REG - Faron Pharma. Oy - Faron 2023 Half-Year Financial Results
29/08/2023 07:15
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RNS Number : 5474K Faron Pharmaceuticals Oy 29 August 2023
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, MA - 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 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
(https://eur01.safelinks.protection.outlook.com/?url=https%3A%2F%2Ffaron.videosync.fi%2Fh1-2023&data=05%7C01%7C%7C6653d0cc1f314488ef9408db8e74d6c2%7Ca2d9b7a432f64a96b03727499230d5fd%7C1%7C0%7C638260404701647945%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=TRfw5iMQN4IRvEt%2FuwnTjHn66KLwht6W5wQDsAiJ260%3D&reserved=0)
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 (mailto:daniel@lifesciadvisors.com)
+1 (617) 430-7576
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
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
(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)
.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)
.
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 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)
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 (13 730) (13 110) (28 713)
Parent company
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 2 691 116 507 -15 -116 265 2 919
31 December 2021 (Audited)
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 2 691 129 544 2 (143 713) (11 476)
31 December 2022 (Audited)
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 Unaudited Audited
1-6/2023 1-6/2022
6 months 6 months
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.
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