REG - Faron Pharma. Oy - Announcement of Placing

Faron Pharmaceuticals OyAnnouncement

04/04/2024 07:00

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RNS Number : 3006J  Faron Pharmaceuticals Oy  04 April 2024

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, NEW ZEALAND,
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
EU REGULATION 596/2014 ("MAR") AND ARTICLE 7 OF MAR AS IT FORMS PART OF
DOMESTIC LAW IN THE UNITED KINGDOM 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 4.8
Million and of

PDMR Dealings

 

Company announcement, 4 April 2024 at 7:00 a.m. BST/ 9:00 a.m. EEST

Inside information

 

Key highlights

 

-       The Company has conducted a private placement directed to a
limited number of institutional and other investors to raise EUR 4.8 million
to secure the required and previously communicated short-term bridge financing
totalling EUR 8 million (incl. the EUR 3.2 million convertible loan announced
on 4 March 2024).

-       Upon receipt of these proceeds, the Company continues to satisfy
the required covenant levels and expects to have sufficient working capital
into June 2024.

-       The Placing was supported by both new and existing shareholders
such as European Innovation Council (EIC Fund) and other Finnish and
international investors.

-       To complete the enrolment of the phase 2 of the BEXMAB study
with interim and final readouts and to obtain regulatory feedback from the FDA
between now and Q1/2025, the Company expects to need an additional EUR 27
million in total (accounting for the raised EUR 8 million in early March and
this Placing).

-       The Company continues active endeavours and preparations to
secure longer term funding. The Company's Board of Directors has proposed to
the Annual General Meeting scheduled to be held on 5 April 2024 an
authorization for a larger share issuance contemplated to be launched as a
public offering (with planned allocation preferences to existing shareholders
and bridge finance lenders) as soon as practicable once the required
preparations and approvals are in place. The targeted size of the contemplated
share issue is planned to be set accordingly, to meet cash runway needs for
2024.

 

TURKU, FINLAND / BOSTON, MA - Faron Pharmaceuticals Ltd (First North:
FARON, AIM: FARN), a clinical stage biopharmaceutical company pioneering
macrophage reprogramming for effective anticancer immunotherapies, today
announces that it has conducted a placement of 3,200,298 newly issued treasury
shares ("Placing Shares") to raise EUR 4.8 million before expenses to a
limited number of institutional investors and other investors
("Placing"). Upon receipt of these proceeds, the Company continues to satisfy
the required covenant levels and expects to have sufficient working capital
into June 2024. Carnegie Investment Bank AB (publ), Finland Branch is acting
as sole bookrunner and lead manager in the Placing.

 

The Placing was carried out as a private placement by way of a firm
placement of Placing Shares to a limited number of institutional and other
investors. To implement the Placing, the Board of Directors of Faron (the
"Board") has decided to issue 3,200,298 shares to Faron itself without
consideration ("Treasury Shares") and, subject to the registration of the
Treasury Shares, further convey such Treasury Shares as Placing Shares to the
participating investors. The subscription price per Placing Share of EUR
1.50 (the "Issue Price") represents a 11.2 % discount to the close price on 3
April 2024 on Nasdaq Helsinki First North ("First North"). The settlement of
the Placing (delivery against payment) trades is expected to complete on or
around 9 April 2024. The Placing was supported by both new and existing
shareholders such as European Innovation Council (EIC Fund) and other Finnish
and international investors.

"This fundraise will enable us to meet our immediate financing needs and
continue our ambitious bexmarilimab development program, with a focus on
delivering next milestones," said Dr. Markku Jalkanen, Chief Executive Officer
of the Company. "These funds are part of the larger financing plan to secure
cash runway into beginning of 2025 and to complete Phase II study and receive
FDA's guidance for the pivotal study part. We would like to thank all our
investors for their support in developing this novel immunotherapy, especially
for myeloid leukemia with very few treatment options".

 

 

As was announced by the Company on 4 March 2024 following its receipt of the
EUR 3.2 million binding commitments for convertible loans to secure the
Company's immediate short-term financing needs until the end of March 2024 and
allowing the Company to make critical payments to third parties under agreed
waiver ("Waiver") with IPF Fund II SCA, SICAV-FIAR ("IPF"), the Company has
continued active endeavours to secure its short and longer-term financing
needs. The now announced Placing covers the required and previously
communicated short-term bridge financing totalling at least EUR 8 million
(incl. the EUR 3.2 million convertible loan announced on March 4, 2024) to
secure continued compliance with the cash covenants agreed in the Waiver. As
part of the Waiver, the minimum cash covenant remains at the lowered level of
EUR 4.5 million until 30 April 2024 and thereafter it returns to the
previously agreed level (being the higher of the Company's cash runway for the
past three (3) calendar months and the Company's expected cash runway for the
following three (3) calendar months). The Company continues active endeavours
and preparations to secure longer term funding.

 

As previously announced, the Board has proposed to the Annual General Meeting
scheduled to be held on 5 April 2024 an authorization for a larger share
issuance contemplated to be launched as a public offering (with planned
allocation preferences to existing shareholders and bridge finance lenders
including conversion of loans) (the "Public Offering") as soon as practicable
once the required preparations and approvals are in place. The receipt of
long-term financing is necessary to secure funding for 2024 and especially the
uninterrupted continuation of the Company's BEXMAB study to full read out of
the Phase II study and FDA feedback on registrational study design during
2024. The targeted size of the contemplated Public Offering is planned to be
set accordingly, to meet these cash runway needs for 2024. The Company is also
evaluating and continuously negotiating several business development
alternatives that may result in non-dilutive funding.

 

 

USE OF PROCEEDS

 

Faron has completed an overall cost reduction plan that eliminated over 20% of
operating expenses including a 25% reduction in employee-related expenditure.
Cash burn for the first half of 2024 is estimated at EUR 2.5 million per month
declining to approximately EUR 2.0 million per month in the second half of the
year.

Key activities

o  Continuation of BEXMAB Phase 2 Study.

o  Obtaining FDA advice on registrational Study design.

o  Maintaining GMP status for manufactured bexmarilimab and preparing it for
registrational Trial.

o  Short term funding needs to satisfy the IPF covenant and bridge operations
into June 2024 before a long-term financing is in place.

o  Short term IPF related financing costs.

 

 

DETAILS OF THE PLACING AND SHARE ISSUES

 

The Placing is carried out within the authorization granted to the Board by
shareholders at the Company's Annual General Meeting held on 24 March 2023 to
issue up to 12,500,000 new shares in aggregate in the Company, as well as the
conveyance of up to the same maximum number (twelve million five hundred
thousand (12,500,000)) of treasury shares in the possession of the Company,
including the right to deviate from the shareholders' pre-emptive subscription
right. The Company has decided to first issue the Treasury Shares to itself
without consideration and then immediately convey such Treasury Shares as
Placing Shares to the participating investors against their payment of the
Issue Price (delivery against payment of the Issue Price in full).

 

A total of 3,200,298 Treasury Shares (representing approximately 4.7 per cent
of all the issued shares and votes in the Company immediately prior to the
Placing) have been issued and registered in the Finnish Trade Register today
on 4 April 2024. Following the issuance, the aggregate number of ordinary
shares in the Company is 72,007,497. As a part of the Placing, the 3,200,298
Placing Shares are further conveyed to investors with payment and settlement
(delivery against payment of the Issue Price in full) expected to be completed
on or about 9 April 2024. 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 (save for the Annual General Meeting scheduled to be held on 5 April
2024, the record date of which was 22 March 2024). Following, and subject to,
the completion of the settlement in full, the Company will have no shares in
treasury and therefore, the total number of voting rights in Faron will be
72,007,497 (the "New Number of Shares and Votes"). This figure may be used by
shareholders as the denominator for the calculations by which they will
determine whether they are required to notify an interest in, or a change to
their interest in, the New Number of Shares and Votes of the Company.

 

Furthermore, to align the Issue Price to the possibly lower subscription price
per share to be applied in the potential Public Offering or (in the absence of
the Public Offering) other equity round completed before 10 June 2024 (the
"Other Equity Round"), subject to the Annual General Meeting scheduled to be
held on 5 April 2024 making the required resolutions and granting the
authorisation, and the Company completing such Public Offering or Other Equity
Round, the Company would, in connection with (or following) the Public
Offering or the Other Equity Round grant the subscribers in the Placing either
new shares in the Company free of charge or other instruments to achieve the
same net effect from both the Company's and the said subscribers' perspective.
Such additional shares or other instruments would be granted as soon as
practicable after the completion of the Public Offering or the Other Equity
Round, estimated on or about 15 June 2024.

 

In assessing the Placing and its terms and concluding that there are weighty
financial and value creation reasons for the Company to deviate from the
shareholders' pre-emptive subscription right, the Board has carefully assessed
the timing, structure, size, price, participants and other terms of the
Placing from the Company's and all of its shareholders' perspective, also in
light of e.g. available alternatives, consultation and market feedback
received, as well as the information, circumstances, timing, needs and planned
action to secure the required short and long term financing previously and
consistently announced and updated by the Company.

 

As previously announced by the Company on 28 March 2024 and 18 November 2022,
respectively, the Company has issued to IPF special rights which entitle them
to subscribe for new ordinary shares in the Company ("Warrants"). Pursuant to
the terms and conditions of the Warrants, the subscription price per share on
the exercise of a) a total of 319,944 Warrants shall be the lower of either
EUR 1.85 (equivalent to issue price of the placing announced by the Company on
14 October 2022) or the subscription price per share in any subsequent share
offering undertaken by the Company and b) a total of 613,496 Warrants shall be
the lower of either EUR 1.63 (equivalent to the terms of a waiver received
from IPF) or the subscription price per share in any subsequent share offering
undertaken by the Company. As the Issue Price is EUR 1.50, the subscription
price per share of the aforementioned aggregate amount of 933,440 Warrants
shall be adjusted to EUR 1.50. The Company has also resolved to issue an
additional 53,570 Warrants to IPF (with the same subscription price per share
of EUR 1.50).

 

Further, pursuant to the terms of the warrant holder agreement entered into
between the Company and IPF as announced on 28 March 2024, the number of
warrants to be issued to IPF ( currently 613,496 Warrants) may be further
increased upon (and subject to) agreed adjustment events so that the total
number of new shares in the Company (issued as a result of the exercise of the
increased number of warrants) multiplied by the (adjusted) subscription price
per share in any subsequent share offering undertaken by the Company is equal
to EUR 1,000,000 (minus any amounts already paid). The Company will separately
publish an announcement on the issuance of the additional warrants.

 

ADMISSION

 

The Company will make applications for the admission of the Placing Shares to
trading on First North and AIM with said admissions expected to become
effective and trading to commence on or around 9 April 2024 (the
"Admissions").

 

RELATED PARTY AND PDMR DEALING

 

Timo Syrjälä, an existing shareholder in the Company, has subscribed for and
been allocated 133,333 Placing Shares in aggregate (subscribed for by himself
and through Acme Investments SPF Sarl ("Acme"), an entity wholly owned by Mr.
Syrjälä), for an aggregate subscription value of approximately EUR 0.2
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 13,432,335 shares, representing 18,65 per cent
of the issued shares and votes of the Company following the Placing. Mr
Syrjälä is a "Substantial Shareholder" in the Company for the purposes of
the AIM Rules for Companies (the "AIM Rules"). His subscription for Placing
Shares pursuant to the Placing is a related party transaction for the purposes
of the AIM Rules. The Directors of the Company, all of whom are independent of
Mr Syrjälä, having consulted with Cairn Financial Advisers LLP, the
Company's nominated adviser for the purposes of the AIM Rules, consider the
terms of the participation by Mr. Syrjälä in the Placing to be fair and
reasonable insofar as shareholders are concerned.

 

In addition, Markku Jalkanen and Tuomo Pätsi, directors of the Company, as
well as Scientific Advisor Sirpa Jalkanen have subscribed for 33,333, 13,333
and 33,333 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  2,175,266                       3.16                          33,333                                   2,208,599                       3.07
 Sirpa Jalkanen   1,138,168                       1.65                          33,333                                   1,171,501                       1.63
 Tuomo Pätsi      11,765                          0.02                          13,333                                   25,0980                         0.03

 
 

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, Christine
Roth, Marie-Louise Fjällskog 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)    Sirpa Jalkanen

                                                                  c)     Tuomo Pätsi

 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)     1.50                                                              a) 33,333

     b)    1.50                                                               b) 33,333

     c)     1.50                                                              c) 13,333

 d.  Aggregated information

     - Aggregated Volume                                          79,999

     - Price                                                      1.50
 e.  Date of the transaction                                      3 April 2024
 f.  Place of the transaction                                     Nasdaq First North Growth Market

 

 

 

 

 

For more information please contact:

 

Investor Contact, US

LifeSci Advisors

Daniel Ferry

Managing Director

daniel@lifesciadvisors.com

+1 (617) 430-7576

 

Investor Contact, EUR

Faron Pharmaceuticals

Yrjö E K Wichmann

SVP, Funding & Investor Relations

yrjo.wichmann@faron.com

investor.relations@faron.com

Phone: +358 (0) 40 5868 979

 

Cairn Financial Advisers LLP, Nomad

Sandy Jamieson, Jo Turner

Phone: +44 (0) 207 213 0880

 

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

 

ICR Consilium

Mary-Jane Elliott, David Daley, Lindsey Neville

faron@consilium-comms.com

Phone: +44 (0)20 3709 5700

 

 

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 LOANS, ANY
SECURITIES ISSUED UPON CONVERSION OF THE LOANS AND ANY SECURITIES ISSUED IN
THE INVESTMENT ROUND (COLLECTIVELY, THE "SECURITIES") 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 SECURITIESIN THE UNITED
STATES OR TO MAKE A PUBLIC OFFERING IN THE UNITED STATES. ANY SALE OF THE
SECURITIES 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 BEXMAB

The BEXMAB study is an open-label Phase 1/2 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 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 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 trials
as a potential therapy for patients with hematological cancers in combination
with other standard treatments. Further information is available
at www.faron.com
(https://eur01.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.faron.com%2F&data=05%7C01%7C%7Ca4ae0afa96854c5c5f2a08db771ae20d%7Ca2d9b7a432f64a96b03727499230d5fd%7C1%7C0%7C638234729855975666%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=%2FNadoN9wXIGZtfCkFVuLSTXPpNg3%2BBXoRfIQaIPce6k%3D&reserved=0)
.

 

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 completion and use of proceeds from the Placing,
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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