REG - Faron Pharma. Oy - Announcement of Placing

Faron Pharmaceuticals OyAnnouncement

29/06/2023 07:00

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RNS Number : 3058E  Faron Pharmaceuticals Oy  29 June 2023

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

 

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

 

 

Faron Pharmaceuticals Ltd

 

("Faron" or the "Company")

Inside information: Announcement of Placing of Newly Issued Treasury Shares to
Raise EUR 6.6 Million and of

PDMR Dealings

 

Company announcement, June 29, 2023 at 9:00 EEST/ 7:00 a.m. BST

Inside information

 

KEY HIGHLIGHTS

·      The Company has conducted a private placement directed to a
limited number of institutional and other investors to raise EUR 6.6 million.

·      Significant majority of the net proceeds of the Placing will be
used for the acceleration of the bexmarilimab clinical development program and
manufacturing.

·      As disclosed in the Company's full year report on March 3, 2023
total cash and cash equivalents held by the Company as of December 31, 2022
were ca. EUR 7.0 million.

·      In January 2023, the Company successfully raised a total of EUR
12.0 million gross.

·      Gross proceeds of the Placing together with other currently
confirmed funding, are expected to provide the Company with working capital
into Q4 of 2023.

·      The Company plans to issue first-half 2023 financial results on
August 29, 2023.

 

TURKU, FINLAND / BOSTON, MA - Faron Pharmaceuticals Ltd (First North: FARON,
AIM: FARN), a clinical-stage biopharmaceutical company focused on tackling
cancers via novel immunotherapies, today announces that it has conducted a
placement of  2,601,510 newly issued treasury shares ("Placing Shares") to
raise EUR 6.6 million before expenses to a limited number of institutional
investors and other investors ("Placing"). Upon receipt of these proceeds the
Company expects to have sufficient working capital into Q4 of 2023.

 

The Placing was carried out as a private placement by way of a firm
placement of Placing Shares to a limited number of institutional and other
investors. To implement the Placing, the Board of Directors of Faron (the
"Board") has decided to issue 2,601,510 shares to Faron itself without
consideration ("Treasury Shares") and, subject to the registration of the
Treasury Shares, further convey all of such Treasury Shares as Placing Shares
to the participating investors at the Issue Price of EUR 2.55 per Placing
Share. The Issue Price represents a 11.8% discount to the close price on 28
June 2023 on NASDAQ Helsinki First North Growth.  The settlement of the
Placing (delivery against payment) trades is  expected to complete on or
around July 3, 2023.

 

"This fundraise will enable us to accelerate our ambitious bexmarilimab
development program, with a specific focus on advancing our combination trials
in hematologic malignancies," said Dr. Markku Jalkanen, Chief Executive
Officer of Faron. "Far too many patients are not benefiting from recently
approved treatments because their immune system simply doesn't recognize and
mount a defence against their cancer. Bexmarilimab data so far indicates the
potential to offer these patients a chance and improve their quality of life."

"We are very pleased with the results of this Placing," said James O'Brien,
Chief Financial Officer of Faron. "These funds raised strengthen our balance
sheet and will allow us to continue accelerating our bexmarilimab development
program, which has so far demonstrated strong efficacy and safety data in
patients left no other therapeutic options."

 

USE OF PROCEEDS

 

The development of bexmarilimab has advanced significantly over the past 12 -
18 months and the furthering of its development provides an opportunity to
build additional value for shareholders. The primary reason
for conducting the Placing is to accelerate and expand the clinical
development of this drug candidate. Some of the proceeds will also be used to
support general corporate purposes and other pipeline development, and to
strengthen the Company's balance sheet and to continue satisfying the
covenants agreed with the Company's financing providers (including the
requirement to maintain a minimum cash balance of EUR 6.0 million while
maintaining three months cash runway). Additionally, Faron and its lender, IPF
Partners, have not negotiated final terms at this time to utilize the second
EUR 5.0 million tranche of the agreed loan commitment between the parties.

 

Bexmarilimab

·      Progress BEXMAB hematologic combination trial

·      Advance bexmarilimab CMC commercial scale production

 

General corporate

·      Strengthening of the Company's balance sheet

 

 

DETAILS ON PLACING AND SHARE ISSUE

 

The Placing is carried out within the authorization granted to the Board by
shareholders at the Company's Annual General Meeting held on March 24, 2023 to
issue up to a total of 12,500,000 new ordinary shares in the Company as well
as to convey up to the same maximum number (12,500,000) of treasury shares in
the possession of the Company, in a directed share issue and in deviation from
the shareholders' pre-emptive rights. The Placing is implemented in two
phases, i.e. by the Company first issuing the Treasury Shares to itself
without consideration and then immediately conveying all of such Treasury
Shares as Placing Shares to the participating investors against their payment
of the Issue Price. A total of 2,601,510 Treasury Shares have been issued and
registered in the Finnish Trade Register today on June 29, 2023. As a result
of the Placing, the number of ordinary shares in the Company will increase by
2,601,510 new shares (representing approximately 4.1 per cent of all the
issued shares and votes in the Company immediately prior to the Placing).

 

In connection with the Placing, the Company has entered into a lock-up
undertaking for a period of 90 days with customary and certain other
exemptions, including the possibility to issue or convey further shares to
qualifying long-only investors and within the existing authorities granted at
the Company's annual general meeting held in March 2023 (taking into account
the authorities used in connection with the contemplated Share Issue).

 

All of the Treasury Shares are further conveyed as Placing Shares to the
investors participating in the Placing, with the payment and settlement
(delivery against payment of the Issue Price in full) expected to be completed
on or about July 3, 2023.

 

Upon conveyance of the Placing Shares to investors, the Placing Shares will
rank pari passu in all respects with the existing shares of the Company. The
Placing Shares confer a right to dividends and other shareholder rights from
the payment and settlement to investors. One Placing Share entitles the holder
to one vote in the general meeting of the Company. The aggregate number of
ordinary shares in the Company will be 66,161,373, this is also the figure to
be used as the denominator for calculations of interests in the Company's
voting rights.

ADMISSION

 

The Company will make applications for the admission of the Placing Shares
(and the remaining Treasury Shares) to trading on First North and AIM with
said admissions expected to become effective and trading to commence on or
around July 3, 2023 (the "Admissions").

 

RELATED PARTY AND PDMR DEALING

 

Timo Syrjälä, an existing shareholder in the Company, has subscribed for and
been allocated 460,588 Placing Shares in aggregate (subscribed for through
Acme Investments SPF Sarl ("Acme"), an entity wholly owned by Mr. Syrjälä),
for an aggregate subscription value of approximately EUR 1.2 million at the
Issue Price. Following the completion of the Placing, Mr. Syrjälä's total
holding in the Company's shares, which includes his indirect holding through
Acme, will be 13,223,063 shares, representing 19.99 per cent of the issued
shares and votes of the Company following the Placing. Mr Syrjälä is a
"Substantial Shareholder" in the Company for the purposes of the AIM Rules for
Companies (the "AIM Rules"). His subscription for Placing Shares pursuant to
the Placing is a related party transaction for the purposes of the AIM Rules,
the First North Rulebook and the Finnish Limited Liability Companies Act. The
Directors of the Company, all of whom are independent of Mr Syrjälä, having
consulted with Cairn Financial Advisers LLP, the Company's nominated adviser
for the purposes of the AIM Rules, consider the terms of the participation by
Mr. Syrjälä in the Placing to be fair and reasonable insofar as shareholders
are concerned.

 

In addition, Markku Jalkanen and Tuomo Pätsi, directors of the Company, as
well as Vesa Karvonen, General Counsel of the Company have subscribed for
21,569, 11,765 and 4,000 shares respectively. Their beneficial interests in
the issued shares and votes of the Company are set out below:

 

 

 

 

 

 

                                                    Before the Placing                                                                                     Following the Placing
 Director                                           Number of ordinary shares held  % of issued shares and votes  Number of Placing Shares subscribed for  Number of ordinary shares held  % of issued shares and votes
 Markku Jalkanen (including spouse Sirpa Jalkanen)  3,291,865                       5.18                          21,569                                   3,313,434                       5.01
 Tuomo Pätsi                                        -                               -                             11,765                                   11,765                          0.02
 Vesa Karvonen                                      100,000                         0.16                            4,000                                    104,000                       0.16

 

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

 

 

 Notification of a Transaction pursuant to Article 19(1) of Regulation (EU) No.
 596/2014
 1   Details of the person discharging managerial responsibilities/person closely
     associated
 a.  Name                                                         a)     Markku Jalkanen

                                                                  b)    Tuomo Pätsi

                                                                  c)     Vesa Karvonen

 2   Reason for notification

 a.  Position/Status                                              Directors
 b.  Initial notification/                                        Initial Notification

     Amendment
 3   Details of the issuer, emission allowance market participant, auction
     platform, auctioneer or auction monitor
 a.  Name                                                         Faron Pharmaceuticals Oy
 b.  LEI                                                          7437009H31TO1DC0EB42
 4   Details of the transaction(s): section to be repeated for (i) each type of
     instrument; (ii) each type of transaction; (iii) each date; and (iv) each
     place where transactions have been conducted
 a.  Description of the financial instrument, type of instrument  Ordinary shares

Identification Code

                                                                  ISIN: FI4000153309
 b.  Nature of the transaction                                    Purchase of ordinary shares
 c.  Price(s) and volume(s)                                                    Average
                                                                              Price(s)     Volume(s)
     a)     2.55                                                              a) 21,569

     b)    2.55                                                               b) 11,765

     c)     2.55                                                              c)  4,000

 d.  Aggregated information

     - Aggregated Volume                                          37,334

     - Price                                                      2.55

 e.  Date of the transaction                                      28 June 2023
 f.  Place of the transaction                                     Nasdaq First North Growth Market

 

 

For more information please contact:

 

Investor Contact, EUR

Faron Pharmaceuticals

Yrjö EC K Wichmann

SVP, Investor Relations

yrjo.wichmann@faron.com (mailto:yrjo.wichmann@faron.com)

investor.relations@faron.com (mailto:investor.relations@faron.com)

Phone: +358 (0) 40 5868 979

 

Investor Contact, US

Faron Pharmaceuticals

Julia Balanova

VP, Investor Relations

julia.balanova@faron.com (mailto:julia.balanova@faron.com)

investor.relations@faron.com (mailto:investor.relations@faron.com)

Phone: +1 (917) 306-6096

 

Media Contact

Faron Pharmaceuticals

Jennifer C. Smith-Parker

Head of Communications

Jennifer.Smith-Parker@faron.com (mailto: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

 

Consilium Strategic Communications

Mary-Jane Elliott, David Daley, Lindsey Neville

faron@consilium-comms.com (mailto:faron@consilium-comms.com)

Phone: +44 (0)20 3709 5700

 

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

 

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

 

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

 

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

 

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

 

 

About Bexmarilimab

Bexmarilimab is Faron's wholly owned, investigational immunotherapy with the
potential to provide immune stimulation for treatment-resistant cancers
through targeting myeloid cell function. A novel anti-Clever-1 humanized
antibody, bexmarilimab targets Clever-1 positive (Common Lymphatic Endothelial
and Vascular Endothelial Receptor 1) tumor-associated macrophages (TAMs) in
the tumor microenvironment, converting highly immunosuppressive M2 macrophages
to immune-stimulating M1 macrophages. As an immuno-oncology therapy,
bexmarilimab has therapeutic potential in combination with other standard
treatments including immune checkpoint molecules in both solid tumors and
hematologic malignancies.

 

About Faron Pharmaceuticals Ltd.

Faron Pharmaceuticals Oy (AIM: FARN, First North: FARON), together with its
subsidiaries, is a clinical stage biopharmaceutical group focused on building
the future of immunotherapy by harnessing the power of the immune system to
tackle cancer. Bexmarilimab, a novel anti-Clever-1 humanized antibody, is its
investigational immunotherapy with the potential to remove immunosuppression
of cancers through targeting myeloid cell function. Bexmarilimab is being
investigated in Phase I/II clinical trials as a potential therapy for patients
with hematological and solid cancers in combination with other standard
treatments including immune checkpoint molecules. Faron is headquartered in
Turku, Finland. Further information is available at www.faron.com.

 

IMPORTANT INFORMATION

 

Market Abuse Regulation

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

 

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

 

MiFID II

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

 

Caution regarding forward-looking statements

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

 

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

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