REG - Faron Pharma. Oy - Faron Obtains Debt Funding from IPF Partners

Faron Pharmaceuticals OyAnnouncement

28/02/2022 07:00

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RNS Number : 9950C  Faron Pharmaceuticals Oy  28 February 2022

Faron Pharmaceuticals Ltd.

("Faron or Company")

 

Faron Obtains Up to EUR 30 Million Debt Funding from IPF Partners to Advance
and Accelerate Pipeline

 

·      Financing of up to EUR 30 million through a loan from IPF
Partners

·      Initial tranche consists of EUR 10 million

·      Proceeds from first tranche provide the Company with sufficient
working capital through Q4 2022

·      The utilization of two additional tranches of EUR 5 million and
EUR 15 million, respectively, is subject to certain conditions precedent

·      IPF Partners will also be granted warrants entitling them to
subscribe for ordinary shares and have the right to appoint a board observer

Company announcement, February 28, 2022 at 02:00 AM (EST) / 07:00 AM (GMT) /
09:00 AM (EET)

Inside information

 

TURKU, FINLAND / BOSTON, MA - Faron Pharmaceuticals Ltd. (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, announces that it has entered into a secured
debt agreement ("Funding Agreement") with IPF Partners ("IPF") to advance and
accelerate its pipeline programs. The first tranche of EUR 10 million is
agreed to be drawn today and is to be repaid quarterly over a five year term.
Subject to certain conditions being met, Faron may have access to an
additional EUR 20 million in funding until mid-2023 on a four and one-half
year term under the Funding agreement. The Funding Agreement is subject to
minimum cash and gross gearing covenants.

 

"This funding agreement strengthens our financial position and adds
flexibility to our funding strategy by adding a debt instrument into our
funding tools," said Toni Hänninen, Chief Financial Officer of Faron. "We are
excited to be working with IPF Partners, one of the leading alternative
financing providers focused on the healthcare sector, and thank them for their
partnership."

 

The Funding Agreement is for up to EUR 30 million in three tranches. The first
tranche of EUR 10 million will be drawn down on the date of this announcement.
The second tranche of EUR 5 million may be drawn down on or before June 30,
2023 if Faron raises at least EUR 15 million of new gross equity, has
sufficient funding until March 31, 2023 and has received an approval from the
Food and Drug Administration of the U.S. Department of Health and Human
Services regarding the protocol for a pivotal clinical trial of bexmarilimab
in an oncology indication. The third, yet uncommitted tranche of up to EUR 15
million could be utilized after the drawdown of tranche two, subject to the
IPF investment committee's prior approval on or before June 30, 2023. Each
tranche carries an annual cash interest of three-month EURIBOR + 9.00% in
addition to customary structuring and legal fees. The total cash cost of the
arrangement is dependent on whether the debt is repaid on each maturity date
or earlier.

 

As part of the arrangement, IPF will also be granted special rights which
entitle them to subscribe for new ordinary shares in the Company against
payment ("Warrants") for a period of seven years following the drawdown of
each tranche except for the first drawdown, for which the subscription period
will commence on March 25, 2022 and end on the date falling seven years after
such date. The subscription price per share on the basis of these Warrants
will equal the 30-day volume-weighted average price of an ordinary share of
Faron on the Nasdaq Helsinki First North exchange immediately preceding the
drawdown date of the respective tranche. The number of shares to be subscribed
for under the Warrants will be calculated by dividing 10.0% of each tranche
amount by the strike price defined above, subject to standard adjustments. For
the first tranche the subscription price is calculated to be EUR 3.126 per
share. Accordingly, IPF will have 319,944 Warrants giving them the right to
subscribe for up to 319,944 ordinary shares in Faron following the drawdown of
the first tranche. The issuance of Warrants in connection with the drawdown of
the first tranche is carried out within the authorization granted to the Board
by shareholders at the Company's Annual General Meeting held on April 23,
2021. Additionally, according to the Funding Agreement, IPF has the right to
appoint a board observer in Faron.

 

"This year will be critical for the bexmarilimab development program as we
expect updated survival and biomarker data from our Phase I/II MATINS trial,
the initiation of our first hematologic Phase I/II trial, enrollment of
patients in the first study evaluating bexmarilimab in combination with an
anti-PD-1 molecule, and a meeting with the US FDA to discuss our data and path
towards a regulatory filing," said Dr. Markku Jalkanen, Chief Executive
Officer of Faron. "This financing agreement will notably help us continue to
accelerate our ambitious bexmarilimab development program, which has the
potential to bring the promise of immunotherapy to a much broader patient
population compared to the relatively small percentage of cancer patients
benefiting from checkpoint inhibitor therapies today."

 

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

 

For more information please contact:

 

Media / Investor Contact

Faron Pharmaceuticals

Eric Van Zanten

Head of Communications

eric.vanzanten@faron.com (mailto:Eric.vanzanten@faron.com)

Investor.relations@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 (mailto: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. 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 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 (http://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.

 

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