REG - Faron Pharma. Oy - Financial Statement January 1 to December 31 2021
25/03/2022 07:16
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RNS Number : 9818F Faron Pharmaceuticals Oy 25 March 2022
Faron Pharmaceuticals Ltd.
("Faron" or "Company")
Faron Financial Statement Release January 1 to December 31, 2021
Financial statement release March 25, 2022 at 09:00 AM (EET) / 07:00 AM (GMT)
/ 03:00 AM (EDT)
Inside information
2021 Highlights
· Bexmarilimab shows compelling antitumor activity in multiple
advanced treatment resistant solid tumor types as a monotherapy with strongest
clinical benefit rate (partial response or stable disease) observed in five
different tumor types - cutaneous melanoma (30%), gastric cancer (30%),
cholangiocarcinoma (30%), hepatocellular carcinoma (40%) and breast cancer
(40%)
· Biomarker analysis showed patients with low baseline levels of
inflammatory cytokines in blood achieved significantly higher clinical benefit
following treatment with bexmarilimab monotherapy
· First patient dosed in Phase II/III HIBISCUS trial assessing
Traumakine(®) as a first-line treatment for hospitalized COVID-19 patients
· Balance sheet strengthened by two successful share placings
totaling EUR 25.6 million gross, both including investment from European
Investment Council (EIC) Fund, a breakthrough initiative from the European
Commission
· Virtual briefing and Q&A to be held today at 8:00 AM (EDT) /
12:00 PM (GMT) / 2:00 PM (EET)
Major Events After the 2021 Financial Year
· Landmark analysis estimates 70% nine-month overall survival rate
(11 months from initiation of treatment) for Phase I/II MATINS study patients
who benefited from treatment with bexmarilimab and 26% for patients who did
not benefit from treatment
· Secured a debt funding agreement with IPF Partners for up to EUR
30 million - EUR 10 million was accessed in February 2022, with an additional
EUR 20 million available in the future, subject to certain conditions being
met
· 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
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, today announced audited full-year financial
results for January 1 to December 31, 2021 (the "period") and H2 2021 and
provided an overview of recent corporate developments.
"I am extremely proud of the progress we made in 2021 across each of our
pipeline programs and building our corporate infrastructure to support the
ambitious plans we have for 2022 and beyond," said Dr. Markku Jalkanen, Chief
Executive Officer of Faron. "Last year we accelerated the development of
bexmarilimab as a monotherapy, where it has shown compelling antitumor
activity in heavily pre-treated patients across multiple solid tumor types,
while also progressing plans to study bexmarilimab in combination with
standard of care in first-line solid tumors and in hematological malignancies.
We also initiated a study of Traumakine as a first-line treatment for
hospitalized COVID-19 patients without prior steroid treatment, which we
believe could represent a significant step forward in the treatment of lung
failure due to viral infections. We accomplished all of this while also
strengthening our balance sheet, adding highly experienced team members and
expanding our global footprint with a growing presence in the United States."
HIGHLIGHTS (including post period):
Pipeline Highlights
Bexmarilimab - Faron's wholly-owned, novel precision cancer immunotherapy
candidate, in Phase I/II development for difficult-to-treat cancers.
· Compelling antitumor activity in multiple advanced solid tumor
types was reported from patients enrolled in the completed Part I and ongoing
Part II of the MATINS study, investigating bexmarilimab as a potential
monotherapy in patients with solid tumors who have exhausted all treatment
options. The strongest results were observed in cutaneous melanoma, gastric
cancer, cholangiocarcinoma, hepatocellular carcinoma and breast cancer with a
30.0% - 40.0% clinical benefit rate (CBR) across these tumor types.
· Landmark analysis estimates 70% nine-month overall survival rate
for MATINS patients who benefited from treatment with bexmarilimab and 26% for
patients who did not benefit from treatment. Median overall survival has not
yet been reached in the clinical benefit patient group.
· Biomarker analysis shows patients with low interferon gamma
(IFNy) and tumor necrosis factor alpha (TNFa) levels experienced significantly
higher clinical benefit following treatment with bexmarilimab, which is
opposite to what is usually seen with checkpoint inhibitors and other T cell
activating agents, meaning bexmarilimab 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.
· A more than 100% increase in IFNy levels was seen after the first
cycle of bexmarilimab treatment among patients who experienced clinical
benefit. In certain patients, bexmarilimab is able to turn cold tumors into
hot tumors and may serve as a catalyst for the immune system allowing
initially checkpoint inhibitor resistant patients to become responsive to PD-1
blockade.
· Further clinical trials are planned to start in 2022 to
investigate bexmarilimab's potential in additional clinical settings,
including in combination with anti-PD-1 therapy in selected advanced solid
tumors and in combination with standard of care in hematological malignancies.
· A key patent with claims protecting the composition of matter of
bexmarilimab was granted by the United States Patent and Trademark Office and
equivalent Japanese patent office. This patent family covers bexmarilimab's
binding sequences and Clever-1's corresponding epitope - specific elements of
the antibody-antigen binding site - with an expected expiry date, not
including any potential extensions, of 2037. The European Patent Office also
issued an allowance letter, which means that more than 80% of pharmaceutical
markets are now covered with this patent family.
· A new role for soluble Clever-1 was identified, related to its
capacity to control T cell activation. The scientific findings, from tests on
MATINS patients' plasma, suggest that their high levels of free, soluble
Clever-1 can act as a direct inhibitor of T cell activation, providing a
greater immunosuppressive effect than previously expected and indicating
broader applicability for bexmarilimab. A new patent application has been
filed seeking protection for these inventions and related applications.
Traumakine - Faron's investigational intravenous (IV) interferon beta-1a
therapy, in development for the treatment of acute respiratory distress
syndrome (ARDS) and other ischemic or hyperinflammatory conditions.
· Dosing commenced in the Phase II/III HIBISCUS trial investigating
Traumakine in the treatment of hospitalized COVID-19 patients compared to
corticosteroid treatment with dexamethasone. The US Department of Defense
(DoD) selected the HIBISCUS trial to receive $6.1 million of funding from the
Coronavirus Aid, Relief, and Economic Security (CARES) Act.
· Building on Faron's already strong IP portfolio for Traumakine,
Faron signed a sub-license agreement covering a relevant manufacturing patent
in the US. Faron also applied for patent protection relating to Traumakine's
induction of CD73 for organ protection, through the sequential use of IV
interferon beta-1a followed by corticosteroids for the treatment of systemic
inflammation.
· Scientific Reports published data from INFORAAA study showing
Traumakine induced up-regulation of CD73 was associated with 100% survival in
surgically operated ruptured abdominal aorta aneurysm (RAAA) patients. These
patients are at high risk of ischemia-reperfusion injury, with expected
mortality between 30-40%.
· Partnership established with the 59th Medical Wing of the U.S.
Air Force and U.S. Army and U.S. Army Institute of Surgical Research to
explore the use of Traumakine for organ protection in combat wounds leading to
multi-organ failure from ischemia and reperfusion.
· New manufacturing process is progressing as planned in
collaboration with AGC Biologics.
HAEMATOKINE - An AOC3 (amine oxidase copper containing 3) protein inhibitor
targeting Vascular Adhesion Protein-1 (VAP-1) in development for use in
regenerative medicine and to treat hematological malignancies.
· Faron acquired rights for this potential use of AOC3 inhibitors
and will be responsible for the future development of Haematokine and for the
management, prosecution, maintenance and filing of patent applications.
· The multidisciplinary journal Cellular and Molecular Life
Sciences published research showing the inhibition of VAP-1 potentially
supports the expansion of human hematopoietic stem cells (HSC), which are
essential to the formation of new cells within blood. This approach has the
potential to benefit a variety of conditions where an expansion of HSC is
needed. This includes bone marrow transplantation, where approximately 25% of
transplants fail due to poor expansion of transplanted cells.
Corporate Highlights
· Balance sheet was strengthened by raising EUR 25.6 million gross
through private placements of new ordinary shares. This includes two
placements, which encompassed existing and new investors, including the
European Innovation Council Fund, a breakthrough initiative from the European
Commission. In February 2022, Faron also announced a debt funding agreement
with IPF Partners for up to EUR 30 million. EUR 10 million was accessed upon
signing of the agreement with an additional EUR 20 million available in the
future through additional tranches of EUR 5 million and EUR 15 million,
subject to certain conditions being met.
· Anne Whitaker joined the Faron Board of Directors, bringing more
than 25 years of experience in the life science industry, including senior
leadership roles with large pharmaceutical, biotech and specialty pharma
companies. Anne is the current Chairman of the Board for Aerami Therapeutics
Holdings, Inc. Anne previously served as Chief Executive Officer of Novoclem
Therapeutics, Inc., Executive Vice President at Bausch Health, President and
Chief Executive Officer of Synta Pharmaceuticals and as President, North
America Pharmaceuticals at Sanofi.
· 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.
Dr. Fjällskog joined Faron from Sensei Biotherapeutics (SNSE), a Nasdaq
listed immuno-oncology company. As Chief Medical Officer at Sensei, she was
responsible for leading clinical and development strategy and operations.
Previously, she served as Vice President, Clinical Development at Merus (MRUS)
and Infinity Pharmaceuticals (INFI) where she led development of multiple
small molecule and immuno-oncology clinical programs. She was also formerly
Global Clinical Program Leader at the Novartis Institute for Biomedical
Research.
· Faron hosted a virtual R&D Day in February 2022 presenting
the Company's plans to accelerate the development of bexmarilimab. The event
was hosted by Dr. Markku Jalkanen, Chief Executive Officer, and members of the
Global Management Team including Dr. Marie-Louise Fjällskog, Chief Medical
Officer and Dr. Juho Jalkanen, Chief Operating Officer. External perspectives
were provided by Dr. Tyler Curiel, Professor of Medicine and Microbiology,
Immunology & Molecular Genetics at The University of Texas Health Science
Center at San Antonio, United States and Dr. Maija Hollmén, Adjunct Professor
of Tumour Immunology, Group Leader and Academy Research Fellow at the MediCity
Research Laboratory, Institute of Biomedicine, University of Turku, Finland.
Impact of COVID-19
· Despite the ongoing global pandemic, the Company was able to
continue operations with limited disruptions. This included the successful
planning and execution of its clinical trials, which proceeded as planned.
· Additionally, Faron closely followed and strictly complied with
the regulations and recommendations of the Finnish National Institute for
Health and Welfare (THL) and other relevant local and international
authorities to ensure the safety of its employees, study subjects and
partners.
Financial
· On December 31, 2021, the Company held cash balances of EUR 6.9
million (2020: EUR 4.1 million).
· Loss for the period for the financial year ended December 31,
2021 was EUR 21.2 million (2020: EUR 16.9 million).
· Net assets on December 31, 2021 were EUR 2.9 million (2020: EUR
-1.8 million).
· In February 2021, the Company successfully raised a total of EUR
15.0 million gross (EUR 14.4 million net) from new and existing shareholders,
through issuance of a total of 3,521,127 new ordinary shares. In September
2021, the Company successfully raised a total of EUR 10.6 million gross (EUR
10.1 million net) from new and existing shareholders, through issuance of a
total of 2,763,158 new ordinary shares. Proceeds from both raises will be used
to accelerate and expand the clinical development of the Company's main drug
candidates and to strengthen the Company's balance sheet.
· Post period, in February 2022, Faron secured a debt funding
agreement with IPF Partners for up to EUR 30 million. EUR 10 million was
accessed upon signing of the agreement with an additional EUR 20 million
available in the future through additional tranches of EUR 5 million and EUR
15 million, subject to certain conditions being met.
Consolidated key figures, IFRS
EUR '000 Unaudited Unaudited 1-12/2021 1-12/2020
12 months
12 months
7-12/2021 7-12/2020
6 months
6 months
Revenue 0 0 0 0
Other operating income 4,927 1,379 6,137 2,122
Research and Development expenses (8,361) (8,345) (17,369) (13,879)
General and Administrative expenses (7,250) (2,543) (9,876) (4,897)
Loss for the period (10,649) (9,603) (21,209) (16,946)
Unaudited Unaudited 1-12/2021 1-12/2020
12 months
12 months
7-12/2021 7-12/2020
6 months
6 months
Loss per share EUR (0.21) (0.22) (0.42) (0.37)
Number of shares at end of period 53,232,032 46,896,747 53,232,032 46,896,747
Average number of shares 51,836,953 44,606,204 50,723,964 45,712,111
EUR '000 Unaudited Unaudited 31 December 2021 31 December 2020
30 June 2021 30 June 2020
Cash and cash equivalents 6,967 11,627 6,853 4,108
Equity 2,813 7,313 2,919 (1,849)
Balance Sheet total 11,865 14,343 13,182 8,367
Board of Directors' Proposal on the Dividend
The Group's loss for the accounting period was EUR 21,208,864.89 (2020: EUR
16,946,261.84).
The Board of Directors does not recommend the payment of a dividend (2020:
nil).
24 March 2022
Faron Pharmaceuticals Ltd
Board of Directors
This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 ("MAR").
Webcast for investors, analysts and media
A live webcast and Q&A session for investors, analysts and media will be
hosted by Dr. Markku Jalkanen, Chief Executive Officer of Faron, and Toni
Hänninen, Chief Financial Officer of Faron, at 2:00 pm EET / 12:00 pm GMT /
8:00 am EDT today. The Full-year results release for 2021, presentation,
webcast details, and Annual Report 2021 will be made available at
www.faron.com/investors (http://www.faron.com/investors) . A replay of the
analyst briefing will be made available shortly afterwards.
Webcast link: https://faron.videosync.fi/2021-results
(https://faron.videosync.fi/2021-results)
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
Publication of financial information during year 2022
Faron's financial statements for full year 2021 will be published today,
25 March 2022 and will also be available on the Company's website at
https://www.faron.com/investors/results
(https://www.faron.com/investors/results) . The half-year financial report for
the period 1 January to 30 June 2022 is scheduled to be published on 25 August
2022. The Annual General Meeting is planned for 22 April 2022. A separate
stock exchange notice will be issued by Faron's Board of Directors to convene
the meeting.
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.
Chairman's Statement
During 2021, Faron has continued to make significant progress across the
business. It has maintained its focus on pipeline delivery, including the
initiation of clinical trials and generation of further clinical data. The
Company has developed the management team with new hires and raised funds
during the period, all of which has been achieved against the continued
challenges of COVID-19.
A key priority for Faron has been to continue to advance its wholly-owned
novel precision cancer immunotherapy candidate, bexmarilimab, through the
Phase I/II MATINS clinical trial. Over the course of the year the Company has
generated and presented further clinical data showing that heavily
pre-treated, late-stage cancer patients who receive clinical benefit from
bexmarilimab can achieve long term survival. Through the multiple cohorts
tested to date, bexmarilimab has generated compelling efficacy data and has
continually been shown to be safe and well-tolerated. Faron is continuing to
analyze biomarker data from the trial to better understand which patients are
most likely to respond.
The Company will continue to accelerate bexmarilimab through clinical
development and is planning to study bexmarilimab in combination with other
checkpoint inhibitors and as a treatment for hematological malignancies, in
addition to the ongoing MATINS trial. The evolving data generated to date
suggest bexmarilimab is an active drug with a novel mechanism of action which,
I believe, has the potential to play a significant role in the future
treatment of cancer patients.
2021 saw the COVID-19 pandemic continue to evolve. With the global call for
research to identify potential therapies being widely answered by life science
companies, including Faron, there has been unprecedented innovation in this
space. Despite this, there is still a need for new therapeutic options to
treat the serious complications of COVID-19, including acute respiratory
distress syndrome (ARDS). As such, Faron was pleased to initiate the Phase
II/III HIBISCUS trial, investigating Traumakine, Faron's investigational
intravenous (IV) interferon (IFN) beta-1a therapy, in hospitalized COVID-19
patients.
Faron has generated a wealth of data on the potential of Traumakine during its
clinical development and we were pleased to publish data from the completed
Phase II INFORAAA trial showing the up-regulation of CD73 in surgically
operated ruptured abdominal aorta aneurysm (RAAA) patients. The results show
the role of CD73 in organ protection and its ability to benefit patients
undergoing major surgery, and we remain confident that Traumakine has
potential beyond ARDS, across multiple indications, where there continues to
be significant unmet medical need.
Despite the difficult funding environment due to COVID-19, Faron has
successfully secured further investment over the period to progress its
pipeline. This is testament not only to the potential of our product
candidates but also to the expertise and credibility of the management team.
The Board meets regularly to discuss the Company's performance, review the
clinical programs, discuss ongoing business strategy and assess the Company's
financial situation in order to continue to progress the pipeline and deliver
value for shareholders.
On behalf of the Board, I would like to take this opportunity to thank all the
staff at Faron, without whom we would not have achieved so much this year; my
colleagues on the Board for their commitment to the Company; our partner
organisations and steering committee members for their support and expertise;
Faron's investors for showing continued confidence in the Company and,
importantly, the health professionals and patients across our trial network. I
would also like to extend a warm welcome to Dr. Marie-Louise Fjällskog, our
new Chief Medical Officer. Her knowledge and network will be invaluable to
Faron as we continue to accelerate bexmarilimab through clinical development
whilst progressing our other product candidates.
Finally, I would also like to thank the management team, particularly Dr.
Markku Jalkanen, Chief Executive Officer, Toni Hänninen, Chief Financial
Officer, and Dr. Juho Jalkanen, Chief Operating Officer, who also acted as
interim Chief Medical Officer in 2021, for their leadership. Under their
expert guidance, we are looking forward to another year of continued progress
during 2022.
Dr. Frank Armstrong
Chairman
24 March 2022
Chief Executive Officer's Review
Despite the ongoing challenges presented by a global pandemic, 2021 was
another year of significant progress for our Company. Each of our pipeline
assets moved forward and our quest to harness the power of the immune system
to tackle cancer and inflammation is closer to being realized. We believe
strongly that all three of our programs, bexmarilimab, Traumakine and
Haematokine, have the potential to fundamentally change treatment paradigms
and meaningfully improve patient outcomes.
Since Faron was founded, our focus has been to challenge the status quo and
accelerate innovation. Incremental progress is not good enough. We exist to
address areas of significant unmet need; areas where there are no currently
approved treatment options, or, in the case of cancer, where far too many
patients are not benefiting from recent advances.
Bexmarilimab has the potential to bring the promise of immunotherapy to many
more patients and in 2021 we significantly advanced its development. Our Phase
I/II MATINS (Macrophage Antibody To INhibit immune Suppression) study
investigating the safety and efficacy of bexmarilimab showed that patients
across five different tumor types experienced disease control rates between
30% and 40%. The data also showed that heavily pre-treated, late-stage cancer
patients who receive clinical benefit from bexmarilimab can achieve long term
survival. These results are important, and the global community took notice
when we presented the data at international cancer meetings including ESMO,
ESMO-IO and ASCO.
We also learned a great deal in 2021 about which cancer patients are most
likely to benefit from treatment with bexmarilimab and what happens in the
tumor microenvironment when patients respond to treatment. Biomarkers, which
are proteins or other substances that are made at higher amounts by cancer
cells than normal cells, are a critical missing link in attempting to identify
appropriate candidates for immunotherapy and tailoring immunotherapy treatment
regimens. The biomarker analysis we conducted showed clearly that patients
with low baseline levels of serum interferon gamma (IFNy) and tumor necrosis
factor alpha (TNFa) were more likely to experience clinical benefit following
treatment with bexmarilimab. Patients with low levels of pro-inflammatory
cytokines experiencing higher clinical benefit is opposite to what is usually
seen with currently approved checkpoint inhibitors and other T-cell activating
agents.
Our analysis also showed that among patients who experienced clinical benefit,
IFNy levels increased over 100% after the first cycle of bexmarilimab
treatment. Interferon gamma is a marker for inflammation which suggests
bexmarilimab may amplify an immune response and serve as a catalyst for the
immune system allowing initially checkpoint inhibitor resistant patients to
become responsive to PD-1 blockade.
This enhanced understanding of who is most likely to respond to treatment with
bexmarilimab and what happens in the tumor microenvironment allowed us to
refocus and accelerate our development plan in 2021. In addition to the
ongoing MATINS trial, we progressed plans to study bexmarilimab in combination
with other checkpoint inhibitors and as a treatment for hematological
malignancies. We are undertaking an ambitious strategy but given the data we
have seen to date and our evolving understanding of which biomarkers will
predict response to treatment, we believe bexmarilimab has the potential to
broadly impact cancer care.
We have also been successful in obtaining long term patent protection for
bexmarilimab. During 2021 the United States Patent and Trademark Office and
equivalent Japanese patent office approved protection, at least through 2037,
for our humanized anti-Clever-1 antibody (bexmarilimab) sequence and the
counter binding site of this antibody on Clever-1. Faron has also received an
allowance letter from the European Patent Office, which now means that more
than 80% of pharmaceutical markets are covered with this patent family.
Leading our bexmarilimab development efforts moving forward will be Dr.
Marie-Louise Fjällskog, who joined Faron in January 2022 as our new Chief
Medical Officer. We were thrilled to add someone of Marie-Louise's caliber to
our team. She has over 30 years of experience in clinical oncology,
translational research, and drug development and has held senior R&D roles
at several clinical stage biotech companies. She was also formerly Global
Clinical Program Leader at the Novartis Institute for Biomedical Research
where she led global development of oncology treatments targeting CDK4/6,
BCL-2, PD-1, CSF-1 and CD73.
In addition to bexmarilimab, 2021 proved to be an important year for
Traumakine as well. Traumakine is our investigational intravenous interferon
beta-1a therapy, which we are developing for the treatment of acute
respiratory distress syndrome (ARDS) and other ischemic or hyperinflammatory
conditions. Traumakine works by up-regulating CD73, a critical enzyme which
yields anti-inflammatory adenosine and can prevent fluid from building up in
and around organs.
In August, dosing commenced in the Phase II/III HIBISCUS trial investigating
Traumakine in the treatment of hospitalized COVID-19 patients. While
hospitalizations and severity of disease have decreased since the initiation
of this study, we continue to believe that Traumakine has the potential to
become a powerful treatment option for patients who are at risk of developing
ARDS as a consequence of a viral infection, such as COVID-19. This trial is
supported the US Department of Defense through funding from the Coronavirus
Aid, Relief, and Economic Security Act.
Additionally, research highlighting results from our Phase II INFORAAA
clinical trial, which examined the effect of Traumakine on mortality of
surgically operated ruptured abdominal aorta aneurysm (RAAA) patients, was
published in the multidisciplinary journal Scientific Reports. Analysis showed
that up-regulation of CD73 following treatment with Traumakine was associated
with 100% survival compared to the expected mortality rate for operated RAAA
patients, which is between 30-40%. Ischemia-reperfusion injury, tissue damage
caused when blood supply returns to tissue after a period of oxygen depletion,
is the main cause of death for operated RAAA patients. We believe Traumakine
has the potential to prevent acute organ injury following major surgery and
polytrauma by reducing inflammation and preventing vascular leakage. This
could represent a significant advancement in patient care given there are
currently no drugs approved for this condition.
Similar to the patent advancements we made with bexmarilimab, our intellectual
property (IP) portfolio for Traumakine was also strengthened in 2021 by
signing a sub-license agreement covering a relevant manufacturing patent in
the US. In addition, we applied for patent protection relating to Traumakine's
induction of CD73 for organ protection, through the sequential use of IV
interferon beta-1a followed by corticosteroids for the treatment of systemic
inflammation. Adding these patent protections to our already strong IP
portfolio will ensure we are able to move each of the potential indications
forward with the ultimate goal of making this innovative drug available to
patients in the coming years.
The third program in our pipeline is Haematokine, an investigational Vascular
Adhesion Protein‑1 (VAP-1) inhibitor. Haematokine blocks VAP-1 enzymatic
activity, which supports the expansion of human hematopoietic stem cells. This
has the potential to benefit a variety of conditions where an expansion of
hematopoietic stem cells is needed. Most notably, this includes bone marrow
transplantation, where approximately 25% of transplants fail due to poor
expansion of transplanted cells.
In November, the multidisciplinary journal Cellular and Molecular Life
Sciences published research that aligns with our pre-clinical findings.
Pre-clinical studies are continuing, and we believe Haematokine could have
broad applicability, not just in hematological malignancies, but across the
field of regenerative medicine.
Our focus for 2022 will be to accelerate bexmarilimab's clinical development,
which in addition to the ongoing MATINS trial will include the initiation of
trials investigating bexmarilimab in a first line setting in combination with
other checkpoint inhibitors and as a treatment for hematological malignancies.
We have a responsibility to the millions of cancer patients across the globe
currently not benefiting from existing treatment options to move this novel
asset forward as quickly as possible. We will move with urgency because
patients can't wait.
I would like to thank our shareholders for their continued support of our
Company and the management team. I would also like to express my profound
gratitude to every Faronial, which is what we call our team members. They come
to work each day committed to disrupting the current treatment landscape and
fundamentally improving patient outcomes.
As critical as 2021 was, there is no doubt that 2022 will be the most
important year in the history of our Company. There is also no doubt that with
the team we have in place and with your continued support, we are positioned
to exceed even our most ambitious goals.
Dr. Markku Jalkanen
Chief Executive Officer
24 March 2022
Financial Review
Despite challenging market conditions, we were able to conduct two successful
fundraising rounds in 2021. Combined, they raised EUR 25.6 million gross and
both rounds included new investors. Both also included investments by the
European Investment Council (EIC) Fund, which is focused on investing in
companies across Europe developing breakthrough and disruptive technologies.
We were proud to become the first publicly listed company to receive an
investment from the EIC Fund.
As a result of these fundraising efforts, the Company's net cash flow in 2021
showed EUR 2.9 million positive. We were able to accomplish this while also
increasing R&D and G&A expenditures.
Post period, in February 2022, Faron secured a debt funding agreement with IPF
Partners, one of the leading alternative financing providers focused on the
healthcare sector, for up to EUR 30 million. EUR 10 million was accessed upon
signing of the agreement with an additional EUR 20 million available in the
future, subject to certain conditions being met. This non-dilutive funding
agreement strengthened our financial position and gives us the flexibility to
access supplemental and inexpensive capital as we continue to accelerate the
development of our pipeline assets.
Revenue and Other Operating Income
The Company's revenue was EUR 0.0 million for the year ended 31 December 2021
(2020: EUR nil).
The Company recorded EUR 6.1 million (2020: EUR 2.1 million) of other
operating income. This consisted of mainly of the result of the arbitration
ruling in favor of Faron in its case against Rentschler Biopharma SE (EUR 3.8
million) and the rest consists of government grant and loan.
Research and Development Costs
R&D costs increased by EUR 3.5 million from EUR 13.9 million in 2020 to
EUR 17.4 million in 2021. The costs of outsourced clinical trial services were
decreased by EUR 0.9 million from EUR 4.4 to EUR 3.5 million. The cost of
employee benefits was increased by EUR 0.4 million from EUR 2.9 to EUR 3.3
million, mainly driven by additional headcount.
General and Administration Costs
Administrative expenses increased by EUR 5.0 million from EUR 4.9 million in
2020 to EUR 9.9 million in 2021. The increase was mainly due to the EUR 3.1
million increase in other G&A costs, mainly driven by legal expenses,
which were offset by other income. Further, employee benefits increased by EUR
1.0 million mainly driven by additional headcount.
Taxation
The Company's tax credit for the fiscal year 2021 can be recorded only after
the Finnish tax authorities have approved the tax report and confirmed the
amount of tax-deductible expenses. The total amount of cumulative tax losses
carried forward approved by tax authorities on 31 December 2021 was EUR 42.6
million (2020: EUR 38.2 million). The Company estimates that it can utilise
most of these during the years 2020 to 2021 by offsetting them against future
profits. In addition, Faron has EUR 70.1 million of
R&D costs incurred in the financial years 2010 - 2020 that have not yet
been deducted from taxation. This amount can be deducted over an indefinite
period at the Company's discretion.
Losses
Loss before income tax was EUR 21.2 million (2020: EUR 16.9 million). Net loss
for the year was EUR 21.2 million (2020: EUR 16.9 million), representing a
loss of EUR 0.42 per share (2020: EUR 0.37 per share) (adjusted for the
changes in number of issued shares).
Cash Flows
Net cash flow was EUR 2.9 million positive for the year ended 31 December 2021
(2020: EUR 2.8 million negative). Cash used for operating activities increased
by EUR 4.7 million to EUR 22.2 million for the year, compared to EUR 17.5
million for the year ended 31 December 2020. This increase was mostly driven
by an increase in R&D investments. Net cash inflow from financing
activities was EUR 25.6 million (2020: EUR 14.8 million) mainly due to the
successful equity placings completed in February 2021 and September 2021.
Fundraising
In February 2021, the Company successfully raised a total of EUR 15.0 million
gross (EUR 14.4 million net) from new and existing shareholders, through
issuance of a total of 3,521,127 new ordinary shares. In September 2021, the
Company successfully raised a total of EUR 10.6 million gross (EUR 10.1
million net) from new and existing shareholders, through issuance of a total
of 2,763,158 new ordinary shares. Proceeds from both raises will be used to
accelerate and expand the clinical development of the Company's main drug
candidates and to strengthen the Company's balance sheet. Post period, in
February 2022, Faron secured a debt funding agreement with IPF Partners for up
to EUR 30 million. EUR 10 million was accessed upon signing of the agreement
with an additional EUR 20 million available in the future, subject to certain
conditions being met.
Financial Position
As at 31 December 2021, total cash and cash equivalents held were EUR 6.9
million (2019: EUR 4.1 million).
Going Concern
As part of their going concern review, the Directors have followed the Finnish
Limited Liability Companies Act, the Finnish Accounting Act and the guidelines
published by the Financial Reporting Council entitled "Guidance on the Going
Concern Basis of Accounting and Reporting on Solvency and Liquidity Risks -
Guidance for directors of companies that do not apply the UK Corporate
Governance Code". The Company and its subsidiaries (the "Group") are subject
to a number of risks similar to those
of other development stage pharmaceutical companies.
These risks include, amongst others, generation of revenues in due course from
the development portfolio and risks associated with research, development,
testing and obtaining related regulatory approvals of its pipeline products.
Ultimately, the attainment of profitable operations is dependent on future
uncertain events which include obtaining adequate financing to fulfil the
Group's commercial and development activities and generating a level of
revenue adequate to support the Group's cost structure.
The Group made a net loss of EUR 21.2 million during the year ended 31
December 2021. It had a positive equity of EUR 2.9 million including an
accumulated deficit of EUR 116.265 million. As at that date, the Group had
cash and cash equivalents of EUR 6.9 million.
The Directors have prepared detailed financial forecasts and cash flows
looking beyond 12 months from the date of the approval of these financial
statements. In developing these forecasts, the Directors have made assumptions
based upon their view of the current and future economic conditions that are
expected to prevail over the forecast period. The Directors estimate that the
cash held by the Group together with known receivables will be sufficient to
support the current level of activities into the fourth quarter of 2022. The
Directors are continuing to explore sources of finance available to the Group
and they believe they have a reasonable expectation that they will be able to
secure sufficient cash inflows for the Group to continue its activities for
not less than 12 months from the date of approval of these financial
statements; they have therefore prepared the financial statements on a going
concern basis. Because the additional finance is not committed at the date of
issuance of these financial statements, these circumstances represent a
material uncertainty that may cast significant doubt on the Company's ability
to continue as 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.
Headcount
Headcount of the Company at the end of year was 37 (2020: 30).
Shares and Share Capital
During the period 1 January to 31 December 2021, the Company, using the share
authorities granted at the Annual General Meeting held on 18 May 2020, issued
a total of 3,521,127 new ordinary shares at an issuance price of EUR 4.26 per
share. During the same period, the Company, using the share authorities
granted at the Annual General Meeting held on 23 April 2021, issued a total of
2,763,158 new ordinary shares at an issuance price of EUR 3.80 per share.
The subscription price net of costs was credited in full to the Company's
reserve for invested unrestricted equity, and the share capital of the Company
was not increased.
The Company has no shares in treasury; therefore at the end of 2021 the total
number of voting rights was 53,232,032.
Legal Proceedings
As announced by the Company on 9 November 2021, the arbitration tribunal
appointed by the Arbitration Institute of the Stockholm Chamber of Commerce
(SCC) ruled in favor of Faron in its case against Rentschler Biopharma SE
("Rentschler"). Faron was seeking damages from Rentschler for unfounded
termination of an agreement concerning the manufacturing process for
Traumakine. As a result of the favorable arbitration award, Rentschler was
ordered to pay Faron EUR 3.8 million in damages. The parties were jointly and
severally liable towards the arbitral tribunal and the SCC for the fees and
expenses of the arbitral tribunal and the fees of the SCC, which were paid in
equal shares. In addition, each party carried its own legal costs. A
third-party recovery services provider funded the proceedings for Faron. The
funder received compensation from Faron in accordance with the litigation
funding agreement.
Toni Hänninen
Chief Financial Officer
24 March 2022
Consolidated Income Statement, IFRS
EUR '000 Unaudited Unaudited 1-12/2021 1-12/2020
12 months
12 months
7-12/2021 7-12/2020
6 months
6 months
Revenue 0 0 0 0
Other operating income 4,927 1,379 6,137 2,122
Research and development expenses (8,361) (8,345) (17,369) (13,879)
General and administrative expenses (7,250) (2,543) (9,876) (4,897)
Operating loss (10,684) (9,509) (21,108) (16,654)
Financial expense (44) (160) (235) (389)
Financial income 103 76 165 109
Loss before tax (10,625) (9,593) (21,178) (16,934)
Tax expense (9) (10) (16) (10)
Loss for the period (10,634) (9,603) (21,194) (16,944)
Other comprehensive loss (15) (15) 2
Total comprehensive loss for the period (10,649) (9,603) (21,209) (16,946)
Loss per ordinary share
Basic and diluted loss per share, EUR (0.21) (0.22) (0.42) (0.37)
Consolidated Balance Sheet, IFRS
EUR '000 31 December 2021 31 December 2020
Assets
Non-current assets
Machinery and equipment 20 14
Right-of-use-assets 187 361
Intangible assets 899 565
Prepayments and other receivables 53 56
Total non-current assets 1,159 996
Current assets
Prepayments and other receivables 5,170 3,263
Cash and cash equivalents 6,853 4,108
Total current assets 12,023 7,371
Total assets 13,182 8,367
Equity and liabilities
Capital and reserves attributable to the equity holders of the Company
Share capital 2,691 2,691
Reserve for invested unrestricted equity 116,507 92,015
Accumulated deficit (116,265) (96,557)
Translation difference (15) 2
Total equity 2,919 (1,849)
Non-current liabilities
Borrowings 2,918 2,728
Lease liabilities 16 199
Other liabilities 151 786
Total non-current liabilities 3,085 3,713
Current liabilities
Borrowings 429 122
Lease liabilities 184 176
Trade payables 2,229 2,115
Accruals and other current liabilities 4,336 4,090
Total current liabilities 7,178 6,503
Total liabilities 10,263 10,216
Total equity and liabilities 13,182 8,367
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 2019 2,691 78,916 - (79,997) 1,610
Comprehensive loss for the period - - 2 (16,946) (16,944)
Transactions with equity holders of the Company
Issue of ordinary shares, net of transaction costs EUR 1,004 thousand - 13,098 - - 13,098
Share-based compensation - - - 386 386
- 13,098 - 386 13,484
Balance as at 31 December 2020 2,691 92,015 2 (96,557) (1,849)
Comprehensive loss for the period - - (15) (21,194) (21,209)
Transactions with equity holders of the Company
Issue of ordinary shares, net of transaction costs EUR 1,067 thousand - 24,492 - - 24,492
Share-based compensation - - - 1,487 1,487
- 24,492 - 1,487 25,980
Balance as at 31 December 2021 2,691 116,507 (15) (116,265) 2,919
Consolidated Cash Flow Statement, IFRS
EUR '000 Unaudited Unaudited 1-12/2021 1-12/2020
12 months
12 months
7-12/2021 7-12/2020
6 months
6 months
Cash flow from operating activities
Loss before tax (10,640) (9,593) (21,194) (16,936)
Adjustments for:
Received grant (745) (587) (1,387) (587)
Depreciation and amortisation 165 153 307 283
Interest expense 128 56 216 149
Tax expense 6 10 16 10
Unrealised foreign exchange loss (gain), net 434 242 153 117
Share-based compensation 644 386 1,487 386
Adjusted loss from operations before changes in working capital (10,008) (9,333) (20,402) (16,578)
Change in net working capital:
Prepayments and other receivables (-1259) (1,631) (1,919) (1,097)
Trade payables 744 1,878 723 1,641
Other liabilities 24 (83) (565) (1,416)
Cash used in operations (10,499) (9,169) (22,163) (17,450)
Taxes paid (1) (1) (16) (1)
Interest paid (10) 1 (40) (28)
Net cash used in operating activities (10,508) (9,169) (22,218) (17,479)
Cash flow from investing activities
Payments for intangible assets (76) (60) (461) (137)
Payments for equipment (6) (3) (13) (5)
Net cash used in investing activities (81) (63) (473) (142)
Cash flow from financing activities
Proceeds from issue of shares 10,515 106 25,559 14,103
Share issue transaction cost (405) (52) (1,067) (1,004)
Proceeds from borrowings 145 630 662 630
Repayment of borrowings - - (122) (122)
Proceed from grants 750 1,375 750 1,375
Payment of lease liabilities (95) (104) (191) (195)
Net cash from financing activities 10,910 1,955 25,590 14,787
Net increase (+) / decrease (-) in cash and cash equivalents 320 (7,277) 2,899 (2,834)
Effect of exchange rate changes on cash and cash equivalents (434) (242) (153) (117)
Cash and cash equivalents at 1 January 6,967 11,627 4,108 7,059
Cash and cash equivalents at 31 December 6,853 4,108 6,853 4,108
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