription Shares at the Issue Price of 350 pence per share. The Placing and Subscription have been supported by the participation of existing and new institutional shareholders. The Board of Directors of Faron has resolved on the issuance of the Placing Shares and the Subscription Shares pursuant to the authorisation granted by the Annual General Meeting of Shareholders in May 2016 and approved the subscriptions. The Placing Shares and the Subscription Shares are expected to be registered with the Finnish Trade Register on or about today, 1 March 2017.

Application has been made to the London Stock Exchange for admission to trading on AIM of the 1,422,340 Placing Shares and Subscription Shares (in aggregate) (“Admission”), and it is expected that Admission will take place at 8:00 a.m. on Friday 3 March 2017.

The Placing Shares and Subscription Shares will, when registered, be credited as fully paid and will rank pari passu in all respects with the existing Ordinary Shares, including the right to receive all dividends or other distributions made, paid or declared in respect of such shares after the date of registration of the Placing Shares and Subscription Shares with the Finnish Trade Register.

Faron’s enlarged issued number of shares immediately following registration and Admission will be 27,734,044 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 27,734,044 (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.

Commenting on the successful Placing and Subscription, Dr Markku Jalkanen, CEO of Faron, said:

“We are delighted by the interest we have received in this oversubscribed financing round, and would like to thank our existing and new institutional investors for their support and continued committment to Faron. This funding will be invaluable as we continue the advancement of our programmes during what is set to be a pivotal year for the Company. As well as expecting to receive data from our Phase III INTEREST trial in the second half of the year, we can now look forward to expanding the pre-clinical and planned clinical development of Clevegen into further solid tumour indications including ovarian, pancreatic and melanoma. We believe that Clevegen’s ability to remove immune suppressision around tumours will be the next important step in the fight against tumour growth and spread, and could lead to complete cancer remission as well as providing long term vaccination against future tumours from the patient’s own immune system.”

The information contained within this announcement constitutes inside information stipulated under the Market Abuse Regulation (EU) No. 596/2014.

All capitalised terms in this announcement are with reference to the announcement made by Faron at 7.00 a.m. on 28 February 2017.

ENDS

For more information please contact:

Faron Pharmaceuticals Oy

Dr Markku Jalkanen, Chief Executive Officer

E-mail: investor.relations@faronpharmaceuticals.com

Consilium Strategic Communications

Mary-Jane Elliott, Chris Welsh, Lindsey Neville, Rosie Phillips

Phone: +44 203 709 5700

E-Mail: Faron@consilium-comms.com

Westwicke Partners, IR (US)

Chris Brinzey

Phone: +1 339 970 2843

E-Mail: chris.brinzey@westwicke.com

Cairn Financial Advisers LLP, Nominated Adviser

Emma Earl, Tony Rawlinson, Rebecca Anderson

Phone: +44 207 213 0880

Panmure Gordon (UK) Limited, Lead Bookrunner and Corporate Broker

Freddy Crossley, Duncan Monteith (Corporate Finance)

Tom Salvesen (Corporate Broking)

Phone: +44 207 886 2500

Whitman Howard Limited, Joint Corporate Broker

Ranald McGregor-Smith, Francis North

Phone: +44 207 659 1234

About Faron Pharmaceuticals Oy

Faron 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, cancer immunotherapy and vascular damage. The pipeline is built on Faron’s scientific knowledge and control of the endothelial barrier, the membrane of cells lining blood and lymphatic vessels to separate blood content from tissues. The Company’s lead candidate Traumakine is in development for the treatment of Acute Respiratory Distress Syndrome (“ARDS”), a rare, severe, life-threatening medical condition characterised by widespread inflammation in the lungs. Traumakine is currently in pan-European (INTEREST) and Japanese pivotal Phase III studies, and is commencing a European Phase II trial for the Rupture of Abdominal Aorta Aneurysm (“RAAA”). Additionally, Faron is developing Clevegen® a ground breaking pre-clinical anti-Clever-1 antibody. Clevegen has the ability to convert the immune environment around a tumour from being immune suppressive to immune stimulating. This novel macrophage-directed immuno-oncology approach is called Tumour Immunity Enabling Technology (“TIET”) and can be used alone or in combination with other immune checkpoint molecules for the treatment of cancer patients. New application opportunities related to TIET cover chronic infections and inefficient vaccination. Based in Turku, Finland, Faron Pharmaceuticals is listed on AIM under the ticker ‘FARN’. Further information is available at www.faronpharmaceuticals.com

Forward Looking Statements

Certain statements included herein express Faron Pharmaceutical’s expectations or estimates of future performance and constitute “Forward-looking Statements”.  Forward-looking Statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by Faron Pharmaceuticals are inherently subject to significant business, economic and competitive uncertainties and contingencies.  Such Forward-looking Statements involve known and unknown risks, uncertainties and other factors that may cause the actual financial results, performance or achievements to be materially different from estimated future results, performance or achievements expressed or implied by those Forward-looking Statements and, as such, the Forward-looking Statements are not guarantees of future performance. 

Proposed Placing and Subscription

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, THE REPUBLIC OF IRELAND, NEW ZEALAND OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.

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 OR ANY OTHER ENTITY IN ANY JURISDICTION. NEITHER THIS ANNOUNCEMENT NOR THE FACT OF ITS DISTRIBUTION, SHALL FORM THE BASIS OF, OR BE RELIED ON IN CONNECTION WITH ANY INVESTMENT DECISION IN RESPECT OF FARON PHARMACEUTICALS.

THE PROPOSED TRANSACTION REFERRED TO IN THIS ANNOUNCEMENT WOULD BE MADE PURSUANT TO A PRIVATE PLACEMENT EXEMPTION UNDER THE EUROPEAN DIRECTIVE 2003/71/EC (AND AMENDMENTS THERETO (THE “PROSPECTUS DIRECTIVE”), AS IMPLEMENTED IN THE MEMBER STATES OF THE EUROPEAN ECONOMIC AREA, FROM THE REQUIREMENTS TO PRODUCE A PROSPECTUS UNDER THE PROSPECTUS DIRECTIVE (AND AMENDMENTS THERETO) FOR OFFERS OF SECURITIES. FARON PHARMACEUTICALS HAS NOT TAKEN ANY ACTION, NOR WILL IT TAKE ANY ACTION, TO OFFER ANY SECURITIES OR ANY OTHER DOCUMENTS RELATING TO THE PROPOSED TRANSACTION 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.

Faron Pharmaceuticals Oy

(“Faron” or the “Company”)

Proposed Placing and Subscription to raise up to £5.0 million

TURKU – FINLAND, 7.00 A.M. GMT, 28 February 2017 – Faron Pharmaceuticals Oy (Faron” or “Company”) (LON: FARN), the clinical stage biopharmaceutical company, is pleased to announce a proposed placing of up to 1,362,340 new ordinary shares in the capital of the Company (the “Placing Shares”) and a proposed subscription of up to 60,000 new ordinary shares in the capital of the Company (the “Subscription Shares”) at a price of 350 pence per share (the “Issue Price”) to raise, in aggregate, up to approximately £5.0 million before expenses.

KEY HIGHLIGHTS

·    Proposed conditional placing of up to 1,362,340 Placing Shares at the Issue Price (“Placing”) and conditional subscription of up to 60,000 Subscription Shares at the Issue Price (“Subscription”) to raise, in aggregate, up to approximately £5.0 million before expenses

·      The Placing Shares and Subscription Shares if subscribed for in full will represent, in aggregate, approximately 5.4% of the Company’s total number of existing issued shares

·      The Issue Price of 350 pence per share represents a premium of 0.7% to the closing mid-market price of 347.5 pence on 27 February 2017, being the last practicable date prior to this announcement

·      The net proceeds of the proposed Placing and Subscription (of approximately £4.7 million if fully subscribed) would be used to fund:

The expansion of the pre-clinical and planned early-stage clinical development of Clevegen, the Company’s novel cancer immune switch antibody, to other Clever-1 positive solid tumours (ovarian, pancreas, melanoma)

Further strengthen the Company’s balance sheet as it explores strategic partnering negotiations

·     The proposed Placing and Subscription is to be implemented through a private placement with a limited number of institutional and other investors. It is expected that finalisation of the proposed Placing and Subscription will commence immediately following this announcement. Further terms of the proposed Placing and Subscription are set out below

·    Panmure Gordon (UK) Limited (“Panmure Gordon”) is acting as Lead Bookrunner and Corporate Broker to the Company and Cairn Financial Advisers LLP (“Cairn”) as Nominated Adviser to the Company

Commenting on the proposed Placing and Subscription, Dr Markku Jalkanen, CEO of Faron, said:

“2017 is set to be a pivotal year for Faron as we prepare to get data from our Phase III INTEREST trial in the second half of the year.  We are also continuing our development program for Clevegen and this proposed placing should assist us in expanding its pre-clinical and planned early-stage clinical development to Phase I/II trials in other Clever-1 positive solid tumours (ovarian, pancreas, melanoma). We believe that Clevegen’s ability to remove immune suppressision around tumours will be the next important step in the fight against tumour growth and spread, and could lead to complete cancer remission as well as providing long term vaccination against future tumours from the patient’s own immune system. We would like to thank our existing and new institutional investors for their support and for their continued committment to our programmes.”

REASONS FOR THE PROPOSED PLACING AND SUBSCRIPTION

Expansion of the pre-clinical and clinical development of Clevegen®

·      Faron intends to expand the pre-clinical and planned early-stage clinical development of Clevegen, its novel cancer immune switch antibody, to Phase I/II trials in other solid tumours (ovarian, pancreas, melanoma) known to reside high numbers of Clever-1 positive immune suppressive macrophages

·      The Directors believe that Clevegen’s ability to remove local immune suppression by targeting pro-tumoural type-2 macrophages could help the human body’s own immune system to combat cancer

Further strengthen Faron’s balance sheet as it explores commercialisation opportunities

·     In addition to its in-house development of its own programmes, Faron continues to explore out-licensing and partnering opportunities of its technologies and/or products with a number of companies, including those in the immuno-oncology field

·     The Company continually assesses business opportunities to produce maximum value for shareholders, and a strong balance sheet should be beneficial to securing favourable terms from these opportunities

DETAILS OF THE PROPOSED PLACING AND SUBSCRIPTION AND ISSUE OF EQUITY

Subject to the Placing Shares and Subscription Shares being subscribed in full, they are to be issued by the Company pursuant to the Directors’ existing authority to allot ordinary shares in the capital of the Company (“Ordinary Shares”) for cash on a non-pre-emptive basis approved by shareholders at the Company’s annual general meeting held on 26 May 2016. The Company has received non-binding indications of interest from potential institutional investors for the Placing and Subscription during a pre-marketing process.

In connection with the proposed Placing, the Company has entered into a placing agreement with Panmure Gordon and Cairn (together the “Placing Advisers”) (the “Placing Agreement”). The Placing is conditional upon, inter alia:

·      the Placing Agreement having become unconditional in all respects;

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

·      legally binding commitments being received in respect of all of the Placing Shares and the Subscription Shares (the “Placee Condition“); and

·      the Placing Shares and the Subscription Shares being issued and being registered at the Finnish Trade Registry (the “Issue Condition“).

Pursuant to the terms of the Placing Agreement, Panmure Gordon has agreed to use reasonable endeavours to procure placees for the Placing Shares at the Issue Price. The Placing is being implemented through a private placement with a limited number of institutional and other investors. A further announcement will be made to confirm its completion in due course, but by no later than 4.30 p.m. on 1 March 2017. The Placing Agreement contains customary warranties and an indemnity from the Company in favour of the Placing Advisers together with provisions which enable the Placing Advisers to terminate the Placing Agreement in certain circumstances before satisfaction of the Issue Condition, including where there has been a material breach of any of the warranties in the reasonable opinion of any Placing Adviser or where there is a material adverse change in the business or financial affairs of the Company. In order to satisfy the Issue Condition prior to Admission, pursuant to the terms of the Placing Agreement, Panmure Gordon has agreed to underwrite the subscription for and payment to the Company of the gross total of the Issue Price for the Placing Shares upon satisfaction of the Placee Condition.

Assuming that the Placing Shares and Subscription Shares are fully subscribed for, an application has been made for admission of the Placing Shares and Subscription Shares to trading on AIM (“Admission”) and it is expected that Admission will become effective and that dealings in the Placing Shares and Subscription Shares will commence on or around 8.00 a.m. on 3 March 2017. As noted above, a further update announcement will be made in due course. 

MARKET ABUSE REGULATION

The Market Abuse Regulation (“MAR”) became effective from 3 July 2016. Market Soundings, as defined in MAR, were taken in respect of the proposed Placing and Subscription with the result that certain persons became aware of inside information, as permitted by MAR. That inside information in relation to the Placing and Subscription 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 a Market Sounding are no longer in possession of inside information relating to the Company and its securities.

ENDS

For more information please contact:

Faron Pharmaceuticals Oy

Dr Markku Jalkanen, Chief Executive Officer

E-mail: investor.relations@faronpharmaceuticals.com

Consilium Strategic Communications

Mary-Jane Elliott, Chris Welsh, Lindsey Neville, Rosie Phillips

Phone: +44 203 709 5700

E-Mail: Faron@consilium-comms.com

Westwicke Partners, IR (US)

Chris Brinzey

Phone: +1 339 970 2843

E-Mail: chris.brinzey@westwicke.com

Cairn Financial Advisers LLP, Nominated Adviser

Emma Earl, Tony Rawlinson, Rebecca Anderson

Phone: +44 207 213 0880

Panmure Gordon (UK) Limited, Lead Bookrunner and Corporate Broker

Freddy Crossley, Duncan Monteith (Corporate Finance)

Tom Salvesen (Corporate Broking)

Phone: +44 207 886 2500

Whitman Howard Limited, Joint Corporate Broker

Ranald McGregor-Smith, Francis North

Phone: +44 207 659 1234

About Faron Pharmaceuticals Oy

Faron 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, cancer immunotherapy and vascular damage. The pipeline is built on Faron’s scientific knowledge and control of the endothelial barrier, the membrane of cells lining blood and lymphatic vessels to separate blood content from tissues. The Company’s lead candidate Traumakine is in development for the treatment of Acute Respiratory Distress Syndrome (“ARDS”), a rare, severe, life-threatening medical condition characterised by widespread inflammation in the lungs. Traumakine is currently in pan-European (INTEREST) and Japanese pivotal Phase III studies, and is commencing a European Phase II trial for the Rupture of Abdominal Aorta Aneurysm (“RAAA”). Additionally, Faron is developing Clevegen® a ground breaking pre-clinical anti-Clever-1 antibody. Clevegen has the ability to convert the immune environment around a tumour from being immune suppressive to immune stimulating. This novel macrophage-directed immuno-oncology approach is called Tumour Immunity Enabling Technology (“TIET”) and can be used alone or in combination with other immune checkpoint molecules for the treatment of cancer patients. New application opportunities related to TIET cover chronic infections and inefficient vaccination. Based in Turku, Finland, Faron Pharmaceuticals is listed on AIM under the ticker ‘FARN’. Further information is available at www.faronpharmaceuticals.com

Forward Looking Statements

Certain statements included herein express Faron Pharmaceutical’s expectations or estimates of future performance and constitute “Forward-looking Statements”.  Forward-looking Statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by Faron Pharmaceuticals are inherently subject to significant business, economic and competitive uncertainties and contingencies.  Such Forward-looking Statements involve known and unknown risks, uncertainties and other factors that may cause the actual financial results, performance or achievements to be materially different from estimated future results, performance or achievements expressed or implied by those Forward-looking Statements and, as such, the Forward-looking Statements are not guarantees of future performance. 

First Patient Recruited in Phase II RAAA Study

Faron Pharmaceuticals Oy

(“Faron” or the “Company”)

First Patient Recruited in Phase II RAAA Study

First patient recruited in the Traumakine® INFORAAA trial for the prevention of Multi-Organ Failure and patient mortality after surgical repair of a Ruptured Abdominal Aortic Aneurysm (RAAA)

TURKU – FINLAND, 20 February 2017 – Faron Pharmaceuticals Ltd (“Faron”) (LON: FARN), the clinical stage biopharmaceutical company, is pleased to announce the enrolment of the first patient in the Phase II INFORAAA clinical trial of Traumakine® for the treatment of Multi-Organ Failure (MOF) and mortality prevention of surgically operated Ruptured Abdominal Aorta Aneurysm (RAAA) patients. The high mortality rate of RAAA, which accounts for 4-5 deaths per 100,000 population (Karthikesalingam et al., 2014), requires new treatments to prevent post-operative reperfusion injury leading to the death of RAAA patients, which exhibits a 30-50% mortality rate post-operatively. RAAA accounts for 13-14/100,000 hospital admissions annually (Anjum et al., 2012), and is the second indication for Traumakine targeted by Faron.

Open surgical aortic repair to treat RAAA patients is associated with a Systemic Inflammatory Response Syndrome (SIRS) affecting vital organs, especially the heart, lungs, kidneys, and intestines. The death of approximately 80% of the operated RAAA patients is caused by MOF, similar to patients with Acute Respiratory Distress Syndrome (ARDS). Traumakine (FP-1201-lyo) is currently in a European Phase III clinical trial for the treatment of ARDS, with encouraging Phase I/II data. The Directors consider that data seen to date supports the rationale for extending the use of Traumakine in similar conditions to potentially treat single, and multiple, organ failures. For example, during the Traumakine phase I/II study, there was a reduced need for haemodialysis (an indication of improved kidney function) among the ARDS patients on Traumakine.

Dr Markku Jalkanen, CEO of Faron, said: “We are delighted to start the trial with the first patient enrolled in the Phase II INFORAAA trial for the reduction of post-operative RAAA patient mortality. The main cause of death for these patients is MOF following a post-operative reperfusion injury of ischemic organs including kidneys, liver, brain and intestines. We believe that Traumakine shows significant efficacy for the recovery of operated RAAA patients. Furthermore, there is a possibility that a positive outcome of both the INFORAAA and INTEREST trials could result in the INFORAAA trial fulfilling Phase III trial requirements. The clinical data of RAAA patients treated with FP-1201-lyo during the INFORAAA trial could also provide us with valuable information on the recovery of ischemic single organ injuries and planning further trials to treat these injuries.”

The Phase II INFORAAA trial (EudraCT 014-000899-025) evaluates the efficacy and safety of FP-1201-lyo compared to placebo for the prevention of MOF following open surgery for RAAA. The trial is a double-blind, randomised (2:1), parallel group study and the same dosing is used as in the on-going INTEREST Phase III trial for the treatment of ARDS patients, who also experience MOF. Both FP-1201-lyo and placebo are administered intravenously once a day for six consecutive days post-operation in addition to intensive care. The primary end point of the INFORAAA trial is to evaluate mortality after 30 days of the first dose administration and the trial also has several secondary and explorative end points, which are related to the nature of these patients. The trial is initiated with 8 sites in Finland and is planned to be expanded to Baltic States and UK.

About Ruptured Abdominal Aortic Aneurysm (RAAA)

Ruptured Abdominal Aortic Aneurysm (RAAA) is a surgical emergency with an overall mortality of 70 to 80%. It requires immediate surgery and aortic repair. Approximately half of the deaths of RAAA patients is due to not reaching the hospital in time, and despite immediate surgery and intensive care treatment, the second half dies in hospital within 30 days post-operatively, mostly due to multi-organ failure. The cause of high post-operative mortality is mainly due to prolonged hypotension/hypoxia from the ruptured aorta and the aftermath of restoring blood flow: reperfusion, vascular leakage and failure of vital organs. Currently there are an estimated 20,000 US and European patients per annum eligible for treatment.

Cited references:

Karthikesalingam A, Holt PJ, Vidal-Diez A, Ozdemir BA, PoloNiecki JD, Hinchliffe RJ and Thompson MM (2014) Mortality from ruptured abdominal aortic aneurysms: Clinical lessons from a comparison of outcomes in England and the USA. Lancet 383: 963-69.

Anjum A, Allmen von R, Greenhalgh R and Powell JT (2012) Explaining the decrease in mortality from abdominal aortic aneurysm rupture. British J. Surgery 99: 637-45.

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

For more information please contact:

Hume Brophy, PR (UK)

Conor Griffin, Alexia Faure, Alex Protsenko

Phone: +44 207 862 6381

E-mail: faron@humebrophy.com 

Consilium Strategic Communications

Mary-Jane Elliott, Chris Welsh, Lindsey Neville

Tel: +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

Cairn Financial Advisers LLP, Nominated Adviser

Emma Earl, Tony Rawlinson, Rebecca Anderson

Phone: +44 207 213 0880

Panmure Gordon (UK) Limited, Joint Broker

Freddy Crossley, Duncan Monteith (Corporate Finance)

Tom Salvesen (Corporate Broking)

Phone: +44 207 886 2500

Whitman Howard Limited, Nominated Broker (UK)

Ranald McGregor-Smith, Francis North

Phone: +44 207 659 1234

About Faron Pharmaceuticals Ltd

Faron 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, cancer immunotherapy and vascular damage. The pipeline is built on Faron’s scientific knowledge and control of the endothelial barrier, the membrane of cells lining blood and lymphatic vessels to separate blood content from tissues. The Company’s lead candidate Traumakine is in development for the treatment of Acute Respiratory Distress Syndrome (“ARDS”), a rare, severe, life-threatening medical condition characterised by widespread inflammation in the lungs. Traumakine is currently in pan-European (INTEREST) and Japanese pivotal Phase III studies, and is commencing a European Phase II trial for the Rupture of Abdominal Aorta Aneurysm (“RAAA”). Additionally, Faron is developing Clevegen® a ground breaking pre-clinical anti-Clever-1 antibody. Clevegen has the ability to convert the immune environment around a tumour from being immune suppressive to immune stimulating. This novel macrophage-directed immuno-oncology approach is called Tumour Immunity Enabling Technology (“TIET”) and can be used alone or in combination with other immune checkpoint molecules for the treatment of cancer patients. New application opportunities related to TIET cover chronic infections and inefficient vaccination. Based in Turku, Finland, Faron Pharmaceuticals is listed on AIM under the ticker ‘FARN’. Further information is available at www.faronpharmaceuticals.com

Faron update for 2017

Faron Pharmaceuticals Oy

(“Faron” or the “Company”)

Faron update for 2017

TURKU – FINLAND, 09 February 2017 – Faron Pharmaceuticals Ltd (“Faron”) (LON: FARN), the clinical stage biopharmaceutical company, is pleased to provide the following update for the year ahead, 2017. The Company’s full year 2016 audited financial results will be announced on 29 March 2017.

Targeted pipeline progress for 2017:

Traumakine®:

·      The Company expects to obtain the read-out for the pan-European phase III trial (INTEREST) results (all-cause mortality at day 28) during H2 2017.

·      The Company has recently received the third recommendation from the trial IDMC (Independent Data Monitoring Committee) to continue the study without any modifications.

·      The Company has established a manufacturing plan to build its stocks of Traumakine®. Subject to a positive outcome of the INTEREST study, having manufacturing in place should facilitate the application process for market approval of Traumakine®.

·      The Company plans to commence a Phase II US safety study (INTRUST) with Traumakine® in H2 2017. It is expected that the full study will take 12 months to complete. Timing remains subject to regulatory approvals with a pre-IND FDA meeting targeted to occur in Q3 2017.

·      The Company currently expects the Japanese Phase III pivotal study recruitment for the treatment of ARDS with Traumakine®, run by its Japanese licensing partner Maruishi Pharmaceutical Co., to progress towards completion during 2017.

·      The first recruited patient for the Company’s Traumakine® clinical study (INFORAAA) for the treatment of patients with rupture of acute abdominal aorta (RAAA) is expected in Q1 2017. The Company expects to get interim results from this 160-patient trial in 12 to 18 months. The aim of this trial is to reduce mortality in operated RAAA patients, which normally varies from 30 to 50% of all patients surgically operated on. The INFORAAA study will also assist in the design of Traumakine® trials for single organ failures.

Clevegen®:

·      The Company expects to file the first clinical trial application (CTA) with the UK regulatory authorities (MHRA) in late 2017 / early 2018.

·      The first, and primarily safety focused, trial is to be conducted with liver cancer patients at the Birmingham University Liver Cancer Centre and is expected to continue into a Phase II study via an adapted trial design for hepatocellular carcinomas (HCC) patients to recognise early efficacy signals.

·      The high yield Clevegen® production clones prepared by Selexis for Faron have demonstrated 5+ g/l production levels without optimisation of the bioreactor conditions. Faron expects that its manufacturing partner Abzena will provide purified drug substance for the Clevegen® pre- and clinical studies during Q2 2017.

Financials:

·      Faron will provide full year results on 29 March 2017.

·      At the end of 2016, Faron had approximately €11.5 million in cash.

Business development:

·      Whilst Faron is focusing on the completion of the INTEREST study and planned CTA filing for Clevegen®, the Company continues to explore potential business opportunities for both assets in order to consider how best to produce maximum value for its shareholders.

Additional corporate matters:

·      Due to the retirement of the Company’s Chief Medical Officer, Dr Ilse Piippo MD, the Company’s Medical Director Dr Matti Karvonen MD has taken the position from 1 February 2017. Dr Ilse Piippo will continue to support the Company as a Regulatory Consultant and will support the Company in setting up a planned paediatric Traumakine® study programme. The plan for this programme will be required for European marketing authorisation of Traumakine® and should also provide a two (2) year extension for Traumakine’s® orphan status in Europe (to a total of 12 years post approval).

·      The recently hired Director for Research, Dr Jami Mandelin, will join the Management Team and will be responsible for pre-clinical drug development and research collaborations with Faron’s scientific network.

Dr Markku Jalkanen, CEO of Faron, said: “We are very excited about Faron’s prospects for 2017 and beyond. We are getting close to read-out of the INTEREST trial, which we believe could revolutionise intensive care practices for ARDS patients. We are therefore continuing to prepare the business in anticipation of commercial launch soon after the trial results are received. In addition, the Company continues to progress and expand its clinical development programme in order to increase indications targeted and maximise shareholder value. The Company has made new hires and I would also like to take the opportunity to thank Dr Ilse Piippo for working with us since 2007 and building the current regulatory pathway for Traumakine®. The skills and commitment she has shown over the years are still evident as she builds the road for treatment with Traumakine® in paediatric applications. As a replacement, Dr Matti Karvonen has already demonstrated his strengths in the past eight months and I am confident that the Faron pipeline will progress well under his supervision.”

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

For more information please contact:

Hume Brophy, PR (UK)

Conor Griffin, Alexia Faure, Alex Protsenko

Phone: +44 207 862 6381

E-mail: faron@humebrophy.com 

Westwicke Partners, IR (US)

Chris Brinzey

Phone: +1 339 970 2843

E-Mail: chris.brinzey@westwicke.com

Cairn Financial Advisers LLP, Nominated Adviser

Emma Earl, Tony Rawlinson, Rebecca Anderson

Phone: +44 207 213 0880

Panmure Gordon (UK) Limited, Joint Broker

Freddy Crossley, Duncan Monteith (Corporate Finance)

Tom Salvesen (Corporate Broking)

Phone: +44 207 886 2500

Whitman Howard Limited, Broker

Ranald McGregor-Smith, Francis North

Phone: +44 207 659 1234

About Faron Pharmaceuticals Ltd

Faron 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, cancer immunotherapy and vascular damage. The pipeline is built on Faron’s scientific knowledge and control of the endothelial barrier, the membrane of cells lining blood and lymphatic vessels to separate blood content from tissues. The Company’s lead candidate Traumakine is in development for the treatment of Acute Respiratory Distress Syndrome (“ARDS”), a rare, severe, life-threatening medical condition characterised by widespread inflammation in the lungs. Traumakine is currently in pan-European (INTEREST) and Japanese pivotal Phase III studies, and is commencing a European Phase II trial for the Rupture of Abdominal Aorta Aneurysm (“RAAA”). Additionally, Faron is developing Clevegen® a ground breaking pre-clinical anti-Clever-1 antibody. Clevegen has the ability to convert the immune environment around a tumour from being immune suppressive to immune stimulating. This novel macrophage-directed immuno-oncology approach is called Tumour Immunity Enabling Technology (“TIET”) and can be used alone or in combination with other immune checkpoint molecules for the treatment of cancer patients. New application opportunities related to TIET cover chronic infections and inefficient vaccination. Based in Turku, Finland, Faron Pharmaceuticals is listed on AIM under the ticker ‘FARN’. Further information is available at www.faronpharmaceuticals.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”, ”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 discussed in the forward looking statements including 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, reliance on key personnel, uninsured and underinsured losses and other factors, many of which are beyond the control of the Company. 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.

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