Faron 2024 Half-Year Financial Results

Faron Pharmaceuticals Ltd.

(“Faron” or “the Company”)

Faron Reports Half-Year Financial Results, 1 January – 30 June 2024

Company Announcement, 27 August 2024

Summary Highlights  

·      Initial preliminary phase II data read-out from the BEXMAB trial confirmed earlier positive phase I findings in myelodysplastic syndrome (MDS) patients that have failed with hypomethylating agent (HMA) , reinforcing bexmarilimab’s potential to improve the therapeutic benefit for patients with aggressive hematological malignancies who do not respond to the current standard of care (SoC).   

·      The Company reported that there was a total of 14 HMA-failed MDS patients who had been treated in both the phase I and II arms of the BEXMAB trial with a combination of bexmarilimab and azacitidine, with an overall response rate (ORR) of 79% (11/14). For The BEXMAB Phase I MDS patients with prior HMA failure with adequate follow-up available the estimated median overall survival (mOS) was 13.4 months compared to the 5-6 months that would typically be expected under standard of care historically.

·      Dr. Juho Jalkanen was appointed as Faron’s new Chief Executive Officer, Mr. Tuomo Pätsi was elected as the Chair of the Board.

·      Faron founders and bexmarilimab developers, Dr. Markku Jalkanen and Dr. Sirpa Jalkanen, were selected as finalists for the European Inventor Award 2024.

·      Cash position was strengthened through a convertible loan issuance and two share placements successfully raising a total of EUR 35.5 million (gross).

·      Hybrid briefing and Q&A to be held tomorrow on 28 August 2024, at 8:00 am (EST) / 1:00 pm (BST) / 3:00 pm (EEST).

Post period events

·      The U.S. Food and Drug Administration ( FDA) granted bexmarilimab Fast Track Designation (FTD) for the treatment of relapsed or refractory myelodysplastic syndrome (r/r MDS) in combination with azacitidine.

·      The Company announced positive feedback from the FDA regarding the registrational clinical development plan for bexmarilimab for the treatment of higher-risk (HR) MDS, with a recommendation that the Company conducts a confirmatory phase III study in frontline HR MDS, without requiring a separate phase III in the relapsed / refractory setting, and accelerated approval for r/r MDS could be achieved with an interim read-out of the confirmatory phase III study .

·      Dr. Petri Bono was appointed Chief Medical Officer and Mr. Yrjö Wichmann was appointed as permanent Chief Financial Officer.

TURKU, FINLAND Faron Pharmaceuticals Ltd. (AIM: FARN, First North: FARON), a clinical-stage biopharmaceutical company focused on tackling cancers via novel immunotherapies, today announces unaudited half-year financial results for 1 January to 30 June 2024 (the period ).

“After a tough start we have ended the first half of 2024 in a very strong position ,” said Dr. Juho Jalkanen, Chief Executive Officer of Faron. “We’ve continued to make significant progress in the clinical development of bexmarilimab, our wholly owned immunotherapy asset, in hematological malignancies, building on the highly encouraging data and regulatory feedback reinforcing our belief in the potential of bexmarilimab to address a very important clinical need. Our meeting with the FDA to discuss the registrational clinical development plan for bexmarilimab was highly favorable, with a proposal that significantly reduces development costs and timelines to bring bexmarilimab therapy to all HR MDS patients in an accelerated fashion .”

“Despite some financial challenges earlier in the year, we have significantly strengthened our balance sheet and are now in a strong position.  Everything is progressing as planned and our focus is to ensure that we are armed with adequate resources to be able to meet our objectives of completing Phase II of the BEXMAB trial and optimizing the outcome of partnering with Phase II data.  There remains an urgent unmet medical need for new treatment options for MDS patients, and we are committed t o rapidly advancing bexmarilimab through clinical development, to bring it to patients as soon as possible.”

Pipeline Highlights

Bexmarilimab Faron’s wholly-owned, novel precision cancer immunotherapy candidate, in phase I/II development for difficult-to-treat hematological and solid tumor cancers.

·      The BEXMAB phase I results have already indicated a high ORR of 87.5% (7/8) amongst HMA-failed MDS patients treated with a combination of bexmarilimab and azacitidine, and the study progressed into Phase II in this population.

·      There was a total of 14 HMA-failed MDS patients treated in both phase I and II with this novel combination by May 2024.

·      The ORR in this otherwise untreatable population was 79% (11/14). The current true remission rate was 64% (9/14).

·      For The BEXMAB phase I MDS patients with prior HMA failure with adequate follow-up available the estimated mOS was 13.4 months compared to the 5-6 months that would typically be expected under standard of care historically.

·      Further analysis of the patient profiles of the BEXMAB trial showed that patients had experienced disease progression following previous treatment with azacitidine monotherapy or combinations of up to four therapies that included azacitidine or decitabine with magrolimab, venetoclax and sabatolimab.

Corporate Highlights

·      The cash position has been significantly strengthened through a combination of a convertible note issuance, private placements directed to institutional and other investors, a public offering to Finnish retail investors and an open offering to UK retail and institutional investors to raise a total of EUR 35.5 million.

·      Dr. Juho Jalkanen was appointed as the Company’s new Chief Executive Officer (CEO), taking over from Dr. Markku Jalkanen, who retired as CEO, but who is continuing as a member of the Board of Directors of Faron. Dr. Juho Jalkanen has worked at Faron in various roles since 2006, most recently serving as its Chief Operating Officer.

·      Mr. Tuomo Pätsi was elected as the Chair of the Board, following the departure of Dr. Frank Armstrong who did not stand for re-election. Mr. Pätsi was the President of the EMEA region and Worldwide Markets for Celgene Corporation, a global pharmaceutical company and currently wholly owned subsidiary of Bristol Myers Squibb, engaged primarily in the discovery, development, and commercialization of therapies for the treatment of cancer. He is an experienced biotech and pharmaceutical executive who was, until recently, the Executive Vice President for Seagen Inc., a US-based, cancer-focused biotechnology company.

·      Mr. Yrjö Wichmann was appointed as the Company’s interim Chief Financial Officer (CFO, Int.)  Mr. Wichmann previously served as the Company’s CFO between 2014 and 2019 and as Senior Vice President, Financing & IR from 2019 to April 2024. Mr. Wichmann is an accomplished biotech and financial executive with over 20 years’ experience in financing and investment banking. In August 2024, Mr. Wichmann was appointed as the Company’s permanent Chief Financial Officer.

·      Dr. Markku Jalkanen, co-founder, Board member and former CEO of Faron, and Dr. Sirpa Jalkanen, co-founder and member of Faron’s Scientific Advisory Board, were selected as finalists for the European Inventor Award 2024, in recognition of their research developing Faron’s wholly owned precision cancer immunotherapy candidate, bexmarilimab.

Financial highlights

·      On 19 February 2024 the Company announced that it was in breach of several undertakings agreed in the secured debt agreement dated 28 February 2022, between IPF Fund II SCA, SICAV-FIAR (“IPF”) as Lender and Faron Pharmaceuticals Ltd as Borrower and subsequent waiver letters provided by IPF, and was therefore in several events of default. Faron’s bank accounts are pledged to IPF and IPF notified Faron’s banks of the blocking of the pledged accounts due to the above-mentioned breaches. After successful funding arrangements, the bank accounts were released in the beginning of March 2024.

·      On 4 March 2024 the Company raised a total of   EUR 3.2 million through convertible loan instruments subscribed by a limited number of the Company’s existing shareholders. The Convertible loans and related interest and fees were converted into shares in the June offering.

·      On 4 April 2024 the Company conducted a private placement directed to a limited number of institutional and other investors to raise EUR 4.8 million which, together with the EUR 3.2 million convertible loan announced on 4 March 2024, secured the required short-term bridge financing totaling EUR 8 million.

·      On 4 June 2024 Faron announced an offering of approximately EUR 30.7 million in total by offering for subscription preliminarily a maximum of 30,714,592 new and/or treasury shares at a subscription price of EUR 1.00 per Offer Share. The Offering was conducted as a directed share issue by way of

i.      a public offering to private individuals and legal entities in Finland,

ii.     an institutional offering to institutional investors in the European Economic Area.

iii.    a separate open offer to qualifying holders of depositary interests in the United Kingdom and elsewhere and

iv.    a separate retail offer to retail investors in the United Kingdom on the “REX” platform.

The results of the offering were announced on 20 June 2024, and it attracted significant interest from both existing shareholders and new investors and was oversubscribed. T he Company raised a total of approximately   EUR 30.7 million, of which approximately   EUR 3.7 million  was paid by converting the convertible loan and related arrangement fees and interests into shares in the Company. As a result of the share offering, with the   gross proceeds of approximately   EUR 27 million   the Company believes it will have sufficient resources to execute its core business and deliver on its key milestones of the year 2024 under the current business plan and in compliance with the financial covenants of the IPF Fund. The Board of Directors of the Company decided to issue of a total of 30,709,056 newly issued treasury shares and new shares in the Company. As set out in the terms and conditions of the Offering, existing shareholders and DI (depositary interest) holders were given an allocation preference. Carnegie Investment Bank AB, Finland Branch (“Carnegie”) and Peel Hunt LLP (“Peel Hunt”) acted as lead managers (the “Lead Managers”) and bookrunners for the Offering. On 20 June 2024 the Company entered into 90-day lock-up agreement with Lead Managers.

Post period events

·      The FDA granted bexmarilimab a Fast Track Designation (FTD) for the treatment of relapsed or refractory myelodysplastic syndrome (r/r MDS) in combination with azacitidine.

·      Faron received positive feedback from its formal Type D Scientific Advice Meeting with the FDA regarding the registrational clinical development plan for bexmarilimab in the treatment of HR MDS. The FDA acknowledged the difficulties of running a randomized study with a comparator in the r/r setting and instead proposed that Faron conduct a confirmatory phase III study in frontline high-risk MDS (HR MDS), that would not require a separate phase III in r/r MDS. Accelerated approval for r/r MDS could possibly be obtained with the existing phase II trial in addition to an interim read-out from the confirmatory phase III trial as per the FDA’s Project FrontRunner.

·      Dr. Petri Bono was appointed as the Company’s Chief Medical Officer (CMO), succeeding Dr. Birge Berns, who will continue her role as part of Faron’s medical leadership team involved in developing bexmarilimab. Dr. Bono is an oncologist and has served as the CMO and member of the Group executive team of Terveystalo, the largest private healthcare service provider in Finland. Prior to joining Terveystalo he was the CMO at Helsinki University Hospital. He brings leading expertise in immunology, with his own research focusing on molecular and immunological oncology.

·      Mr. Yrjö Wichmann was appointed as the Company’s Chief Financial Officer (CFO), having served as Faron’s interim CFO since April 2024.

Half-Year Financial Results

·      Cash balances of EUR 30.0 million on June 30, 2024 (2023: EUR 6.3 million).

·      Operating loss of EUR 11.3 million for the six months ended June 30, 2024 (2023: EUR 12.8 million).

·      Net assets of EUR 1.4 million on June 30, 2024 (2023: EUR -9.5 million).

·      The cash position has been strengthened with a convertible loan issuance and two share placements successfully raising a total of EUR 35.5 million (gross)

·      On June 30, 2024, the Company had outstanding borrowings of EUR 8.9 million under a loan facility with IPF which is subject to financial covenants. The Company is required to satisfy these agreed covenants including the requirement to maintain a minimum cash balance of EUR 6.0 million while maintaining three months cash runway. On 30 June 2024, and 27 August 2024, the Company was in compliance with all covenants while holding cash balances of EUR 30.0 million. The cash held by the Group together with known receivables will be sufficient to support the current level of activities until the end of Q1 2025.

Consolidated key figures, IFRS

 EUR’000

Unaudited

Unaudited     

Audited

1-6/2024

1-6/2023

1-12/2023

6 months

6 months

                12 months

Revenue

0

0

0

Other operating income

0

0

0

Research and Development expenses

(6 662)

(8 518)

(19 542)

General and Administrative expenses

(4 628)

(4 294)

(9 026)

Loss for the period

(14 395)

(13 730)

(30 944)

Unaudited

Unaudited

Audited

1-6/2024

1-6/2023

1-12/2023

6 months

6 months

                12 months

Loss per share, EUR

(0.20)

(0.22)

(0.48)

Number of shares at end of period

104 624 864

66 161 373

68 786 699

Average number of shares

70 452 291

62 985 028

65 055 036

 EUR’000

Unaudited

Unaudited

Audited

30 Jun 2024

30 Jun 2023

31 Dec 2023

Cash and cash equivalents

29 979

6 315

6 875

Equity

1 379

(9 483)

(15 160)

Balance sheet total

35 460

12 836

10 220

Conference call information

A hybrid briefing and Q&A session for investors, analysts and media will be hosted by Dr. Juho Jalkanen, Chief Executive Officer, and Yrjö Wichmann, Chief Financial Officer, tomorrow 28 August 2024, at 8:00 am (EST) / 1:00 pm (BST) / 3:00 pm (EEST).

Webcast registration link: https://faron.videosync.fi/q2-2024

The half-year report, presentation, and a replay of the webcast will be available on the Company’s website at https://www.faron.com/investors .

For more information please contact:

Investor Contact
Faron Pharmaceuticals
E-mail:
investor.relations@faron.com

ICR Consilium
Mary-Jane Elliott, David Daley, Lindsey Neville
Phone: +44 (0)20 3709 5700
E-mail:  
faron@consilium-comms.com

Cairn Financial Advisers LLP, Nomad

Sandy Jamieson, Jo Turner

Phone: +44 (0) 207 213 0880

Peel Hunt LLP, Broker

Christopher Golden, James Steel

Phone: +44 (0) 20 7418 8900

Sisu Partners Oy, Certified Adviser on Nasdaq First North

Juha Karttunen

Phone: +358 (0)40 555 4727

Jukka Järvelä

Phone: +358 (0)50 553 8990

About Bexmarilimab

Bexmarilimab is Faron’s wholly owned, investigational immunotherapy designed to overcome resistance to existing treatments and optimize clinical outcomes, by targeting myeloid cell function and igniting the immune system. Bexmarilimab binds to Clever-1, an immunosuppressive receptor found on macrophages leading to tumor growth and metastases (i.e. helps cancer evade the immune system). By targeting the Clever-1 receptor on macrophages, bexmarilimab alters the tumor microenvironment, reprogramming macrophages from an immunosuppressive (M2) state to an immunostimulatory (M1) state, upregulating interferon production and priming the immune system to attack tumors and sensitizing cancer cells to standard of care.

About BEXMAB

The BEXMAB study is an open-label Phase I/II clinical trial investigating bexmarilimab in combination with standard of care (SoC) in the aggressive hematological malignancies of acute myeloid leukemia (AML) and myelodysplastic syndrome (MDS). The primary objective is to determine the safety and tolerability of bexmarilimab in combination with SoC (azacitidine) treatment. Directly targeting Clever-1 could limit the replication capacity of cancer cells, increase antigen presentation, ignite an immune response, and allow current treatments to be more effective. Clever-1 is highly expressed in both AML and MDS and associated with therapy resistance, limited T cell activation and poor outcomes.

About Faron Pharmaceuticals Ltd.

Faron (AIM: FARN, First North: FARON) is a global, clinical-stage biopharmaceutical company, focused on tackling cancers via novel immunotherapies. Its mission is to bring the promise of immunotherapy to a broader population by uncovering novel ways to control and harness the power of the immune system. The Company’s lead asset is bexmarilimab, a novel anti-Clever-1 humanized antibody, with the potential to remove immunosuppression of cancers through reprogramming myeloid cell function. Bexmarilimab is being investigated in Phase I/II clinical trials as a potential therapy for patients with hematological cancers in combination with other standard treatments. Further information is available at www.faron.com .

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 Company’s current expectations and assumptions regarding the completion and use of proceeds from the Offering, 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 Company’s current beliefs and assumptions and are based on information currently available to the Company.

A number of factors could cause actual results to differ materially from the results and expectations dis-cussed in the forward-looking statements, many of which are beyond the control of the Company. In addition, other factors which could cause actual results to differ materially include the ability of the Company to successfully licence its programmes, risks associated with vulnerability to general economic and business conditions, competition, environmental and other regulatory changes, actions by governmental authorities, the availability of capital markets or other sources of funding, reliance on key personnel, uninsured and underinsured losses and other factors. Although any forward-looking statements contained in this announcement are based upon what the Company believes 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.

Chairman and Chief Executive Officer’s Review

Introduction

Following a challenging spring, Faron has ended the first half of 2024 in a very strong position, both financially and from a clinical development perspective. We’ve continued to see extremely encouraging data from our ongoing BEXMAB trial and now, with adequate resources secured, we can fully commit and concentrate on our most important task of progressing bexmarilimab through phase II trials in order to bring this important treatment to market, and to patients, as quickly as possible.

Bexmarilimab

Driving the clinical development of bexmarilimab continues to be Faron’s top priority. We reached a significant milestone in January this year when we dosed the first patient in phase II of the BEXMAB trial which is evaluating the safety and efficacy of bexmarilimab, in combination with SoC in patients with HMA r/r MDS, an aggressive myeloid leukemia with very few treatment options. We have continued to make good progress in the trial and in May this year, we announced initial positive phase II data, confirming our earlier positive phase I findings.

The BEXMAB phase I results had already indicated a high overall response rate (ORR) of 87.5% (7/8) amongst HMA-failed MDS patients treated with a combination of bexmarilimab + azacitidine. In May there were a total of 14 HMA-failed MDS patients treated in both phase 1 & 2 with this novel combination. The treatment has been well tolerated, without any dose-limiting toxicity. The ORR in this otherwise untreatable population is 79% (11/14). The current true remission rate is 64% (9/14). Similar size patient cohorts treated with existing alternatives have reported 0-20% ORR, without deep and durable remissions. For phase I patients with adequate follow-up available the estimated median overall survival (mOS) in May to be 13.4 months, which is still subject to change.

R/r MDS represents a significant therapeutic challenge and, based on the data gathered to date, we believe that bexmarilimab has the potential to fill a very important clinical gap and save and improve the lives of HMA-failed MDS patients.

Post period, we were particularly pleased to announce the outcome of our formal Type D Scientific Advice Meeting with the FDA regarding the registrational study plan for bexmarilimab in r/r HR MDS. Given the previously reported promising trial results, Faron had proposed to move into a randomized registrational phase III study for the treatment of r/r MDS using bexmarilimab + azacitidine against the investigator’s choice of a HMA. Instead, given the encouraging efficacy already seen in both frontline and r/r HR MDS and the well-established safety profile of bexmarilimab, the FDA proposed that after the ongoing phase II BEXMAB study in r/r MDS, Faron should move directly into a registrational blinded randomized frontline HR MDS study investigating bexmarilimab + azacitidine against placebo + azacitidine.

Subject to continued positive results, the FDA’s feedback means that a separate phase III in r/r MDS would not be required and Faron’s ongoing BEXMAB phase II study could be the registrational trial for patients with r/r MDS.  

This highly positive feedback exceeded our expectations, and we are now adjusting our development plan accordingly. The FDA’s proposal significantly reduces development costs and timelines to bring bexmarilimab therapy to all HR MDS patients, and underlines the high unmet need in HR MDS, a condition for which new treatment options are urgently needed.

We have made a number of changes to our leadership team and Board during the period, including the appointment of a new CEO and Chairman, and post-period CMO and CFO, building and strengthening the existing strong track record of the team, bringing leading expertise to support the Company’s continued progress. We would like to extend our deep gratitude to Dr. Markku Jalkanen, who retired as CEO earlier this year. Under his leadership, Faron has grown significantly, and we would like to acknowledge his efforts and commitment in progressing bexmarilimab through the clinic.

Financial review

Statement of comprehensive income

The operating loss for the six months ended 30 June 2024, was EUR 11.3 million (six months ended 30 June 2023: loss of EUR 12.8 million). No revenue was generated during the period or prior period. Research and development expenses decreased by EUR 1.8 million to EUR 6.7 million (2023: EUR 8.5 million). General and administrative expenses increased by EUR 0.3 million to EUR 4.6 million (2023: EUR 4.3 million).

The loss for the period was EUR 14.4 million (2023: loss of EUR 13.7 million) and the basic and diluted loss per share was EUR 0.20 (2023: loss per share of EUR 0.22).

Statement of financial position and cash flows

As of 30 June 2024, net assets amounted to EUR 1.4 million (30 June 2023: EUR -9.5 million). The net cash flow for the first six months in 2024 was EUR 23.1 million (2023: EUR -0.7 million). As of 30 June 2024, total cash and cash equivalents held were EUR 30.0 million (2023: EUR 6.3 million).

Corporate

Faron’s Annual General Meeting (AGM) was held on 5 April 2024 in Turku. The AGM adopted the financial statements of the Company and re-elected audit firm PricewaterhouseCoopers Oy (“PwC”) as the Company’s auditor. Additionally, the number of members of the Board was confirmed as five. Tuomo Pätsi, Markku Jalkanen, John Poulos, Marie-Louise Fjällskog and Christine Roth were re-elected to the Board for a term that ends at the end of the next AGM. The AGM also resolved to establish a Shareholders’ Nomination Board for the Company and its Charter as proposed by the Board was adopted. Authorization to the Board to decide on the issuance of twenty million shares, options or other special rights entitling to shares and conveyance of up to the same maximum number of treasury shares in the possession of the Company was granted to the Board. This authorization remains valid until 30 June 2025. In addition, the AGM authorized the Board to resolve on issuances of shares in connection with a larger share issuance, which authorization contains the right to issue new shares or dispose of the Company’s own shares in the possession of the Company in the amount on thirty million. This authorization was utilized in June when the Company organized a public offer of its shares.

Summary & outlook

During the remainder of 2024, our focus continues to be the progression of bexmarilimab through clinical development.  We are looking forward to reporting further data from the ongoing phase II part of the BEXMAB trial in H2.  We are also adjusting our clinical development plan for bexmarilimab following feedback from the FDA, and we will announce further details on that in due course. We are also actively continuing discussions with potential partners to take  bexmarilimab into phase III and approval.

On behalf of the Board, we would like to thank our shareholders, existing and new, for their support of Faron. We would also like to thank our employees for their continued commitment to our mission and the patients we serve. We look forward to updating the market on our progress throughout the course of the year.

Dr. Juho Jalkanen

Chief Executive Officer

Mr. Tuomo Pätsi

Chairman

Consolidated Income Statement, IFRS

EUR’000

Unaudited

1-6/2024

6 months

Unaudited

1-6/2023

6 months          

Audited

1-12/2023

12 months

Revenue

0

0

0

Other operating income

0

0

0

Research and development expenses

(6 662)

(8 518)

(19 542)

General and administrative expenses

(4 628)

(4 294)

(9 026)

Operating loss

(11 290)

( 12 812)

(28 568)

Financial income

1 292

0

233

Financial expense

(4 350)

(918)

(2 609)

Loss before tax

(14 349)

(13 730)

( 30 944)

Tax expense

-46

(0)

0

Loss for the period

(14 395)

(13 730)

(30 944)

Translation difference

11 

0

2

Comprehensive loss for the period attributable to the equity holders of the Parent company

(14 384)

(13 730)

(30 942)

Loss per ordinary share

Basic and diluted loss per share, EUR

(0.20)

(0.22)

(0.48)

Consolidated Balance Sheet, IFRS

EUR’000

Unaudited

Unaudited

Audited

31 Dec 2023

30 Jun 2024

30 Jun 2023

Assets

Non-current assets

Machinery and equipment

3

10

6

Right-of-use-assets

344

272

198

Intangible assets

1 086

1 127

1 088

Prepayments and other receivables

60

60

60

Total non-current assets

1 494

1 469

1 352

Current assets

Prepayments and other receivables

3 987

5 052

1 992

Cash and cash equivalents

29 979

6 315

6 875

Total current assets

33 966

11 367

8 868

Total assets

35 460

12 836

10 220

EUR’000

Unaudited

Unaudited

Audited

31 Dec 2023

30 Jun 2024

30 Jun 2023

Capital and reserves attributable to the equity holders of the Parent company

Share capital

2 691

2 691

2 691

Reserve for invested unrestricted equity

184 866

144 778

154 352

Accumulated deficit

(186 181)

(156 955)

(172 208)

Translation difference

3

2

4

Total equity

1 379

(9 483)

(15 160)

Provisions

Other provisions

0

0

0

Total provisions

0

0

0

Non-current liabilities

Borrowings

8 706

10 892

9 423

Lease liabilities

239

163

50

Other liabilities

1 643

702

895

Total non-current liabilities

10 588

11 757

10 369

Current liabilities

Borrowings

3 672

2 304

3 475

Lease liabilities

105

119

163

Trade payables

17 473

6 002

8 971

Accruals and other current liabilities

2 243

2 137

2 403

Total current liabilities

23 493

10 562

15 012

Total liabilities

34 081

22 319

25 380

Total equity and liabilities

35 460

12 836

10 220

Consolidated Statement of Changes in Equity, IFRS

EUR’000

Share capital

Reserve for invested unrestricted equity

Translation difference

Accumulated deficit

Total equity

Balance as at
31 December 2022 (Audited)

2 691

129 544

2

(143 713)

(11 476)

Comprehensive loss for the last six months 2023

0

0

0

(13 730)

(13 730)

Transactions with equity holders of the Parent company

Issue of ordinary shares

0

15 233

0

0

15 233

Share-based compensation

0

0

0

489

489

0

15 233

0

(13 241)

1 992

Balance as at 30 June 2023 (Unaudited)

2 691

144 778

2

(156 955)

(9 483)

Comprehensive loss for the year 2023

0

0

2

(30 944)

(30 942)

Transactions with equity holders of the Company

Issue of ordinary shares, net of transaction costs

0

24 808

0

0

24 808

Share-based compensation

0

0

0

2 450

2 450

0

24 808

2

(28 494)

(3 684)

Balance as at
31 December 2023 (Audited)

2 691

154 352

4

(172 208)

(15 160)

Comprehensive loss for the last six months 2024

0

0

11

(14 395)

(14 384)

Transactions with equity holders of the Company

Issue of ordinary shares, net of transaction costs

0

30 514

0

0

30 514

Share-based compensation

0

0

0

369

369

0

30 514

11

(14 026)

16 499

Balance as at 30 June 2024 (Unaudited)

2 691

184 866

15

(186 234)

1 338

Consolidated Cash Flow Statement, IFRS

€’000

Unaudited

1-6/2024

6 months

Unaudited

1-6/2023

6 months

    Audited

1-12/2023

12 months

Cash flow from operating activities

Loss before tax

(14 349)

(13 730)

(30 944)

Adjustments for:

Received grants

0

(0)

(33)

Depreciation and amortization

158

174

346

Change in provision

0

(158)

(158)

Financial items

3059

918

2376

Tax expense

0

0

0

Share-based compensation

369

489

2450

Adjusted loss from operations before changes in working capital

(10 764)

(12 308)

(25 963)

Change in net working capital:

Prepayments and other receivables (increase -)

(2 127)

1 028

300

Trade payables (increase +)

5 557

(8)

2 994

Other liabilities (increase +)

(593)

(272)

(50)

Cash used in operations

(7 926)

(11 561)

(22 719)

Income taxes paid

(150)

0

0

Transaction costs related to loans and borrowings

0

0

(0)

Interest received

0

0

243

Interest paid

(617)

(782)

(1 330)

Net cash used in operating activities

(8 693)

(12 343)

(23 806)

Cash flow from investing activities

Payments for intangible assets

(123)

(68)

(123)

Payments for tangible assets

0

0

(0)

Net cash used in investing activities

(123)

(68)

(123)

Cash flow from financing activities

Proceeds on issue of shares

35 500

12 077

26 031

Share issue transaction cost

(498)

(648)

(1 190)

Proceeds from borrowings

3 200

64

64

Repayment of borrowings

(5 314)

0

(861)

Transaction and structuring fees of borrowings

(750)

0

(400)

Proceeds from grants

(28)

382

481

Payment of lease liabilities

(337)

(84)

(142)

Net cash from financing activities

31 773

11 791

23 983

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

23 103

(675)

(114)

Effect of exchange rate changes

(145)

(55)

(168)

Cash and cash equivalents at 1 January

6 876

6 990

6 990

Cash and cash equivalents at the end of period

29 979

6 315

6 876

Notes to the interim financial report

1.   Corporate information

Faron Pharmaceuticals Ltd (the “Company”) is a clinical stage biopharmaceutical company incorporated and domiciled in Finland, with its headquarters at Joukahaisenkatu 6, 20520 Turku, Finland. The Company currently has a pipeline based on the endothelial receptors involved in regulation of immune response, in oncology and organ damage.

The Company has been listed on the London Stock Exchange’s AIM market since November 17, 2015, with a ticker FARN, and since December 3, 2019, the Company has been listed on the Nasdaq First North Growth Market with a ticker FARON.

2.   Summary of significant accounting policies

 

2.1.   Basis of preparation

The unaudited H1 interim financial report has been prepared in accordance with the International Financial Reporting Standards of the International Accounting Standards Board (IASB) and as adopted by the European Union (IFRS) and the interpretations of the International Financial Reporting Standards Interpretations Committee (IFRIC) .


The principal accounting policies applied in the preparation of these interim financial report is set out below. The Company has consistently applied these policies to all the periods presented, unless otherwise stated. The areas of the report involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the interim financial report, are disclosed in note 2.21 of the Financial Statement of 2023 Annual Report. 


The unaudited interim financial report incorporates the parent company, Faron Pharmaceuticals Ltd, and all subsidiaries (the “Group”).


All amounts are presented in thousands of euros, unless otherwise indicated, rounded to the nearest euro thousand.

2.2.      Going concern

The Group has forecasted its estimated cash requirements over the next twelve months. To make these forecasts the Group has made a number of assumptions regarding the quantity and timing of future expenditure and income as well as other key factors. Though these estimates have been made with caution and care, they continue to contain a significant amount of uncertainty. The Group also has debt obligations which carry financial covenants that could adversely impact the Group’s liquidity and operating flexibility. Based on the forecast the Group believes that it has adequate financial resources to continue its operations until the year end of 2024.   

The Group has taken several actions to secure further financing. The Directors believe that the Group can gain access to further resources to sustain operations over the next 12 months. Therefore, this unaudited financial report has been prepared on a going concern basis. At this stage the Group cannot disclose any of these options.

Because the additional finance is not committed at the date of issuance of this H1 2024 report, these circumstances represent a material uncertainty that may cast significant doubt on the Group’s ability to continue as a going concern. Should the Group be unable to obtain further finance such that the going concern basis of preparation were no longer appropriate, adjustments would be required, including to reduce balance sheet values of assets to their recoverable amounts, to provide for further liabilities that might arise.

2.3.      Financial covenants

At 30 June 2024, the Company had outstanding borrowings of EUR 8.9 million under a loan facility with IPF Partners which is subject to financial covenants. The financial covenants are minimum cash covenant and gross gearing covenant. The cash covenant obliges the to maintain a minimum cash balance of EUR 6.0 million while maintaining three months cash burn rate, historically or on forward looking basis. In May 2024 the Company agreed in advance with IPF a deviation to the required level of the minimum cash covenant until the end of October 2024. The gross gearing covenant (which may not exceed 25 per cent at any time) is calculated as the ratio of borrowings to market capitalisation and when determining the “borrowings”, the aggregate principal amount of the financial indebtedness of the group will be taken into account save for any financial indebtedness owed by a member of the group to another member of the group or R&D loans to Business Finland. The level of the minimum cash covenant is linked to the level of the gross gearing covenant so that it is either the three-month or six-month cash burn. At 30 June 2024 the Company was in compliance with all covenants while holding cash balances of EUR 30.3 million. The cash held by the Group together with known receivables will be sufficient to support the current level of activities until the end of Q1 2025.

3.   Subsequent events

In its meeting on 26 August 2024, the Board of Directors of the Company approved the publishing of this interim financial report.

Faron 2023 Half-Year Financial Results

Faron Pharmaceuticals Ltd.

(“Faron” or “the Company”)

 

Faron Reports Half-Year Financial Results, January 1 – June 30, 2023

 

Company Announcement, August 29, 2023

 

Summary Highlights (including post-period events)  

 

  • The US Food and Drug Administration (FDA) granted bexmarilimab Orphan Drug Designation (ODD) for the treatment of acute myeloid leukemia (AML).
  • The latest data from the Phase I/II BEXMAB study reinforces bexmarilimab’s potential to improve the therapeutic benefit for patients with aggressive hematological malignancies who do not respond to the current standard of care (SoC).   
  • Compelling data with objective responses were observed in three of five patients in the 6 mg/kg bexmarilimab + azacitidine doublet cohort.  
  • Eight of fifteen objective responses were observed across all three doublet dosing cohorts, with one patient still on treatment after 13 months. 
  • Continued efficacy signals with the prolonged duration of responses thus far support advancement to Phase II in Q4 2023 in relapsed/refractory AML and myelodysplastic syndromes (MDS) patients failing hypomethylating agents (HMAs). 
  • New biomarker data presented at the EHA2023 Congress indicates that bexmarilimab’s mode of action in AML/MDS is supported by durable Clever-1 target engagement in the bone marrow. This mechanism results in notable increases in T and NK cells, along with enhanced antigen presentation. 
  • The Phase II BEXCOMBO protocol has been approved by the FDA.
  • The Board was strengthened with the addition of Tuomo Pätsi, and the Leadership team was enhanced with the appointment of James O’Brien, CPA, MBA, as Chief Financial Officer. 
  • Mr. Leopoldo Zambeletti stepped down from the Board to assume a business development consulting role at Faron. 
  • Cash position was strengthened through two private placements directed to institutional and other investors, successfully raising EUR 18.6 million.
  • Virtual briefing and Q&A to be held today at 08:00 am (EDT) / 13:00 pm (BST) / 15:00 pm (EEST).

 

TURKU, FINLAND / BOSTON, MAFaron Pharmaceuticals Ltd. (AIM: FARN, First North: FARON), a clinical-stage biopharmaceutical company focused on tackling cancers via novel immunotherapies, today announces unaudited half-year financial results for January 1 to June 30, 2023 (the “period”).

 

“I am extremely proud of the progress we made in the first half of 2023,” said Dr. Markku Jalkanen, Chief Executive Officer of Faron. “We continued to execute on advancing our clinical Phase I/II BEXMAB study of bexmarilimab, our wholly-owned immunotherapy asset, in hematological malignancies. To date, we achieved strong objective responses across all three cohorts in relapsed/refractory to SoC patients, including objective responses in three of five patients receiving the high dose. Based on this compelling data, we are advancing into the Phase II portion of the study and actively preparing for regulatory submission in the first half of 2025. The recent  FDA Orphan Drug Designation for bexmarilimab in AML further reaffirms our program by offering important clinical development and commercialization benefits. We also strengthened our cash position and welcomed a former Board member as a transactional advisor. I am excited for what the future holds.”

 

Pipeline Highlights

 

Bexmarilimab Faron’s wholly-owned, novel precision cancer immunotherapy candidate, in Phase I/II development for relapsed/refractory AML and MDS.

 

  • The FDA has granted ODD for bexmarilimab for the treatment of AML.
  • Updated data from the Phase I/II BEXMAB study showed objective responses (OR) with complete remission of blasts in the bone marrow (mCR) in three of five patients in the 6 mg/kg bexmarilimab + azacitidine cohort. In addition, one of the three patients achieved complete recovery of blood counts i.e., complete remission (CR). 
  • Eight of fifteen ORs were observed across all three doublet dosing cohorts. 
  • Four of the eight patients across the three doublet dosing cohorts (1, 3, and 6 mg/kg) had failed prior SoC hypomethylating agents (HMAs). 
  • All three patients with MDS and prior HMA failure demonstrated ORs (partial response (PR), mCR, and CR) across the dosing cohorts. 
  • Four patients out of six in the triplet dosing cohort treated with azacitidine, venetoclax, and bexmarilimab have shown objective responses. 
  • The updated BEXMAB data supports advancement to Phase II in Q4 2023 in SoC relapsed/refractory AML and MDS patients failing hypomethylating agents (HMA). 
  • Biomarker data presented at the European Hematology Association 2023 Hybrid Congress showed bexmarilimab’s mode of action in AML/MDS is supported with durable Clever-1 target engagement in the bone marrow, with increases observed in T and NK cells, and antigen presentation. 
  • The Company presented two posters at the American Association for Cancer Research Annual Meeting 2023 on its Phase I/II MATINS study of bexmarilimab in solid tumors and published a manuscript via medRxiv. The findings from MATINS, which have established strong foundations for Faron’s ongoing development program, indicate that bexmarilimab monotherapy facilitates macrophage conversion, and induces changes in the tumor microenvironment resulting in disease control and prolonged survival in late-stage cancer. Furthermore,  targeting Clever-1 with bexmarilimab is well-tolerated. A positive Phase I/II meeting with the FDA supported bexmarilimab’s development in solid tumors. 
  • Preparations are ongoing for the initiation of the Phase II BEXCOMBO trial evaluating bexmarilimab with PD-1 blockade, aimed at improving the clinical benefits from standard-of-care PD-1 blockade.  The first, proof-of-concept cohort under the investigation will be in head and neck cancer, followed by bladder and non-small cell lung cancers. Patient cohorts will comprise between 15 and 40 subjects, with the opportunity for subgroup enrichment.  

 

Corporate Highlights

  • The cash position has been strengthened through two private placements directed to institutional and other investors to raise EUR 18.6 million in January 2023 (EUR 12.0 million) and in June 2023 (EUR 6.6 million), which settled in early July 2023.
  • James O’Brien, CPA, MBA, joined as Chief Financial Officer. Mr. O’Brien is an accomplished biotech and financial executive with extensive experience in the US capital markets. His appointment highlights Faron’s progression towards becoming a global biopharmaceutical company.
  • Mr. Tuomo Pätsi joined the Board as a Non-Executive Director of the Company. Dr. Gregory B. Brown stepped down from his position as a Non-Executive Director. Mr. Pätsi was the President of the EMEA region and Worldwide Markets for Celgene Corporation, a global pharmaceutical company and currently wholly owned subsidiary of Bristol Myers Squibb, engaged primarily in the discovery, development, and commercialization of therapies for the treatment of cancer. He is an experienced biotech and pharmaceutical executive who was until recently the Executive Vice President for Seagen Inc., a US-based, cancer-focused biotechnology company.
  • Mr. Leopoldo Zambeletti, who joined Faron’s Board as a Non-Executive Director in September 2015, stepped down to take on a business development consulting role within Faron. He is a highly respected figure within the life sciences and investment banking industries and, since 2013, has been an independent strategic advisor to life science companies on mergers and acquisitions, out-licensing deals, and financing strategy.
     

Half-Year Financial Results

  • Cash balances of EUR 6.3 million on June 30, 2023 (2022: EUR 9.9 million). The Company raised EUR 6.6 million at the end of June which had not been settled until July 2023. The Company entered the third quarter with EUR 12.8 million and has funds sufficient to support operations into Q4 2023.
  • Operating loss of EUR 12.8 million for the six months ended June 30, 2023 (2022: EUR 13.4 million).
  • Net assets of EUR -9.5 million on June 30, 2023 (2022: EUR -5.2 million).
  • The cash position has been strengthened by two private placements directed to institutional and other investors to raise EUR 18.6 million.
  • On June 30, 2023, the Company had outstanding borrowings of EUR 9.8 million under a loan facility with IPF Partners which is subject to financial covenants. The Company is required to satisfy these agreed covenants including the requirement to maintain a minimum cash balance of EUR 6.0 million while maintaining three months cash runway. On June 30, 2023, and August 28, 2023, the Company was in compliance with all covenants while holding cash balances of EUR 6.3 million and EUR 9.1 million, respectively. The cash held by the Group together with known receivables will be sufficient to support the current level of activities until the year end of 2023.

Consolidated key figures, IFRS

 EUR’000

Unaudited

Unaudited     

Audited

 

1-6/2023

1-6/2022

1-12/2022

6 months

6 months

                12 months

Revenue

0

0

0

Other operating income

0

485

803

Research and Development expenses

(8 518)

(10 047)

(20 730)

General and Administrative expenses

(4 294)

(3 801)

(7 498)

Loss for the period

(13 730)

(13 121)

(28 730)

 

 

 

 

 

Unaudited

Unaudited

Audited

1-6/2023

1-6/2022

1-12/2022

6 months

6 months

                12 months

Loss per share, EUR

(0.22)

(0.25)

(0.52)

Number of shares at end of period

66 161 373

56 575 453*

59 805 383

Average number of shares

62 985 028

53 235 643

55 229 835

 

 

 

 

 EUR’000

Unaudited

Unaudited

Audited

30 Jun 2023

30 Jun 2022

31 Dec 2022

Cash and cash equivalents

6 315

9 936

6 990

Equity

(9 483)

(5 194)

(11 476)

Balance sheet total

12 836

16 729

11 271

 

* of which 1,311,800 were held in treasury

 

August 29, 2023

Faron Pharmaceuticals

Board of Directors

 

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 (“MAR”).

 

Conference call information

A virtual briefing and Q&A session for investors, analysts and media will be hosted by Dr. Markku Jalkanen, Chief Executive Officer, and James O’Brien, Chief Financial Officer, today, August 29, 2023, at 8:00 am (EST) / 1:00 pm (BST) / 3:00 pm (EEST) on the day of results.

 

Webcast registration link: https://faron.videosync.fi/h1-2023

 

The half-year report, presentation, and a replay of the webcast will be available on the Company’s website at https://www.faron.com/investors.

For more information please contact:

 

Investor Contact

LifeSci Advisors

Daniel Ferry

Managing Director

daniel@lifesciadvisors.com

+1 (617) 430-7576

 

Media Contact

Faron Pharmaceuticals

Jennifer C. Smith-Parker

Head of Communications

Jennifer.Smith-Parker@faron.com

 

Cairn Financial Advisers LLP, Nomad

Sandy Jamieson, Jo Turner

Phone: +44 (0) 207 213 0880

 

Peel Hunt LLP, Broker

Christopher Golden, James Steel

Phone: +44 (0) 20 7418 8900

 

Sisu Partners Oy, Certified Adviser on Nasdaq First North

Juha Karttunen

Phone: +358 (0)40 555 4727

Jukka Järvelä

Phone: +358 (0)50 553 8990

About Bexmarilimab

Bexmarilimab is Faron’s wholly owned, investigational immunotherapy designed to overcome resistance to existing treatments and optimize clinical outcomes, by targeting myeloid cell function and igniting the immune system. Bexmarilimab binds to Clever-1, an immunosuppressive receptor found on macrophages leading to tumor growth and metastases (i.e., helps cancer evade the immune system). By targeting the Clever-1 receptor on macrophages, bexmarilimab alters the tumor microenvironment, reprogramming macrophages from an immunosuppressive (M2) state to an immunostimulatory (M1) one, upregulating interferon production and priming the immune system to attack tumors and sensitizing cancer cells to standard of care.  

About BEXMAB

The BEXMAB study is a first-in-human, open-label Phase I/II clinical trial investigating bexmarilimab in combination with standard of care (SoC) in the aggressive hematological malignancies of acute myeloid leukemia (AML) and myelodysplastic syndrome (MDS). The primary objective is to determine the safety and tolerability of bexmarilimab in combination with SoC (azacitidine) treatment and to identify the recommended Phase II dose. Directly targeting Clever-1 could limit the replication capacity of cancer cells, increase antigen presentation, ignite an immune response, and allow current treatments to be more effective. Clever-1 is highly expressed in both AML and MDS and associated with therapy resistance, limited T cell activation and poor outcomes.

About BEXCOMBO

The Phase BEXCOMBO study will be aimed at testing bexmarilimab with PD-1 blockade. The study’s purpose is to improve standard-of-care PD-1 response rates. The indications targeted are head and neck cancer as the first cohort to gain proof-of-concept data, followed by bladder cancer and non-small cell lung cancer. Patient cohorts will number between 15 and 40 subjects, with allowed enrichment of subgroups. We see development in this space as key to addressing an unmet medical need, as clinical data show that up to 80% of cancer patients do not respond to single agent PD-1 blockade. Planning continues for trial initiation.

About Faron Pharmaceuticals Ltd.

Faron (AIM: FARN, First North: FARON) is a global, clinical-stage biopharmaceutical company, focused on tackling cancers via novel immunotherapies. Its mission is to bring the promise of immunotherapy to a broader population by uncovering novel ways to control and harness the power of the immune system. The Company’s lead asset is bexmarilimab, a novel anti-Clever-1 humanized antibody, with the potential to remove immunosuppression of cancers through targeting myeloid cell function. Bexmarilimab is being investigated in Phase I/II clinical trial as a potential therapy for patients with hematological cancers in combination with other standard treatments. Further information is available at www.faron.com.

Forward-Looking Statements

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

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

Chairman and Chief Executive Officer’s Review

 

Introduction

The first half of 2023 has been a period of significant progress for Faron. Most notably, we continued to accelerate our ambitious bexmarilimab development program. The most recent data from the Phase I/II BEXMAB study in relapsed/refractory myeloid leukemia (AML) and myelodysplastic syndromes (MDS) patients builds upon earlier positive data. These findings set a clear trajectory for further bexmarilimab clinical and regulatory development, bringing the promise of treatment to patients who do not respond to currently approved standard-of-care treatments.

 

Bexmarilimab

Driving the clinical development of bexmarilimab continues to be Faron’s top priority. Since we recruited the first patient in our Phase I/II BEXMAB study in June 2022, we have continued to see positive data that indicates truly life-changing therapeutic potential for acute myeloid leukemia (AML) and myelodysplastic syndromes (MDS) patients refractory to standard of care (SoC).

 

Most recently, we reported compelling data of objective responses in three of five patients in the 6 mg/kg bexmarilimab + azacitidine doublet cohort, and eight of 15 objective responses observed in all three doublet dosing cohorts with patient still on treatment after 13 months. We intend to have additional Phase I data in Q4 2023. Yet even now, the updated data supports the advancement to the Phase II portion in the Q4 2023 focusing on SoC relapsed/refractory acute AML and MDS patients failing hypomethylating agents (HMA). Furthermore, we announced plans to file the Company’s first Biologics License Application (BLA) to the FDA in H1 2025.

 

This opportunity is so exciting because we know that certain blood cancer cells carry significant amounts of cell surface Clever-1, which may limit the body’s ability to mount an immune response. In fact, research has shown a clear survival benefit among certain blood cancer patients with low Clever-1 expression. By adding bexmarilimab to standard of care we expect to downregulate Clever-1 expression, thereby increasing antigen presentation and allowing the immune system to better identify and kill cancer cells. This could result in a deeper and more durable clinical benefit compared to what most patients experience with currently approved treatments.

 

The FDA has recognized the importance of addressing the unmet needs of this population and granted bexmarilimab ODD for the treatment of AML. AML is the most common leukemia among the adult population and accounts for about 80% of all cases.

 

As bexmarilimab advances and Faron expands into a global pharmaceutical company, we hired James O’Brien, CPA, MBA, as Chief Financial Officer (CFO). Mr. O’Brien is an accomplished biotech and financial executive with extensive experience in the US capital markets. Most recently, Mr. O’Brien served as the CFO of Cognition Therapeutics, Inc. (NASDAQ: CGTX), a clinical-stage biopharmaceutical company which successfully completed an IPO in October 2021, raising USD 52 million. He previously served as Executive Vice President of Finance with Enzo Biochem, Inc. (NYSE: ENZ). Earlier in his career, he held positions with increasing responsibilities at pharmaceutical companies including Actavis PLC (now AbbVie, Inc. (NYSE: ABBV)), the US subsidiary of Swiss company Nycomed, which has since been acquired by Takeda Pharmaceuticals, and Bristol Myers Squibb. 

 

In terms of other plans for bexmarilimab, we anticipate initiation of the Phase II BEXCOMBO trial evaluating bexmarilimab with PD-1 blockade. The trial is aimed at improving standard-of-care PD-1 response rates. Head and neck cancer would be the first cohort indication to gain proof-of-concept data, followed by bladder cancer and non-small cell lung cancer. Patient cohorts will number between 15 and 40 subjects, with allowed enrichment of subgroups. We see development in this space as key to addressing an unmet medical need, as clinical data show that up to 80% of cancer patients do not respond to single agent PD-1 blockade and evolving data suggest that promoting pro-inflammatory cytokines, such as IFN-gamma (ɣ), is necessary for effective responses to these agents. Because bexmarilimab induces IFN-ɣ upregulation, which is required for immune modulation in the tumor microenvironment, BEXCOMBO offers the potential to expand the population of PD-1 responders and provide meaningful benefit to more patients.  

 

 

Financial review Faron entered 2023 having completed a EUR 12.0 million equity financing in January 2023. In June, we completed our second equity financing, bringing the year-to-date total to EUR 18.6 million. The capital raised through the private placements is instrumental in advancing our bexmarilimab research and development program, accelerating the progress of our pipeline, and bringing us closer to delivering life-changing therapies to tackle aggressive hematological malignancies. Faron’s shareholders continue to be extremely supportive of our clinical development programs and achieving our objectives.

 

Faron’s recent financial performance has been marked by a strategic emphasis on capital efficiency, a key element of extending our cash runway, while having the strength and ability to advance our clinical development programs. This capital efficiency has allowed us to achieve more with our available resources, fostering a culture of innovation while maintaining a prudent financial approach. By allocating resources thoughtfully and embracing a culture of continuous improvement, we are dedicated to maximizing the impact of our efforts and achieving our mission. The balance between achieving clinical milestones and responsible fiscal management underscores our dedication to creating a sustainable, long-term value for all stakeholders.

 

During the period, nearly 70% of all spending was directly supportive of our bexmarilimab clinical development program. Faron maintained General and Administrative expenses at 2022 levels excluding one-time items and financing expenses.

 

Statement of comprehensive income

The operating loss for the six months ended June 30, 2023, was EUR 12.8 million (six months ended 30 June 2022: loss of EUR 13.4 million). No revenue was generated during the period or prior period. Research and development expenses decreased by EUR 1.5 million to EUR 8.5 million (2022: EUR 10.0 million). General and administrative expenses increased by EUR 0.5 million to EUR 4.3 million (2022: EUR 3.8 million).

 

The loss for the period was EUR 13.7 million (2022: loss of EUR 13.1 million) and the basic and diluted loss per share was EUR 0.22 (2022: loss per share of EUR 0.25).

 

Statement of financial position and cash flows

As of June 30, 2023, net assets amounted to EUR -9.5 million (June 30, 2022: EUR -5.2 million). The net cash flow for the first six months in 2023 was EUR -0.7 million (2022: EUR 3.1 million). As of June 30, 2023, total cash and cash equivalents held were EUR 6.3 million (2022: EUR 9.9 million).

 

Corporate

Faron’s Annual General Meeting (AGM) was held on March 24, 2023. The AGM adopted the financial statements of the Company and re-elected audit firm PricewaterhouseCoopers Oy (“PwC”) as the Company’s auditor. Additionally, the number of members of the Board was confirmed as seven. Frank Armstrong, John Poulos, Leopoldo Zambeletti, Markku Jalkanen, Anne Whitaker and Erik Ostrowski were re-elected to the Board and Tuomo Pätsi was elected as a new member to the Board for a term that ends at the end of the next AGM. In June 2023 Leopoldo Zambeletti stepped down from his position in Faron’s Board due to his appointment as the Company’s business development consultant.

 

 

Summary & outlook

Our focus for the remainder of 2023 continues to be the acceleration of bexmarilimab’s clinical development. Faron plans to seek FDA advice during Q3 2023 on bexmarilimab’s progress. The completion of dose escalation, readout of enrichment cohorts, and initiation of phase II BEXMAB part are expected in Q4 2023. We are committed to changing the treatment paradigm for those with limited treatment options.

 

On behalf of the Board, we would like to thank our shareholders, existing and new, for their support of Faron. We would also like to thank our employees for their continued commitment to our mission and the patients we serve. We look forward to updating the market on our progress throughout the course of the year.

 

Dr Markku Jalkanen

Chief Executive Officer

 

Dr Frank Armstrong

Chairman

 

Consolidated Income Statement, IFRS

EUR’000

Unaudited

1-6/2023

6 months

Unaudited

1-6/2022

6 months          

Audited

1-12/2022

12 months

Revenue

0

0

0

Other operating income

0

485

803

Research and development expenses

(8 518)

(10 047)

(20 730)

General and administrative expenses

(4 294)

(3 801)

(7 498)

Operating loss

(12 812)

(13 364)

(27 426)

Financial income

0

692

96

Financial expense

(918)

(430)

(1 400)

Loss before tax

(13 730)

(13 102)

(28 730)

Tax expense

0

(19)

0

Loss for the period

(13 730)

(13 121)

(28 730)

Translation difference

0 

11

17

Comprehensive loss for the period attributable to the equity holders of the Parent company

(13 730)

(13 110)

(28 713)

 

 

 

 

Loss per ordinary share

 

 

 

Basic and diluted loss per share, EUR

(0.22)

(0.25)

(0.52)

 

 

Consolidated Balance Sheet, IFRS

 

EUR’000

Unaudited

Unaudited

Audited

31 Dec 2022

30 Jun 2023

30 Jun 2022

Assets

 

 

 

Non-current assets

 

 

 

Machinery and equipment

10

17

13

Right-of-use-assets

272

98

314

Intangible assets

1 127

1 011

1 154

Prepayments and other receivables

60

53

60

Total non-current assets

1 469

1 179

1 541

 

 

 

 

Current assets

 

 

 

Prepayments and other receivables

5 052

5 614

2 740

Cash and cash equivalents

6 315

9 936

6 990

Total current assets

11 367

15 550

9 730

 

 

 

 

Total assets

12 836

16 729

11 271

 

 

 

 

 

 

 

 

 

 

 

 

EUR’000

Unaudited

Unaudited

Audited

31 Dec 2022

30 Jun 2023

30 Jun 2022

Capital and reserves attributable to the equity holders of the Parent company

 

Share capital

2 691

2 691

2 691

Reserve for invested unrestricted equity

144 778

120 839

129 544

Accumulated deficit

(156 955)

(128 726)

(143 713)

Translation difference

2

2

2

Total equity

(9 483)

(5 194)

(11 476)

 

 

 

 

Provisions

 

 

 

Other provisions

0

0

158

Total provisions

0

0

158

 

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

Borrowings

10 892

12 250

11 102

Lease liabilities

163

0

163

Other liabilities

702

539

853

Total non-current liabilities

11 757

12 789

12 118

 

 

 

 

Current liabilities

 

 

 

Borrowings

2 304

0

1 851

Lease liabilities

119

106

153

Trade payables

6 002

7 791

6 014

Accruals and other current liabilities

2 137

1 238

2 453

Total current liabilities

10 562

9 135

10 471

 

 

 

 

Total liabilities

22 319

21 924

22 748

 

 

 

 

Total equity and liabilities

12 836

16 729

11 271

Consolidated Statement of Changes in Equity, IFRS

 

EUR’000

 

Share capital

Reserve for invested unrestricted equity

Translation difference

Accumulated deficit

Total equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as at
31 December 2021 (Audited)

 

2 691

116 507

-15

-116 265

2 919

 

 

 

 

 

 

 

Comprehensive loss for the last six months 2022

0

0

11

-13 121

-13 110

 

 

 

 

 

 

 

Transactions with equity holders of the Parent company

 

 

 

 

 

Issue of ordinary shares

 

0

4 332

0

0

4 332

Share-based compensation

 

0

0

0

665

665

 

 

0

4 332

0

665

4 997

 

 

 

 

 

 

 

Balance as at 30 June 2022 (Unaudited)

 

2 691

120 839

2

-128 726

-5 194

 

 

 

 

 

 

 

Comprehensive loss for the year 2022

 

0

0

17

(28 730)

(28 713)

 

 

 

 

 

 

 

Transactions with equity holders of the Company

 

 

 

 

 

Issue of ordinary shares, net of transaction costs

0

13 037

0

0

13 037

Share-based compensation

 

0

0

0

1 297

1 297

Other movements

 

0

0

0

(16)

(16)

 

 

0

13 037

17

(27 448)

(14 395)

 

 

 

 

 

 

 

Balance as at
31 December 2022 (Audited)

 

2 691

129 544

2

(143 713)

(11 476)

 

 

 

 

 

 

 

Comprehensive loss for the last six months 2023

0

0

0

(13 730)

(13 730)

 

 

 

 

 

 

 

Transactions with equity holders of the Company

 

 

 

 

 

Issue of ordinary shares, net of transaction costs

0

15 233

0

0

15 233

Share-based compensation

 

0

0

0

489

489

 

 

0

15 233

0

(13 241)

1 992

 

 

 

 

 

 

 

Balance as at 30 June 2023 (Unaudited)

 

2 691

144 778

2

(156 955)

(9 483)

 

Consolidated Cash Flow Statement, IFRS

 

 

€’000

Unaudited

1-6/2023

6 months

Unaudited

1-6/2022

6 months

    Audited

1-12/2022

12 months

Cash flow from operating activities

 

 

 

Loss before tax

(13 730)

(13 102)

(28 730)

Adjustments for:

 

 

 

Received grants

0

(415)

(803)

Depreciation and amortization

174

151

300

Change in provision

(158)

0

(158)

Financial items

918

529

1 304

Tax expense

0

(19)

0

Share-based compensation

489

665

1 297

Adjusted loss from operations before changes in working capital

(12 308)

(12 191)

(26 790)

Change in net working capital:

 

 

 

Prepayments and other receivables (increase -)

1 028

819

2 864

Trade payables (increase +)

(8)

1 211

719

Other liabilities (increase +)

(272)

(1 014)

1 183

Cash used in operations

(11 561)

(11 175)

(22 023)

Income taxes paid

0

0

0

Transaction costs related to loans and borrowings

0

0

(165)

Interest received

0

0

11

Interest paid

(782)

(108)

(816)

Net cash used in operating activities

(12 343)

(11 283)

(22 993)

 

 

 

 

Cash flow from investing activities

 

 

 

Payments for intangible assets

(68)

(167)

(385)

Payments for tangible assets

0

0

(0)

Net cash used in investing activities

(68)

(167)

(385)

 

 

 

 

Cash flow from financing activities

 

 

 

Proceeds on issue of shares

12 077

4 331

13 445

Share issue transaction cost

(648)

0

(365)

Proceeds from borrowings

64

10 389

10 389

Repayment of borrowings

0

(108)

(105)

Proceeds from grants

382

0

231

Payment of lease liabilities

(84)

(96)

(116)

Net cash from financing activities

11 791

14 516

23 478

 

 

 

 

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

(675)

3 083

137

Effect of exchange rate changes

(55)

17

37

 

 

 

 

Cash and cash equivalents at 1 January

6 990

6 853

6 853

Cash and cash equivalents at the end of period

6 315

9 936

6 990

 

Notes to the interim financial report

1.   Corporate information

Faron Pharmaceuticals Ltd (the “Company”) is a clinical stage biopharmaceutical company incorporated and domiciled in Finland, with its headquarters at Joukahaisenkatu 6, 20520 Turku, Finland. The Company currently has a pipeline based on the endothelial receptors involved in regulation of immune response, in oncology and organ damage.

 

The Company has been listed on the London Stock Exchange’s AIM market since November 17, 2015, with a ticker FARN, and since December 3, 2019, the Company has been listed on the Nasdaq First North Growth Market with a ticker FARON.

 

2.    Summary of significant accounting policies

2.1.    Basis of preparation

The unaudited H1 interim financial report has been prepared in accordance with the International Financial Reporting Standards of the International Accounting Standards Board (IASB) and as adopted by the European Union (IFRS) and the interpretations of the International Financial Reporting Standards Interpretations Committee (IFRIC).

The principal accounting policies applied in the preparation of these interim financial report is set out below. The Company has consistently applied these policies to all the periods presented, unless otherwise stated. The areas of the report involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the interim financial report, are disclosed in note 2.2.

The unaudited interim financial report incorporates the parent company, Faron Pharmaceuticals Ltd, and all subsidiaries (the “Group”).

All amounts are presented in thousands of euros, unless otherwise indicated, rounded to the nearest euro thousand.

 

2.2.         Going concern

The Group has forecasted its estimated cash requirements over the next twelve months. To make these forecasts the Group has made a number of assumptions regarding the quantity and timing of future expenditure and income as well as other key factors. Though these estimates have been made with caution and care, they continue to contain a significant amount of uncertainty. The Group also has debt obligations which carry financial covenants that could adversely impact the Group’s liquidity and operating flexibility. Based on the forecast the Group believes that it has adequate financial resources to continue its operations until the year end of 2023.  
 

The Group has taken several actions to secure further financing during the rest of the year 2023. The Directors believe that the Group can gain access to further resources to sustain operations over the next 12 months. Therefore, this unaudited financial report has been prepared on a going concern basis. At this stage the Group cannot disclose any of these options.

 

Because the additional finance is not committed at the date of issuance of this H1 2023 report, these circumstances represent a material uncertainty that may cast significant doubt on the Group’s ability to continue as a going concern. Should the Group be unable to obtain further finance such that the going concern basis of preparation were no longer appropriate, adjustments would be required, including to reduce balance sheet values of assets to their recoverable amounts, to provide for further liabilities that might arise.

 

2.3.         Financial covenants

At June 30, 2023, the Company had outstanding borrowings of EUR 9.8 million under a loan facility with IPF Partners which is subject to financial covenants. The Company is required to satisfy these agreed covenants including the requirement to maintain a minimum cash balance of EUR 6.0 million while maintaining three months cash runway. At June 30, 2023, and August 28, 2023, the Company is in compliance with all covenants while holding cash balances of EUR 6.3 million and EUR 9.1 million, respectively. The cash held by the Group together with known receivables will be sufficient to support the current level of activities until the year end of 2023.

 

3.    Subsequent events

The settlement of the second private placement during the period announced on June 29, 2023, was completed early July 2023.

In its meeting on August 28, 2023, the Board of Directors of the Company approved the publishing of this interim financial report.

Faron Reports 2022 Half-Year Financial Results

Faron Pharmaceuticals Oy

(“Faron” or “Company”)

 

Faron Reports Half-Year Financial Results, January 1 – June 30, 2022

 

August 25, 2022 at 2:00 am EDT / 7:00 am BST / 9:00 am EEST

 

Summary of January – June 2022

  • New data reinforces bexmarilimab’s potential to bring the promise of immunotherapy to cancer patients who are currently not benefiting from approved checkpoint inhibitors
  • Compelling 12-month survival data reported from Phase I/II MATINS study with 100% survival among checkpoint refractory melanoma and cholangiocarcinoma patients who benefited from bexmarilimab treatment
  • Biomarker data presented at AACR and ASCO Annual Meetings showed a clear biomarker profile (low baseline levels of inflammatory markers like IFN-gamma and TNF-alpha) among patients who experienced clinical benefit following bexmarilimab treatment – benefiting patients also showed a higher level of Clever-1 positive intra-tumoral macrophages
  • Biomarker profile of patients benefiting from bexmarilimab matches that of patients who are usually refractory to PD-1 blockade, which further validates anti-PD1 combination development strategy
  • First patient dosed in the Phase I/II BEXMAB study investigating bexmarilimab in combination with standard of care in myeloid hematological malignancies including acute myeloid leukemia (AML)
  • Significant worldwide expansion of bexmarilimab epitope patents which now cover more than 90% of pharmaceutical markets until at least 2037
  • Erik Ostrowski, joined the Faron Board of Directors, and the Leadership team was enhanced with the addition of Marie-Louise Fjällskog, M.D., Ph.D., as Chief Medical Officer and the appointment of Juho Jalkanen, M.D., Ph.D., as Chief Operating Officer
  • Cash position strengthened by debt funding agreement with IPF Partners for up to EUR 30 million and successful private placement including an investment from The Leukemia & Lymphoma Society Therapy Acceleration Program® (LLS TAP)
  • Virtual briefing and Q&A to be held today at 7:00 am EDT / 12:00 pm BST / 2:00 pm EEST

 

 

TURKU, FINLAND / BOSTON, MA Faron Pharmaceuticals Oy (AIM: FARN, First North: FARON), a clinical stage biopharmaceutical company focused on building the future of immunotherapy by harnessing the power of the immune system to tackle cancer and inflammation, today announced unaudited half-year financial results for January 1 to June 30, 2022 (the “period”).

 

“I am extremely proud of the progress we made over the first half of 2022,” said Dr. Markku Jalkanen, Chief Executive Officer of Faron. “We advanced our ambitious bexmarilimab development program, which beyond the MATINS trial includes combination studies in both solid tumors and hematologic malignancies, we presented data showing patients whose tumors express elevated levels of Clever-1 and low levels of PD-L1, a population that does not typically respond to or is ineligible for treatment with currently approved checkpoint inhibitors, are likely to experience clinical benefit and immune ignition following treatment with bexmarilimab, and we reported patients benefiting from bexmarilimab treatment experienced nearly a six-fold survival advantage over those who did not. We also strengthened our cash position and welcomed not just a new investor, The Leukemia & Lymphoma Society Therapy Acceleration Program® (LLS TAP), but in them a partner whose organization and network will help us further accelerate our development of bexmarilimab.”

 

Pipeline Highlights

 

Bexmarilimab Faron’s wholly-owned, novel precision cancer immunotherapy candidate, in Phase I/II development for difficult-to-treat cancers.

 

  • Updated survival data today show that 63% of patients who benefited from treatment with bexmarilimab were alive at 12-months compared to 9% of those who did not. The strongest survival benefit was seen in checkpoint refractory melanoma and cholangiocarcinoma, where 12-month survival was 100% among patients who benefited from bexmarilimab treatment and 6% for patients who did not benefit from treatment. The analysis included 134 heavily pre-treated, advanced disease patients across 10 solid tumor cohorts from Parts I and II of the MATINS study.  
  • Biomarker data presented at the American Association for Cancer Research (AACR) Annual Meeting 2022 showed patients with low baseline levels of serum interferon gamma (IFNy) and tumor necrosis factor alpha (TNFa) experienced significantly higher clinical benefit following bexmarilimab treatment. When used together, IFNy and TNFa are highly predictive of response to bexmarilimab.
  • Additional biomarker data presented at the American Society of Clinical Oncology Annual Meeting showed that that the tumors of patients benefiting from treatment with bexmarilimab had statistically significant higher levels of Clever-1 positive intra-tumoral cells and a trend towards low PD-L1 levels, a population that does not typically respond to or is ineligible for treatment with currently approved checkpoint inhibitors. These patients with immunologically cold tumors also exhibited an ignition of immune response, as indicated by increased levels of IFNy following therapy, which suggests bexmarilimab may serve as a catalyst for the immune system allowing initially checkpoint inhibitor resistant or ineligible patients to become responsive to PD-1 blockade.
  • The first patient was dosed in the Phase I/II BEXMAB study investigating bexmarilimab in combination with standard of care in multiple hematological malignancies. This marks the first time bexmarilimab is being assessed as part of a clinical study in hematologic malignancies. Based on initial safety data, there is potential for Phase II expansion and to include a first line triplet therapy of bexmarilimab, azacitidine and venetoclax in newly diagnosed acute myeloid leukemia (AML) patients who are not able to tolerate chemotherapy.
  • AACR journal Molecular Cancer Therapeutics published research examining the discovery and preclinical development of bexmarilimab. Reporting the humanization and nonclinical characterization steps used to determine the physicochemical properties, biological potency, and safety profile of bexmarilimab, the authors conclude that bexmarilimab could induce an immunostimulatory tumor microenvironment that leads to anti-tumor efficacy.
  • Data was presented at the European Hematology Association 2022 Congress showing Clever-1 is expressed in patient bone marrow blasts and monocytes in acute myeloid leukemia (AML) and myelodysplastic syndrome (MDS) and that blocking Clever-1 with bexmarilimab in these patients induced immune activation as observed through increased antigen presenting molecule, human leucocyte antigen DR (HLA-DR) expression and declined PD-1 expression.
  • The proprietary position of bexmarilimab was significantly increased with patents granted in Europe, China, South Korea and Mexico. With previously received patents in the US and Japan, bexmarilimab epitope patents now cover more than 90% of pharmaceutical markets until at least 2037.

 

Traumakine®Faron’s investigational intravenous (IV) interferon beta-1a therapy, in development for the treatment of ischemic or hyperinflammatory conditions.

 

  • Scientific Reports published data from Faron’s INFORAAA study showing Traumakine-induced up-regulation of CD73 prevents death after emergency open aortic surgery. Up-regulation of CD73 was associated with 100% survival compared to expected mortality between 30-40%.
  • Research was published identifying novel genetic factors that underly the interaction of corticosteroids with interferon beta signaling in acute respiratory distress syndrome (ARDS) and COVID-19. The research identified a deleterious effect of glucocorticosteroids when given together with intravenous IFN beta-1a therapy. The Company and its scientific collaborators found that patients receiving Traumakine carrying the single nucleotide polymorphism (SNP) rs9984273 (C/T) in subunit 2 of interferon receptor (INFAR2) showed a substantial reduction in mortality compared to patients without the gene mutation. The same SNP that was also associated with better outcome in COVID-19.
  • Phase II/III HIBISCUS trial assessing Traumakine (Intravenous Interferon beta-1a; IFN beta-1a) as a first-line treatment for hospitalized COVID-19 patients who require low flow oxygen support was closed due to low COVID-19 hospitalization rates and a shortage of patients not already receiving steroids. Study resources were re-focused on the development of bexmarilimab.
  • Development of Traumakine continues together in collaboration with the 59th Medical Wing of the US Air Force and Wake Forest University Medical School for ischemia-reperfusion injury and battlefield injuries that lead to polytrauma and systemic inflammation. The latest primate results will be presented at the annual Military Health System Research Symposium (MHSRS) on the 13th of September in Orlando, Florida. MHSRS is the biggest military research symposium in the USA.

 

Corporate Highlights

  • Secured a debt funding agreement with IPF Partners for up to EUR 30 million. The first tranche of EUR 10 million was accessed in February 2022, with an additional EUR 20 million available in the future, subject to certain conditions being met. As part of the arrangement relating to the debt funding, Faron grants IPF warrants entitling them to subscribe for ordinary shares of the Company against payment. In total 319,944 Warrants were issued to IPF in relation to the first tranche utilized.
  • Cash position strengthened with successful private placement totaling gross EUR 5.0 million, the final portion of which amounting to EUR 0.5 million settled in early July 2022. The placing included investment from The Leukemia & Lymphoma Society Therapy Acceleration Program® (LLS TAP), a funding initiative to accelerate innovative blood cancer therapeutics and change the standard of care in leukemia, lymphoma, and multiple myeloma. In total Faron raised EUR 5.0 million with the fundraise and 2,006,621 ordinary shares were issued to investors (of which 1,806,621 shares in June).
  • Erik Ostrowski, BS, MBA, veteran biotech and financial executive with significant fundraising and investment bank experience, joined the Faron Board of Directors in April 2022. He is currently the Chief Financial Officer and Treasurer of AVROBIO (Nasdaq: AVRO), a role he has served since joining the company in January 2019. Prior to joining AVROBIO, he served as CFO of Summit Therapeutics plc. (Nasdaq: SMMT) and vice president of finance at Organogenesis Inc. (Nasdaq: ORGO). He previously worked in investment banking, most recently as a director with Leerink Partners LLC., having begun his career as an accountant with Coopers & Lybrand (now PricewaterhouseCoopers).
  • Marie-Louise Fjällskog, M.D., Ph.D., joined Faron’s Global Management Team as Chief Medical Officer, bringing with her over 30 years of experience in clinical oncology, translational research, and drug development.
  • Juho Jalkanen, M.D., Ph.D., was appointed Chief Operating Officer. In this role, Dr. Jalkanen leads business strategy and daily operations for Faron including oversight of academic and industry partnerships, resource prioritization and allocation, chemistry, manufacturing and controls, supply chain and driving performance measures.
     

Half-Year Financial Results

  • Cash balances of EUR 9.9 million at 30 June 2022 (2021: EUR 7.0 million).
  • Operating loss of EUR 13.4 million for the six months ended 30 June 2022 (2021: EUR 10.4 million).
  • Net assets of EUR -5.2 million as at 30 June 2022 (2021: EUR 2.8 million).
  • Cash position strengthened by debt funding agreement with IPF Partners for EUR 10 million and successful private placement of EUR 5.0 million

 

Consolidated key figures, IFRS

 

 EUR’000

Unaudited

1-6/2022
6 months

Unaudited

1-6/2021
6 months

1-12/2021
12 months

Revenue

0

0

0

Other operating income

485

1 210

6 137

Research and Development expenses

(10 047)

(9 008)

(17 369)

General and Administrative expenses

(3 801)

(2 626)

(9 876)

Loss for the period

(13 121)

(10 560)

(21 194)

 

 

 

 

 

Unaudited

1-6/2022
6 months

Unaudited

 1-6/2021
6 months

1-12/2021
12 months

Loss per share, EUR

(0,25)

(0,21

-0,42

Number of shares at end of period

56,575,453*

50,457,874

46,799,747

Average number of shares

53,235,643

49,615,167

44,584,199

 

 

 

 

 

Unaudited

30 Jun 2022

Unaudited

30 Jun 2021

31 Decmber 2021

Cash and cash equivalents

9 936

6 967

6 853

Equity

(5 194)

2 813

2 919

Balance sheet total

16 729

11 865

13 182

 

* of which 1,311,800 are held in Treasury

 

24 August 2022

Faron Pharmaceuticals

Board of Directors

 

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 (“MAR”).

 

Conference call information

A virtual briefing and Q&A session for investors, analysts and media will be hosted by Dr. Markku Jalkanen, Chief Executive Officer, and Toni Hänninen, Chief Financial Officer, today, August 25, 2022 at 7:00 am (EDT) / 12:00 pm (BST) / 2:00 pm (EEST) on the day of results.

 

Webcast registration link: https://faron.videosync.fi/2022-halfyear-results

 

The half-year report, presentation, and a replay of the webcast will be available on the Company’s website at www.faron.com/investors.

 

 

For more information please contact:

 

Investor Contact

Faron Pharmaceuticals

Julia Balanova

VP, Investor Relations

julia.balanova@faron.com

investor.relations@faron.com

Phone: +1 (917) 306-6096

 

Media Contact

Faron Pharmaceuticals

Eric Van Zanten

VP, Communications

eric.vanzanten@faron.com

Phone: +1 (610) 529-6219

 

Cairn Financial Advisers LLP, Nomad

Sandy Jamieson, Jo Turner

Phone: +44 (0) 207 213 0880

 

Peel Hunt LLP, Broker

Christopher Golden, James Steel

Phone: +44 (0) 20 7418 8900

 

Sisu Partners Oy, Certified Adviser on Nasdaq First North

Juha Karttunen

Phone: +358 (0)40 555 4727

Jukka Järvelä

Phone: +358 (0)50 553 8990

 

Consilium Strategic Communications

Mary-Jane Elliott, David Daley, Lindsey Neville

faron@consilium-comms.com

Phone: +44 (0)20 3709 5700

 

About Bexmarilimab

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

 

About MATINS

The MATINS (Macrophage Antibody To INhibit immune Suppression) study is a first-in-human open label phase I/II clinical trial investigating the tolerability, safety and efficacy of bexmarilimab in ten different hard-to-treat metastatic or inoperable solid tumour cohorts – cholangiocarcinoma, colorectal cancer, cutaneous melanoma, ER+ breast cancer, gastric cancer, hepatocellular carcinoma, ovarian cancer, uveal melanoma, pancreatic cancer and anaplastic thyroid carcinoma – which are all known to host a significant number of Clever-1 positive tumour-associated macrophages (TAMs). The completed Part I of the trial dealt with tolerability, safety and dose escalation. The ongoing Part II is focused on identifying patients who show an increased number of Clever-1 positive TAMs and exploring safety and efficacy. Part III will be focused on assessing efficacy. Data from MATINS have shown that bexmarilimab has the potential to be the first macrophage immune checkpoint therapy. To date, the investigational therapy has been shown to be safe and well-tolerated, making it a low-risk candidate for combination with existing cancer therapies, and has demonstrated early signs of clinical benefit in patients who have exhausted all other treatment options.

 

About BEXMAB

The BEXMAB study is a first-in-human open label phase I/II clinical trial investigating bexmarilimab in combination with standard of care (SoC) in aggressive hematological malignancies including acute myeloid leukemia (AML) and myelodysplastic syndrome (MDS). The primary objective is to determine the safety and tolerability of bexmarilimab in combination with SoC (azacitidine) treatment and to identify the recommended Phase 2 dose. Based on initial safety data, there is potential for expansion to include a first line triplet therapy of bexmarilimab, azacitidine and venetoclax in newly diagnosed AML patients who are not able to tolerate chemotherapy. Clever-1 is highly expressed in both AML and MDS and associated with therapy resistance, limited T cell activation and poor outcomes. Directly targeting Clever-1 could limit the replication capacity of cancer cells, increase antigen presentation, ignite an immune response, and allow current chemotherapy treatments to be more effective.

 

About Faron Pharmaceuticals Ltd. 

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

 

Forward Looking Statements

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

 

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

 

 

Chairman and Chief Executive Officer’s Review

 

Introduction

The first half of 2022 has been a period of significant progress for Faron. Most notably, we continued to accelerate our ambitious bexmarilimab development program. Key to this is our advanced understanding of which patients are likely to respond to treatment and what happens in the tumor microenvironment when they do. These findings, in addition to the significant 12-month survival advantage experienced by patients who responded to treatment, further strengthen our belief that bexmarilimab has the potential to bring the promise of immunotherapy to a much broader patient population, both as a monotherapy and in combination with currently approved standard of care treatments.

 

Bexmarilimab

Driving the clinical development of bexmarilimab continues to be Faron’s top priority, which is why we recruited Marie-Louise Fjällskog, M.D., Ph.D. to join the Company as our new Chief Medical Officer. Dr. Fjällskog has over 30 years of experience in clinical oncology, translational research, and drug development. She joined us from Sensei Biotherapeutics (SNSE), where she served as Chief Medical Officer for the Nasdaq listed immuno-oncology focused biopharmaceutical company. Prior to her tenure at Sensei, she was Vice President, Clinical Development at both Merus (MRUS) and Infinity Pharmaceuticals (INFI) where she led development of multiple small molecule and immunotherapy clinical programs. Earlier in her career she spent time at the Novartis Institute for Biomedical Research as Global Clinical Program Leader responsible for the development of oncology treatments targeting CDK4/6, BCL-2, PD-1, CSF-1 and CD73.

 

Dr. Fjällskog has been instrumental in advancing our bexmarilimab development program, which is focused in three areas, monotherapy in late-stage solid tumors, combination with anti-PD-1 in first-line solid tumors, and combination with standard of care in hematologic malignancies. She has also significantly advanced our translational research efforts.

 

Data from the completed Part 1 and Part II of the MATINS trial continue to be analyzed, but we were able to report updated 12-month survival data in June. The further updated analysis shows that 63% of patients who benefited from treatment with bexmarilimab were alive at 12-months compared to 9% of patients who did not benefit from treatment. The strongest survival benefit was seen in checkpoint refractory melanoma and cholangiocarcinoma where 12-month survival was 100% among patients who benefited from bexmarilimab treatment and 6% for patients who did not benefit from treatment. The updated survival data is significant, especially when you consider these were heavily pre-treated patients with substantially advanced disease. It’s highly encouraging that an anti-tumor immune response was activated in these heavily compromised patients and that almost two-thirds of the patients who benefited from treatment had a durable response lasting at least 12-months.

 

We look forward to sharing this data and additional translational research with the FDA late this year or in early 2023. With their input, we will finalize a dose, frequency and design of the next step, which we anticipate will be a randomized study to confirm survival benefit against comparator (physician choice of chemo or potentially best supportive care).

 

We also plan to engage the FDA around the design of our planned trial investigating bexmarilimab in combination with anti-PD1 in first line solid tumors. We are extremely excited about this combination given the translational research we reported earlier this year at the American Association for Cancer Research and American Society of Clinical Oncology Annual Meetings. This data identified a clear biomarker profile among patients who responded to treatment with bexmarilimab. Notably, these patients, those with low baseline levels of inflammatory cytokines and tumors that expressed low levels of PD-L1, typically do not respond to or are ineligible for treatment with currently approved checkpoint inhibitors. This means that bexmarilimab works where anti-PD1 treatments do not. Patients with immunologically cold tumors also exhibited an ignition of immune response, as indicated by increased levels of IFN-y following therapy, which suggests bexmarilimab may serve as a catalyst for the immune system allowing initially checkpoint inhibitor resistant or ineligible patients to become responsive to PD-1 blockade.

 

In addition to solid tumors, we also believe bexmarilimab can become an important treatment option in hematologic malignancies. In June we enrolled the first patient in our Phase I/II BEXMAB study. The primary objective of BEXMAB is to determine the safety, tolerability and preliminary efficacy of bexmarilimab in combination with standard of care in patients with relapsed acute myeloid leukemia (AML), myelodysplastic syndrome (MDS), or chronic myelomonocytic leukemia (CMML). Based on initial safety data, there is potential for Phase II expansion and to include a first line triplet therapy of bexmarilimab, azacitidine and venetoclax in newly diagnosed AML patients who are not able to tolerate chemotherapy.

 

This opportunity is so exciting because we know that certain blood cancer cells carry significant amounts of cell surface Clever-1, which may limit the body’s ability to mount an immune response. In fact, research has shown a clear survival benefit among certain blood cancer patients with low Clever-1 expression. By adding bexmarilimab to standard of care we expect to downregulate Clever-1 expression, thereby increasing antigen presentation and allowing the immune system to better identify and kill cancer cells. This could provide a deeper and more durable clinical benefit compared to what most patients experience with currently approved treatments.

 

Patent progress

Building a global intellectual property (IP) portfolio around Clever-1 remains a key priority for Faron as it is critical for the future commercialization of bexmarilimab. We continued to make progress towards this goal over the first half of 2022 with patents granted in Europe, China, South Korea, and Mexico. These, in addition to the previously received patents mean that we now have bexmarilimab epitope patents covering more than 90% of pharmaceutical markets until at least 2037.

 

Traumakine and Haematokine

Beyond bexmarilimab, we continue to be excited about the potential of our two additional pipeline assets, Traumakine and Haematokine, even though we made the difficult decision in April to discontinue our Phase II/III HIBISCUS trial assessing Traumakine as a first-line treatment for hospitalized COVID-19 patients. The emergence of the less severe Omicron variant, widespread vaccinations, and the continued early use of steroids severely limited our potential patient pool and made it impossible for us to reach our enrollment targets.

 

Our near-term development focus for Traumakine has shifted to settings where steroid use is not as widespread. This includes major operations and polytrauma where patients are at high risk of ischemia-reperfusion injury, which is tissue damage caused when blood supply returns to tissue after a period of oxygen depletion. Data from our INFORAAA trail published earlier this year showed that Traumakine up-regulates CD73, a key organ protective endothelial enzyme that reduces inflammation and prevents vascular leakage. The data also showed up-regulation of CD73 was associated with 100% survival among surgically operated ruptured abdominal aorta aneurysm (RAAA) patients – a patient population with expected mortality between 30-40%.

 

The focus of our Haematokine development program was further validated this year with the publication of research in the multidisciplinary journal Cellular and Molecular Life Sciences showing the inhibition of Vascular Adhesion Protein1 (VAP-1) potentially supports the expansion of human hematopoietic stem cells (HSC). The research showed for the first time that VAP-1 serves as a check point-like inhibitor, restricting the expansion of hematopoietic stem cells. As a result, we believe that inhibiting the enzymatic activity of VAP-1 enables the expansion of hematopoietic stem cells, which are essential to the formation of new cells and that this approach could have broad applicability in the fields of regenerative medicine and the treatment of hematological malignancies.

 

Financial review

In February 2022, Faron entered into a secured debt agreement with IPF Partners, a leading alternative financing provider focused on the healthcare sector. This agreement allowed Faron to access EUR 10 million immediately and subject to certain conditions being met, Faron may have access to an additional EUR 20 million in funding. Not only did this agreement strengthen our financial position, but it also added flexibility to our funding strategy by adding a debt instrument into our funding tools. We were also able to complete a successful private placement totaling EUR 5.0 million, including investment from The Leukemia & Lymphoma Society Therapy Acceleration Program® (LLS TAP), a funding initiative to accelerate innovative blood cancer therapeutics and change the standard of care in leukemia, lymphoma, and multiple myeloma. We were delighted to receive this significant support from our existing and new investors, providing additional financial resources to allow the further acceleration of our development programs and significantly strengthening our balance sheet.

 

Statement of comprehensive income

The operating loss for the six months ended 30 June 2022 was EUR 13.4 million (six months ended 30 June 2021: loss of EUR 10.4 million). No revenue was generated during the period or prior period. Research and development expenses increased by EUR 1.0 million to EUR 10.0 million (2021: EUR 9.0 million). General and administrative expenses increased by EUR 1.2 million to EUR 3.8 million (2021: EUR 2.6 million).

 

The loss for the period was EUR 13.1 million (2021: loss of EUR 10.6 million) and the basic and diluted loss per share was EUR 0.25 (2021: loss per share of EUR 0.21).

 

Statement of financial position and cash flows

As of June 30, 2022 net assets amounted to EUR -5.2 million (June 30, 2021: EUR 2.8 million). The net cash flow for the first six months in 2022 was EUR 3.1 million (2021: EUR 2.8 million). As of June 30, 2022 total cash and cash equivalents held were EUR 9.9 million (2021: EUR 7.0 million).

 

Corporate

Faron’s Annual General Meeting (AGM) was held on April 22, 2021. The AGM adopted the financial statements of the Company and re-elected audit firm PricewaterhouseCoopers Oy (“PwC”) as the Company’s auditor. Additionally, the number of members of the Board was confirmed as seven. Frank Armstrong, Gregory Brown, John Poulos, Leopoldo Zambeletti, Markku Jalkanen and Anne Whitaker were re-elected to the Board and Erik Ostrowski was elected as a new member to the Board for a term that ends at the end of the next AGM.

 

Summary & outlook

Our focus for the remainder of 2022 continues to be the acceleration of bexmarilimab’s clinical development. Preparations for the pivotal expansion stage of the MATINS study, including confirmation of dosage, dose frequency and tumor type, are priorities for us. We also continue planning for the initiation of our Company sponsored trial investigating bexmarilimab in combination with anti-PD1 in first-line tumors and expect to see early data from BEXMAB by year-end. Alongside these activities, we will continue to explore the potential of Traumakine, with a focus on preventing multiple organ dysfunction syndrome after ischemia-reperfusion injury caused by a major trauma, and Haematokine.

 

On behalf of the Board, we would like to thank our shareholders, existing and new, for their support of Faron. We would also like to thank our employees for their continued commitment to our mission and the patients we serve. We look forward to updating the market on our progress throughout the course of the year.

 

Dr Markku Jalkanen

Chief Executive Officer

 

Dr Frank Armstrong

Chairman

 

 

 

 

 

 

 

 

Consolidated Income Statement, IFRS

EUR’000

Unaudited

1-6/2022

6 months

Unaudited
1-6/2021
6 months

1-12/2021
12 months

Revenue

0

0

0

Other operating income

485

1 210

6 137

Research and development expenses

(10 047)

(9 008)

(17 369)

General and administrative expenses

(3 801)

(2 626)

(9 876)

Operating loss

(13 364)

(10 424)

(21 108)

Financial expense

(430)

(191)

(235)

Financial income

692

61

165

Loss before tax

(13 102)

(10 554)

(21 179)

Tax expense

(19)

(6)

(15)

Loss for the period

(13 121)

(10 560)

(21 194)

Translation difference

11

 

(15)

Comprehensive loss for the period attributable to the equity holders of the Parent company

(13 110)

(10 560)

(21 209)

 

 

 

 

Loss per ordinary share

 

 

 

Basic and diluted loss per share, EUR

(0.25)

(0.21)

(0.42)

 

 

Consolidated Balance Sheet, IFRS

 

EUR’000

Unaudited
30 June 2022

Unaudited
30 June 2021

31 December 2021

Assets

 

 

 

Non-current assets

 

 

 

Machinery and equipment

17

19

20

Right-of-use-assets

98

273

187

Intangible assets

1 011

920

899

Prepayments and other receivables

53

53

53

Total non-current assets

1 179

1 265

1 159

 

 

 

 

Current assets

 

 

 

Prepayments and other receivables

5 614

3 634

5 170

Cash and cash equivalents

9 936

6 967

6 853

Total current assets

15 550

10 600

12 023

 

 

 

 

Total assets

16 729

11 865

13 182

 

 

 

 

 

Unaudited
30 June 2022

Unaudited
30 June 2021

31 December 2021

Capital and reserves attributable to the equity holders of the Parent company

 

 

 

Share capital

2 691

2 691

2 691

Reserve for invested unrestricted equity

120 839

106 396

116 507

Translation difference

2

(1)

(15)

Accumulated deficit

(128 726)

(106 274)

(116 265)

Total equity

(5 194)

2 813

2 919

 

 

 

 

Non-current liabilities

 

 

 

Borrowings

12 250

3 231

2 918

Lease liabilities

0

109

16

Other liabilities

539

146

151

Total non-current liabilities

12 789

3 486

3 085

 

 

 

 

Current liabilities

 

 

 

Borrowings

0

0

429

Lease liabilities

106

178

184

Trade payables

7 791

4 555

5 295

Other current liabilities

1 238

832

1 270

Total current liabilities

9 135

5 565

7 178

 

 

 

 

Total liabilities

21 924

9 052

10 263

 

 

 

 

Total equity and liabilities

16 729

11 865

13 182

 

 

Consolidated Statement of Changes in Equity, IFRS

 

 

EUR’000

Share capital

Reserve for invested unrestricted equity

Translation difference

Accumulated deficit

Total equity

Balance as at 31 December 2020

2 691

92 015

2

-96 557

-1 849

Comprehensive loss for the last six months 2021

0

 

(1)

(10 560)

(10 561)

 

 

 

 

 

 

Transactions with equity holders of the Parent company

 

 

 

 

 

Issue of ordinary shares

0

14 381

0

0

14 381

Share-based compensation

0

0

0

843

843

 

0

14 381

0

843

15 224

 

 

 

 

 

 

 

Balance as at 30 June 2021

2 691

106 396

(1)

(106 274)

2 813

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive loss for the year 2021

0

0

(15)

(21 194)

(21 209)

 

 

 

 

 

 

Transactions with equity holders of the Parent company

 

 

 

 

 

Issue of ordinary shares

0

24 492

 

0

24 492

Share-based compensation

0

0

 

1 487

1 487

 

0

24 492

0

1 487

25 980

 

 

 

 

 

 

 

Balance as at 31 December 2021

2 691

116 507

(15)

(116 265)

2 919

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive loss for the last six months 2022

0

0

11

(13 121)

(13 110)

 

 

 

 

 

 

Transactions with equity holders of the Parent company

 

 

 

 

 

Issue of ordinary shares

0

4 332

 

0

4 332

Share-based compensation

0

0

0

665

665

 

0

4 332

0

665

4 997

 

 

 

 

 

 

Balance as at 30 June 2022

2 691

120 839

2

(128 726)

(5 194)

 

 

Consolidated Cash Flow Statement, IFRS

€’000

Unaudited 1-6/2022 6 months

Unaudited 1-6/2021 6 months

1-12/2021
12 months

 

Cash flow from operating activities

 

 

 

Loss before tax

(13 102)

(10 554)

(21 194)

Adjustments for:

 

 

 

Received grant

(415)

(642)

(1 387)

Depreciation and amortisation

151

142

307

Interest expense

529

88

216

Tax expense

(19)

10

16

Unrealised foreign exchange loss (gain), net

(12)

(27)

153

Share-based compensation

665

843

1 487

Adjusted loss from operations before changes in working capital

(12 204)

(10 141)

(20 402)

Change in net working capital:

 

 

 

Prepayments and other receivables (increase -)

819

(660)

(1 919)

Trade payables (increase +)

1 211

(21)

723

Other liabilities

(1 014)

(337)

(566)

Cash used in operations

(11 187)

(11 158)

(22 163)

Taxes paid

0

(15)

(16)

Interest paid

(108)

(30)

(40)

Net cash used in operating activities

(11 295)

(11 204)

(22 218)

 

 

 

 

Cash flow from investing activities

 

 

 

Payments for intangible assets

(167)

(385)

(461)

Payments for equipment

0

(7)

(13)

Net cash used in investing activities

(167)

(392)

(473)

 

 

 

 

Cash flow from financing activities

 

 

 

Proceeds from issue of shares

4 331

14 382

24 492

Proceeds from borrowings

10 389

264

662

Repayment of borrowings

(108)

(122)

(122)

Proceeds from grants

0

0

750

Payment of lease liabilities

(96)

(96)

(191)

Net cash from financing activities

14 516

14 427

25 590

 

 

 

 

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

3 054

2 831

2 899

Effect of exchange rate changes on cash and cash equivalents

28

27

(153)

 

 

 

 

Cash and cash equivalents at 1 January

6 853

4 108

4 108

Cash and cash equivalents at the end of period

9 936

6 967

6 853

 

 

 

 

 

Notes to the interim financial report

 

Faron Pharmaceuticals Ltd (the “Company”) is a clinical stage biopharmaceutical company incorporated and domiciled in Finland, with its headquarters at Joukahaisenkatu 6, 20520 Turku, Finland. The Company currently has a pipeline based on the endothelial receptors involved in regulation of immune response, in oncology and organ damage.

 

The Company has been listed on the London Stock Exchange’s AIM market since 17 November 2015, with a ticker FARN, and since 3 December 2019, the Company has been listed on the Nasdaq First North Growth Market list with a ticker FARON.

 

2.    Summary of significant accounting policies

 

2.1.    Basis of preparation

 

The unaudited H1 interim financial report has been prepared in accordance with the International Financial Reporting Standards of the International Accounting Standards Board (IASB) and as adopted by the European Union (IFRS) and the interpretations of the International Financial Reporting Standards Interpretations Committee (IFRIC).

The principal accounting policies applied in the preparation of these interim financial report is set out below. The Company has consistently applied these policies to all the periods presented, unless otherwise stated. The areas of the report involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the interim financial report, are disclosed in note 2.2.

The unaudited interim financial report incorporate the parent company, Faron Pharmaceuticals Ltd, and all subsidiaries (the “Group”).

All amounts are presented in thousands of euros, unless otherwise indicated, rounded to the nearest euro thousand.

 

2.2.         Going concern

 

The Group has forecasted its estimated cash requirements over the next twelve months. In order to make these forecasts the Group has made a number of assumptions regarding the quantity and timing of future expenditure and income as well as other key factors. Though these estimates have been made with caution and care, they continue to contain a significant amount of uncertainty. Based on the forecast the Group believes that it has adequate financial resources to continue its operations into Q1 2023 and therefore this unaudited financial report has been prepared on a going concern basis. In its meeting on 24 August 2022 the Board of Directors of the Company approved the publishing of this interim financial report.

 

The Group has taken several acts to secure further financing during the rest of the year 2022. The Directors believe that the Group can gain access to further resources to sustain operations over the next 12 months. At this stage the Group cannot disclose any of these options.

 

Because the additional finance is not committed at the date of issuance of these H1 reports, these circumstances represent a material uncertainty that may cast significant doubt on the Group’s ability to continue as a going concern. Should the Group be unable to obtain further finance such that the going concern basis of preparation were no longer appropriate, adjustments would be required, including to reduce balance sheet values of assets to their recoverable amounts, to provide for further liabilities that might arise.

 

 

Half-Year Financials, January 1 – June 30 2021

Faron Pharmaceuticals Oy

(“Faron”)

Faron Reports Half-Year Financials, January 1 – June 30, 2021

Significant progress made in H1 2021 including acceleration of most advanced pipeline assets – Bexmarilimab and TraumakineÒ

August 26, 2021 at 7:00 am BST / 9:00 am EEST

January – June 2021 in short/ Summary of January – June 2021

  • Bexmarilimab shows compelling antitumor activity in multiple advanced solid tumor types as a monotherapy with strongest disease control rate, DCR (30.0% – 40.0%), observed in cutaneous melanoma, gastric cancer, cholangiocarcinoma and hepatocellular carcinoma patients
  • Median overall survival (OS) not yet reached in DCR patient group
  • Initiation of pivotal stage (Part III) of bexmarilimab’s MATINS study on track for Q4 2021 alongside clinical expansion into neoadjuvant setting, hematological malignancies and first line lung cancer in combination with anti-PD-1
  • Secured key US patents for both bexmarilimab and TraumakineÒ
  • Received $6.1 million commitment from the US Department of Defense (DoD) to support the Traumakine HIBISCUS trial as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act
  • Balance sheet strengthened by successful share placing of €15 million gross including investment from European Investment Council (EIC) Fund, a breakthrough initiative from the European Commission
  • Virtual briefing and Q&A to be held today at 12:00 pm BST / 2:00 pm EEST / 7:00 am EDT

TURKU, FINLAND / BOSTON, MA – Faron Pharmaceuticals Oy (AIM: FARN, First North: FARON), a clinical stage biopharmaceutical company focused on building the future of immunotherapy by harnessing the power of the immune system to tackle cancer and inflammation, today announced unaudited half-year financial results for January 1 to June 30, 2021 (the “period”) and provided an overview of recent corporate developments.

“I am extremely proud of the progress we made over the first half of 2021,” said Dr. Markku Jalkanen, Chief Executive Officer of Faron. “We progressed our most advanced pipeline assets with bexmarilimab showing compelling antitumor activity as a monotherapy in heavily pre-treated patients across multiple solid tumor types and the initiation of the HIBISCUS trial assessing Traumakine as a first-line treatment for hospitalized COVID-19 patients, which we believe will represent a significant step forward in the treatment of lung failure due to viral infections. We also strengthened our balance sheet, which will allow us to continue investing in our pipeline and further our goal of developing new treatments for patients battling life-threatening diseases.”

HIGHLIGHTS (including post period):

Pipeline Highlights

Bexmarilimab Faron’s wholly-owned, novel precision cancer immunotherapy candidate, in Phase I/II development for difficult-to-treat cancers.

  • Compelling antitumor activity in multiple advanced solid tumor types was reported from patients enrolled in the completed Part I and ongoing Part II of the MATINS study, investigating bexmarilimab as a potential monotherapy in patients with solid tumors who have exhausted all treatment options. The strongest results were observed in cutaneous melanoma, gastric cancer, cholangiocarcinoma, and hepatocellular carcinoma, with a 30.0% — 40.0% disease control rate across these tumor types. Additional MATINS data was accepted as a late-breaking abstract and will be presented at the European Society for Medical Oncology (ESMO) Congress 2021 in mid-September.  
  • Further clinical trials are planned to start in Q4 2021 to investigate bexmarilimab’s potential in additional clinical settings, including in combination with standard of care as a first-line therapy in selected advanced solid tumors and as a monotherapy in hematological malignancies. Additionally, trials will also investigate bexmarilimab as a standalone neoadjuvant therapy for patients with early-stage colorectal cancer and renal cell carcinoma.
  • A key US patent with claims protecting the composition of matter of bexmarilimab was granted by the United States Patent and Trademark Office. The patent covers bexmarilimab’s binding sequences and Clever-1’s corresponding epitope – specific elements of the antibody-antigen binding site – with an expected expiry date, not including any potential extensions, of 2037. This patent was also granted in Japan.
  • A new role for soluble Clever-1 was identified, related to its capacity to control T cell activation. The scientific findings, from tests on MATINS patients’ plasma, suggest that their high levels of free, soluble Clever-1 can act as a direct inhibitor of T cell activation, providing a greater immunosuppressive effect than previously expected and indicating broader applicability for bexmarilimab. A new patent application has been filed seeking protection for these inventions and related applications.
  • Clinical Cancer Research, a journal of the American Association for Cancer Research, published research on the mode of action of bexmarilimab, exploring the systemic immune signatures induced by bexmarilimab in advanced cancer patients with solid tumors and providing a mechanistic understanding of how a macrophage-targeted approach can promote robust activation of T cells (Clin Cancer Res 2021: 27: 4205-20), and also highlighted by the Editors.
  • Companion diagnostic for Clever-1 detection in histological samples developed and validated with Laboratory Corporation of America (“Labcorp”). The staining antibody developed can be used by Labcorp and other diagnostic service providers across the globe and will allow for efficient analysis of tumor biopsies.

Traumakine®Faron’s investigational intravenous (IV) interferon beta-1a therapy, in development for the treatment of acute respiratory distress syndrome (ARDS) and other ischemic or hyperinflammatory conditions.

  • Dosing commenced in the Phase II/III HIBISCUS trial investigating Traumakine in the treatment of hospitalized COVID-19 patients compared to corticosteroid treatment with dexamethasone. HIBISCUS will be conducted in approximately 10 – 15 study sites across the US, enrolling 140 patients who require low flow oxygen support, but not mechanical ventilation. The US Department of Defense (DoD) selected the HIBISCUS trial to receive $6.1 million of funding from the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
  • Building on Faron’s already strong IP portfolio for Traumakine, Faron signed a sub-license agreement covering a relevant manufacturing patent in the US. Faron also applied for patent protection relating to Traumakine’s induction of CD73 for organ protection, through the sequential use of IV interferon beta-1a followed by corticosteroids for the treatment of systemic inflammation.
  • Partnership established with the 59th Medical Wing of the U.S. Air Force and U.S. Army and U.S. Army Institute of Surgical Research to explore the use of Traumakine for organ protection in combat wounds leading to multi-organ failure from ischemia and reperfusion.
  • New manufacturing process is progressing as planned in collaboration with AGC Biologics.

Corporate Highlights

  • Balance sheet was strengthened by raising EUR 15 million gross through a private placement of new ordinary shares. This placement encompassed existing and new investors, including the European Innovation Council Fund, a breakthrough initiative from the European Commission.
  • Anne Whitaker joined the Faron Board of Directors, bringing more than 25 years of experience in the life science industry, including senior leadership roles with large pharmaceutical, biotech and specialty pharma companies. Anne is the current Chairman of the Board for Aerami Therapeutics Holdings, Inc. Prior to taking the role of Chairman at Aerami, Anne served as the Aerami’s Chief Executive Officer and a Director. Anne previously served as Chief Executive Officer of Novoclem Therapeutics, Inc., Executive Vice President at Bausch Health, President and Chief Executive Officer of Synta Pharmaceuticals and as President, North America Pharmaceuticals at Sanofi.

Half-Year Financial Results

  • Cash balances of €7.0 million at 30 June 2021 (2020: €11.6 million).
  • Operating loss of €10.4 million for the six months ended 30 June 2021 (2020: €7.1 million).
  • Net assets of €2.8 million as at 30 June 2021 (2020: €7.3 million).
  • In February 2021, Faron raised €15 million gross (€14.4 million net) from new and existing shareholders through an issuance of 3,521,127 new ordinary shares.

Consolidated key figures, IFRS

€’000 Unaudited 1-6/2021
6 months
Unaudited 1-6/20
6 months
1-12/2020
12 months
Revenue 0 0 0
Other operating income 1,210 743 2,122
Research and Development expenses (9,008) (5,534) (13,879)
General and Administrative expenses (2,626) (2,354) (4,897)
Loss for the period (10,560) (7,343) (16,946)
Unaudited 1-6/2021
6 months
                Unaudited 1-6/2020
6 months
1-12/2020
12 months
Loss per share EUR (0.21) (0.16) (0.37)
Number of shares at end of period 50,457,874 46,799,747 46,896,747
Average number of shares 49,615,167 44,584,199 45,712,111
€’000 Unaudited              30 Jun 2021 Unaudited 30 Jun 2020 31 Dec 2020
Cash and cash equivalents 6,967 11,627 4,108
Equity 2,813 7,313 (1,849)
Balance sheet total 11,865 14,343 8,367

 

25 August 2021

Faron Pharmaceuticals

Board of Directors

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 (“MAR”).

Conference call information

A virtual briefing and Q&A session for analysts will be hosted by Dr. Markku Jalkanen, Chief Executive Officer, and Toni Hänninen, Chief Financial Officer, at 12:00 pm BST / 2:00 pm EEST / 8:00 am EDT on the day of results. A presentation, webcast details will be made available at www.faron.com/investors.

A replay of the analyst briefing will be made available shortly afterwards. 

Webcast link: https://www.lsegissuerservices.com/spark/FaronPharmaceuticalsOy/events/9b3b55bd-b730-43bf-8509-c1ec3e510415

For more information please contact:

Media Contact

Faron Pharmaceuticals

Eric Van Zanten

Head of Communications

eric.vanzanten@faron.com

Investor.relations@faron.com

+1 (610) 529-6219

Investor Contact

Stern Investor Relations

Julie Seidel

julie.seidel@sternir.com

Phone: +1 (212) 362-1200

Cairn Financial Advisers LLP, Nomad

Sandy Jamieson, Jo Turner, Mark Rogers

Phone: +44 (0) 207 213 0880

Peel Hunt LLP, Broker

Christopher Golden, James Steel

Phone: +44 (0) 20 7418 8900

Sisu Partners Oy, Certified Adviser on Nasdaq First North

Juha Karttunen

Phone: +358 (0)40 555 4727

Jukka Järvelä

Phone: +358 (0)50 553 8990

Consilium Strategic Communications

Mary-Jane Elliott, David Daley, Lindsey Neville

Phone: +44 (0)20 3709 5700

E-mail: faron@consilium-comms.com

About Faron Pharmaceuticals Ltd

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

Forward Looking Statements

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

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

Chairman and Chief Executive Officer’s Review

Introduction

To date, 2021 has been a year of significant accomplishments for Faron; most notably, we have been able to accelerate our lead pipeline programs and secure further funding to allow continued execution of key priorities. The latest data signaling the ability of bexmarilimab to increase survival in cancer patients who have exhausted all treatment options is compelling and it clearly demonstrated the importance of targeting myeloid cell control in the development of next generation immunotherapies. Additionally, the potential of Traumakine, Faron’s intravenous interferon-beta 1a, to treat hospitalized COVID-19 patients, continued to be explored in the phase II/III HIBISCUS study, which is being co-funded by the US Department of Defense. We also conducted a successful fundraising round that raised EUR 15 million and included several new high-quality Continental European institutional investors. The largest of the new investors was the European Investment Council Fund (EIC) and their investment in Faron was the first time that the EIC invested in a publicly listed company. In this report we are pleased to provide further information on the progress we made in the first half of 2021 and insights into our plans for the second half of the year.

Bexmarilimab – Headline data from MATINS indicates compelling anti-tumor activity in multiple advanced solid tumors

Driving the clinical development of bexmarilimab continues to be Faron’s top priority and in the first six months of the year we made considerable progress, generating compelling clinical data and furthering our understanding of the science behind this novel asset. Bexmarilimab is our wholly-owned, novel precision cancer immunotherapy candidate, which causes conversion of the immune environment around a tumor from immune-suppressive to immune-stimulating, by targeting Clever-1, a receptor known to be expressed on immunosuppressive macrophages in the tumor microenvironment. Bexmarilimab is differentiated from other immunotherapies as it specifically targets M2 tumor-associated macrophages (TAMs), which facilitate tumor growth. Through myeloid cell plasticity, bexmarilimab can convert these M2 TAMs to M1s, leaving existing M1 TAMs intact and allowing both to support immune activation against tumors. We believe it has the potential to function as a novel macrophage checkpoint immunotherapy, both as a monotherapy and in combination with other immuno-oncology therapies or standard-of-care treatments.

The ongoing MATINS (Macrophage Antibody To INhibit immune Suppression) study, our first-in-human, open label phase I/II clinical trial with an adaptive design, is investigating the safety and efficacy of bexmarilimab monotherapy in selected metastatic or inoperable solid tumors. The completed Part I of the MATINS trial, primarily intended to investigate safety and tolerability, has shown that bexmarilimab promoted immune activation in all dosed patients and can downregulate a range of major inhibitory immune checkpoints (like PD-1, CTLA-4, etc.) that current immuno-oncology therapies aim to suppress. Bexmarilimab has also been well tolerated, showing no significant adverse events even at the highest dosing levels.

Data continued to be generated in 2021 on the strength of bexmarilimab’s clinical efficacy across the ten different hard-to-treat solid tumor cohorts under investigation – cholangiocarcinoma, colorectal cancer, cutaneous melanoma, ER+ breast cancer, gastric cancer, hepatocellular carcinoma, ovarian cancer, uveal melanoma, pancreatic cancer and anaplastic thyroid carcinoma. Patients in the MATINS trial were all heavily pre-treated and their cancer at the time of treatment with bexmarilimab was significantly advanced.

To date, the strongest results have been observed in four tumor types, with a disease control rate, or DCR (partial response + stable disease rate), of 30.0% — 40.0% across the cutaneous melanoma, gastric cancer, cholangiocarcinoma and hepatocellular carcinoma cohorts. Our progress in the MATINS trial, generating clinical efficacy data, is helping us determine which patients may benefit most from treatment with bexmarilimab. The tumor types that yielded the best responses are now primary candidates to become expansion cohorts for Part III of the MATINS study. Together with the additional work underway investigating higher and more frequent dosing, biomarkers of efficacy and the potential for combinations in earlier lines of therapy, we are building a clear path towards the next, pivotal stage of our development program.

A striking scientific observation from the MATINS study was the discovery earlier this year of an abundant amount of free, soluble Clever-1 in the plasma of MATINS patients. Further experimental testing of isolated Clever-1 has indicated that this soluble form is a direct inhibitor of T cells and could be having an immunosuppressive effect in all locations of the body, therefore controlling the general immune capacity of patients. This would represent a broader immunosuppressive effect than previously expected. It follows that inactivation of Clever-1 with bexmarilimab has the potential to be more universally applicable, by improving patients’ immune response and therefore enabling them to benefit from immuno-oncology therapeutics which have previously been ineffective. Following this observation, we filed a new patent application seeking protection for these inventions and related applications.

Building a global intellectual property (IP) portfolio around Clever-1 is a key priority for Faron and important for the future commercialization of bexmarilimab. In June 2021, the United States Patent and Trademark Office granted a new US Patent, No. 11,046,761, with claims protecting the composition of matter of bexmarilimab through 2037. This patent is a welcome addition to our existing global IP portfolio for targeting Clever-1, covering bexmarilimab’s binding sequences and Clever-1’s corresponding epitope – specific elements of the antibody-antigen binding site. We were granted a similar patent in Japan.

Also in June, Clinical Cancer Research, a journal of the American Association for Cancer Research, published a paper analyzing the mode of action of bexmarilimab, both in vitro and in patients from Part I of the MATINS study. Authored by Dr. Maija Hollmén and colleagues at the University of Turku, Finland – part of Faron’s scientific network – and supported by investigators from the MATINS study, the paper explores the systemic immune signatures induced by bexmarilimab in advanced cancer patients with solid tumors and provides a mechanistic understanding of how a macrophage-targeted approach can promote robust activation of T cells.

The remainder of 2021 will be a critical time for bexmarilimab’s development program as we move towards the pivotal expansion stage (Part III) of the MATINS study and the presentation of additional data at the European Society for Medical Oncology (ESMO) Congress, which will take place September 16 – 21, 2021. Following confirmation of the cancer cohorts that we intend to take into Part III, along with recommendations on dosage and dose frequency, we intend to meet with the FDA ahead of patient recruitment, which is expected to begin in H1 2022. Clinical expansion of the program will also commence in H2 2021 investigating bexmarilimab’s potential in additional clinical settings – in combination with standard of care (SOC) as a first-line therapy in selected advanced solid tumors, as a standalone neoadjuvant therapy for patients with early-stage colorectal cancer and renal cell carcinoma, and as a potential treatment for patients with hematological malignancies.

Traumakine – Lung protection and anti-COVID-19 in one treatment under development

Faron continues to explore the potential of Traumakine, our investigational intravenous (IV) interferon (IFN) beta-1a therapy, as a treatment for acute respiratory distress syndrome (ARDS), acute kidney injury, cardiac protection, prevention of solid organ transplant failure and ischemia reperfusion injury. We believe intravenous IFN beta-1a has the potential to become a powerful treatment option for patients who are at risk of developing ARDS because of a viral infection, such as COVID-19.

Despite the progress that has been made with COVID vaccinations, there remains a critical need to identify effective treatment options for hospitalized COVID-19 patients. For over a decade, Faron has been engaged in research to identify new treatments for patients who are at risk of developing acute respiratory distress syndrome because of a viral infection. We are proud to add the weight of our experience to the ongoing global response to COVID-19 and feel strongly that Traumakine could play a significant role in the treatment of hospitalized COVID-19 patients.

One of the body’s main first lines of defense against viral infection is endogenous IFN-beta production, but recent findings have shown that seriously ill COVID-19 patients have compromised interferon responses. We believe Traumakine treatment can further strengthen the body’s natural defenses. Specifically, the intravenous dosing of Faron’s IFN beta-1a provides the lung vasculature with optimal exposure to IFN, which we believe is a critical aspect of Traumakine’s potential to increase protection against serious lung complications.

In August, the Phase II/III HIBISCUS trial assessing Traumakine as a first-line treatment for hospitalized COVID-19 patients began in the US. The study is being conducted in approximately 10-15 study sites across the US and will enroll 140 patients who require low flow oxygen support, but not mechanical ventilation. The safety and efficacy of Traumakine will be compared to corticosteroid treatment with dexamethasone. Subject to data from HIBISCUS supporting Traumakine’s profile, we will work alongside regulatory authorities and other parties to identify the best path to ensure its future availability to patients.

As part of the HIBISCUS trial’s protocol, concomitant corticosteroid treatment is not possible but will be enabled in a sequenced manner following treatment with Traumakine. This approach reflects feedback from the FDA, together with learnings from the earlier development of Traumakine, that further studies with our IV IFN beta-1a should exclude the use of concomitant corticosteroids since they are likely to block its desired therapeutic effect. Faron believes the sequential use of Traumakine followed by corticosteroids could be the optimal approach to provide the best patient benefit from both therapies. In light of this, Faron applied for new patent protection relating to Traumakine’s induction of CD73 – the cell surface protein – for organ protection, followed by the use of corticosteroids for the treatment of systemic inflammation.

Financially, we have seen strong support for this program. In January 2021, the US Department of Defense (DoD) selected the HIBISCUS trial to receive $6.1 million of funding from the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Faron has an existing working relationship with the DoD’s designated military unit, the 59th Medical Wing of the US Air Force, and the US Army Institute of Surgical Research, to explore the use of Traumakine for organ protection in combat wounds leading to multi-organ failure from ischemia and reperfusion. The support for HIBISCUS from the DoD is further validation of the promise this potential therapy holds for severe COVID-19 patients.

Financial review

In February 2021, Faron raised EUR 15.0 million gross (EUR 14.4 million net) from new and existing shareholders through an issuance of 3,521,127 new ordinary shares. Several new high-quality Continental European institutional investors participated in the share placing, expanding our investor base, along with existing investors. The European Investment Council (EIC) Fund, a breakthrough initiative from the European Commission, was the largest of the new investors. Faron is the first publicly-listed company that the EIC Fund has invested in. We were delighted to receive this significant support from our existing and new investors, providing additional financial resources to allow the further acceleration of our development programs and significantly strengthening our balance sheet.

Statement of comprehensive income

The loss from operations for the six months ended 30 June 2021 was EUR 10.4 million (six months ended 30 June 2020: loss of EUR 7.1 million). No revenue was generated during the period or prior revenue. Research and development expenditure increased by EUR 3.5 million to EUR 9.0 million (2020: EUR 5.5 million). Administrative expenses increased by EUR 0.3 million to EUR 2.6 million (2020: EUR 2.4million).

The loss after tax for the period was EUR 10.6 million (2020: loss of EUR 7.3 million) and the basic loss per share was EUR 0.21 (2020: loss per share of EUR 0.16).

Statement of financial position and cash flows

As of June 30, 2021 net assets amounted to EUR 2.8 million (June 30, 2020: EUR 7.3 million). The net cash flow for the first six months in 2021 was EUR 2.9 million (2020: EUR 4.4 million). As of June 30, 2021 total cash and cash equivalents held were EUR 7.0 million (2020: EUR 11.6 million).

Corporate

Faron’s Annual General Meeting (AGM) was held on April 23, 2021. The AGM approved all the proposals of the Board of Directors and its committees set out in the notice of the AGM published March 25, 2021. The number of members of the Board was confirmed as seven. Frank Armstrong, Markku Jalkanen, Matti Manner, Leopoldo Zambeletti, Gregory Brown and John Poulos were re-elected to the Board and Anne Whitaker was elected as a new member to the Board for a term that ends at the end of the next AGM. Additionally, Faron announced on March 29, 2021 that Peel Hunt LLP had been appointed as their sole Broker.

In June, 2021 Faron opened both a new office in Cambridge, MA and employed our first US-based employee. We expect our presence in the US to grow in the second half of 2021 or early 2022 as we add additional resources to support the acceleration of the bexmarilimab development program.  

Impact of COVID-19 

During the pandemic our ability to secure funding and remote working operations to our portfolio companies is key to continued success. Even during exceptional circumstances, we were able to continue to operate our business almost normally and the development of our clinical trials proceeded as planned. 

Additionally, Faron closely followed and strictly complied with the regulations and recommendations of the Finnish National Institute for Health and Welfare (THL) and other relevant authorities to ensure the safety for its employees, study subjects and partners.

Legal proceedings

As previously announced, Faron has an ongoing arbitration against Rentschler Biopharma SE relating to an agreement concerning the Traumakine API manufacturing. The arbitration is funded by a third-party recovery services provider. The final arbitration decision is expected to be issued by the arbitration tribunal in autumn 2021.

Summary & outlook

Our focus for the remainder of 2021 is the acceleration of bexmarilimab’s clinical development. Preparations for the pivotal expansion stage (Part III) of the MATINS study, including confirmation of dosage and dose frequency, are priorities for us, ahead of patient recruitment, which is expected to begin in H1 2022 following an advice meeting with the US Food & Drug Administration. In H2 2021 we also expect trials to commence investigating the potential of bexmarilimab in combination with standard of care (SOC) as a first-line therapy in selected advanced solid tumors, as a standalone neoadjuvant therapy in multiple indications and as a potential monotherapy in patients with hematological malignancies. Alongside this activity, we will continue patient recruitment in the HIBISCUS trial, investigating the potential of Traumakine in hospitalized COVID-19 patients. On behalf of the Board, we would like to thank our shareholders, existing and new, for their support of Faron. We would also like to thank our employees for their continued commitment to our mission and the patients we serve. We look forward to updating the market on our progress throughout the course of the year.

Dr Markku Jalkanen

Chief Executive Officer

Dr Frank Armstrong

Chairman

Consolidated Income Statement, IFRS

€’000 Unaudited 1-6/2021
6 months
Unaudited 1-6/2020
6 months
1-12/2020
12 months
Revenue 0 0
Other operating income 1,210 743 2,122
Research and development expenses (9,008) (5,534) (13,879)
General and administrative expenses (2,626) (2,354) (4,897)
Operating loss (10,424) (7,145) (16,654)
Financial expense (191) (230) (389)
Financial income 61 31 107
Loss before tax (10,554) (7,343) (16,936)
Tax expense (6) 0 (10)
Loss for the period (10,560) (7,343) (16,946)
Other comprehensive income
Total comprehensive loss for the period (10,560) (7,343) (16,946)
Loss per ordinary share
Basic and diluted loss per share, EUR (0.21) (0.16) (0.37)
Consolidated Balance Sheet, IFRS€’000  Unaudited30 June 2021 Unaudited30 June 2020 31 December 2020
Assets
Non-current assets
Machinery and equipment 19 13 14
Right-of-use-assets 273 456 361
Intangible assets 920 560 565
Prepayments and other receivables 53 80 56
Total non-current assets 1,265 1,109 996
Current assets
Prepayments and other receivables 3,634 1,607 3,263
Cash and cash equivalents 6,967 11,627 4,108
Total current assets 10,600 13,234 7,371
Total assets 11,865 14,343 8,367
Equity and liabilities
Capital and reserves attributable to the equity holders of the Company
Share capital 2,691 2,691 2,691
Reserve for invested unrestricted equity 106,396 91,960 92,015
Accumulated deficit (106,274) (87,339) (96,557)
Translation difference (1) 1 2
Total equity 2,813 7,313 (1,849)
Non-current liabilities
Borrowings 3,231 2,303 2,728
Lease liabilities 109 288 199
Other liabilities 146 0 786
Total non-current liabilities 3,486 2,591 3,713
Current liabilities
Borrowings 0 0 122
Lease liabilities 178 181 176
Trade payables 4,555 2,729 4,608
Other current liabilities 832 1,529 1,597
Total current liabilities 5,565 4,439 6,503
Total liabilities 9,052 7,030 10,216
Total equity and liabilities 11,865 14,343 8,367

 

Consolidated Statement of Changes in Equity, IFRS

’000

Share capital Reserve for invested unrestricted equity Translation difference Accumulated deficit Total equity
Balance as at 1 January 2020 2,691 78,916 (79,997) 1,610
Comprehensive loss for the first six months 2020 1 (7,343) (7,342)
Transactions with equity holders of the Company
Issue of ordinary shares, net of transaction costs EUR 952 thousand 13,044 13,044
Share-based compensation
13,044 13,044
Balance as at 30 June 2020 2,691 91,960 1 (87,339) 7,313
Comprehensive loss for the last six months 2020 1 (9,603) (9,602)
Transactions with equity holders of the Company
Issue of ordinary shares, net of transaction costs EUR 52 thousand 54 54
Share-based compensation 386 386
54 386 440
Balance as at 31 December 2020 2,691 92,015 2 (96,557) (1,849)
Comprehensive loss for the first six months 2021 (1) (10,560) (10,561)
Transactions with equity holders of the Company
Issue of ordinary shares, net of transaction costs EUR 662 thousand 14,381 14,381
Share-based compensation 843 843
14,381 843 15,224
Balance as at 30 June 2021 2,691 106,396 (1) (106,274) 2,813

Consolidated Cash Flow Statement, IFRS

€’000 Unaudited 1-6/2021
6 months
Unaudited 1-6/2020
6 months
1-12/2020
12 months
Cash flow from operating activities
Loss before tax (10,554) (7,343) (16,936)
Adjustments for:
Received grant (642) 0 (587)
Depreciation and amortisation 142 130 283
Interest expense 88 93 149
Tax expense 10 0 10
Unrealised foreign exchange loss (gain), net (27) (125) 117
Share-based compensation 843 0 386
Adjusted loss from operations before changes in working capital (10,141) (7,245) (16,578)
Change in net working capital:
Prepayments and other receivables (660) 534 (1,097)
Trade payables (21) (237) 1,641
Other liabilities (337) (1,333) (1,416)
Cash used in operations (11,158) (8,281) (17,450)
Taxes paid (15) 0 (1)
Interest paid (30) (29) (28)
Net cash used in operating activities (11,204) (8,310) (17,479)
Cash flow from investing activities
Payments for intangible assets (385) (77) (137)
Payments for equipment (7) (2) (5)
Net cash used in investing activities (392) (79) (142)
Cash flow from financing activities
Proceeds from issue of shares 15,044 13,997 14,103
Share issue transaction cost (662) (952) (1,004)
Proceeds from borrowings 264 0 630
Repayment of borrowings (122) (122) (122)
Proceed from grants 0 0 1,375
Payment of lease liabilities (96) (91) (195)
Net cash from financing activities 14,427 12,832 14,787
Net increase (+) / decrease (-) in cash and cash equivalents 2,831 4,443 (2,834)
Effect of exchange rate changes on cash and cash equivalents 27 125 (117)
Cash and cash equivalents at 1 January 4,108 7,059 7,059
Cash and cash equivalents at the end of period 6,967 11,627 4,108

Notes to the financial statements

  1. Corporate information

Faron Pharmaceuticals Ltd (the “Company”) is a clinical stage biopharmaceutical company incorporated and domiciled in Finland, with its headquarters at Joukahaisenkatu 6, 20520 Turku, Finland. The Company currently has a pipeline based on the endothelial receptors involved in regulation of immune response, in oncology and organ damage.

The Company has been listed on the London Stock Exchange’s AIM market since 17 November 2015, with a ticker FARN, and since 3 December 2019, the Company has been listed on the Nasdaq First North Growth Market list with a ticker FARON.

 

  1. Summary of significant accounting policies

    1. Basis of preparation

The unaudited H1 report has been prepared in accordance with the International Financial Reporting Standards of the International Accounting Standards Board (IASB) and as adopted by the European Union (IFRS) and the interpretations of the International Financial Reporting Standards Interpretations Committee (IFRS IC). The financial statements have been prepared on a historical cost basis, unless otherwise stated.

 

The principal accounting policies applied in the preparation of these interim financial statements are set out below. The Company has consistently applied these policies to all the periods presented, unless otherwise stated. The areas of the financial statements involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 2.2.

The unaudited consolidated financial statements incorporate the parent company, Faron Pharmaceuticals Ltd, and all subsidiaries in which it holds over 50% of the voting rights (the “Group”).

 

All amounts are presented in thousands of euros, unless otherwise indicated, rounded to the nearest euro thousand.

    1. Going concern

The Company has forecasted its estimated cash requirements over the next twelve months. In order to make these forecasts the Company has made a number of assumptions regarding the quantity and timing of future expenditure and income as well as other key factors. Though these estimates have been made with caution and care, they continue to contain a significant amount of uncertainty. Based on the forecast the Company believes that it has adequate financial resources to continue its operations into Q4 2021 and therefore these unaudited financial statements have been prepared on a going concern basis. In its meeting on 25 August 2021 the Board of Directors of the Company approved the publishing of these interim financial statements.

The Company has taken several acts to secure further financing during the rest of the year 2021. The Directors believe that the Company can gain access to further resources to sustain operations over the next 12 months. At this stage the Company cannot disclose any of these options.

Because the additional finance is not committed at the date of issuance of these H1 reports, these circumstances represent a material uncertainty that may cast significant doubt on the Company’s ability to continue as a going concern. Should the Group be unable to obtain further finance such that the going concern basis of preparation were no longer appropriate, adjustments would be required, including to reduce balance sheet values of assets to their recoverable amounts, to provide for further liabilities that might arise.

Half-year Report

Faron Pharmaceuticals Oy

(“Faron” or the “Company”)

Half-year report 1 January to 30 June 2020 (unaudited)

–     Development of novel cancer immunotherapy Clevegen® (bexmarilimab) continues in Phase I/II MATINS trial across 10 tumour types

–     IV interferon beta-1a, Traumakine®, being investigated as potential COVID-19 treatment in two ongoing global trials with preparations for US trial underway

–     Successful €14 million placing in April strengthens Company’s balance sheet

–     Additional grants of €3.3 million and €4.6 million loans awarded to drive R&D and CMC programmes

Half-year report, 24 September 2020 at 9.00 AM (EEST)

TURKU, FINLAND – Faron Pharmaceuticals Oy (AIM: FARN, First North: FARON), the clinical stage biopharmaceutical company, today announces its unaudited half-year report for 1 January to 30 June 2020 (the “period”).

HIGHLIGHTS

Operational (including post period):

Clevegen® (bexmarilimab) – Regulator of major inhibitory immune checkpoints and wholly-owned novel cancer immunotherapy in development

Clinical Development Updates:

·      Dosing of Part II of the ongoing MATINS trial commenced in February, with strong patient recruitment across 10 cancer types (ER-positive breast cancer, cholangiocarcinoma (bile duct cancer) and gall bladder cancer, colorectal cancer, gastric cancer, hepatocellular carcinoma, cutaneous melanoma, uveal melanoma, ovarian cancer, pancreatic ductal adenocarcinoma and anaplastic thyroid cancer). This basket trial also has three dosing levels for colorectal cancer (CRC) at 0.3, 1.0 and 3.0 mg/kg.

·      A comprehensive review and analysis of data from the completed Part I (dose finding) stage of the trial was completed by the data monitoring committee (“DMC”) with a recommendation from the DMC to rapidly expand into additional tumour types. As of today, and based on early clinical benefits, four cancer types (colorectal, ovarian, cutaneous melanoma and uveal melanoma) have been selected as the candidate expansion cancer types for Part III.

·      The World Health Organization (WHO) approved bexmarilimab as the International Nonproprietary Name (INN) for Clevegen.

·      Further detail was provided on clinical expansion plans for bexmarilimab, which will include the investigation of alternative dosing cycles, as pharmacodynamic (PD) markers may indicate a need for shorter frequencies, as well as further studies in additional clinical settings – in combination with standard of care (SOC) as a first-line therapy in selected advanced solid tumours and as a standalone neoadjuvant therapy for patients with early stage colon cancer.

·      The Company expects to announce topline data from its first expansion cohorts of the MATINS trial in the fourth quarter of 2020 and determine the final dosage, and dosing frequency for the expansion cohorts, in the first quarter of 2021.

Data Presentations:

·      Previously announced safety and efficacy data from Part I of the MATINS trial were presented at the virtual American Society of Clinical Oncology (ASCO20) Annual Meeting, showing that bexmarilimab was well tolerated without dose-limiting toxicities; CLEVER-1 inhibition led to immune cell activation and downregulation of several checkpoint molecules; and interferon gamma and chemokine CXCL10 responses were associated with clinical responses observed in target or non-target lesions.

·      Data from Part I of the trial were also presented at the European Society of Medical Oncology (ESMO) Virtual Congress 2020, including key pharmacokinetics and Clever-1 occupancy data, evidence of very good tolerability across all dosing levels, immune activation in all subjects, promising clinical anti-tumour activity and the conversion of immunologically non-inflamed (cold) tumours into inflamed (hot) tumours in patients traditionally not responsive to currently available checkpoint inhibitors.

Business Development and Manufacturing:

·      AGC Biologics, a global contract development and manufacturing organization, was selected as the commercial scale manufacturer of bexmarilimab. The commercial scale manufacturing process established by AGC Biologics will also provide a dossier to support future regulatory filings in Europe and the US.

·      A €2,500,000 grant from the European Innovation Council (EIC) Accelerator pilot scheme was awarded to the Company to progress the MATINS trial and related business activities. The EIC Accelerator pilot scheme supports top-class innovators, entrepreneurs, small companies and scientists with funding opportunities to support developing and bringing to the market new breakthrough products, services and business models that would become future drivers of economic growth for Europe.

·      Faron joined the Finnish Cancer IO consortium, a new cancer immunotherapy-focused €10 million top-level collaborative research and innovation project within Business Finland’s Personalized Health Program, and was awarded a €800,000 grant from Business Finland to conduct a detailed, state-of-the-art characterization of the immunological responses seen in cancer patients in the MATINS trial. Bexmarilimab will be studied in experimental combinations with anti-cancer molecules from other consortium members.

Traumakine® – in development for the treatment of organ failures

Clinical Development:

·       Faron’s intravenous (IV) interferon (IFN) beta-1a, Traumakine, was selected to be part of the two global trials investigating potential treatments for COVID-19.

·       WHO’s global Solidarity trial began in April 2020 investigating four treatment options against SOC to assess their relative effectiveness against COVID-19 – remdesivir; lopinavir/ritonavir; lopinavir/ritonavir with IFN beta-1a; and chloroquine or hydroxychloroquine. In July, WHO removed the hydroxychloroquine and lopinavir/ritonavir treatment arms from the trial due to insufficient evidence of benefit leaving IFN beta-1a and remdesivir as the only two drugs remaining in the trial, subject to WHO announcing further new compounds for inclusion. IFN beta-1a now remains as a monotherapy. The WHO expects to provide a readout from the SOLIDARITY trial in the fourth quarter of 2020.

·       The global REMAP-CAP (Randomized, Embedded, Multifactorial Adaptive Platform Trial for Community-Acquired Pneumonia) investigating potential treatments for patients with community acquired pneumonia, including COVID-19 patients, introduced a new treatment arm to include Faron’s IV IFN beta-1a. The study is directly comparing the treatment effect of Traumakine, hydrocortisone treatments, and other study treatment options on the clinical outcomes of COVID-19 patients and those with other causes of pneumonia requiring intensive care unit (ICU) care. 

·       Faron announced that a third trial will investigate the potential of Traumakine to treat COVID-19. HIBISCUS (Human Interferon Beta In Severe CoronavirUS) will be an investigator-initiated study at the Harvard Medical School’s Beth Israel Deaconess Medical Center (BIDMC), focused on ICU patients with ARDS caused by viral infection (e.g. COVID-19, influenza). Commencement of the phase II/III pivotal, randomized, placebo controlled study, which aims to recruit 350 patients, remains subject to finalisation of funding arrangements and regulatory approval. Faron expects to initiate this study in the fourth quarter of 2020.

·       Detailed analyses into the effects of glucocorticoids on IV IFN beta-1a activity, which arose following the INTEREST trial in 2018, were published in Intensive Care Medicine, a world leading journal in the field of critical care. The results showed that the desired mechanism of action of IV IFN beta-1a in the lung vasculature – the upregulation of CD73 – is blocked by the administration of glucocorticoids, and co-administration of glucocorticoids with IV IFN beta-1a increases mortality in patients with acute respiratory distress syndrome (ARDS) compared to patients administered with IV IFN beta-1a alone.

Business Development and Manufacturing:

·       Faron announced plans to initiate a new state-of-the-art process for Traumakine manufacturing and was awarded a €2,100,000 low interest rate loan from Business Finland, the governmental innovation financing agency of Finland, which will be used to develop and select a new cell line that can be used for future commercial scale production of the Company’s IV IFN beta-1a. The Company subsequently received a loan guarantee from Finnvera (official Export Credit Agency of Finland) for €2,500,000 loan to expand the commercial scale manufacturing.

AOC3 Antagonist Platform Technology (HaematokineTM)

·        In March 2020, Faron acquired rights for the potential new use of AOC3 inhibitors. Faron will be responsible for the future development of the AOC3 protein inhibitor and for the management, prosecution, maintenance and filing of patent applications. The project is now named HaematokineTM as the Company believes that the use of AOC3 inhibitors could regulate the expansion of hematopoietic stem cells and could become a life saving treatment for patients who have lost their bone morrow for various reasons such as hematological cancers. The Company is continuing IND-enabling studies for this program, however, the recent first review by the Finnish patent office has made the Company believe that global patent protection could be possible for the HaematokineTM project.

Corporate

·      Faron hosted a virtual R&D Day presenting the Company’s R&D strategy and insights into its two clinical stage programmes. In addition to Faron Management, three external experts provided additional perspectives on both programmes. Alongside Markku Jalkanen, Chief Executive Officer, and members of the Executive Leadership and senior management teams, external perspectives were provided by Prof. Alberto Mantovani, Humanitas University, Milan, Italy; Ass. Prof. Maija Hollmén, MediCity, Turku University, Finland and Dr. Petri Bono, Terveystalo, Helsinki, Finland.

·       The Company’s Annual general meeting (AGM) was held on 18 May 2020. The AGM approved all the proposals of the board of directors and its committees set out in the notice of the AGM published on 14 April 2020. The number of members of the Board was confirmed as six. Frank Armstrong, Markku Jalkanen, Matti Manner, Leopoldo Zambeletti, Gregory Brown and John Poulos were re-elected to the Board for a term that ends at the end of the next AGM.

·       Faron announced on 27 July 2020 that Cairn Financial Advisers LLP had been appointed as Nominated Adviser to the Company with immediate effect. Panmure Gordon (UK) Limited continues to act as the Company’s Broker.

Impact of COVID-19

During the pandemic our ability to secure funding and remote working operations to our portfolio companies is key to continued success. Even during exceptional circumstances, we were able to continue to operate our business almost normally and the development of our clinical trials proceeded as planned.

Additionally, Faron closely followed and strictly complied to the regulations and recommendations of the Finnish National Institute for Health and Welfare (THL) and other relevant authorities to ensure the safety for its employees, study subjects and partners.

Financial

·       Cash balances of €11.6 million at 30 June 2020 (2019: €2.9 million).

·       Operating loss of €7.1 million for the six months ended 30 June 2020 (2019: €6.3 million).

·       Net assets of €7.3 million as at 30 June 2020 (2019: €-1.8 million).

·       In April 2020 the Company raised a total of €14 million gross (€13 million net) in a share placing, effected via a private placement of new Ordinary Shares to a limited number of institutional investors in the Nordic region and a concurrent proposed private placement of new Ordinary Shares to UK institutional investors.

·       Additional grants of €3.3 million, loan of €2.1 million and a loan guarantee for €2.5 million were awarded in H1 and partially post period. Those non-diluting funds (in total of €7.9 million) funds will be dispersed to the Company in H2 and thereafter, and thus are not included in H1 cash balances.

Consolidated key figures, IFRS

€’000

Unaudited

1-6/2020
6 months

Unaudited

1-6/2019
6 months

1-12/2019
12 months

Revenue

0

0

0

Research and Development expenses

(5,534)

(4,982)

(10,237)

General and Administrative expenses

(2,354)

(1,361)

(3,049)

Loss for the period

(7,343)

(6,412)

(13,262)

Unaudited

1-6/2020
6 months

Unaudited

1-6/2019
6 months

1-12/2019
12 months

Loss per share EUR

(0.16)

(0.19*)

(0.36)

Number of shares at end of period

46,799,747

37,233,894

43,290,747

Average number of shares

44,584,199

33,819,699

36,850,577

€’000

Unaudited 30 Jun 2020

Unaudited

30 Jun 2019

31 Dec 2019

Cash and cash equivalents

11,627

2,892

7,059

Equity

7,313

(1,761)

1,610

Balance sheet total

14,343

5,103

10,209

*correction to interim results announced on 23 September 2019, the Loss per share is EUR 0.19 instead of EUR 0.17

Commenting on the results, Dr Markku Jalkanen, CEO of Faron, said: “I am delighted to report the significant progress we have made so far in 2020, advancing the Faron pipeline and investing to secure the future of our clinical programmes. Our novel precision cancer immunotherapy, bexmarilimab, continues to deliver very promising results in a development programme that has rapidly expanded this year and our confidence in this novel therapy has been strengthened by the MATINS Part I data, showing that bexmarilimab has led to CLEVER-1 inhibition with immune cell activation and downregulation of several checkpoint molecules.  With the MATINS trial now advancing across ten cancer cohorts we stand to learn much more about the potential of this novel therapy in the coming months and we look forward to continuing our discussions with regulators about the future development plan of this program.

“As the scientific community has rallied in 2020 to identify therapies for COVID-19 patients, I am proud that Faron has been able to support two global initiatives and a planned US trial, to investigate the potential of Traumakine for the treatment of ARDS and COVID-19. We look forward to the upcoming WHO SOLIDARITY trial data in fourth quarter of this year and expect to initiate our HIBISCUS US study with Harvard University in the fourth quarter of this year.

“The Company’s successful fundraise in April and a number of additional non-dilutive funds put the Company in a strong financial position to progress our clinical programmes and I would like to thank all our shareholders for their continued support.”

September 24, 2020

Faron Pharmaceuticals

Board of Directors

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 (“MAR”).

Conference call information

Faron will host a webcast and conference call for analysts to provide an update on the results, followed by a Q&A session, at 7.30am EST / 12:30pm BST / 2:30pm EEST. A presentation to accompany the call will be available on the Faron website (https://www.faron.com/investors/results) at 7.00am EST / 12.00pm BST / 2.00pm EEST

The webcast can be accessed here https://www.lsegissuerservices.com/spark/FaronPharmaceuticalsOy/events/f2025553-c840-4c5c-9f34-d6e3b6d58fa3 

Dial-in details are:

UK: 0800 028 8438

Finland: 0931 583 827

US: (918) 922-6506
Conference ID: 5946048

For more information please contact:

Faron Pharmaceuticals Oy

Dr Markku Jalkanen, Chief Executive Officer

investor.relations@faron.com

Cairn Financial Advisers LLP, Nomad

Sandy Jamieson, Jo Turner,  Mark Rogers

Phone. +44 207 213 0880     

Panmure Gordon (UK) Limited, Broker

Rupert Dearden

Phone: +44 207 886 2500     

Sisu Partners Oy, Certified Adviser on Nasdaq First North

Juha Karttunen, Jussi Majamaa

Phone: +358 (0)40 555 4727

Consilium Strategic Communications

Mary-Jane Elliott, David Daley, Lindsey Neville

Phone: +44 (0)20 3709 5700

E-mail: faron@consilium-comms.com 

Stern Investor Relations, Inc.

Julie Seidel

Phone: +(1)212 362 1200

Email: Julie.Seidel@sternir.com

About Faron Pharmaceuticals Ltd  

Faron (AIM: FARN, First North: FARON) is a clinical stage biopharmaceutical company developing novel treatments for medical conditions with significant unmet needs. The Company currently has a pipeline based on the receptors involved in regulation of immune response in oncology and organ damage. Clevegen, its precision immunotherapy, is a novel anti-Clever-1 antibody with the ability to switch immune suppression to immune activation in various conditions, with potential across oncology, infectious disease and vaccine development. Currently in phase I/II clinical development as a novel macrophage checkpoint immunotherapy for patients with untreatable solid tumours, Clevegen has potential as a single-agent therapy or in combination with other standard treatments including immune checkpoint molecules. Traumakine, the Company’s pipeline candidate to prevent vascular leakage and organ failures, has completed a phase III clinical trial in Acute Respiratory Distress Syndrome (ARDS). Plans for its future development are being finalised to avoid interfering steroid use together with Traumakine. Faron is based in Turku, Finland. Further information is available at www.faron.com.

Caution regarding forward looking statements

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

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

Chairman’s and Chief Executive Officer’s Review

Introduction

The first half of 2020 has continued to build further excitement around Faron’s pipeline, which we saw gain momentum in 2019. Clevegen® (bexmarilimab), by providing significant immune activation for cancer patients, has delivered solid achievements against our objectives for the period. Traumakine® (intravenous interferon-beta 1a) in turn has become a key candidate as a potential COVID-19 treatment due to its ability to act as an anti-viral and lung function supportive agent. We also announced a new pre-clinical project, now called HaematokineTM, a treatment involving the regeneration of haematopoietic stem cells. Faron also attracted a total of 22 million in new funding, which includes a significant amount of non-dilutive funds (7.9 million). In this report we are pleased to provide further information on our H1 2020 progress and also give insights into our plans and intended progress for the second half of the year.

Clevegen (bexmarilimab) – Commencement of Part II of MATINS study with strong patient recruitment and encouraging Part I results

Driving the clinical development of Clevegen has been Faron’s priority and in the first six months of the year we have delivered strong results, with the programme continuing apace. Bexmarilimab is our wholly-owned novel precision cancer immunotherapy candidate, which causes conversion of the immune environment around a tumour from immune-suppressive to immune-stimulating by reducing the number and function of immune suppressive tumour-associated macrophages (TAMs) by inactivating the function of CLEVER-1 receptor. Bexmarilimab is differentiated from other immunotherapies through its specific targeting of M2 TAMs, which facilitate tumour growth. Through myeloid cell plasticity, bexmarilimab can convert these M2 TAMs to M1s, leaving existing M1 TAMs intact and allowing both to support immune activation against tumours. We believe it has the potential to function as a novel macrophage checkpoint immunotherapy, both as a monotherapy and in combination with other immuno-oncology therapies or standard of care treatments.

The ongoing MATINS trial, our first-in-human open label phase I/II clinical trial with an adaptive design, is investigating the safety and efficacy of bexmarilimab in selected metastatic or inoperable solid tumours. The completed Part I of the MATINS trial, primarily intended to investigate safety and tolerability, has already shown that bexmarilimab administration promoted immune activation in all dosed patients, with data also indicating that bexmarilimab can down regulate a range of major inhibitory immune checkpoints (like PD-1, CTLA-4, etc.) that current immuno-oncology therapies aim to suppress. Bexmarilimab has also been well tolerated, showing no significant adverse events even at the highest dosing levels.

Clinical progress accelerated early in 2020 when the MATINS trial’s data monitoring committee (DMC) approved the first expansion cohort for Part II of the trial in patients suffering from late-stage colorectal cancer (CRC). A second expansion cohort, in patients with ovarian cancer, quickly followed. Ovarian cancer is a tumour type known to host a significant number of Clever-1 positive TAMs and it presents a high unmet medical need with few available treatments for patients. As of today, additional clinical benefits have been observed in cutaneous melanoma and uveal melanoma. All these four cancer types are primary candidates to become expansion cohorts for the Part III of the MATINS study.

In March 2020, a comprehensive review and analysis of data from the completed Part I stage of the trial was undertaken by the DMC. Key findings presented to the committee included evidence of immune activation in all subjects (except those receiving the lowest 0.1 mg/kg dose) following treatment with bexmarilimab and emerging evidence of clinical responses. According to the RECIST response evaluation criteria, bexmarilimab treatment showed a clinical effect of two partial responses and seven cases of stable disease, which equated to a response rate in Part I of 36 per cent (9/25) among 0.3-10 mg/kg dose levels.

In light of these findings, the DMC recommended a rapid expansion of the study to include all cancer cohorts in the study protocol, beyond the CRC and ovarian cancer cohorts previously selected. The committee also recommended that patient recruitment for the expansion cohorts should follow standard of care for each cancer type and enable subjects with less compromised immune systems to be enrolled to the trial (i.e. earlier treatment lines whenever possible, according to the study protocol).

In total, bexmarilimab is now being investigated in ten cancer cohorts: ER-positive breast cancer, cholangiocarcinoma (bile duct cancer) and gall bladder cancer, colorectal cancer, gastric cancer, hepatocellular carcinoma, cutaneous melanoma, uveal melanoma, ovarian cancer, pancreatic ductal adenocarcinoma and anaplastic thyroid cancer.

At a time when health systems have been stretched to their limits by the ongoing global COVID-19 pandemic, we have been particularly pleased that patient recruitment into the MATINS trial has not been affected and we look forward to learning more about bexmarilimab’s potential as the trial progresses. Our confidence in bexmarilimab has only strengthened this year. Despite the MATINS trial patients’ very advanced stage of disease and several lines of previous therapies, including PD-1 and CTLA-4 inhibitors, we remain very encouraged by the evidence emerging of this candidate’s single agent efficacy. That is why we also announced this year that clinical expansion plans for bexmarilimab will include the investigation of alternative dosing cycles, as pharmacodynamics markers may indicate a need for shorter frequencies, as well as further studies in additional clinical settings. The Company also intends to investigate bexmarilimab in combination with standard of care, as a first-line therapy in selected advanced solid tumours, and as a standalone neoadjuvant therapy for patients with early stage colon cancer.

Patient recruitment for the several cohorts has already completed and the rest are expected to follow in the next few months. The data from these cohorts will allow the Company to obtain advice from regulatory authorities for the continuation into Part III of the study. Patient recruitment for a small number of additional cohorts is expected to complete around early Q4 2020 and discussions with the FDA likely to follow in early 2021.

Alongside bexmarilimab’s clinical progress in 2020, the Company has undertaken further work to prepare for its future, by appointing global contract development and manufacturing organisation, AGC Biologics, as the commercial scale manufacturer. This is a significant milestone in our bexmarilimab programme. AGC Biologics has decades of experience in manufacturing of biotechnological products, including commercial market supplies of FDA, PDMA and EMA approved products. The commercial scale manufacturing process it establishes for bexmarilimab will provide a dossier to support future regulatory filings in Europe and the US.

We have also continued our partnering discussions with third parties, including leading pharmaceutical companies, with the aim of supporting expansion of clinical development and exploring the potential of bexmarilimab in combination with existing immunotherapies and other cancer therapies. While these remain important to our strategy, Faron’s strong financial position does provide the Company with greater flexibility to independently advance this candidate further in its development programme.

Traumakine – Lung protection and anti-COVID-19 in one treatment under development

Traumakine is currently involved in three major clinical studies sponsored by the global scientific community in its search for therapies against COVID-19. These explore the potential of the Company’s intravenous (IV) interferon (IFN) beta-1a, Traumakine, to reduce intensive care need and mortality for COVID-19 patients but also as a future treatment for acute respiratory distress syndrome (ARDS) and one that could have significant impact on the intensive-care burden from COVID-19. This is well justified, and our greater understanding from previous trials on the interference from corticosteroids on the efficacy of our investigational IV IFN beta-1a has enabled us to refocus our efforts on this asset, which we continue to believe holds great potential as a future treatment for ARDS. Alongside the acceleration of bexmarilimab’s development programme, Faron began 2020 continuing to work with regulatory authorities to determine the next steps in Traumakine’s future development pathway. We were pleased therefore, when in March the U.S. Food and Drug Administration (FDA) accepted the Company’s proposed protocol design for the next Traumakine study in ARDS patients. That trial protocol reflected the feedback and conclusions from the FDA that further studies with our IV IFN beta-1a should exclude the use of concomitant glucocorticoids since they are likely to block its desired therapeutic effect, and may have a potentially deleterious impact on patient survival. Since March, the FDA has indicated that a separate arm in this study is required, to test a separate effect of a corticosteroid called dexamethasone. This study called HIBISCUS has now been designed together with Harvard University in the US. The Company expects approval of this study in due course and for recruitment to start during Q4 2020.

In April we joined two global initiatives investigating the potential of multiple therapies to treat COVID-19, by providing supplies of Traumakine to REMAP-CAP, the Randomized, Embedded, Multifactorial Adaptive Platform Trial for Community-Acquired Pneumonia program, and the World Health Organization’s (WHO’s) Solidarity trial.

One of the body’s main first lines of defence against viral infection is endogenous IFN-beta production, but recent findings have shown that seriously ill COVID-19 patients have compromised interferon responses. We believe Traumakine treatment can further strengthen the body’s natural defences. Specifically, the intravenous dosing of Faron’s IFN beta-1a provides the lung vasculature with optimal exposure to IFN, which we believe is a critical aspect of Traumakine’s potential to increase protection against serious lung complications.

While both global initiatives are ongoing, Faron is also supporting a third trial to investigate the potential of the Company’s IV IFN beta-1a to treat COVID-19. HIBISCUS (Human Interferon Beta In Severe CoronavirUS), will be an investigator initiated study at Harvard Medical School’s Beth Israel Deaconess Medical Center (BIDMC), focused on ICU patients with ARDS caused by viral infection (e.g. COVID-19, influenza). Commencement of this Phase II/III pivotal, randomized, placebo-controlled study, remains subject to finalisation of funding arrangements and regulatory approval. The study will test Traumakine against both placebo and dexamethasone, which is now a part of the standard of care in the US.

Subject to data from these trials supporting Traumakine’s profile, the Company will work with regulatory authorities and other parties to identify the best path to ensure its future availability to patients. 

As a sign of our continued commitment to the Traumakine programme and looking ahead to its future, the Company announced (August, post-period) that AGC Biologics, the commercial scale manufacturer of bexmarilimab, will be the new manufacturing house for the commercial scale production of Traumakine’s active pharmaceutical ingredient – interferon beta-1a. 

HaematokineTM – Hematopoietic stem cell expansion

In March the Company acquired rights for the potential new use of AOC3 inhibitors. The AOC3 enzymatic domain, a semicarbazide-sensitive amine oxidase, is known to produce hydrogen peroxide, a potent inflammatory mediator. AOC3 in vivo, ex vivo and in vitro studies have revealed that ACO3 enzymatic end product hydrogen peroxide (H2O2) controls expansion of hematopoietic stem cells. Hematopoietic Stem Cell Transplantation (HSCT) is today the standard of care in all haematological malignancies. This is due to the fact that transplant failure is a lethal complication and a result of poor expansion of transplanted cells, which can occur in up to 30 per cent of patients. In addition, secondary transplantation and treatments reviving failing transplants are expensive and often unsuccessful. With Haematokine, the Company believes, we can expand stem cells by regulating AOC3 activity.

Financial review

In April the Company successfully raised approximately €14 million (£12.9 million) through a private placement of new ordinary shares to institutional investors in the UK and the Nordic region. The majority of these proceeds are being used to advance our bexmarilimab clinical programme and expand manufacturing, while also significantly strengthening the Company’s balance sheet to support other ongoing activities.

During the period the Company was awarded two grants to support its activities: An €0.8 million grant from Business Finland to conduct detailed, state-of-the-art characterization of the immunological responses seen in cancer patients in the bexmarilimab MATINS trial and a €2.5 million grant from the European Innovation Council (EIC) Accelerator pilot scheme to progress the MATINS trial and related business activities.

The Company was also awarded a €2.1 million low interest rate loan from Business Finland, which is being used to develop and select a new cell line for use in the future commercial scale production of Traumakine. Additionally, post period, the Company received a loan guarantee for a €2.5 million loan, which will be used to further expand that cell line. The Company has partnered with Danske Bank A/S Finland Branch for the loan arrangement.

These grants and loans, totalling €7.9 million, are non-dilutive. Proceeds of these grants and loans are not included in the H1 cash balances as the proceeds will be dispersed to the Company post period.

Statement of comprehensive income

The loss from operations for the six months ended 30 June 2020 was EUR 7.1 million (six months ended 30 June 2019: loss of EUR 6.3 million). No revenue was generated during the period or prior revenue. Research and development expenditure increased by EUR 0.5 million to EUR 5.5 million (2019: EUR 5.0 million). Administrative expenses increased by EUR 1.0 million to EUR 2.4 million (2019: EUR 1.4 million).

The loss after tax for the period was EUR 7.3 million (2019: loss of EUR  6.4 million) and the basic loss per share was EUR 0.16 (2019: loss per share of  EUR 0.19).

Statement of financial position and cash flows

At 30 June 2020, net assets amounted to EUR 7.3 million (30 June 2019: EUR−1.8 million). The net cash flow for the first six months in 2020 was EUR 4.4 million (2019: EUR −1.1 million). As at 30 June 2020, total cash and cash equivalents held were EUR 11.6 million (2019: EUR 2.9 million).

Legal proceedings

As announced by the Company on 2 October 2019 and 30 December 2019, the Company has received a letter from Rentschler Biopharma SE in which Rentschler stated that it was terminating the agreement concerning Traumakine API manufacturing. The Company considers that this statement is without merit and that Rentschler has breached the agreement. Faron has filed a request for arbitration to seek damages. The arbitration proceeding is ongoing and the final arbitration award is expected to be issued by the arbitration tribunal during mid year 2021. To fund the proceedings, the Company has entered into a litigation funding agreement with a third-party recovery services provider offering non-recourse financing services which, subject to final quantum, is expected to cover both the Company’s and the adverse party’s legal expenses and which, in the event of success, would receive a typical portion of any damages awarded.

Corporate

On 16 June 2020, the Company hosted a virtual R&D Day presenting its R&D strategy and insights into the Clevegen and Traumakine programmes. Faron management representatives were joined by Prof. Alberto Mantovani, Humanitas University, Milan, Italy; Ass. Prof. Maija Hollmén, MediCity, Turku University, Finland, and Dr. Petri Bono, Terveystalo, Helsinki, Finland, who provided additional perspectives on both programmes. The event, well attended, was an opportunity for the Company to showcase the strength of its clinical programmes and plans for the future. 

The Company’s Annual general meeting (AGM), held on 18 May 2020, approved all the proposals of the board of directors and its committees set out in the notice of the AGM published on 14 April 2020. The number of members of the Board was confirmed as six. Frank Armstrong, Markku Jalkanen, Matti Manner, Leopoldo Zambeletti, Gregory Brown and John Poulos were re-elected to the Board for a term that ends at the end of the next AGM.

Summary & outlook

Our focus for H2 2020 will be the expedition of Clevegen’s clinical development through Parts II and III of the MATINS trial and to report these data to regulatory authorities. We will also continue to support the ongoing COVID-19 research initiatives investigating the potential of the Company’s IV IFN beta-1a, Traumakine. The successful financing undertaken in H1 and post period 2020 puts the Company in a strong financial position to progress both clinical programmes and related business activities, while partnering discussions continue.

On behalf of the Board we would like to thank the whole Faron team for their commitment, resilience and agility during the challenging times of 2020. Their response has enabled the Company to make significant achievements against its objectives and has secured a strong position for the second half of 2020.

We look forward to updating the market on our progress throughout the course of the year.

 

Consolidated Income Statement, IFRS

 €’000

Unaudited

1-6/2020
6 months

Unaudited

1-6/2019
6 months

1-12/2019
12 months

Revenue

0

0

0

Other operating income

743

0

185

Research and development expenses

(5,534)

(4,982)

(10,237)

General and administrative expenses

(2,354)

(1,361)

(3,049)

Operating loss

(7,145)

(6,343)

(13,101)

Financial expense

(230)

(73)

(224)

Financial income

31

5

74

Loss before tax

(7,343)

(6,411)

(13,251)

Tax expense

0

(0)

(11)

Loss for the period

(7,343)

(6,412)

(13,262)

Other comprehensive income

Total comprehensive loss for the period

(7,343)

(6,412)

(13,262)

Loss per ordinary share

Basic and diluted loss per share, EUR

(0.16)

(0.19*)

(0.36)

 

Consolidated Balance Sheet, IFRS

€’000

 Unaudited

 30 June
2020

Unaudited

30 June
 2019

31 December 2019

Assets

Non-current assets

Machinery and equipment

13

14

13

Right-of-use-assets

456

0

386

Intangible assets

560

522

529

Prepayments and other receivables

80

595

77

Total non-current assets

1,109

1,131

1,005

Current assets

Prepayments and other receivables

1,607

1,080

2,145

Cash and cash equivalents

11,627

2,892

7,059

Total current assets

13,234

3,972

9,204

Total assets

14,343

5,103

10,209

Equity and liabilities

Capital and reserves attributable to the equity holders of the Company

Share capital

2,691

2,691

2,691

Reserve for invested unrestricted equity

91,960

68,695

78,916

Accumulated deficit

(87,339)

(73,146)

(79,997)

Translation difference

1

0

Total equity

7,313

(1,761)

1,610

Non-current liabilities

Borrowings

2,303

2,363

2,263

Lease liabilities

288

0

261

Total non-current liabilities

2,591

2,363

2,524

Current liabilities

Borrowings

0

0

163

Lease liabilities

181

0

135

Trade payables

2,729

2,868

2,967

Other current liabilities

1,529

1,633

2,810

Total current liabilities

4,439

4,501

6,075

Total liabilities

7,030

6,864

8,599

Total equity and liabilities

14,343

5,103

10,209

 

Consolidated Statement of Changes in Equity, IFRS

‘000

Share capital

Reserve for invested unrestricted equity

Translation difference

Accumulated deficit

Total equity

Balance as at 1 January 2019

2,691

64,464

(66,786)

369

Comprehensive loss for the first six months 2019

(6,412)

(6,412)

Transactions with equity holders of the Company

Issue of ordinary shares, net of transaction costs EUR 230 thousand

4,230

4,230

Share-based compensation

51

51

4,230

51

4,281

Balance as at 30 June 2019

2,691

68,695

(73,146)

(1,761)

Comprehensive loss for the last six months 2019

(6,850)

(6,850)

Transactions with equity holders of the Company

Issue of ordinary shares, net of transaction costs EUR 919 thousand

10,222

10,222

Share-based compensation

Balance as at 31 December 2019

2,691

78,916

(79,997)

1,610

Comprehensive loss for the first six months 2020

1

(7,343)

(7,342)

Transactions with equity holders of the Company

Issue of ordinary shares, net of transaction costs EUR 952 thousand

13,044

13,044

Share-based compensation

13,044

0

13,044

Balance as at 30 June 2020

2,691

91,960

1

(87,339)

7,313

 

Consolidated Cash Flow Statement, IFRS

€’000

Unaudited

1-6/2020
6 months

Unaudited

1-6/2019
6 months

1-12/2019
12 months

Cash flow from operating activities

Loss before tax

(7,343)

(6,411)

(13,251)

Adjustments for:

Depreciation and amortisation

130

48

238

Interest expense

93

39

158

Tax expense

0

11

Unrealised foreign exchange loss (gain), net

(125)

29

(7)

Share-based compensation

0

51

51

Adjusted loss from operations before changes in working capital

(7,245)

(6,245)

(12,800)

Change in net working capital:

Prepayments and other receivables

534

1,679

1,173

Trade payables

(237)

(641)

(567)

Other liabilities

(1,333)

(334)

731

Cash used in operations

(8,281)

(5,541)

(11,463)

Taxes paid

0

0

(9)

Interest paid

(29)

(26)

(51)

Net cash used in operating activities

(8,310)

(5,567)

(11,523)

Cash flow from investing activities

Payments for intangible assets

(77)

(41)

(100)

Payments for equipment

(2)

(0)

Net cash used in investing activities

(79)

(41)

(100)

Cash flow from financing activities

Proceeds from issue of shares

13,997

4,461

15,627

Share issue transaction cost

(952)

(230)

(1,175)

Proceeds from borrowings

0

231

307

Repayment of borrowings

(122)

(0)

Payment of lease liabilities

(91)

(151)

Net cash from financing activities

12,832

 4,461

14,608

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

4,443

(1,147)

2,985

Effect of exchange rate changes on cash and cash equivalents

125

(29)

7

Cash and cash equivalents at 1 January

7,059

4,067

4,067

Cash and cash equivalents at the end of period

11,627

2,892

7,059

Notes to the financial statements

1.  Corporate information

 

Faron Pharmaceuticals Ltd (the “Company”) is a clinical stage biopharmaceutical company incorporated and domiciled in Finland, with its headquarters at Joukahaisenkatu 6, 20520 Turku, Finland. The Company currently has a pipeline based on the endothelial receptors involved in regulation of immune response, in oncology and organ damage. 

The Company has been listed on the London Stock Exchange’s AIM market since 17 November 2015, with a ticker FARN, and since 3 December 2019, the Company has been listed on the Nasdaq First North Growth Market list with a ticker FARON.

2.  Summary of significant accounting policies

 

2.1.  Basis of preparation

The unaudited H1 report have been prepared in accordance with the International Financial Reporting Standards of the International Accounting Standards Board (IASB) and as adopted by the European Union (IFRS) and the interpretations of the International Financial Reporting Standards Interpretations Committee (IFRS IC). The financial statements have been prepared on a historical cost basis, unless otherwise stated.

The H1 report has been prepared on the basis of a full retrospective application of IFRS 15, Revenue from Contracts with Customers, with the adoption date as of 1 January 2017.

The principal accounting policies applied in the preparation of these interim financial statements are set out below. The Company has consistently applied these policies to all the periods presented, unless otherwise stated. The areas of the financial statements involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 2.2.

The unaudited consolidated financial statements incorporate the parent company, Faron Pharmaceuticals Ltd, and all subsidiaries in which it holds over 50% of the voting rights (the “Group”).

All amounts are presented in thousands of euros, unless otherwise indicated, rounded to the nearest euro thousand.

2.2.    Going concern

The Company has forecasted its estimated cash requirements over the next twelve months. In order to make these forecasts the Company has made a number of assumptions regarding the quantity and timing of future expenditure and income as well as other key factors. Though these estimates have been made with caution and care, they continue to contain a significant amount of uncertainty. Based on the forecast the Company believes that it has adequate financial resources to continue its operations into Q1 2021 and therefore these unaudited financial statements have been prepared on a going concern basis. In its meeting on 23 September 2020 the Board of Directors of the Company approved the publishing of these interim financial statements.

Company has taken several acts to secure further financing during rest of the year 2020. The Directors believe that the Company can gain access to further resources to sustain operations over the next 12 months. At this stage the Company can not disclose any of these options.

Because the additional finance is not committed at the date of issuance of these H1 reports, these circumstances represent a material uncertainty that may cast significant doubt on the Company’s ability to continue as going concern. Should the Group be unable to obtain further finance such that the going concern basis of preparation were no longer appropriate, adjustments would be required, including to reduce balance sheet values of assets to their recoverable amounts, to provide for further liabilities that might arise.

AIM Rules for Companies disclosure

Frank Armstrong, Chairman of the Company, was Chairman of Redx Pharma plc from 1 September 2014 until his resignation on 20 April 2017. On 24 May 2017, Redx Pharma plc was put into administration by Liverpool City Council as a result of non-payment of an outstanding loan of £2 million and the ordinary shares in Redx Pharma plc were suspended from trading on AIM. On 3 November 2017, Redx Pharma plc exited administration with all creditors paid and trading in the shares of Redx Pharma plc resumed on AIM.

Interim results

Faron Pharmaceuticals Ltd

(“Faron” or the “Company”)

Interim results for the six months ended 30 June 2019

TURKU – FINLAND, 23 September 2019 – Faron (AIM: FARN), the clinical stage biopharmaceutical company, today announces its unaudited interim results for the six months ended 30 June 2019 (the “Period”).

HIGHLIGHTS  

Operational (including post Period-end):

Clevegen®  – wholly-owned novel cancer immunotherapy in clinical development

  • Dose escalation reached its planned maximum level of 10mg/kg in the open label phase I/II MATINS study and data from 11 subjects, dosed across three sites in Finland and the UK, indicated Clevegen’s potential early efficacy and good tolerability.
  • All subjects showed a switch in their immune cell profiles towards increased immune activation, demonstrating the biological effect of Clevegen.
  • The first partial responder observed among colorectal cancer (CRC) patients showed a continuation of lung and lymph node metastasis shrinkage. The subject’s tumour load biochemical marker, carcinoembryonic antigen (CEA), also normalised.
  • CRC was selected as a first expansion cohort for part II of the trial. Simon’s two-stage statistical design will be utilised during parts II and III to predict cohort sizes for efficacy and regulatory acceptance.
  • A pre-IND package was filed with the FDA, to be followed by the IND submission and to enable new trial site openings in the US. Planning commenced to include top clinical cancer research centres in France and Spain as the next European countries to join the trial.
  • New experimental data supporting the immunotherapeutic blockade of Clever-1 as an alternative to, or in combination with PD-1 checkpoint inhibition to reactivate immunity against immunosuppressive tumours was published in Clinical Cancer Research, a journal of the American Association for Cancer Research.
  • Data from the MATINS study was selected for a poster discussion presentation at the European Society of Medical Oncology (ESMO) 2019 Congress, taking place in Barcelona between 27 September and 1 October 2019.
  • Several new patent filings have been carried out during the period to further strengthen the existing IP around Clevegen use in conditions where harmful immune suppression causes serious diseases.
  • Manufacturing has been established to supply drug product for cohort expansions in part II of the MATINS study.
  • Partnering discussions continue with the aim of supporting expansion of clinical development and exploring the potential of Clevegen in combination with existing immunotherapies.

Traumakine® – in development for the treatment of ARDS and organ failures without interfering corticosteoids

  • Top-line data from the phase III ARDS trial with Japanese partner Maruishi Pharmaceutical Co., Ltd were, as expected, consistent with the INTEREST study results, showing that treatment with Traumakine did not result in reduced mortality or an increased number of ventilator-free survival days when compared to placebo. In the study very high concomitant glucocorticoid use (77%) was observed.
  • A phase I study in healthy volunteers (pharmacokinetic/dynamic YODA study), examining the administration and concomitant use of corticosteroids with Traumakine, confirmed observations previously seen in the INTEREST study. Traumakine produced the expected levels of bioactivity, suggesting drug formulation was not a factor in the outcome of that trial and that concomitant corticosteroid use interferes in the desired interferon-beta effect on CD73.
  • Interim results from the phase II INFORAAA study examining the effect of Traumakine on mortality (predominantly for Multi-Organ Failure, MOF) and on pharmacodynamic biomarkers in surgically operated Ruptured Abdominal Aorta Aneurysm (RAAA) patients, showed biomarker (MxA and CD73) responses indicating a good interferon-beta response from Traumakine. A trend toward reduction of mortality was seen in patients increasing their CD73 plasma levels.
  • Based on the advice from the INFORAAA Independent Data Monitoring Committee and investigators, the Company has decided to close the INFORAAA trial, as unexpected high use of concomitant corticosteroids prevent the scientific implementation of the INFORAAA protocol.
  • Faron remains focused on designing a new global phase III trial for Traumakine treatment (CALIBER) for the treatment of ARDS taking into account the high levels of concomitant steroids used as a standard of care for ARDS and some RAAA patients, and is in the process of seeking scientific advice from regulatory authorities on the proposed new trial structure.
  • It is the understanding of the Company that the current API manufacturing process used to manufacture Traumakine requires significant upgrading to secure MAA/BLA approval. Various options are currently explored.
  • The Company envisages that further Traumakine trials are likely to be funded through a third party.

Group financial

  • Raised EUR 4.5 million (net EUR 4.2 million) in aggregate through a placing and subscription in March and May 2019 at an issue price of Eur 0.76 (£0.65) per share.
  • Cash balances of EUR 2.9 million at 30 June 2019 (2018: EUR 11.2 million).
  • Operating loss of EUR 6.3 million for the six months ended 30 June 2019 (2018: EUR 14.0 million).
  • Net assets of EUR −1.8 million (2018: EUR 6.7 million) as at 30 June 2019.
  • Post the Period-end raised approximately EUR 2.5 million (before expenses) through an issue of equity consisting of subscriptions and an open offer at an issue price of EUR 1.19 (GBP 1.06) per share.
  • The net proceeds of the post-Period fundraise are expected to provide the Company with working capital into Q1 2020. 

Commenting on the results, Dr Markku Jalkanen, CEO of Faron, said: “We have focused on two important matters during H1-2019, MATINS study progress and the re-design of Traumakine’s development pathway. I am delighted to report that both of these have advanced significantly. Our novel precision cancer immunotherapy, Clevegen, has been well tolerated in cancer patients with advanced solid tumours, all showing an immune switch that we predicted based on the preclinical data and expected mode of action of Clevegen. We have also observed a first partial responder showing a constant decline of tumour burden in tumour imaging and biochemical markers. The response in this patient, who suffers from colorectal cancer (MSI low type) and has failed on all previous treatments, is a promising indicator of Clevegen’s potential.

“It has become clear that Traumakine’s development requires a study design which would avoid concomitant corticosteroid use. Faron’s solution is a design which would allow corticosteroid use within the standard of care arm but never in combination with Traumakine. As soon as the Company receives feedback for this new design, we will finalise plans to allow us to progress third party funding discussions. The unmet medical need among these patients is significant and the widespread use of corticosteroids for ARDS and multi-organ failures requires serious re-consideration.

“I am pleased that, through the recent fundraise, the Company is in a more secure financial position while we explore partnering activities for Clevegen and funding opportunities for Traumakine. I would like to thank shareholders, both new and existing, for their support of Faron.”

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 (MAR).

For more information please contact:

Faron Pharmaceuticals Ltd

Dr Markku Jalkanen, Chief Executive Officer

investor.relations@faron.com 

Consilium Strategic Communications

Mary-Jane Elliott, David Daley, 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

Panmure Gordon (UK) Limited, Nomad and Broker

Emma Earl, Freddy Crossley (Corporate Finance)

James Stearns (Corporate Broking) 

Phone: +44 207 886 2500

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 based on the endothelial receptors involved in regulation of immune response, in oncology and organ damage. Clevegen, its precision immunotherapy, is a novel anti-Clever-1 antibody with the ability to switch immune suppression to immune activation in various conditions, with potential across oncology, infectious disease and vaccine development. Currently in phase I/II clinical development as a novel macrophage checkpoint immunotherapy for patients with untreatable solid tumours, Clevegen has potential as a single-agent therapy or in combination with other immune checkpoint molecules. Traumakine, the Company’s pipeline candidate to prevent vascular leakage and organ failures, has completed a phase III clinical trial in Acute Respiratory Distress Syndrome (ARDS).Plans for its future development are being finalised to avoid interfering steroid use together with Traumakine. Faron is based in Turku, Finland. Further information is available at www.faron.com.

Chairman’s and Chief Executive Officer’s Review

Introduction

Faron’s two projects Clevegen and Traumakine are based on long term research findings made by the Company’s scientific network. This network has shown again its vital role through our work to understand the unexpected results from the INTEREST study – the  interfering role of corticosteroids on exogenous and endogenous action of interferon-beta. This analysis has penetrated to molecular signalling pathways and could have a significant impact on the wide use of corticosteroids in emergency conditions. Similarly, Clevegen’s mode of action has advanced the detailed understanding of how Clever-1 blockade results in an immune switch needed by cancer patients who are immune suppressed by their disease progress. Therefore, the Company believes that both projects are today on solid grounds to move forward and in this report we provide further information on their progress.

Clevegen – encouraging phase I/II MATINS data show potential of novel cancer immunotherapy

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

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

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

All study subjects dosed in the trial have experienced a switch in their immune cell profiles following treatment with Clevegen towards increased immune activation. Typically this has been observed by one or more of the following: increased CD8+ cells, an increase in the CD8+/CD4+ ratio, a decrease in regulatory T-cells (T-regs) and a substantial increase in mobile natural killer (NK) cells in the blood. These changes were measurable immediately post-dosing, indicating a dynamic response in the immunological switch to immune-activation after the immunotherapeutic blockade of Clever-1. Data indicate that dose escalation results in prolonged Clever-1 occupancy of the blood monocytes during the first two weeks of the three-week dosing cycle before a decrease to baseline levels prior to the next dosing cycle. Key data will be presented in a poster discussion session at the European Society of Medical Oncology (ESMO) meeting in Barcelona September 27 – October 1.

The majority of patients in the trial have received 5-7 different treatment lines prior to entering the MATINS study. Faron is investigating why the observed immune activation has not turned into anti-tumour activity in all study subjects but only in part. The Company believes the patient’s immune system receiving Clevegen as a last line of therapy could have been adversely affected by the underlying therapies they have received prior to taking part in the MATINS study, as previous chemotherapies can inactivate bone marrow, preventing revitalization of the immune system. It is also important to note that the partial responder patient with CRC (MSI low type) is resistant to PD-1 treatments, increasing the significance of this response.

The planned distinct cohort expansions during part II of the study will focus on identification of patients who show an increased number of Clever-1 positive circulating monocytes and the safety and efficacy of the treatment. The Company has announced that CRC has been selected as the first expansion cohort in part II and that initiation of this expansion is expected in Q4 2019. Faron also intends, subject to regulatory approval, to amend the MATINS trial to allow inclusion of hormone receptor-positive breast cancer, gastric cancer and uveal melanoma, based on striking translational data on Clever-1 positive cancer types and current poor survival rates and associated with high Clever-1 expression. Additionally, Faron has filed a pre-IND package to the FDA and intends to file a final IND package in early Q4-2019. If accepted, Faron plans to open new sites in the US and facilitate expansion of the CRC cohort as fast as possible. Similarly, Faron is planning to include top cancer centres in France and Spain as the next European countries to join the MATINS trial.

Traumakine – determining a path for future development

Following the detailed analyses undertaken by the Company and its scientific network during 2018 to understand the INTEREST trial results, in 2019 Faron has continued to further explore the potential causes and to determine a way forward for Traumakine’s continued development.

The final part of the pharmacokinetic/dynamic YODA study, examining the administration of concomitant steroids and Traumakine in healthy volunteers, confirmed earlier observations from parts I and II of the study that the INTEREST study drug produced the expected levels of bioactivity, suggesting drug formulation was not a factor in the outcome of the INTEREST trial. Results from YODA also showed that concomitant use of interferon-beta and the corticosteroid prednisolone reduced interferon-beta action, compared to subjects who did not receive steroids. This was evident through both clinical signs of the subjects and reduction of cluster of differentiation 73 (CD73) activity responses measured from blood samples of these subjects.

Results from the Japanese Traumakine phase III trial for ARDS, which included high levels of concomitant corticosteroid use, were in line with results from the INTEREST trial with the effect of corticosteroids showing similar trends to those observed from the INTEREST study.

Interim results of the Company’s phase II study examining the effect of Traumakine on mortality (predominantly MOF) and pharmacodynamic biomarkers of surgically operated RAAA patients (INFORAAA trial) also indicated corticosteroid interference with Traumakine action. Whilst biomarker (MxA and CD73) responses indicated a good interferon-beta response from Traumakine, unexpectedly, concomitant corticosterone was recorded both in the active and placebo treatment arms. The removal of corticosteroid-treated patients from statistical analysis reduced group sizes and made statistical interim mortality analysis meaningless; however, a trend toward reduction of mortality was seen in the Traumakine-treated patients who did not receive corticosteroids.

The Company has conducted a full review of all the Traumakine data with key opinion leaders in order to make decisions on Traumakine’s future development. This review has led to the decision to close the INFORAAA trial given unexpected levels of concomitant corticosteroid use seen in the trial to date which would prevent the scientific implementation of the INFORAAA protocol. The Company is designing a new global phase III trial for Traumakine treatment (CALIBER) for the treatment of ARDS taking into account the high levels of concomitant steroids used as a standard of care for ARDS and some RAAA patients, and is in the process of seeking regulatory feedback on the proposed trial. The Company envisages that further Traumakine trials are likely to be funded through a third party.

Financial review

During the Period, in March and May 2019, the Company successfully raised approximately EUR 4.5 million from new and existing shareholders, employees and Company Directors.  The majority of these proceeds are being used to advance Clevegen through the MATINS trial, further Traumakine development through the design and preparation of the global phase III CALIBER clinical trial and advance partnering discussions in respect of both Traumakine and Clevegen.

Statement of comprehensive income

The loss from operations for the six months ended 30 June 2019 was EUR 6.3 million (six months ended 30 June 2018: loss of EUR 14.0 million). No revenue was generated during the the period or prior revenue. Research and development expenditure decreased by EUR 6.7 million to EUR 5.0 million (2018: EUR 11.7 million). Administrative expenses decreased by EUR 1.0 million to EUR 1.4 million (2018: EUR 2.4 million). Both the research and development and the administrative expenses include the IFRS charge resulting from the options allocated by the Board to the personnel. This had no impact on the cash flow or the Company’s equity.

The loss after tax for the Period was EUR 6.4 million (2018: loss of EUR 14.1 million) and the basic loss per share was 0.17 (2018: loss per share of 0.45).

Statement of financial position and cash flows

At 30 June 2019, net assets amounted to EUR −1.8 million (30 June 2018: EUR 6.7 million). The net cash flow for the first six months in 2019 was EUR −1.1 million (2018:  EUR 1.8 million positive). As at 30 June 2019, total cash and cash equivalents held were EUR 2.9 million (2018: EUR 11.2 million).

Events after the Period

In August 2019, the Company successfully raised approximatey EUR 2.5 million (before expenses) from existing Shareholders. The net proceeds are expected to provide the Company with working capital into early Q1 2020 to further the clinical development of Clevegen. 

Corporate

Yrjö Wichmann left his role as the Company’s Chief Financial Officer to take up the new position of Vice President, Financing and Investor Relations. Mr. Wichmann remains a member of the senior management team but stepped down from the Board with effect from 28 May 2019.

Toni Hänninen was appointed as Faron’s new CFO from 1 June 2019, being responsible for both internal and external reporting.

The annual general meeting held on 28 May 2019 resolved the number of members of the Board as six. Frank Armstrong, Markku Jalkanen, Matti Manner, Leopoldo Zambeletti, Gregory Brown and John Poulos were re-elected to the Board for a term that ends at the end of the next AGM.

Summary & outlook

The successful financing undertaken in H1 2019 will allow us to further progress the clinical programme for Clevegen which, we continue to believe, offers significant potential as a novel immunotherapy for patients in need of new treatment options. Successful completion of part I of the MATINS study and initiation of the cohort expansion phase in colorectal cancer in Q4 2019 will provide important data to support our ongoing negotiations as we seek to enter a licensing agreement for Clevegen. We will also fund the commercialisation preparation of Traumakine by seeking scientific advice and regulatory approval for the CALIBER study in H2 2019.

On behalf of the Board, we would like to thank our new and existing shareholders for their continued support and belief in Faron. While work continues apace to progress development of our two clinical assets we will also continue to preserve cash in order to drive value for shareholders. We look forward to updating shareholders on the pathways for Clevegen and Traumakine over the coming months. 

Caution regarding forward looking statements

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

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

Statement of comprehensive income

Group

Parent

EUR ‘000

Unaudited six months ended 30 Jun 2019

Unaudited six months ended 30 Jun 2018

For the year ended 31 Dec 2018

Unaudited six months ended 30 Jun 2019

Unaudited six months ended 30 Jun 2018

For the year ended 31 Dec 2018

Revenue

20

19

20

19

Other operating income

14

205

14

205

Research and development expenses

(4,982)

(11,701)

(16,463)

(4,982)

(11,701)

(16,463)

General and administrative expenses

(1,361)

(2,372)

(3,750)

(1,334)

(2,368)

(3,740)

Operating loss

(6,343)

(14,038)

(19,989)

(6,316)

(14,034)

(19,979)

Financial expense

(73)

(327)

(397)

(73)

(327)

(397)

Financial income

5

305

302

5

305

302

Loss before tax

(6,411)

(14,060)

(20,084)

(6,384)

(14,055)

(20,074)

Tax expense

(0)

(2)

(0)

(2)

Loss for the period

(6,412)

(14,060)

(20,086)

(6,384)

(14,055)

(20,076)

Comprehensive loss for the period attributable to the equity holders of the Company

(6,412)

(14,060)

(20,086)

(6,384)

(14,055)

(20,076)

Loss per ordinary share

Basic and diluted loss per share, EUR

(0,17)

(0,45)

(0,65)

(0,17)

(0,45)

(0,65)

Interim Results

Faron Pharmaceuticals Ltd

(“Faron” or the “Company”)

Interim Results for the six months ended 30 June 2017

–       INTEREST Phase III Traumakine® trial patient recruitment to complete in Q4 2017 and FDA advice received regarding advancement to BLA

–       Traumakine clinical development broadened to include organ protection opportunities

–       Clevegen® advancing towards clinic

TURKU – FINLAND, 6 September 2017 – Faron Pharmaceuticals Ltd (Faron”) (LON: FARN), the clinical stage biopharmaceutical company, today announces its unaudited Interim Results for the six months ended 30 June 2017 (the “Period”).

HIGHLIGHTS

Operational (including post period-end)

·      Pipeline progress with portfolio of products focused on acute organ traumas, vascular damage and cancer immunotherapy

·      Traumakine – lead product in late Phase III with opportunity to become world’s only approved ARDS treatment

Pivotal, pan-European, Phase III INTEREST trial with Faron’s lead product Traumakine for the treatment of Acute Respiratory Distress Syndrome (“ARDS”) continues as planned and is expected to complete recruitment of the targeted 300 patients during the fourth quarter of 2017.

Faron announced plans to initiate a program for compassionate use of Traumakine treatment once the trial is closed to new patients.

FDA proposal to proceed directly to BLA submission for Traumakine® upon completion of European and Japanese Phase III studies following successful discussions with the Agency as announced 4 September 2017.

Collaboration was initiated with INC Research/inVentiv Health – a global biopharmaceutical solutions organization with end-to-end clinical development and commercialization capabilities – to develop the pre-launch commercialization strategy for Traumakine. 

Japanese partner Maruishi continues to progress their pivotal Phase III ARDS trial in Japan and has received two IDMC recommendations to continue the trial as planned. Maruishi anticipates completion of recruitment in this 120 patient study during H1 2018.

Formulation patent granted in Finland and filed in the US and PCT for Faron’s IV dose form of interferon-beta.

First patient enrolled in February 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).

INFORAAA program open at five sites in Finland with three to four more planned in Estonia and Lithuania in the near future; filing in progress to open three to four sites in the UK.

·      Clevegen – wholly-owned novel cancer immunotherapy in development

Preclinical toxicity studies commenced as planned following successful production of technical batches of Clevegen by manufacturing partner Abzena.

Agreement signed with the University of Birmingham Medical School, UK, to initiate a liver cancer clinical trial program, focused on the protocol design for a Phase I/II trial.

Initiated protocol design to treat melanoma, pancreas and ovarian cancer with Clevegen and to be submitted to the Finnish regulatory authority, FIMEA, later this year.

Financial

·      Raised approximately £5.0 million before expenses through a placing of 1,422,340 Ordinary Shares at an issue price of 350 pence per share in March 2017.

·      Cash balances of €10.3 million (2016: €8.9 million) at 30 June 2017 aided by prudent cost control.

·      Operating loss of €7.2 million (2016: €3.0 million) for the six months ended 30 June 2017.

·      Net assets of €9.5 million (2016: €7.7 million) on 30 June 2017.

Corporate

·      Dr Juho Jalkanen was appointed as Vice President of Business Development in April and stepped down from the Board in May.

·      Two new Board members, Dr Gregory Brown and Mr John Poulos, with significant global networks, were appointed as Non-Executive Directors in May.

Commenting on the results, Dr Markku Jalkanen, CEO of Faron, said: “Our aim is to build Faron into a global business dedicated to addressing areas of significant unmet need, utilising the opportunities contained within our wholly owned pipeline of novel drug candidates. The Truamakine Phase III INTEREST study for ARDS completed two further independent safety reviews and is approaching completion of recruitment in Q4 2017. We are looking forward to the data readout, which if favourable, will pave the way for our first commercial launch of Traumakine. We were further encouraged by the FDA’s recent proposal to allow Traumakine to proceed directly to BLA submission upon completion of the European and Japanese trials and which will likely result in a faster and cheaper route to market in the US in the event of positive data. 

“Beyond ARDS, we believe that Traumakine has excellent potential for application in other areas of organ protection. Impairment of endothelial barrier can be a reason for many organ dysfunctions. We are currently exploring its efficacy in addressing Multi-Organ Failure and mortality in patients with surgically operated Ruptured Abdominal Aorta Aneurysm (RAAA) through a Phase II trial.

“We are also pleased to have made substantial progress with our novel cancer immunotherapy candidate Clevegen, which works to remove immune suppression around tumours caused by tumour associated type-2 macrophages (TAM). Following the development of our new TIET platform and the commencement of preclinical toxicity studies we are now preparing to embark upon an extensive clinical program to investigate this promising candidate. In addition to its potential application in oncology, we are excited by Clevegen’s potential application in a broader range of indications including chronic infections and vaccination enhancement.”

For more information please contact:

Faron Pharmaceuticals Ltd

Dr Markku Jalkanen, Chief Executive Officer

investor.relations@faron.com 

Consilium Strategic Communications

Mary-Jane Elliott, Chris Welsh, Philippa Gardner, 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

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

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.faron.com

 

Chairman’s and Chief Executive Officer’s Review

Introduction

We are pleased to report on the progress of Faron Pharmaceuticals during the six months ended 30 June 2017, a period which has seen the Company make significant progress in the development of its most advanced drug candidates Traumakine and Clevegen. We believe that the Company is now well placed to move into its next stage of development as a commercial entity as we anticipate the outcome of data from the INTEREST trial. As such, during the period we established a collaboration with a biopharmaceutical solutions organization to prepare a commercialization strategy for Traumakine for execution in the event of a positive INTEREST trial outcome. In addition, we believe that in time Faron could become the world’s leading company around organ protection in cardiovascular surgery, transplantation, and other ischemic-reperfusion injuries of vital central organs.

Traumakine – progressing towards completion of Phase III recruitment in Q4 2017

Faron’s lead candidate Traumakine continues to progress through the clinic and we anticipate that INTEREST, the pivotal, pan-European, Phase III trial for the treatment of Acute Respiratory Distress Syndrome (“ARDS”) will complete recruitment of the targeted 300 patients during the fourth quarter of 2017. In August, Faron announced plans to initiate an early access program for compassionate use of Traumakine once the trial is closed to new patients following the fifth meeting of the trial’s Independent Data Monitoring Committee (IDMC) which recommended continuation of the study as planned. The early access programme will allow compassionate use of Traumakine in eligible named patients at European ICU hospitals, who may benefit from Traumakine treatment ahead of the product’s potential regulatory approval.

Following successful pre-IND discussions, we are pleased to report that the FDA has proposed that Faron can proceed directly to Biologics License Application (BLA) submission pending positive results from the two on-going Phase III trials in Europe and Japan. In the letter received on 1 September 2017, the FDA proposed that, subject to the FDA being satisfied with data from the trials, the BLA application for Traumakine can be filed purely with data obtained from the ongoing trials outside of the US. In the event of positive outcomes of the ongoing trials this FDA feedback is therefore expected to shorten the time for approval of Traumakine in US. 

Faron has decided to discuss this new important feedback with its US experts, who have been involved in planning the development of Traumakine in the US. Based on the outcome of these discussions the Company will refine its strategy to build its US presence based on the recent FDA feedback.

In preparation, we are in the process of recruiting a clinical/regulatory head for our Boston office to coordinate US Traumakine development. The US will be a key market for Faron, as demonstrated by the FDA’s Office of Orphan Products Development (OOPD), which has estimated that US annual diagnoses for ALI/ARDS totals 300,000 cases, based on information in the national inpatient sample (NIS) and national hospital discharge survey (NHDS) databases. This is a larger market than previously estimated, which makes Traumakine ineligible for Orphan Drug Designation in the US.

Our partner Maruishi continues to progress its pivotal Phase III trial in Japan and two IDMC recommendations to continue the trial as planned have been received. Maruishi expects to complete recruitment in the first half of 2018. The Company believes that in Korea and Greater China, where commercial partnerships have already been established, further clinical studies may not be needed to secure approval in the event of a positive outcome from the INTEREST trial.

While the Company’s primary focus is on gaining approval for Traumakine in the treatment of ARDS, we also believe that the product has the potential for application in additional disease areas. In February, the first patient was enrolled 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).

Ruptured Abdominal Aortic Aneurysm (RAAA) is a surgical emergency with an overall mortality of 70 to 80% and requires immediate surgery and aortic repair. The main cause of death for these patients is multiple organ failure following a post-operative reperfusion injury of ischemic organs including kidneys, liver, brain and intestines. We believe that Traumakine has the potential to offer significantly improved outcomes for patients following surgery for RAAA. Furthermore, there is the possibility that a positive INFORAAA outcome could be supported by data from the INTEREST trial towards regulatory filings. We also believe that the clinical data from the INFORAAA trial could also provide us with valuable information on the recovery of ischemic single organ injuries and are planning further trials to treat these injuries. The INFORAAA program now has six sites open in Finland with three to four more expected to open in Estonia and Lithuania in the near future. Applications to open three to four sites in the UK are also in progress.

Clevegen – novel cancer immunotherapy approaching start of first Phase I/II trials

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 and function 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 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.

Preclinical toxicity studies of Clevegen have commenced as planned, following successful production of technical batches by our manufacturing partner Abzena. In April the Company signed an agreement with the University of Birmingham Medical School, UK, to initiate a liver cancer clinical trial program, focused on the protocol design for a Phase I/II trial, TIETALC, (Tumour Immunity Enabling Technology Against Liver Cancer). We expect to receive regulatory feedback for the Phase I/II liver cancer protocol from the UK regulatory authority (MHRA) during the second half of 2017. In addition, feedback on the protocol for other solid tumours (melanoma, ovarian and pancreas cancers) from the Finnish regulatory authority (FIMEA) is also expected during the second half of 2017.

Faron also continues a close collaboration with the MediCity unit of Turku University Medical School, where Faron has sponsored a set of Clevegen related preclinical experiments. Data reported at the international Juselius Symposium (June 2017, Helsinki, Finland) demonstrated how genetic depletion of macrophage Clever-1 resulted in tumour growth resistance and prevented the spread of Lewis lung cancer in preclinical models. Furthermore, signs of strong immune activation were observed, as evidenced by CD8 positive T-cells at the tumour site, in line with the expected effect of Clevegen.

Financial Review

During the period, Faron continued to maintain its focused and cost-conscious financial strategy, without compromising the intensity of the development work. The Company raised approximately £5.0 million before expenses through the Placing of 1,422,340 Ordinary Shares 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 team to deliver. The R&D expenses increased significantly but less than anticipated resulting to an operating loss of €7.2 million. The loss combined with the placing during the period, resulted in a fairly modest cash outflow. Thus the cash balances at the end of the period stood at €10.3 million and were stronger than anticipated. No operating income from the EU FP7 grant was recorded during the period as the report for the period ended in May 2017 has not yet been approved by EU. After the EU FP7 grant has been fully utilised, the Company will continue its proven active and successful strategy to utilise various forms of public funding – both grants and loans.

Summary & Outlook

Faron is on track to complete recruitment in the pivotal Phase III INTEREST trial in the fourth quarter of 2017. If the data are favourable this will represent a significant milestone for the Company and will pave the way for the launch of our first commercial product Traumakine, for the treatment ARDS, an area of genuine unmet medical need with poor patient prognosis. We are preparing for potential commercialisation in Europe and plan to make Traumakine available to patients on a compassionate use basis ahead of potential approval. We continue to explore additional opportunities for Traumakine to protect organs beyond the lung in order to maximise the opportunity for our lead asset. We also look forward to making significant progress with our exciting immuno-oncology candidate, Clevegen, now in primate toxicological studies. The Board is confident that both Traumakine and Clevegen position Faron well for the future and looks forward to the coming period with great confidence. 

Caution regarding forward looking statements

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

A number of factors could cause actual results to differ materially from the results and expectations discussed in the forward looking statements, many of which are beyond the control of the Company. In particular, the outcome of clinical trials (including, but not limited to the Company’s INTEREST trial) may not be favourable or clinical trials over and above those currently planned may be required before the Company is able to apply for marketing approval for a product.  In addition,  other factors which could cause actual results to differ materially include 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.  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.

 

Statement of comprehensive income                        (Stated in 1,000 euros)

Note

Unaudited six months ended 30 Jun 2017

Unaudited six months ended 30 Jun 2016 (1)

Year ended 31 Dec 2016

Revenue

2

7

 419

 1 153

Cost of sales

 – 

Gross profit

7

 419

 1 153

Other operating income

3, 4

103

 968

 1 742

Administrative expenses

(1 320)

(974)

(2 161)

Research and development expenses

(5 709)

(3 795)

(9 592)

Operating result

(6 919)

(3 382)

(8 858)

Financial income

6

0

Financial expenses

(299)

 (305)

(361)

Net financial costs

(293)

(305)

(361)

Loss before income taxes

(7 212)

(3 686)

(9 219)

Income tax expense

(1)

(75)

Total comprehensive income for the period

(7 213)

(3 686)

(9 294)

Total comprehensive income, attributable to:

Equity holders of the Company

(7 213)

(3 686)

(9 294)

Loss per share attributable to equity holders of the Company

Basic and diluted loss per share, euro

5

(0,26)

(0,16)

(0,39)

Unaudited

Unaudited

Balance sheet                                                          (Stated in 1,000 euros)

Note

30 Jun
2017

30 Jun
2016  (1)

31 Dec
2016

Assets

Non-current assets

Propertly, plant and equipment

18

 24

21

Intangible assets

897

 926

933

915

 950

954

Current assets

Inventories

1503

 1 021

1 451

Trade and other receivables

3 333

 3 161

3 404

Cash and cash equivalents

10 333

 8 862

11 478

15 169

 13 044

16 333

Total assets

16 084

 13 994

17 287

Equity and liabilities

Capital and reserves attributable to equity holders of the Company

Share capital

2 691

 2 691

2 691

Reserve for invested non-restricted equity

39 815

 25 244

34 006

Retained earnings

(33 027)

(20 206)

(25 814)

Total equity

9 480

 7 729

10 884

Non-current liabilities

Interest-bearing financial liabilities

4

2 434

 2 057

2 033

2 434

 2 057

2 033

Current liabilities

Interest-bearing financial liabilities

65

 93

93

Non-interest-bearing financial liabilities

2 011

 1 009

1 874

Other current liabilities

2 094

 3 105

2 403

4 170

 4 207

4 371

Total liabilities

6 604

 6 265

6 404

Total equity and liabilities

16 084

 13 994

17 287

(1) Restated to reflect that €0.75m of revenue (relating to the signing fee paid by PharmBio) was reclassified from revenue to a current liability in the balance sheet in the year ended 31 December 2016. Accordingly, to provide comparability with the prior period, the same reclassification has been applied for the 6 months ended 30 June 2016 above. The impact of this on associated taxes has also been restated. 

                 

Statement of changes in equity

(Stated in 1,000 euros)

Share capital

Reserve for invested non-restricted equity

Retained earnings

Total equity

Balance at 31 December 2015

 2 691

 24 533

(16 046)

 11 178

Total comprehensive income
for the first six months 2016

(2 580)

(2 580)

 – 

Transactions with equity holders of
the Company

 – 

    Share base payment

237

 237

Increase of share capital

 – 

 – 

 – 

Transaction costs on share capital issued

 – 

Conversion of convertible notes

 – 

 – 

 – 

 – 

(2 342)

(2 342)

Balance at 30 June 2016

 2 691

 24 533

(18 389)

 8 836

Total comprehensive income
for the last six months 2016

(6 714)

(6 714)

 – 

Transactions with equity holders of
the Company

 – 

    Share base payment

 243

 243

Increase of share capital

 9 330

 – 

 9 330

Transaction costs on share capital issued

(811)

(811)

Conversion of convertible notes

 – 

 – 

 – 

 8 519

(6 471)

 2 048

Balance at 31 December 2016

 2 691

 33 052

(24 860)

 10 884

Total comprehensive income
for the first six months 2017

(7 213)

(7 213)

Transactions with equity holders of
the Company

 – 

    Share base payment

 – 

Increase of share capital

 6 197

 – 

  6 197

Transaction costs on share capital issued

(388)

(388)

Conversion of convertible notes

 – 

 – 

 5 809

(7 213)

(1 404)

Balance at 30 June 2017

 2 691

38 861

(32 073)

9 480

Statements of cash flows                                    

(Stated in 1,000 euros)

Unaudited 1 Jan – 30 Jun
2017

Unaudited 1 Jan – 30 Jun
2016

1 Jan – 31 Dec
2016

Cash flow from operating activities

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

(7 213)

(3 686)

(9 294)

Adjustments for

Depreciation and amortization

80

 79

168

Financial items

293

 305

361

Income taxes

1

 –

75

Expensed R&D

 – 

Non-cash items (options granted)

 237

480

Change in net working capital:

Trade and other receivables

71

(1 086)

(1 330)

Inventories

(52)

(728)

(802)

(173)

 2 162

2 325

Interest and other financial costs paid

(299)

(305)

(361)

Interest and other financial income received

6

 0

0

Income taxes paid

(1)

(75)

Net cash used in / from operating activities  (A)

(7 287)

(2 666)

(8 452)

Cash flow from investment activities

Investments in machinery and equipment and intangible assets

(41)

 – 

(92)

Net cash from/used in investing activities (B)

(41)

 

(92)

Cash flow from financing activities

 – 

Proceeds from issue of share capital issue, net

5 809

 – 

8 519

Proceeds from issue of convertible notes

 – 

Proceeds from current borrowings

 – 

(151)

Proceeds from non-current borrowings

401

 611

587

Repayment of current borrowings

(28)

(151)

Net cash used in financing activities (C)

6 182

 460

8 955

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

(1 145)

(2 206)

410

Cash and cash equivalents at 1 January

11 478

 11 068

11 068

Cash and cash equivalents at end of period

10 333

 8 862

11 478

 

Note 1  Basis of Preparation

Corporate information

Faron Pharmaceuticals Ltd. (hereafter “Faron” or “Company”) is a Finnish private limited liability company organized under the laws of Finland and domiciled in Turku, Finland. The Company’s registered address is Joukahaisenkatu 6 B, 20520 Turku, Finland. Faron Pharmaceuticals Ltd. is a clinical stage drug discovery and development company. Currently Faron has three major drug development projects focusing on: acute trauma, inflammatory diseases; and cancer growth and spread.

Basis of accounting

The unaudited interim financial statements have been 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 30 June 2017. 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. These policies are consistent with those used in the financial statements for the year ended 31 December 2016 and with those that the Company expects to apply in its financial statements for the year ending 31 December 2017.

The interim financial statements do not include all of the information required for full annual financial statements and do not comply with all the disclosures in IAS 34 “Interim Financial Reporting”. Additionally though the interim financial statements have been prepared in accordance with IFRS, they are not in full compliance with IFRS.

Going Concern

The Company has prepared forecasts to estimate the Company’s cash requirements over the next twelve months. In order to make these forecasts the Company has made a number of assumptions regarding the quantity and timing of future expenditure and income as well as other key factors. Though these estimates have been made with caution and care, they continue to contain a significant amount of uncertainty. Based on the forecast the Company believes that it has adequate financial resources to continue its operations for the foreseeable future (at least twelve months from the date of this report) and therefore these interim financial statements have been prepared on a going concern basis. 

In its meeting on 5 September 2017 the Board of Directors of Faron Pharmaceuticals Ltd. approved the publishing of interim financial statements.

Note 2  Revenue

The revenue for the first six months in 2017 EUR 7,463 euro. This consisted of payment of INF-beta production.

Note 3  Other operating income

Other operating income of EUR 103 097 consists of the grant component of government subsidized loan. In accordance with IFRS 39 below-market level government loans must be divided into Fair-value -component and Grant component. Thus, the Tekes -loan drawn down during 2016 and 2017 have been decomposed and the grant component is recorded in Other operating income.

Note 4  Tekes loans

During H1 2017 Faron drew down a fourth instalment of EUR 452,908 of the Tekes loan for the Clevegen development work, bringing the total amount of the third Tekes loan to EUR 1,228,080 and the total amount of all Tekes loans drawn down to EUR 2,890,660. The third loan has also a maturity of 10 years from the first instalment, of which the first five years are free of repayment. The interest rate for all Tekes loans is currently one per cent. Loans are unsecured and if the projects fall short of their goals and results cannot be commercialised, part of the loans may be converted into a grant.

Note 5  Loss per share

H1 2017

H1 2016

2016

€ ‘000

€ ‘000

€ ‘000

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
(EUR 1,000)

(7 213)

(3 686)

(9 294)

Weighted average number of ordinary shares in issue

27 290 736

 23 111 704

23 979 650

Basic (and dilutive) loss per share, EUR

(0,26)

(0,16)

(0,39)

Issued ordinary shares at 1 January

23 111 704

 23 111 704

23 111 704

Effect of shares issued

4 179 032

 – 

867 946

Weighted-average number of ordinary shares at end of period

27 290 736

 23 111 704

23 979 650

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
(EUR 1,000)

(7 213)

(3 686)

(9 294)

Interest adjustment

 – 

Diluted weighted average number of ordinary shares in issue

27 593 783

 23 164 610

23 979 650

Basic loss per share, EUR

(0,26)

(0,16)

(0,39)

Weighted-average number of ordinary shares

Issued ordinary shares at 1 January

23 111 704

23 111 704

23 111 704

Effect of shares issued

4 179 032

0

867 946

Weighted-average number of ordinary shares at end of period

27 290 736

 23 111 704

23 979 650

Dilution effect of convertible loans

 – 

Dilution effect of outstanding options

303 047

52 906

–     

Diluted weighted-average number of ord. shares at end of period

27 593 783

23 164 610

23 979 650

FURTHER INFORMATION TO SHAREHOLDERS

AIM:                                                           FARN

Company number:                 (ISIN) FI4000153309

Investor website:                    http://www.faron.com/investor-relations

Registered office:                   Joukahaisenkatu 6, 20900 Turku, FINLAND

Directors:                              Frank Armstrong (Non-Executive Chairman)

                                            Matti Manner (Non-Executive Vice-Chairman)

                                            Gregory B. Brown (Non-Executive Director)

                                            Markku Jalkanen (CEO)

                                            Jonathan Knowles (Non-Executive Director)

                                            Huaizheng Peng (Non-Executive Director)

                                            John Poulos (Non-Executive Director)

                                            Leopoldo Zambeletti (Non-Executive Director)

 Yrjö Wichmann (CFO)

Interim Results for six months ended 30 June 2016

Faron Pharmaceuticals Ltd

(“Faron” or the “Company”)

Interim Results for the six months ended 30 June 2016

Progress continued in Traumakine® Phase III and with Clevegen® indications extended

TURKU – FINLAND, 5 September 2016 – Faron Pharmaceuticals Ltd (Faron”) (LON: FARN), the clinical stage biopharmaceutical company, today announces its unaudited Interim Results for the six months ended 30 June 2016 (the “Period”).

KEY HIGHLIGHTS

Operational Highlights (including Post Period-end)

Traumakine® – for treatment of Acute Respiratory Distress Syndrome (“ARDS”)

Continued to progress the Phase III pan-European INTEREST trial as planned. In June 2016, Faron received the first IDMC (Independent Data Monitoring Committee Chaired by Prof. Arthur Slutsky from Toronto, Canada) recommendation to continue the study.

Announced positive results from the Phase II Japanese study for Traumakine conducted by Faron’s Japanese licensing partner, Maruishi Pharmaceutical Co., Ltd. (“Maruishi”), in January 2016.

Filed a patent application in Finland in March 2016 to further strengthen the Company’s protection of its novel Traumakine formulation (FP-1201-lyo) for the intravenous treatment of ARDS and other vascular diseases. The patent filings will be expanded over the next 2 years to most countries worldwide under the Patent Co-operation Treaty (“PCT”). Through its patent filings Faron is seeking to protect its rights to this discovery for the next 20 years.

Entered into a licensing agreement in June 2016 with Pharmbio Korea Inc. (“Pharmbio”) for the development and commercialisation of Traumakine in Korea to supplement the agreements in place for Japan and China.

Clevegen® – novel cancer immunotherapy checkpoint antibody

Filed two new patent applications for novel cancer immunotherapy candidate Clevegen in April 2016 in Finland. Under the PCT patent filings will be expanded globally over the next few years. The applications open up new opportunities for wider application of this antibody in conditions where removal of  suppression of the local or systemic immunity is desired.

Expanded the development strategy for Clevegen indications by extending the range through the Tumour Immunity Enabling Technology Platform (“TIET”), the Company’s new technology platform announced in May 2016, and presented at an R&D Day in London in June 2016, which can be evaluated alone or in combination with other immune checkpoint molecules in the treatment of common cancers.

Entered into an agreement with Abzena plc (AIM: ABZA) for the manufacture of Clevegen for clinical development in July 2016.

Financial Highlights

Received a €750,000 fee from the licensing agreement with Pharmbio Korea Inc. for the development and commercialisation of Traumakine in Korea. The Company will be entitled to receive further development milestone payments and one third of the profits from Traumakine in Korea.

Recorded significant other operating income of €1.0 million for the period from the Company’s existing European Union FP7 Traumakine grant, in-line with the Company’s strategy to utilise non-dilutive funding sources to support the Company’s R&D program where possible.

As at Period-end, the Company held cash balances of €8.9 million.

The cash position at the end of the Period was stronger than anticipated. In the future, the Company will continue its active and successful strategy to utilise various forms of public funding – both grants and loans.

The operating loss for the Period was €2.6 million.

Net assets as at Period-end were €8.4 million.

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

“Faron has delivered on its key strategic aims for the first half of 2016. We have clear plans to advance our exciting pipeline over the next two to three years, maintaining our focus on the most advanced projects Traumakine and Clevegen, which we believe have tremendous potential for expansion into new indications and territories. Our lead product, Traumakine for acute lung injury, is progressing well. The pivotal pan-European Phase III INTEREST trial is underway at more than 50 sites and we have received encouraging Phase II data from our Japanese partner Maruishi. The Korean licensing deal with Pharmbio is in-line with our growth strategy to partner Traumakine in territories where both clinical and financial impact can be optimised in conjunction with a local partner.

“We have also made substantial progress with our immunotherapy candidate Clevegen through the development of our new TIET platform. In addition to its potential use in combination cancer therapies, new opportunities include chronic infections and vaccination enhancement. We believe the approach offers significant advantages to future collaborators and licensing partners.”

For more information please contact:

Faron Pharmaceuticals Ltd

Katja Wallenlind

Phone +358 (50) 577 4807
E-mail: katja.wallenlind@faronpharmaceuticals.com

Hume Brophy, PR

Mary Clark, Eva Haas, Hollie Vile

Phone: +44 207 862 6390

E-mail: faron@humebrophy.com

Cairn Financial Advisers LLP, Nominated Adviser

Emma Earl, Tony Rawlinson, Rebecca Anderson

Phone: +44 207 148 7900

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

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 a pan-European pivotal Phase III study (INTEREST). 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

Chairman’s and Chief Executive Officer’s Review

INTRODUCTION

We are pleased to report on the progress of Faron Pharmaceuticals for the six months ended 30 June 2016.

Implementing a strategy of bringing novel treatments for significant unmet medical needs to market in a timely and cost-effective manner, Faron’s pipeline is built on its thorough scientific knowledge regarding control of the endothelial barrier, a membrane of cells lining blood and lymphatic vessels to separate blood content from tissues. Both lead indications – acute lung injury and intervening in tumour immune suppression – are based on controlling malfunction of the endothelial barrier.

We continue to strengthen our business and support our objectives of progressing our lead programme, Traumakine, through the on-going pan-European pivotal Phase III INTEREST trial, and the development of our pre-clinical cancer immunotherapy candidate, Clevegen.

OPERATIONAL REVIEW

Pipeline developments

Traumakine® – targeting a breakthrough for ARDS and initiating RAAA plans

Faron’s lead candidate Traumakine is in a pan-European pivotal Phase III INTEREST trial which is progressing as expected. In June 2016, Faron received the first IDMC (Independent Data Monitoring Committee) recommendation to continue the study as planned.

Faron’s Japanese partner, Maruishi, completed a phase II study in Japan, the results of which were announced in January 2016 with encouraging results which are consistent with Faron’s prior Phase I/II data. Maruishi is now preparing for the next pivotal clinical trial which will enable progress towards filing of Traumakine marketing approval in Japan.

Faron has started preparations for a Traumakine US safety trial as requested by the FDA.

In relation to the Company’s application for Orphan Drug Designation (“ODD”) for Traumakine® in the US, the US Office of Orphan Products Development (“OOPD”) has informed Faron that Traumakine is not currently eligible to be granted ODD in the US as according to OOPD’s view there is insufficient nationwide evidence to demonstrate that the US incidence of ARDS is less than the statutory “orphan” limit of 200,000 patients per year. Accurate analysis of the US incidence of ARDS is difficult to determine for a number of reasons and there are varying estimates of the incidence, however the Directors believe that based on the latest available data, the true incidence of ARDS is less than 200,000 patients per annum in the US. Therefore, Faron is appealing the decision made by the OOPD and intends to continue to file additional material in further support of its claim. Separately Traumakine has already been granted orphan status in Europe.

Regardless of Traumakine’s ODD status in the US, the Company is not aware of any other treatment for ARDS that is in a similar advanced stage of development. Additionally, the Directors believe that Traumakine® could be entitled to a US regulatory package called a biologics license application (BLA), which could allow 12 years of data exclusivity in the US, reducing the risk of biosimilar competition in the US market. The Company expects also additional long-term IP protection for its new IV formulation filed earlier this year.

In June, Faron entered into a licensing agreement with Pharmbio for the development and commercialisation of Traumakine in Korea. Under the terms of the agreement, Pharmbio will obtain exclusive Korean rights to Traumakine. Faron received the initial signing fee of €750,000, which was recorded as revenue in H1 2016 financial results, and is entitled to receive additional, undisclosed development based milestones. Pharmbio will also pay Faron one third of Traumakine profits, representing a double digit royalty on net sales, depending on end user pricing, and has agreed to cover development costs for Traumakine in Korea. Additionally, Faron will supply Traumakine drug product to Pharmbio at an agreed transfer price.

Faron is planning to file a Clinical Trial Application in H2 2016 to the Finnish Medicines Agency (“FIMEA”) for the INFORAA clinical trial in patients with surgically treated Rupture of Abdominal Aorta Aneurysm (“RAAA”). These patients often suffer from multi-organ failure, similar to ARDS patients, thus Traumakine may improve their condition. The total incidence of RAAA is 13.5 per 100,000. As RAAA is frequently fatal it accounts for the death of at least 4.5 individuals per 100,000 population. 

New indications for macrophage-directed immunotherapy candidate Clevegen®

Faron’s preclinical drug development project Clevegen revolves around Clever-1, a cell surface receptor on endothelial cells and macrophages involved in cancer growth and spread. Clevegen binds to Clever-1 which reduces suppression of the immune system and converts the immune environment around a tumour from immuno-supressive to immune stimulating, allowing a patient’s own immune system to combat cancer.

In May 2016, Faron announced the expansion of the development strategy for Clevegen introducing the TIET platform, based on Clevegen´s ability to convert pro-tumoural, immune supressing M2 macrophages to pro-inflammatory M1 macrophages which could provide a significant boost to the efficacy of other immune checkpoint molecules already in use or under development. The TIET platform may allow licensing opportunities and wider use of Clevegen as part of combination cancer therapies. As the TIET technology is based on a humanised antibody, the Faron Directors believe it can be combined with a number of other immune therapies without a significant risk of increased adverse events.

Two additional new technology platforms related to TIET, covering chronic infections and inefficient vaccination were also presented at the Company’s R&D Day in London on 14th June 2016. The additional related technology platforms are called Chronic Infection Removal Therapy (“CIRT”) and Vaccination Response Enhancement Technology (“VRET”).

Faron intends to develop Clevegen in-house for immune dependent cancers such as hepatocellular carcinoma, a significant unmet medical need, and other cancers known to depend on tumour associated macrophages (“TAM”).

High quality cGMP manufacturing of Clevegen was assured through a July 2016 agreement with Abzena plc for the manufacture of Clevegen in July 2016.

FINANCIAL REVIEW

During the six months ended 30 June 2016, Faron continued to maintain its focused and cost-conscious strategy without compromising the intensity of its development work. Though the R&D expenses more than doubled (as planned within the Company’s strategy), the combination of higher than anticipated income – in the form of both revenue and grant income – and lower operating costs resulted in a modest cash outflow over the Period. Thus the cash position at the end of the Period was stronger than anticipated. In the future, the Company will continue its active and successful strategy to utilise various forms of public funding – both grants and loans.

Statement of Comprehensive Income

The loss from operations for the Period was €2.6 million (six months ended 30 June 2015: loss of €2.4 million). The Company’s revenue for the Period was €1.2 million (2015: €0.5 million), which comprised of a €0.8 million signing fee from Pharmbio, €0.3 million of prepayment of IFN-beta production and €0.1 million from product sales to Maruishi Pharmaceutical. The Company also recorded €1.0 million (2015: €nil) of other operational income from the EU FP7 grant. Research and development expenditure increased to €3.4 million (2015: €1.7 million) caused mainly by the increase of the clinical trial costs when patient recruitment for the INTEREST trial commenced at the very end of 2015. The administrative expenses were slightly lower at €1.0 million (2015: €1.1 million) mainly due to lower funding expenses during the Period compared to the same period in 2015. Both the research and development and the administrative expenses include the IFRS charge resulting from the options allocated by the Board to personnel in May 2016. The total charge was €0.2 million (2015: €nil.). This charge had no cash impact on the results for the year.

The loss after tax for the Period was €3.0 million (H1 2015: loss of €2.4 million) and the basic loss per share was 0.13 (H1 2015: loss per share of 0.15)

Statement Of Financial Position and Cash Flows

At 30 June 2016, net assets amounted to €8.4 million (30 June 2015: €1.4 million). The net cash outflow for the first six months in 2016 was €2.2 million (H1 2015: inflow of €2.0 million). As at 30 June 2016, total cash and cash equivalents held were €8.9 million (H1 2015: €2.3 million; H2 2015: €11.1 million).

OUTLOOK

The key aim for Faron in 2016 is the completion of the Phase III INTEREST trial recruitment. We confirm our initial estimate that patient recruitment will be carried out in 12 to 18 months from first patient treatment, which occurred in December 2015. We also reiterate that the INTEREST trial results should be available by mid-2017. In respect of our immunotherapy candidate Clevegen, our contracted partner Abzena will produce the Master Cell Bank and manufacture the anti-Clever-1 antibody for clinical development. Faron also plans to intensify commercial efforts around Tumour Immunity Enabling Technologies and make them available for interested licensing partners while at the same time focusing on internal development programmes as well. 

Frank M Armstrong                                   Markku Jalkanen

Chairman                                                    Chief Executive Officer

5 September 2016

Statement of comprehensive income

(Stated in 1,000 euros)

Note

Unaudited six months ended 30 Jun 2016

Unaudited six months ended 30 Jun 2015

Year ended 31 Dec 2015

Revenue

2

 1,169

 454

 520

Cost of sales

(357)

(50)

(25)

Gross profit

 813

 404

 496

Other operating income

3

 968

 – 

 701

Administrative expenses

(974)

(1,074)

(3,061)

Research and development expenses

(3,439)

(1,681)

(3,971)

Operating result

(2,632)

(2,350)

(5,835)

Financial income

 0

 – 

 0

Financial expenses

(305)

(40)

(311)

Net financial costs

(305)

(40)

(311)

Loss before income taxes

(2,936)

(2,390)

(6,146)

Income tax expense

(75)

(42)

(42)

Total comprehensive income for the period

(3,011)

(2,432)

(6,188)

Total comprehensive income, attributable to:

Equity holders of the Company

(3,011)

(2,432)

(6,188)

Loss per share attributable to equity holders of the Company

Basic and diluted loss per share, euro

5

(0.13)

(0.15)

(0.30)

Unaudited

Unaudited

Balance sheet

(Stated in 1,000 euros)

Note

30 Jun
2016

30 Jun
2015

31 Dec
2015

Assets

Non-current assets

Propertly, plant and equipment

 24

 0

 28

Intangible assets

 926

 1,180

 1,001

 950

 1,180

 1,029

Current assets

Inventories

 1,021

 649

 649

Trade and other receivables

 3,836

 647

 2,074

Cash and cash equivalents

 8,862

 2,276

 11,068

 13,719

 3,572

 13,791

Total assets

 14,669

 4,753

 14,821

Equity and liabilities

Capital and reserves attributable to equity holders of the Company

Share capital

 2,691

 2,691

 2,691

Reserve for invested non-restricted equity

 24,533

 11,503

 24,533

Retained earnings

(18,820)

(12,764)

(16,046)

Total equity

 8,404

 1,431

 11,178

Non-current liabilities

Interest-bearing financial liabilities

4

 2,057

 1,691

 1,446

 2,057

 1,691

 1,446

Current liabilities

Interest-bearing financial liabilities

 93

 – 

 245

Non-interest-bearing financial liabilities

 1,009

 – 

 436

Other current liabilities

 3,105

 1,631

 1,517

 4,207

 1,631

 2,197

Total liabilities

 6 265

 3 322

 3 643

Total equity and liabilities

 14 669

 4 753

 14 821

Statement of changes in equity

(Stated in 1,000 euros)

Share capital

Reserve for invested non-restricted equity

Retained earnings

Total equity

Balance at 1 January 2015

 2,691

 6,453

(10,332)

(1,188)


Total comprehensive income for the first six months 2015

(2,432)

(2,432)

Increase of share capital

 5,050

 – 

 5,050

 5,050

(2,432)

 2,618

Balance at 30 June 2015

 2,691

 11,503

(12,764)

 1,431

Total comprehensive income for the financial year 2015

(6,188)

(6,188)

Share base payment

 474

 474

Increase of share capital

 19,261

 – 

 19,261

Transaction costs on share capital issued

(1,181)

(1,181)

 – 

 18,080

(5,714)

 12,366

Balance at 31 December 2015

 2,691

 24,533

(16,046)

 11,178

Total comprehensive income for the first six months 2016

(3,011)

(3,011)

Share base payment

237

 237

 – 

 – 

(2,774)

(2,774)

Balance at 30 June 2016

 2,691

 24,533

(18,820)

 8,404

Statements of cash flows

(Stated in 1,000 euros)

Unaudited 1 Jan – 30 Jun
2016

Unaudited 1 Jan – 30 Jun
2015

1 Jan – 31 Dec
2015

Cash flow from operating activities

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

(3,011)

(2,432)

(6,188)

Adjustments for

Depreciation and amortization

 79

 74

 184

Financial items

 305

 40

 298

Income taxes

 75

 42

 42

Expensed R&D

 – 

 78

Non-cash items (options granted)

 237

 474

Change in net working capital:

Trade and other receivables

(1,761)

(608)

(2,035)

Inventories

(372)

 50

 50

Trade and other current liabilities

 2,162

(30)

 278

Interest and other financial costs paid

(305)

(40)

(285)

Interest and other financial income received

 0

 0

 0

Income taxes paid

(75)

(42)

(42)

Net cash used in / from operating activities (A)

(2,666)

(2,945)

(7,146)

Cash flow from investment activities

Investments in machinery and equipment and intangible assets

 – 

(70)

(107)

Net cash from/used in investing activities (B)

 – 

(70)

(107)

Cash flow from financing activities

Proceeds from issue of share capital issue, net

 – 

 5,050

 18,080

Proceeds from issue of convertible notes

 – 

Proceeds from current borrowings

 – 

 – 

 – 

Proceeds from non-current borrowings

 611

 – 

 – 

Repayment of current borrowings

(151)

 – 

 – 

Net cash used in financing activities (C)

 460

 5,050

 18,080

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

(2,206)

 2,034

 10,827

Cash and cash equivalents at 1 January

 11,068

 242

 242

Cash and cash equivalents at end of period

 8,862

 2,276

 11,068

Note 1  Basis of Preparation

Corporate information

Faron Pharmaceuticals Ltd (hereafter “Faron” or “Company”) is a Finnish limited liability company organised under the laws of Finland and domiciled in Turku, Finland. The Company’s registered address is Joukahaisenkatu 6 B, 20520 Turku, Finland. Faron Pharmaceuticals Ltd is a privately owned clinical stage drug discovery and development company. Currently Faron has two major drug development projects focusing on: acute trauma, inflammatory diseases and cancer growth and spread.

Basis of accounting

The unaudited interim financial statements have been 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 30 June 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. These policies are consistent with those used in the financial statements for the year ended 31 December 2015 and with those that the Company expects to apply in its financial statements for the year ending 31 December 2016.

The interim financial statements do not include all of the information required for full annual financial statements and do not comply with all the disclosures in IAS 34 “Interim Financial Reporting”. Additionally though the interim financial statements have been prepared in accordance with IFRS, they are not in full compliance with IFRS.

Going Concern

The Company has prepared forecasts to estimate the cash requirements over the next twelve months. In order to make these forecasts the Company has made a number of assumptions regarding the quantity and timing of future expenditure and income as well as other key factors. Though these estimates have been made with caution and care, they continue to contain significant amount of uncertainty. Based on the forecast the Company believes that it has adequate financial resources to continue its operations for the foreseeable future (at least twelve months from the date of this report) and therefore these interim financial statements have been prepared on a going concern basis. 

Note 2  Revenue

The revenue for the first six months in 2016 totalled EUR 1,169,494. This consisted of EUR 750,000 signing fee from Pharmbio Korea, EUR 356,500 payment of IFN-beta production and EUR 62,994 from sales of active drug product and placebo to Maruishi.

Note 3  Other operating income

Other operating income totalling EUR 967,557 consists almost entirely of the EU FP7 grant income. Of this EUR 620,459 is grant income that is recorded based on the eligible project costs for the first six months of 2016. The next EUR 343,448 is grant income for project expenses for year 2015, for which Faron did not record grant income in 2015 as those expenses had not been budgeted or pre-approved by EU. After the date of publishing the annual accounts for 2015, EU approved all the reported expenses for the year 2015 and thus Faron has recorded that part of the 2015 grant income as other operating income for the first six months in 2016. When recording grant income, Faron has consistently followed the same accounting practice where it records 75% of the eligible project expenses for each period as grant income.

The remaining other operating income is income that derives from a tax-litigation that Faron won, where the court ordered the Finnish tax authorities to cover some of Faron’s legal expenses.

Note 4  Tekes loans

In March 2016, Faron utilised a possibility to apply for two additional amortisation-free years for the first of its two Tekes development loans. The application was approved and Tekes granted two additional amortisation-free years for the loan. Thus the first amortisation of the loan EUR 244,720 will be due in March 2018. Additionally in April 2016, Faron raised the first instalment of the Tekes loan for the Clevegen development work. The loan has a maturity of 10 years of which first five years are amortisation-free. The interest is currently one per cent. The loan is unsecured and if the project falls short of its goals and results cannot be commercialised, part of the loan may afterwards be converted into a grant.

Note 5  Loss per share

1H2016

1H2015

2015

€ ‘000

€ ‘000

€ ‘000

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
(EUR 1,000)

(3,011)

(2,432)

(6,188)

Weighted average number of ordinary shares in issue

 23,111,704

16,606,406

 20,686,854

Basic (and dilutive) loss per share, EUR

(0.13)

(0.15)

(0.30)

Weighted-average number of ordinary shares

Issued ordinary shares at 1 January

 23,111,704

15,456,250

 15,456,250

Effect of shares issued

 – 

1,150,156

 5,230,604

Weighted-average number of ordinary shares at end of period

 23,111,704

 16,606,406

 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
(EUR 1,000)

(3,011)

(2,432)

(6,188)

Interest adjustment

 – 

9

 9

Convertible loan interest adjusted loss attributable to equity holders

(3,011)

(2,423)

(6,179)

Diluted weighted average number of ordinary shares in issue

 23,164,610

 16,606,406

 20,686,854

Basic loss per share, EUR

(0.13)

(0.15)

(0.30)

Weighted-average number of ordinary shares

Issued ordinary shares at 1 January

23,111,704

15,456,250

 15,456,250

Effect of shares issued

1,150,156

 5,230,604

Weighted-average number of ordinary shares at end of period

 23,111,704

 16,606,406

 20,686,854

Dilution effect of convertible loans

 52,906

 – 

 – 

Diluted weighted-average number of ord. shares at end of period

 23,164,610

 16,606,406

 20,686,854

FURTHER INFORMATION TO SHAREHOLDERS

AIM:                                     FARN

Company number:                 (ISIN) FI4000153309

Investor website:                    http://www.faronpharmaceuticals.com/investor-relations

Registered office:                   Joukahaisenkatu 6, 20900 Turku, FINLAND

Directors:                              Frank Armstrong (Non-Executive Chairman)

                                            Matti Manner (Non-Executive Vice-Chairman)

                                            Markku Jalkanen (CEO)

                                            Juho Jalkanen (Non-Executive Director)

                                            Jonathan Knowles (Non-Executive Director)

                                            Huaizheng Peng (Non-Executive Director)

Leopoldo Zambeletti (Non-Executive Director)

Yrjö Wichmann (CFO)

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