REG - Faron Pharma. Oy - Faron Reports 2022 Half-Year Financial Results
25/08/2022 07:00
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RNS Number : 1470X Faron Pharmaceuticals Oy 25 August 2022
Faron Pharmaceuticals Oy
("Faron" or "Company")
Faron Reports Half-Year Financial Results, January 1 - June 30, 2022
August 25, 2022 at 2:00 am EDT / 7:00 am BST / 9:00 am EEST
Summary of January - June 2022
· New data reinforces bexmarilimab's potential to bring the promise
of immunotherapy to cancer patients who are currently not benefiting from
approved checkpoint inhibitors
· Compelling 12-month survival data reported from Phase I/II MATINS
study with 100% survival among checkpoint refractory melanoma and
cholangiocarcinoma patients who benefited from bexmarilimab treatment
· Biomarker data presented at AACR and ASCO Annual Meetings showed a
clear biomarker profile (low baseline levels of inflammatory markers like
IFN-gamma and TNF-alpha) among patients who experienced clinical benefit
following bexmarilimab treatment - benefiting patients also showed a higher
level of Clever-1 positive intra-tumoral macrophages
· Biomarker profile of patients benefiting from bexmarilimab matches
that of patients who are usually refractory to PD-1 blockade, which further
validates anti-PD1 combination development strategy
· First patient dosed in the Phase I/II BEXMAB study investigating
bexmarilimab in combination with standard of care in myeloid hematological
malignancies including acute myeloid leukemia (AML)
· Significant worldwide expansion of bexmarilimab epitope patents
which now cover more than 90% of pharmaceutical markets until at least 2037
· Erik Ostrowski, joined the Faron Board of Directors, and the
Leadership team was enhanced with the addition of Marie-Louise Fjällskog,
M.D., Ph.D., as Chief Medical Officer and the appointment of Juho Jalkanen,
M.D., Ph.D., as Chief Operating Officer
· Cash position strengthened by debt funding agreement with IPF
Partners for up to EUR 30 million and successful private placement including
an investment from The Leukemia & Lymphoma Society Therapy Acceleration
Program® (LLS TAP)
· Virtual briefing and Q&A to be held today at 7:00 am EDT /
12:00 pm BST / 2:00 pm EEST
TURKU, FINLAND / BOSTON, MA - Faron Pharmaceuticals Oy (AIM: FARN, First
North: FARON), a clinical stage biopharmaceutical company focused on building
the future of immunotherapy by harnessing the power of the immune system to
tackle cancer and inflammation, today announced unaudited half-year financial
results for January 1 to June 30, 2022 (the "period").
"I am extremely proud of the progress we made over the first half of 2022,"
said Dr. Markku Jalkanen, Chief Executive Officer of Faron. "We advanced our
ambitious bexmarilimab development program, which beyond the MATINS trial
includes combination studies in both solid tumors and hematologic
malignancies, we presented data showing patients whose tumors express elevated
levels of Clever-1 and low levels of PD-L1, a population that does not
typically respond to or is ineligible for treatment with currently approved
checkpoint inhibitors, are likely to experience clinical benefit and immune
ignition following treatment with bexmarilimab, and we reported patients
benefiting from bexmarilimab treatment experienced nearly a six-fold survival
advantage over those who did not. We also strengthened our cash position and
welcomed not just a new investor, The Leukemia & Lymphoma Society Therapy
Acceleration Program® (LLS TAP), but in them a partner whose organization and
network will help us further accelerate our development of bexmarilimab."
Pipeline Highlights
Bexmarilimab - Faron's wholly-owned, novel precision cancer immunotherapy
candidate, in Phase I/II development for difficult-to-treat cancers.
· Updated survival data today show that 63% of patients who benefited
from treatment with bexmarilimab were alive at 12-months compared to 9% of
those who did not. The strongest survival benefit was seen in checkpoint
refractory melanoma and cholangiocarcinoma, where 12-month survival was 100%
among patients who benefited from bexmarilimab treatment and 6% for patients
who did not benefit from treatment. The analysis included 134 heavily
pre-treated, advanced disease patients across 10 solid tumor cohorts from
Parts I and II of the MATINS study.
· Biomarker data presented at the American Association for Cancer
Research (AACR) Annual Meeting 2022 showed patients with low baseline levels
of serum interferon gamma (IFNy) and tumor necrosis factor alpha (TNFa)
experienced significantly higher clinical benefit following bexmarilimab
treatment. When used together, IFNy and TNFa are highly predictive of response
to bexmarilimab.
· Additional biomarker data presented at the American Society of
Clinical Oncology Annual Meeting showed that that the tumors of patients
benefiting from treatment with bexmarilimab had statistically significant
higher levels of Clever-1 positive intra-tumoral cells and a trend towards low
PD-L1 levels, a population that does not typically respond to or is ineligible
for treatment with currently approved checkpoint inhibitors. These patients
with immunologically cold tumors also exhibited an ignition of immune
response, as indicated by increased levels of IFNy following therapy, which
suggests bexmarilimab may serve as a catalyst for the immune system allowing
initially checkpoint inhibitor resistant or ineligible patients to become
responsive to PD-1 blockade.
· The first patient was dosed in the Phase I/II BEXMAB study
investigating bexmarilimab in combination with standard of care in multiple
hematological malignancies. This marks the first time bexmarilimab is being
assessed as part of a clinical study in hematologic malignancies. Based on
initial safety data, there is potential for Phase II expansion and to include
a first line triplet therapy of bexmarilimab, azacitidine and venetoclax in
newly diagnosed acute myeloid leukemia (AML) patients who are not able to
tolerate chemotherapy.
· AACR journal Molecular Cancer Therapeutics published research
examining the discovery and preclinical development of bexmarilimab. Reporting
the humanization and nonclinical characterization steps used to determine the
physicochemical properties, biological potency, and safety profile of
bexmarilimab, the authors conclude that bexmarilimab could induce an
immunostimulatory tumor microenvironment that leads to anti-tumor efficacy.
· Data was presented at the European Hematology Association 2022
Congress showing Clever-1 is expressed in patient bone marrow blasts and
monocytes in acute myeloid leukemia (AML) and myelodysplastic syndrome (MDS)
and that blocking Clever-1 with bexmarilimab in these patients induced immune
activation as observed through increased antigen presenting molecule, human
leucocyte antigen DR (HLA-DR) expression and declined PD-1 expression.
· The proprietary position of bexmarilimab was significantly increased
with patents granted in Europe, China, South Korea and Mexico. With previously
received patents in the US and Japan, bexmarilimab epitope patents now cover
more than 90% of pharmaceutical markets until at least 2037.
Traumakine(®) - Faron's investigational intravenous (IV) interferon beta-1a
therapy, in development for the treatment of ischemic or hyperinflammatory
conditions.
· Scientific Reports published data from Faron's INFORAAA study showing
Traumakine-induced up-regulation of CD73 prevents death after emergency open
aortic surgery. Up-regulation of CD73 was associated with 100% survival
compared to expected mortality between 30-40%.
· Research was published identifying novel genetic factors that underly
the interaction of corticosteroids with interferon beta signaling in acute
respiratory distress syndrome (ARDS) and COVID-19. The research identified a
deleterious effect of glucocorticosteroids when given together with
intravenous IFN beta-1a therapy. The Company and its scientific collaborators
found that patients receiving Traumakine carrying the single nucleotide
polymorphism (SNP) rs9984273 (C/T) in subunit 2 of interferon receptor
(INFAR2) showed a substantial reduction in mortality compared to patients
without the gene mutation. The same SNP that was also associated with better
outcome in COVID-19.
· Phase II/III HIBISCUS trial assessing Traumakine (Intravenous
Interferon beta-1a; IFN beta-1a) as a first-line treatment for hospitalized
COVID-19 patients who require low flow oxygen support was closed due to low
COVID-19 hospitalization rates and a shortage of patients not already
receiving steroids. Study resources were re-focused on the development of
bexmarilimab.
· Development of Traumakine continues together in collaboration with
the 59(th) Medical Wing of the US Air Force and Wake Forest University Medical
School for ischemia-reperfusion injury and battlefield injuries that lead to
polytrauma and systemic inflammation. The latest primate results will be
presented at the annual Military Health System Research Symposium (MHSRS) on
the 13(th) of September in Orlando, Florida. MHSRS is the biggest military
research symposium in the USA.
Corporate Highlights
· Secured a debt funding agreement with IPF Partners for up to EUR 30
million. The first tranche of EUR 10 million was accessed in February 2022,
with an additional EUR 20 million available in the future, subject to certain
conditions being met. As part of the arrangement relating to the debt funding,
Faron grants IPF warrants entitling them to subscribe for ordinary shares of
the Company against payment. In total 319,944 Warrants were issued to IPF in
relation to the first tranche utilized.
· Cash position strengthened with successful private placement
totaling gross EUR 5.0 million, the final portion of which amounting to EUR
0.5 million settled in early July 2022. The placing included investment from
The Leukemia & Lymphoma Society Therapy Acceleration Program® (LLS TAP),
a funding initiative to accelerate innovative blood cancer therapeutics and
change the standard of care in leukemia, lymphoma, and multiple myeloma. In
total Faron raised EUR 5.0 million with the fundraise and 2,006,621 ordinary
shares were issued to investors (of which 1,806,621 shares in June).
· Erik Ostrowski, BS, MBA, veteran biotech and financial executive with
significant fundraising and investment bank experience, joined the Faron Board
of Directors in April 2022. He is currently the Chief Financial Officer and
Treasurer of AVROBIO (Nasdaq: AVRO), a role he has served since joining the
company in January 2019. Prior to joining AVROBIO, he served as CFO of Summit
Therapeutics plc. (Nasdaq: SMMT) and vice president of finance at
Organogenesis Inc. (Nasdaq: ORGO). He previously worked in investment banking,
most recently as a director with Leerink Partners LLC., having begun his
career as an accountant with Coopers & Lybrand (now
PricewaterhouseCoopers).
· Marie-Louise Fjällskog, M.D., Ph.D., joined Faron's Global
Management Team as Chief Medical Officer, bringing with her over 30 years of
experience in clinical oncology, translational research, and drug development.
· Juho Jalkanen, M.D., Ph.D., was appointed Chief Operating Officer. In
this role, Dr. Jalkanen leads business strategy and daily operations for Faron
including oversight of academic and industry partnerships, resource
prioritization and allocation, chemistry, manufacturing and controls, supply
chain and driving performance measures.
Half-Year Financial Results
· Cash balances of EUR 9.9 million at 30 June 2022 (2021: EUR 7.0
million).
· Operating loss of EUR 13.4 million for the six months ended 30 June
2022 (2021: EUR 10.4 million).
· Net assets of EUR -5.2 million as at 30 June 2022 (2021: EUR 2.8
million).
· Cash position strengthened by debt funding agreement with IPF
Partners for EUR 10 million and successful private placement of EUR 5.0
million
Consolidated key figures, IFRS
EUR'000 Unaudited Unaudited 1-12/2021
12 months
1-6/2022 1-6/2021
6 months
6 months
Revenue 0 0 0
Other operating income 485 1 210 6 137
Research and Development expenses (10 047) (9 008) (17 369)
General and Administrative expenses (3 801) (2 626) (9 876)
Loss for the period (13 121) (10 560) (21 194)
Unaudited Unaudited 1-12/2021
12 months
1-6/2022 1-6/2021
6 months
6 months
Loss per share, EUR (0,25) (0,21 -0,42
Number of shares at end of period 56,575,453* 50,457,874 46,799,747
Average number of shares 53,235,643 49,615,167 44,584,199
Unaudited Unaudited 31 Decmber 2021
30 Jun 2022 30 Jun 2021
Cash and cash equivalents 9 936 6 967 6 853
Equity (5 194) 2 813 2 919
Balance sheet total 16 729 11 865 13 182
* of which 1,311,800 are held in Treasury
24 August 2022
Faron Pharmaceuticals
Board of Directors
This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 ("MAR").
Conference call information
A virtual briefing and Q&A session for investors, analysts and media will
be hosted by Dr. Markku Jalkanen, Chief Executive Officer, and Toni Hänninen,
Chief Financial Officer, today, August 25, 2022 at 7:00 am (EDT) / 12:00 pm
(BST) / 2:00 pm (EEST) on the day of results.
Webcast registration link: https://faron.videosync.fi/2022-halfyear-results
(https://faron.videosync.fi/2022-halfyear-results)
The half-year report, presentation, and a replay of the webcast will be
available on the Company's website at www.faron.com/investors
(http://www.faron.com/investors) .
For more information please contact:
Investor Contact
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
Eric Van Zanten
VP, Communications
eric.vanzanten@faron.com (mailto:Eric.vanzanten@faron.com)
Phone: +1 (610) 529-6219
Cairn Financial Advisers LLP, Nomad
Sandy Jamieson, Jo Turner
Phone: +44 (0) 207 213 0880
Peel Hunt LLP, Broker
Christopher Golden, James Steel
Phone: +44 (0) 20 7418 8900
Sisu Partners Oy, Certified Adviser on Nasdaq First North
Juha Karttunen
Phone: +358 (0)40 555 4727
Jukka Järvelä
Phone: +358 (0)50 553 8990
Consilium Strategic Communications
Mary-Jane Elliott, David Daley, Lindsey Neville
faron@consilium-comms.com (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 in both solid tumors and hematologic
malignancies. Beyond immuno-oncology, it offers potential in infectious
diseases, vaccine development and more.
About MATINS
The MATINS (Macrophage Antibody To INhibit immune Suppression) study is a
first-in-human open label phase I/II clinical trial investigating the
tolerability, safety and efficacy of bexmarilimab in ten different
hard-to-treat metastatic or inoperable solid tumour cohorts -
cholangiocarcinoma, colorectal cancer, cutaneous melanoma, ER+ breast cancer,
gastric cancer, hepatocellular carcinoma, ovarian cancer, uveal melanoma,
pancreatic cancer and anaplastic thyroid carcinoma - which are all known to
host a significant number of Clever-1 positive tumour-associated macrophages
(TAMs). The completed Part I of the trial dealt with tolerability, safety and
dose escalation. The ongoing Part II is focused on identifying patients who
show an increased number of Clever-1 positive TAMs and exploring safety and
efficacy. Part III will be focused on assessing efficacy. Data from MATINS
have shown that bexmarilimab has the potential to be the first macrophage
immune checkpoint therapy. To date, the investigational therapy has been shown
to be safe and well-tolerated, making it a low-risk candidate for combination
with existing cancer therapies, and has demonstrated early signs of clinical
benefit in patients who have exhausted all other treatment options.
About BEXMAB
The BEXMAB study is a first-in-human open label phase I/II clinical trial
investigating bexmarilimab in combination with standard of care (SoC) in
aggressive hematological malignancies including acute myeloid leukemia (AML)
and myelodysplastic syndrome (MDS). The primary objective is to determine the
safety and tolerability of bexmarilimab in combination with SoC (azacitidine)
treatment and to identify the recommended Phase 2 dose. Based on initial
safety data, there is potential for expansion to include a first line triplet
therapy of bexmarilimab, azacitidine and venetoclax in newly diagnosed AML
patients who are not able to tolerate chemotherapy. Clever-1 is highly
expressed in both AML and MDS and associated with therapy resistance, limited
T cell activation and poor outcomes. Directly targeting Clever-1 could limit
the replication capacity of cancer cells, increase antigen presentation,
ignite an immune response, and allow current chemotherapy treatments to be
more effective.
About Faron Pharmaceuticals Ltd.
Faron (AIM: FARN, First North: FARON) is a clinical stage biopharmaceutical
company developing novel treatments for medical conditions with significant
unmet needs caused by dysfunction of our immune system. The Company currently
has a pipeline based on the receptors involved in regulation of immune
response in oncology, organ damage and bone marrow regeneration. Bexmarilimab,
a novel anti-Clever-1 humanized antibody, is its investigative precision
immunotherapy with the potential to provide permanent immune stimulation for
difficult-to-treat cancers through targeting myeloid function. Currently in
Phase I/II clinical development as a potential therapy for patients with solid
tumors and hematologic malignancies, bexmarilimab has potential as a
single-agent therapy or in combination with other standard treatments
including immune checkpoint molecules. Traumakine is an investigational
intravenous (IV) interferon beta-1a therapy for the treatment of acute
respiratory distress syndrome (ARDS) and other ischemic or hyperinflammatory
conditions. Traumakine is currently being evaluated by the 59th Medical Wing
of the US Air Force and the US Department of Defense for the prevention of
multiple organ dysfunction syndrome (MODS) after ischemia-reperfusion injury
caused by a major trauma. Faron is based in Turku, Finland. Further
information is available at www.faron.com (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.
Chairman and Chief Executive Officer's Review
Introduction
The first half of 2022 has been a period of significant progress for Faron.
Most notably, we continued to accelerate our ambitious bexmarilimab
development program. Key to this is our advanced understanding of which
patients are likely to respond to treatment and what happens in the tumor
microenvironment when they do. These findings, in addition to the significant
12-month survival advantage experienced by patients who responded to
treatment, further strengthen our belief that bexmarilimab has the potential
to bring the promise of immunotherapy to a much broader patient population,
both as a monotherapy and in combination with currently approved standard of
care treatments.
Bexmarilimab
Driving the clinical development of bexmarilimab continues to be Faron's top
priority, which is why we recruited Marie-Louise Fjällskog, M.D., Ph.D. to
join the Company as our new Chief Medical Officer. Dr. Fjällskog has over 30
years of experience in clinical oncology, translational research, and drug
development. She joined us from Sensei Biotherapeutics (SNSE), where she
served as Chief Medical Officer for the Nasdaq listed immuno-oncology focused
biopharmaceutical company. Prior to her tenure at Sensei, she was Vice
President, Clinical Development at both Merus (MRUS) and Infinity
Pharmaceuticals (INFI) where she led development of multiple small molecule
and immunotherapy clinical programs. Earlier in her career she spent time at
the Novartis Institute for Biomedical Research as Global Clinical Program
Leader responsible for the development of oncology treatments targeting
CDK4/6, BCL-2, PD-1, CSF-1 and CD73.
Dr. Fjällskog has been instrumental in advancing our bexmarilimab development
program, which is focused in three areas, monotherapy in late-stage solid
tumors, combination with anti-PD-1 in first-line solid tumors, and combination
with standard of care in hematologic malignancies. She has also significantly
advanced our translational research efforts.
Data from the completed Part 1 and Part II of the MATINS trial continue to be
analyzed, but we were able to report updated 12-month survival data in June.
The further updated analysis shows that 63% of patients who benefited from
treatment with bexmarilimab were alive at 12-months compared to 9% of patients
who did not benefit from treatment. The strongest survival benefit was seen in
checkpoint refractory melanoma and cholangiocarcinoma where 12-month survival
was 100% among patients who benefited from bexmarilimab treatment and 6% for
patients who did not benefit from treatment. The updated survival data is
significant, especially when you consider these were heavily pre-treated
patients with substantially advanced disease. It's highly encouraging that an
anti-tumor immune response was activated in these heavily compromised patients
and that almost two-thirds of the patients who benefited from treatment had a
durable response lasting at least 12-months.
We look forward to sharing this data and additional translational research
with the FDA late this year or in early 2023. With their input, we will
finalize a dose, frequency and design of the next step, which we anticipate
will be a randomized study to confirm survival benefit against comparator
(physician choice of chemo or potentially best supportive care).
We also plan to engage the FDA around the design of our planned trial
investigating bexmarilimab in combination with anti-PD1 in first line solid
tumors. We are extremely excited about this combination given the
translational research we reported earlier this year at the American
Association for Cancer Research and American Society of Clinical Oncology
Annual Meetings. This data identified a clear biomarker profile among patients
who responded to treatment with bexmarilimab. Notably, these patients, those
with low baseline levels of inflammatory cytokines and tumors that expressed
low levels of PD-L1, typically do not respond to or are ineligible for
treatment with currently approved checkpoint inhibitors. This means that
bexmarilimab works where anti-PD1 treatments do not. Patients with
immunologically cold tumors also exhibited an ignition of immune response, as
indicated by increased levels of IFN-y following therapy, which suggests
bexmarilimab may serve as a catalyst for the immune system allowing initially
checkpoint inhibitor resistant or ineligible patients to become responsive to
PD-1 blockade.
In addition to solid tumors, we also believe bexmarilimab can become an
important treatment option in hematologic malignancies. In June we enrolled
the first patient in our Phase I/II BEXMAB study. The primary objective of
BEXMAB is to determine the safety, tolerability and preliminary efficacy of
bexmarilimab in combination with standard of care in patients with relapsed
acute myeloid leukemia (AML), myelodysplastic syndrome (MDS), or chronic
myelomonocytic leukemia (CMML). Based on initial safety data, there is
potential for Phase II expansion and to include a first line triplet therapy
of bexmarilimab, azacitidine and venetoclax in newly diagnosed AML patients
who are not able to tolerate chemotherapy.
This opportunity is so exciting because we know that certain blood cancer
cells carry significant amounts of cell surface Clever-1, which may limit the
body's ability to mount an immune response. In fact, research has shown a
clear survival benefit among certain blood cancer patients with low Clever-1
expression. By adding bexmarilimab to standard of care we expect to
downregulate Clever-1 expression, thereby increasing antigen presentation and
allowing the immune system to better identify and kill cancer cells. This
could provide a deeper and more durable clinical benefit compared to what most
patients experience with currently approved treatments.
Patent progress
Building a global intellectual property (IP) portfolio around Clever-1 remains
a key priority for Faron as it is critical for the future commercialization of
bexmarilimab. We continued to make progress towards this goal over the first
half of 2022 with patents granted in Europe, China, South Korea, and Mexico.
These, in addition to the previously received patents mean that we now have
bexmarilimab epitope patents covering more than 90% of pharmaceutical markets
until at least 2037.
Traumakine and Haematokine
Beyond bexmarilimab, we continue to be excited about the potential of our two
additional pipeline assets, Traumakine and Haematokine, even though we made
the difficult decision in April to discontinue our Phase II/III HIBISCUS trial
assessing Traumakine as a first-line treatment for hospitalized COVID-19
patients. The emergence of the less severe Omicron variant, widespread
vaccinations, and the continued early use of steroids severely limited our
potential patient pool and made it impossible for us to reach our enrollment
targets.
Our near-term development focus for Traumakine has shifted to settings where
steroid use is not as widespread. This includes major operations and
polytrauma where patients are at high risk of ischemia-reperfusion injury,
which is tissue damage caused when blood supply returns to tissue after a
period of oxygen depletion. Data from our INFORAAA trail published earlier
this year showed that Traumakine up-regulates CD73, a key organ protective
endothelial enzyme that reduces inflammation and prevents vascular leakage.
The data also showed up-regulation of CD73 was associated with 100% survival
among surgically operated ruptured abdominal aorta aneurysm (RAAA) patients -
a patient population with expected mortality between 30-40%.
The focus of our Haematokine development program was further validated this
year with the publication of research in the multidisciplinary journal
Cellular and Molecular Life Sciences showing the inhibition of Vascular
Adhesion Protein‑1 (VAP-1) potentially supports the expansion of human
hematopoietic stem cells (HSC). The research showed for the first time that
VAP-1 serves as a check point-like inhibitor, restricting the expansion of
hematopoietic stem cells. As a result, we believe that inhibiting the
enzymatic activity of VAP-1 enables the expansion of hematopoietic stem cells,
which are essential to the formation of new cells and that this approach could
have broad applicability in the fields of regenerative medicine and the
treatment of hematological malignancies.
Financial review
In February 2022, Faron entered into a secured debt agreement with IPF
Partners, a leading alternative financing provider focused on the healthcare
sector. This agreement allowed Faron to access EUR 10 million immediately and
subject to certain conditions being met, Faron may have access to an
additional EUR 20 million in funding. Not only did this agreement strengthen
our financial position, but it also added flexibility to our funding strategy
by adding a debt instrument into our funding tools. We were also able to
complete a successful private placement totaling EUR 5.0 million, including
investment from The Leukemia & Lymphoma Society Therapy Acceleration
Program® (LLS TAP), a funding initiative to accelerate innovative blood
cancer therapeutics and change the standard of care in leukemia, lymphoma, and
multiple myeloma. We were delighted to receive this significant support from
our existing and new investors, providing additional financial resources to
allow the further acceleration of our development programs and significantly
strengthening our balance sheet.
Statement of comprehensive income
The operating loss for the six months ended 30 June 2022 was EUR 13.4 million
(six months ended 30 June 2021: loss of EUR 10.4 million). No revenue was
generated during the period or prior period. Research and development expenses
increased by EUR 1.0 million to EUR 10.0 million (2021: EUR 9.0 million).
General and administrative expenses increased by EUR 1.2 million to EUR 3.8
million (2021: EUR 2.6 million).
The loss for the period was EUR 13.1 million (2021: loss of EUR 10.6 million)
and the basic and diluted loss per share was EUR 0.25 (2021: loss per share of
EUR 0.21).
Statement of financial position and cash flows
As of June 30, 2022 net assets amounted to EUR -5.2 million (June 30, 2021:
EUR 2.8 million). The net cash flow for the first six months in 2022 was EUR
3.1 million (2021: EUR 2.8 million). As of June 30, 2022 total cash and cash
equivalents held were EUR 9.9 million (2021: EUR 7.0 million).
Corporate
Faron's Annual General Meeting (AGM) was held on April 22, 2021. The AGM
adopted the financial statements of the Company and re-elected audit firm
PricewaterhouseCoopers Oy ("PwC") as the Company's auditor. Additionally, the
number of members of the Board was confirmed as seven. Frank Armstrong,
Gregory Brown, John Poulos, Leopoldo Zambeletti, Markku Jalkanen and Anne
Whitaker were re-elected to the Board and Erik Ostrowski was elected as a new
member to the Board for a term that ends at the end of the next AGM.
Summary & outlook
Our focus for the remainder of 2022 continues to be the acceleration of
bexmarilimab's clinical development. Preparations for the pivotal expansion
stage of the MATINS study, including confirmation of dosage, dose frequency
and tumor type, are priorities for us. We also continue planning for the
initiation of our Company sponsored trial investigating bexmarilimab in
combination with anti-PD1 in first-line tumors and expect to see early data
from BEXMAB by year-end. Alongside these activities, we will continue to
explore the potential of Traumakine, with a focus on preventing multiple organ
dysfunction syndrome after ischemia-reperfusion injury caused by a major
trauma, and Haematokine.
On behalf of the Board, we would like to thank our shareholders, existing and
new, for their support of Faron. We would also like to thank our employees for
their continued commitment to our mission and the patients we serve. We look
forward to updating the market on our progress throughout the course of the
year.
Dr Markku Jalkanen
Chief Executive Officer
Dr Frank Armstrong
Chairman
Consolidated Income Statement, IFRS
EUR'000 Unaudited Unaudited 1-12/2021
1-6/2021 12 months
1-6/2022 6 months
6 months
Revenue 0 0 0
Other operating income 485 1 210 6 137
Research and development expenses (10 047) (9 008) (17 369)
General and administrative expenses (3 801) (2 626) (9 876)
Operating loss (13 364) (10 424) (21 108)
Financial expense (430) (191) (235)
Financial income 692 61 165
Loss before tax (13 102) (10 554) (21 179)
Tax expense (19) (6) (15)
Loss for the period (13 121) (10 560) (21 194)
Translation difference 11 (15)
Comprehensive loss for the period attributable to the equity holders of the (13 110) (10 560) (21 209)
Parent company
Loss per ordinary share
Basic and diluted loss per share, EUR (0.25) (0.21) (0.42)
Consolidated Balance Sheet, IFRS
EUR'000 Unaudited Unaudited 31 December 2021
30 June 2022
30 June 2021
Assets
Non-current assets
Machinery and equipment 17 19 20
Right-of-use-assets 98 273 187
Intangible assets 1 011 920 899
Prepayments and other receivables 53 53 53
Total non-current assets 1 179 1 265 1 159
Current assets
Prepayments and other receivables 5 614 3 634 5 170
Cash and cash equivalents 9 936 6 967 6 853
Total current assets 15 550 10 600 12 023
Total assets 16 729 11 865 13 182
Unaudited Unaudited 31 December 2021
30 June 2022
30 June 2021
Capital and reserves attributable to the equity holders of the Parent company
Share capital 2 691 2 691 2 691
Reserve for invested unrestricted equity 120 839 106 396 116 507
Translation difference 2 (1) (15)
Accumulated deficit (128 726) (106 274) (116 265)
Total equity (5 194) 2 813 2 919
Non-current liabilities
Borrowings 12 250 3 231 2 918
Lease liabilities 0 109 16
Other liabilities 539 146 151
Total non-current liabilities 12 789 3 486 3 085
Current liabilities
Borrowings 0 0 429
Lease liabilities 106 178 184
Trade payables 7 791 4 555 5 295
Other current liabilities 1 238 832 1 270
Total current liabilities 9 135 5 565 7 178
Total liabilities 21 924 9 052 10 263
Total equity and liabilities 16 729 11 865 13 182
Consolidated Statement of Changes in Equity, IFRS
EUR'000 Share capital Reserve for invested unrestricted equity Translation difference Accumulated deficit Total equity
Balance as at 31 December 2020 2 691 92 015 2 -96 557 -1 849
Comprehensive loss for the last six months 2021 0 (1) (10 560) (10 561)
Transactions with equity holders of the Parent company
Issue of ordinary shares 0 14 381 0 0 14 381
Share-based compensation 0 0 0 843 843
0 14 381 0 843 15 224
Balance as at 30 June 2021 2 691 106 396 (1) (106 274) 2 813
Comprehensive loss for the year 2021 0 0 (15) (21 194) (21 209)
Transactions with equity holders of the Parent company
Issue of ordinary shares 0 24 492 0 24 492
Share-based compensation 0 0 1 487 1 487
0 24 492 0 1 487 25 980
Balance as at 31 December 2021 2 691 116 507 (15) (116 265) 2 919
Comprehensive loss for the last six months 2022 0 0 11 (13 121) (13 110)
Transactions with equity holders of the Parent company
Issue of ordinary shares 0 4 332 0 4 332
Share-based compensation 0 0 0 665 665
0 4 332 0 665 4 997
Balance as at 30 June 2022 2 691 120 839 2 (128 726) (5 194)
Consolidated Cash Flow Statement, IFRS
€'000 Unaudited 1-6/2022 6 months Unaudited 1-6/2021 6 months 1-12/2021
12 months
Cash flow from operating activities
Loss before tax (13 102) (10 554) (21 194)
Adjustments for:
Received grant (415) (642) (1 387)
Depreciation and amortisation 151 142 307
Interest expense 529 88 216
Tax expense (19) 10 16
Unrealised foreign exchange loss (gain), net (12) (27) 153
Share-based compensation 665 843 1 487
Adjusted loss from operations before changes in working capital (12 204) (10 141) (20 402)
Change in net working capital:
Prepayments and other receivables (increase -) 819 (660) (1 919)
Trade payables (increase +) 1 211 (21) 723
Other liabilities (1 014) (337) (566)
Cash used in operations (11 187) (11 158) (22 163)
Taxes paid 0 (15) (16)
Interest paid (108) (30) (40)
Net cash used in operating activities (11 295) (11 204) (22 218)
Cash flow from investing activities
Payments for intangible assets (167) (385) (461)
Payments for equipment 0 (7) (13)
Net cash used in investing activities (167) (392) (473)
Cash flow from financing activities
Proceeds from issue of shares 4 331 14 382 24 492
Proceeds from borrowings 10 389 264 662
Repayment of borrowings (108) (122) (122)
Proceeds from grants 0 0 750
Payment of lease liabilities (96) (96) (191)
Net cash from financing activities 14 516 14 427 25 590
Net increase (+) / decrease (-) in cash and cash equivalents 3 054 2 831 2 899
Effect of exchange rate changes on cash and cash equivalents 28 27 (153)
Cash and cash equivalents at 1 January 6 853 4 108 4 108
Cash and cash equivalents at the end of period 9 936 6 967 6 853
Notes to the interim financial report
1. Corporate information
Faron Pharmaceuticals Ltd (the "Company") is a clinical stage
biopharmaceutical company incorporated and domiciled in Finland, with its
headquarters at Joukahaisenkatu 6, 20520 Turku, Finland. The Company currently
has a pipeline based on the endothelial receptors involved in regulation of
immune response, in oncology and organ damage.
The Company has been listed on the London Stock Exchange's AIM market since 17
November 2015, with a ticker FARN, and since 3 December 2019, the Company has
been listed on the Nasdaq First North Growth Market list with a ticker FARON.
2. Summary of significant accounting policies
2.1. Basis of preparation
The unaudited H1 interim financial report has been prepared in accordance with
the International Financial Reporting Standards of the International
Accounting Standards Board (IASB) and as adopted by the European Union (IFRS)
and the interpretations of the International Financial Reporting Standards
Interpretations Committee (IFRIC).
The principal accounting policies applied in the preparation of these interim
financial report is set out below. The Company has consistently applied these
policies to all the periods presented, unless otherwise stated. The areas of
the report involving a higher degree of judgment or complexity, or areas where
assumptions and estimates are significant to the interim financial report, are
disclosed in note 2.2.
The unaudited interim financial report incorporate the parent company, Faron
Pharmaceuticals Ltd, and all subsidiaries (the "Group").
All amounts are presented in thousands of euros, unless otherwise indicated,
rounded to the nearest euro thousand.
2.2. Going concern
The Group has forecasted its estimated cash requirements over the next twelve
months. In order to make these forecasts the Group has made a number of
assumptions regarding the quantity and timing of future expenditure and income
as well as other key factors. Though these estimates have been made with
caution and care, they continue to contain a significant amount of
uncertainty. Based on the forecast the Group believes that it has adequate
financial resources to continue its operations into Q1 2023 and therefore this
unaudited financial report has been prepared on a going concern basis. In its
meeting on 24 August 2022 the Board of Directors of the Company approved the
publishing of this interim financial report.
The Group has taken several acts to secure further financing during the rest
of the year 2022. The Directors believe that the Group can gain access to
further resources to sustain operations over the next 12 months. At this stage
the Group cannot disclose any of these options.
Because the additional finance is not committed at the date of issuance of
these H1 reports, these circumstances represent a material uncertainty that
may cast significant doubt on the Group's ability to continue as a going
concern. Should the Group be unable to obtain further finance such that the
going concern basis of preparation were no longer appropriate, adjustments
would be required, including to reduce balance sheet values of assets to their
recoverable amounts, to provide for further liabilities that might arise.
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