REG - Faron Pharma. Oy - Financial Statement January 1 to December 31 2023
13/03/2024 07:00
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RNS Number : 5953G Faron Pharmaceuticals Oy 13 March 2024
Faron Pharmaceuticals Ltd.
("Faron" or "the Company")
Faron's Financial Statement Release January 1 to December 31, 2023
Financial statement release March 13, 2024 at 03:00 AM (EDT) / 07:00 AM (GMT)
/ 09:00 AM (EET)
TURKU, FINLAND / BOSTON, MA - Faron Pharmaceuticals Ltd. (AIM: FARN, First
North: FARON), a clinical- stage biopharmaceutical company focused on tackling
cancers via novel myeloid cell targeted immunotherapies, today announced
audited full-year financial results for January 1 to December 31, 2023 (the
"Period") and provided an overview of recent corporate developments.
2023 Highlights
· Data from the completed Phase I part of the BEXMAB study
demonstrated significant overall response rates (ORR) in both previously
hypomethylating agent (HMA)-failed (5 out of 5) and higher-risk
myelodysplastic syndrome (MDS) patient (5 out of 5) populations. Most
responses were deep and durable with 7 out of 10 MDS patients achieving
complete remission/ marrow complete remission (CR/mCR) and two demonstrating
partial remission (PR), one of whom moved on to receive a stem cell
transplantation and the other, hematological improvement without remission
(HI-P).
· Further analysis of the patient profiles of those treated in the
Phase I part of the BEXMAB trial showed that prior to responding to
bexmarilimab in combination with standard of care (SoC), patients had
experienced disease progression following treatment with all of the leading
azacitidine combinations such as venetoclax, sabatolimab and magrolimab.
· The Company made the decision to commence the Phase II part of
the BEXMAB study based on guidance from the U.S. Food and Drug Administration
(FDA), investigating bexmarilimab in combination with SoC in patients with
HMA-refractory or-relapsed MDS.
· The FDA granted bexmarilimab Orphan Drug Designation (ODD) for
the treatment of acute myeloid leukemia (AML).
· The first in human MATINS study was completed in advanced solid
tumor patients. The study results were published in the journal Cell Reports
Medicine. Bexmarilimab was well tolerated, showed activation of intratumoral
immunity and reprogramming tumor associated macrophages, resulting in an
increase in IFN-gamma signature and changes in the tumor microenvironment
(TME), and providing significant clinical benefit.
· The Company conducted three successful fundraising rounds in
2023, successfully raising EUR 25.7 million.
· A virtual briefing and Q&A will be held today, March 13, 2024
at 8:00 AM (EDT) / 12:00 PM (GMT) / 2:00 PM (EET)
Subsequent events
· In January 2024, Faron dosed the first patients in the Phase II
part of its BEXMAB Study, to evaluate the safety and efficacy of bexmarilimab
in combination with SoC, in HMA-refractory or relapsed MDS patients. This
project Optimus part will provide the final dosing of bexmarilimab for the
registrational part.
· In February 2024, Faron announced that it was in breach of
several undertakings agreed in the facilities agreement entered into on
February 28, 2022 between IPF Fund II SCA, SICAV-FIAR ("IPF") as Lender and
Faron Pharmaceuticals Ltd as Borrower ("Facilities Agreement") and subsequent
waiver letters provided by IPF, and therefore was in several Events of
Default, as defined in the Facilities Agreement.
· In March 2024, Faron successfully raised a total of EUR 3.2
million in subordinated convertible loan arrangements with certain existing
shareholders allowing the Company to make critical payments to third parties
under agreed waivers with IPF. As at March 13, 2024, the Company is in
compliance with all IPF financial covenants as agreed with the waiver letter.
In accordance with the waiver letter, the Company shall issue to IPF
additional special rights which entitle them to subscribe for new ordinary
shares in the Company.
· In March 2024, Faron announced that endeavors are continuing and
it is in active discussions to secure short- and long-term funding.
"I am pleased to report that we have made strong progress in 2023 advancing
our BEXMAB study of bexmarilimab, our wholly owned immunotherapy asset.
Throughout the course of the year, we have reported highly encouraging data
for bexmarilimab, showing a remarkable overall response rate in both
higher-risk frontline MDS patients as well as HMA-failed MDS patients. These
are highly significant findings, given the combinations of treatments these
patients had previously failed on and the very limited options available for
future therapy. They provide us with a path to market and only bolster our
confidence in the potential of this novel immunotherapy to treat patients with
aggressive hematological malignancies," said Dr. Markku Jalkanen, Chief
Executive Officer of Faron.
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 hematological and
solid tumor cancers.
Hematological cancer with standard of care (SoC) - BEXMAB
· The Phase II part of the BEXMAB study commenced based on guidance
from the U.S. Food and Drug Administration (FDA), investigating bexmarilimab
in combination with SoC in patients with HMA-refractory or -relapsed MDS. The
first patient was dosed in January 2024.
· Data from the completed Phase I part of the BEXMAB study
demonstrated significant ORR in both previously HMA-failed (5 out of 5) and
higher-risk MDS patient (5 out of 5) populations. Most responses were deep and
durable with 7 out of 10 MDS patients achieving CR/mCR and two demonstrating
PR, one of whom moved on to receive a stem cell transplantation and the other,
hematological improvement without remission (HI-P).
· Further analysis of the patient profiles of those treated in the
completed Phase I part of the BEXMAB trial showed that patients had
experienced disease progression following previous treatment with azacitidine
monotherapy or combinations of up to four therapies that included azacitidine
or decitabine + magrolimab, venetoclax and sabatolimab. 3 of the 5 patients
were refractory to previous HMA-therapy, with progressive disease (PD) or
stable disease (SD) being the best responses achieved from that therapy. 2
patients had relapsed after treatment with azacitidine or an
azacitidine+venetoclax combination.
· The FDA granted ODD for bexmarilimab for the treatment of AML.
· BEXMAB phase I/II clinical data were presented at key scientific
conferences including the American Society of Hematology (ASH) Annual Meeting
and the European Hematology Association Congress 2023.
· Post period, In January 2024, Faron dosed the first patients in
the Phase II part of its BEXMAB Study, to evaluate additional safety and
efficacy data for bexmarilimab in combination with SoC, in HMA-refractory or
relapsed MDS patients, to obtain regulatory feedback from the FDA on a final
regulatory pathway for market application (BLA)
Single-agent safety and activity in advanced solid tumors - MATINS
· The first in human MATINS study was completed and the full safety
and anti-tumor efficacy results from the first-in-human Phase I/II MATINS
trial of bexmarilimab in patients with treatment-refractory late-stage solid
tumors was published in Cell Reports Medicine.
· The Company presented two posters at the American Association for
Cancer Research Annual Meeting 2023 on its Phase I/II MATINS study of
bexmarilimab in solid tumors and published a manuscript in Cell Reports
Medicine.
· The findings from MATINS, which have established strong
foundations for Faron's ongoing development program, showed activation of
intratumoral immunity and reprogramming tumor associated macrophages resulting
in increase in IFN-gamma signature and changes in the tumor microevironment
(TME), resulting in disease control and prolonged survival in late-stage
cancer. Furthermore, targeting Clever-1 with bexmarilimab was well-tolerated.
· A positive Phase I/II meeting with the FDA supported the
potential to continue development of bexmarilimab in solid tumors both as a
single agent and in combination with anti-PD-1.
Combination potential with PD-1 blockade - BEXCOMBO - and further expansion
· Preparations are ongoing for the initiation of the Phase II
BEXCOMBO trial evaluating bexmarilimab with PD-1 blockade, aimed at improving
the clinical benefits from standard-of-care PD-1 blockade. The first
proof-of-concept cohort under investigation will be head and neck cancer,
followed by non-small cell lung cancers. Patient cohorts will comprise between
15 and 40 subjects, with the opportunity for subgroup enrichment.
· Given the positive results to date, the Company is exploring
bexmarilimab's potential in frontline HR MDS, chronic myelomonocytic leukaemia
(CMML) patients and considering further development and expansion
opportunities with bexmarilimab in hematological cancers in the form of
further partnerships.
Traumakine® - Faron's investigational intravenous (IV) interferon beta-1a
therapy, in development for hyperinflammatory conditions.
· The Company is in collaboration with the Fred Hutchinson Cancer
Research Center in Seattle, Washington, to further investigate the use of IV
IFN beta-1a for the prevention of organ damage from cytokine release syndrome
(CRS) and other CAR-T therapy side effects, such as neurotoxicity (ICANs).
Corporate Highlights
· The balance sheet was strengthened through three private
placements directed to institutional and other investors to raising EUR 25.7
million during 2023.
· James O'Brien, CPA, MBA, joined as Chief Financial Officer. Mr.
O'Brien is an accomplished biotech and financial executive with extensive
experience in the US capital markets. Strengthening of the Board of Directors
with the appointments of Dr. Marie-Louise Fjällskog, Ms. Christine Roth and
Mr. Tuomo Pätsi, who joined the Board as Non-Executive Directors of the
Company. Dr. Marie-Louise Fjällskog was previously the Chief Medical Officer
at Faron. In her position as a Board member, she continues to play an integral
role in the development of bexmarilimab, by providing her clinical and
regulatory expertise to support the Company's progress. Ms. Christine Roth is
a pharmaceutical executive with over three decades of experience in the
industry, with expertise across various therapy areas including Oncology,
Cardiovascular, Metabolic, and Infectious Diseases. Mr. Pätsi is an
experienced biotech and pharmaceutical executive who was until recently
Executive Vice President for Seagen Inc., a US-based, cancer-focused
biotechnology company.
· Mr. Leopoldo Zambeletti, who joined Faron's Board as a
Non-Executive Director in September 2015, stepped down from the Board, to take
on a business development consulting role within Faron. He is a highly
respected figure within the life sciences and investment banking industries
and, since 2013, has been an independent strategic advisor to life science
companies on mergers and acquisitions, out-licensing deals, and financing
strategy.
· Dr. Birge Berns, MD, joined Faron as the Company's interim Chief
Medical Officer. Dr. Berns is a seasoned senior pharmaceuticals executive
with a background in oncology, clinical medicine, rheumatology and immunology.
She brings more than 25 years' experience from senior leadership roles in
global pharmaceutical companies, including Sanofi Aventis and Johnson &
Johnson.
· Dr. Gregory B. Brown and Ms. Anne Whitaker stepped down from
their positions as a Non-Executive Directors.
Full-year Financial Results
· On December 31, 2023, Faron held cash balances of EUR 6,9 million
(2022: EUR 7,0 million).
· Loss for the period for the financial year ended December 31,
2023, was EUR 30,9 million (2022: EUR 28,7 million).
· Net assets on December 31, 2023, were EUR -15,2 million (2022:
EUR -11,5 million).
· In January 2023 the Company successfully raised a total of EUR
12,0 million gross through the issuance of 3,692,308 ordinary shares to
investors.
· In June 2023, Faron conducted a placement of 2,601,510 newly
issued treasury shares to investors to raise EUR 6,6 million gross.
· In October 2023, the Company successfully raised EUR 7,1 million
gross through the issuance of 2,491,998 ordinary shares to investors.
· The primary reason for conducting the placings were to accelerate
and expand the clinical development of the Company's main drug candidate,
bexmarilimab, advance bexmarilimab's commercial scale production, support
general corporate purposes and other pipeline development, and to strengthen
the Company's balance sheet.
· Post period, in February 2024, the Company announced that it is
in breach of several undertakings agreed in the Facilities Agreement with IPF
and subsequent waiver letters provided by IPF and is therefore in several
events of default.
· Post period, in March 2024, the Company successfully raised a
total of EUR 3,2 million in convertible loans allowing the Company to secure
short-term financing. The company continues active endeavors to secure
longer term funding.
Consolidated key figures, IFRS
EUR '000 Unaudited Unaudited 1-12/2023 1-12/2022
12 months 12 months
7-12/2023 7-12/2022
6 months 6 months
Other operating income 0 318 0 803
Research and Development expenses (11,024) (10,683) (19,542) (20,730)
General and Administrative expenses (4,732) (3,697) (9,026) (7,498)
Loss for the period (15,756) (14,062) (28,568) (28,730)
Unaudited Unaudited 1-12/2023 1-12/2022
12 months 12 months
7-12/2023 7-12/2022
6 months 6 months
Loss per share EUR (0.26) (0.27) (0.48) (0.52)
Number of shares at end of period 68,786,699 59,805,383 68,786,699 59,805,383
Average number of shares 67,137,790 57,230,625 65,055,036 55,229,835
EUR '000 Unaudited Unaudited 31 December 2023 31 December 2022
30 June 2023 30 June 2022
Cash and cash equivalents 6,315 9,936 6,875 6,990
Equity (9,483) (5,194) (15,160) (11,476)
Balance Sheet total 12,836 16,729 10,220 11,271
Board of Directors' Proposal on the Dividend
The Group's comprehensive loss for the period was EUR 30,943,935 (2022: EUR
28,924,250). The Board of Directors proposes to the Annual General Meeting
2024 not to pay a dividend.
March 13, 2023
Faron Pharmaceuticals Oy
Board of Directors
Conference call information
A virtual briefing and Q&A session for investors, analysts and media will
be hosted by Dr. Markku Jalkanen, Chief Executive Officer, and James O'Brien,
Chief Financial Officer, today, March 13, 2024, at 8:00 AM (EDT) / 12:00 PM
(GMT) / 2:00 PM (EET).
Webcast registration link: https://faron.videosync.fi/q4-2023
(https://faron.videosync.fi/q4-2023)
The full-year report, presentation, and a replay of the webcast will be
available on the Company's website at https://www.faron.com/investors
(https://www.faron.com/investors) .
For more information please contact:
Investor Contact
LifeSci Advisors
Daniel Ferry
Managing Director
daniel@lifesciadvisors.com (mailto:daniel@lifesciadvisors.com)
+1 (617) 430-7576
Media Contact
ICR Consilium
Mary-Jane Elliott, David Daley, Lindsey Neville
Phone: +44 (0)20 3709 5700
E-mail: faron@consilium-comms.com (mailto:faron@consilium-comms.com)
Cairn Financial Advisers LLP, Nomad
Sandy Jamieson, Jo Turner
Phone: +44 (0) 207 213 0880
Peel Hunt LLP, Broker
Christopher Golden, James Steel
Phone: +44 (0) 20 7418 8900
Sisu Partners Oy, Certified Adviser on Nasdaq First North
Juha Karttunen
Phone: +358 (0)40 555 4727
Jukka Järvelä
Phone: +358 (0)50 553 8990
Publication of financial information during year 2024
Faron's financial statements for full year 2023 will be published today, March
13, 2024 and will also be available on Faron's website at
https://www.faron.com/investors/results
(https://www.faron.com/investors/results) . The half-year financial report for
the period January 1 to June 30, 2024 is scheduled to be published on August
27, 2024. The Annual General Meeting is planned for April 5, 2024. 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, investigational immunotherapy designed
to overcome resistance to existing treatments and optimize clinical outcomes,
by targeting myeloid cell function and igniting the immune system.
Bexmarilimab binds to Clever-1, an immunosuppressive receptor found on
macrophages leading to tumor growth and metastases (i.e. helps cancer evade
the immune system). By targeting the Clever-1 receptor on macrophages,
bexmarilimab alters the tumor microenvironment, reprogramming macrophages from
an immunosuppressive (M2) state to an immunostimulatory (M1) one, upregulating
interferon production and priming the immune system to attack tumors and
sensitizing cancer cells to standard of care.
About BEXMAB
The BEXMAB study is an open-label Phase I/II clinical trial investigating
bexmarilimab in combination with standard of care (SoC) in the aggressive
hematological malignancies of acute myeloid leukemia (AML) and myelodysplastic
syndrome (MDS). The primary objective is to determine the safety and
tolerability of bexmarilimab in combination with SoC (azacitidine) treatment.
Directly targeting Clever-1 could limit the replication capacity of cancer
cells, increase antigen presentation, ignite an immune response, and allow
current treatments to be more effective. Clever-1 is highly expressed in both
AML and MDS and associated with therapy resistance, limited T cell activation
and poor outcomes.
About Faron Pharmaceuticals Ltd.
Faron (AIM: FARN, First North: FARON) is a global, clinical-stage
biopharmaceutical company, focused on tackling cancers via novel
immunotherapies. Its mission is to bring the promise of immunotherapy to a
broader population by uncovering novel ways to control and harness the power
of the immune system. The Company's lead asset is bexmarilimab, a novel
anti-Clever-1 humanized antibody, with the potential to remove
immunosuppression of cancers through reprogramming myeloid cell function.
Bexmarilimab is being investigated in Phase I/II clinical trials as a
potential therapy for patients with hematological cancers in combination with
other standard treatments. Further information is available at www.faron.com.
Forward-Looking Statements
Certain statements in this announcement are, or may be deemed to be,
forward-looking statements. Forward looking statements are identified by their
use of terms and phrases such as ''believe'', ''could'', "should", "expect",
"hope", "seek", ''envisage'', ''estimate'', ''intend'', ''may'', ''plan'',
''potentially'', ''will'' or the negative of those, variations or comparable
expressions, including references to assumptions. These forward-looking
statements are not based on historical facts but rather on the Directors'
current expectations and assumptions regarding the Company's future growth,
results of operations, performance, future capital and other expenditures
(including the amount, nature and sources of funding thereof), competitive
advantages, business prospects and opportunities. Such forward-looking
statements reflect the Directors' current beliefs and assumptions and are
based on information currently available to the Directors.
A number of factors could cause actual results to differ materially from the
results and expectations discussed in the forward-looking statements, many of
which are beyond the control of the Company. In addition, other factors which
could cause actual results to differ materially include the ability of the
Company to successfully license its programs within the anticipated timeframe
or at all, risks associated with vulnerability to general economic and
business conditions, competition, environmental and other regulatory changes,
actions by governmental authorities, the availability of capital markets or
other sources of funding, reliance on key personnel, uninsured and
underinsured losses and other factors. Although any forward-looking statements
contained in this announcement are based upon what the Directors believe to be
reasonable assumptions, the Company cannot assure investors that actual
results will be consistent with such forward-looking statements. Accordingly,
readers are cautioned not to place undue reliance on forward-looking
statements. Subject to any continuing obligations under applicable law or any
relevant AIM Rule requirements, in providing this information the Company does
not undertake any obligation to publicly update or revise any of the
forward-looking statements or to advise of any change in events, conditions or
circumstances on which any such statement is based.
CEO Statement
2023 was a year of significant progress for Faron with momentum building in
our ambitious bexmarilimab development program and a continued laser focus on
proving the potential of this novel myeloid cell re-programming immunotherapy
to treat patients with aggressive hematological malignancies.
Initial promising results emerged early in 2023 from the first part of our
Phase I/II BEXMAB study, investigating bexmarilimab in combination with
standard of care (azacitidine and venetoclax) in relapsed/refractory acute
myeloid leukemia (AML) and myelodysplastic syndromes (MDS) patients who had
failed hypomethylating agents (HMAs). These early, positive responses in a
very difficult to treat refractory setting were extremely exciting, given
patients in the trial had failed standard of care and were left with few
treatment options.
Throughout 2023 the trial delivered highly encouraging results which continued
to improve over time. And by the time the first part of the trial had
completed, the data was no less compelling. The bexmarilimab combination
therapy had shown a strong overall response rate (ORR) in both higher-risk
frontline MDS patients (5/5 patients) as well as HMA-failed MDS patients (5/5
patients). Observed responses were deep and durable with 7/10 MDS patients
achieving complete remission/ marrow complete remission (CR/mCR), and two
demonstrating partial remission (PR), one of whom moved on to receive a stem
cell transplantation and the other, hematological improvement without
remission (HI-P).
The combination continued to be well-tolerated and generated strong and
durable leukemic blast eradication and immune responses. These were tremendous
data, supporting bexmarilimab's unique mechanism of action in the field of
myeloid cell re-programming. And providing compelling evidence for us to
continue development, at pace.
We rapidly initiated the second phase of the BEXMAB study in November,
selecting HMA-refractory or -relapsed MDS as the initial indication, based on
guidance from the U.S. Food and Drug Administration (FDA). MDS presents a
considerable patient burden given the limited efficacy of the current standard
of care, resulting in relatively low response rates and poor overall survival.
Our data from the first part of the study underscored the potential of
combining bexmarilimab with existing treatments to advance care for patients
who so desperately need help. Post period, in January 2024, the first patients
were dosed in the second phase of the study and the team secured additional
trial sites to speed up its recruitment.
This is an incredibly important stage in bexmarilimab's development as data
from this phase of the trial will enable us to discuss a potential
registrational study plan with the FDA.
We are thrilled with this progress and our absolute priority is to pursue an
accelerated path to approval for bexmarilimab in its initial indication, where
we know the need is so great. We also understand the broader opportunities for
this immunotherapy. The FDA has granted Orphan Drug Designation (ODD) to
bexmarilimab for the treatment of acute myeloid leukemia (AML), another
hematological cancer with too few treatment options. Armed with the wealth of
data generated so far in the BEXMAB study, we are exploring bexmarilimab's
potential in low risk MDS as well as chronic myelomonocytic leukaemia (CMML)
patients. These are development and expansion opportunities that we will
consider in the form of partnerships as our research continues.
Communicating to the broader healthcare community was an important aspect of
our work in 2023 and I am delighted that the team was able to share and
discuss the strong data emerging from the BEXMAB program at many of the
leading scientific conferences, including the American Association for Cancer
Research Annual Meeting, the European Hematology Association (EHA) 2023
Congress and the 65th American Society of Hematology (ASH) Annual Meeting. It
was also a significant moment in December of 2023 when the leading scientific
journal, Cell Reports Medicine, published the full safety and anti-tumor
efficacy results from the Company's first-in-human Phase I/II MATINS trial
of bexmarilimab monotherapy in solid tumors. That trial achieved disease
control and prolonged survival in a proportion of patients with very
late-stage cancers who had exhausted all standard treatment options. It formed
the bedrock of our understanding of the potential of bexmarilimab.
Alongside bexmarilimab's significant advancements we have continued to
strengthen the Company's foundations. The appointment of Mr. James O'Brien,
CPA, MBA, as Chief Financial Officer, supports our journey to becoming a
global pharmaceutical company, given his extensive experience in the US
capital markets and strong track record as an accomplished biotech and
financial executive. When Dr. Marie-Louise Fjällskog stepped down as Faron's
Chief Medical Officer, we were delighted that she agreed to continue playing
an integral role in the development of bexmarilimab, by providing clinical and
regulatory expertise through her Non-Executive Director role on our Board. Dr.
Birge Berns, who we appointed interim Chief Medical Officer, is a seasoned
senior pharmaceuticals executive with a background in oncology, clinical
medicine, rheumatology and immunology. She brings a wealth of global
pharmaceutical experience that is critical to this business.
I am excited for the Company's future in 2024. The latest stage of the BEXMAB
trial will provide important data to support our continued discussions with
the FDA and, we hope, provide us with a clear pathway to bringing bexmarilimab
to patients. Our confidence grows in the potential of this novel therapy to
provide better patient outcomes and improve the quality of life of those
suffering from aggressive hematological cancers. The excellent BEXMAB data
have intensified numerous ongoing partnering discussions, and we are looking
forward to advancing these discussions over the coming year.
None of this work would be possible without the ongoing support from our
shareholders, to whom I express my sincere thanks. And to my colleagues on the
management team, and the wider Faron community, thank you for your continued
commitment to making this Company's vision a reality and bringing the promise
of bexmarilimab to patients.
Markku Jalkanen
Chief Executive Officer
March 13, 2024
Chairman Statement
2023 has been another solid year of clinical trial progress for Faron. We
continue to see bexmarilimab, our novel, wholly owned investigational
immunotherapy candidate as the major value driver for Faron, and so our focus
has been, and remains, to continue to advance bexmarilimab through clinical
development.
We were pleased to conclude the MATINS trial, which provided a huge amount of
information around the safety of bexmarilimab in a monotherapy setting and we
were honoured to present and publish the data at several conferences and in
important scientific Journals. As we have said for a long time, we believe
the future of cancer therapy for later-stage treatment is in the combination
setting and we strongly believe, reinforced by the remarkable clinical data
from the last year, that bexmarilimab will be part of the backbone of a
combination setting.
Our most advanced program, and our main focus at Faron, is our Phase I/II
BEXMAB trial investigating the safety, tolerability and preliminary efficacy
of bexmarilimab in combination with standard of care therapies. Over the
course of the year, we have seen very encouraging data from the BEXMAB trial
with bexmarilimab continuing to show real clinical benefit in specific patient
populations. We have consistently provided updates to the market and presented
the data at several prestigious scientific conferences where we have had very
positive feedback from key opinion leaders as well as from the clinicians in
our trials. This has given us continued confidence in the potential of
bexmarilimab to provide better patient outcomes and improve the quality of
life in patients suffering from these aggressive conditions. We will
continue to explore the best options to commercialize bexmarilimab in the
combination setting and, as we move to next year, we are looking to have
substantial interactions with the US FDA about the best path to market in our
chosen indications.
We are very fortunate at Faron to have long-term supportive investors and so,
despite the incredibly challenging funding environment seen this past year in
both Europe and the US, we were pleased to raise additional capital throughout
the period totalling EUR 25,7 million. Amongst other things, these funds
have allowed us to accelerate our bexmarilimab program, bringing this much
needed potential treatment one step closer to patients. We will look to
strengthen our shareholder base as we move into 2024.
We had several Board and management changes over the course of the year. Dr.
Gregory B. Brown and Ms. Anne Whitaker both stepped down from their positions
as a Non-Executive Directors of the Company and Faron Board Member Mr.
Leopoldo Zambeletti also stepped down to assume a transactional advisor role
within the Company on business development opportunities. We were pleased,
however, to welcome Mr. Tuomo Pätsi and Ms. Christine Roth as Non-Executive
Directors of the Company. Ms. Roth has played key roles in the development and
launch of several therapies, including the first immune-oncology therapy and
intentionally designed targeted therapy combinations.
Dr. Marie-Louise Fjällskog, moved from Chief Medical Officer to assume a
Board position and we are very grateful that when she decided to retire, she
had the confidence to continue with the Company in this role. We also
appointed a new Chief Financial Officer, Mr. James O'Brien, a very experienced
US based CFO who has already made a big impact, and Dr. Birge Berns, MD as
Interim Chief Medical Officer.
I would like to take this opportunity to thank our outgoing Board members for
their service and guidance to Faron during their tenure and to Mr. Toni
Hänninen, our previous CFO, for his service to Faron over the years.
As always, I would like to thank the whole management team, led by Dr. Markku
Jalkanen, Chief Executive Officer, for their continued dedication and
guidance, my colleagues on the Board for their commitment to the Company and
our partner organisations and steering committee members for their support and
expertise. I would also like to extend thanks to all the employees at Faron
for their hard work and dedication. Most importantly, I would like to thank
all the patients on our clinical trials, their families, and our trial
investigators without whom we would not be where we are today. 2024 is set to
be a pivotal for Faron when BEXMAB will deliver key data giving us a clearer
direction towards commercialization. I look forward to providing further
updates as we continue to progress our innovative pipeline.
Dr Frank Armstrong
Chairman
Financial Review
Despite continuing challenging market conditions in 2023, the Company was able
to conduct three successful fundraising rounds. Combined, these financings
raised EUR 25,7 million. As a result of these fundraising efforts, the net
cash from financing activities of EUR 23,9 million compared to EUR 23,5
million in 2022. Post period in March 2024, the Company successfully raised a
total of EUR 3.2 million in subordinated convertible loan arrangements with
existing shareholders.
Faron places a strategic emphasis on capital efficiency, a key element of
efforts to extend our cash runway, without compromising the ability to advance
our clinical development program. This capital efficiency has allowed us to
achieve more with available resources, while focusing on clinical outcomes.
During 2023, nearly 70% of cash expenses were spent directly in support of our
bexmarilimab clinical development program including manufacturing. General and
administrative expenses were flat in 2023 when compared to 2022 excluding
one-time items and financing costs.
RESEARCH AND DEVELOPMENT EXPENSES
R&D costs were EUR 19,5 million in 2023 compared to 20,7 million in 2022,
a decrease of EUR 1,2 million. These costs are attributable to advancing our
clinical programs including completion of BEXMAB Phase I and the initiation of
Phase II. Clinical trial costs include the cost of patient and site
enrollment, CRO service costs including monitoring, investigator fees, and
compensation and benefits for personnel directly responsible for R&D
activities, and product supply costs. The costs of outsourced clinical trial
services were EUR 4,0 million in 2023 compared to EUR 5,1 million in 2022.
Compensation and benefits were EUR 3,2 million in 2023 and EUR 5,2 million in
2022 and included stock compensation expense of EUR 0,7 million and EUR 0,3
million in 2023 and 2022, respectively.
GENERAL AND ADMINISTRATION COSTS
G&A expenses were EUR 9,0 million in 2023 compared to EUR 7,5 million in
2022, an increase of EUR 1,5 million. The increase was mainly due to the
recognition of the incremental fair value of amending the terms of 2015 option
plan of EUR 1,2 million. Compensation and benefits were EUR 5,7 million in
2023 and EUR 4,5 million in 2022 and included stock compensation expense of
EUR 1,7 million and EUR 1,0 million in 2023 and 2022, respectively.
TAXATION
The Company's tax credit for the fiscal year 2023 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 December 31, 2023 was EUR 51,6
million (2022: EUR 47,1 million). The Company estimates that it can utilize
most of these during the years 2024 to 2034 by offsetting them against
potential future profits. In addition, the Company has EUR 95,2 million of
R&D costs incurred in the financial years 2010 - 2023 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 and total comprehensive income in 2023 was EUR 30,9
million compared to EUR 28,7 million in 2022, which represents a loss of EUR
0.48 per share and EUR 0.52 per share in 2023 and 2022, respectively.
CASH FLOWS
Net cash flow in each of the years ended December 31, 2023 and 2022 was
essentially flat. Cash used for operating activities in 2023 was EUR 23,8
million compared to 2022 of EUR 23,0 million. Net cash inflow from financing
activities in 2023 was EUR 24,0 million compared to 2022 of EUR 23,5 million.
FUNDRAISING
In January 2023 the Company successfully raised a total of EUR 12,0 million
gross through the issuance of 3,692,308 ordinary shares to investors. In June
2023, Faron conducted a placement of 2,601,510 newly issued treasury shares to
raise EUR 6.6 million gross. In October 2023, the Company successfully raised
EUR 7,1 million gross through the issuance of 2,491,998 ordinary shares to
investors. Post period, In March 2024, the Company successfully raised a total
of EUR 3,2 million in subordinated convertible loan arrangements with certain
existing shareholders.
FINANCIAL POSITION
As of 31 December 2023, total cash and cash equivalents held were EUR 6,9
million compared to 2022 of EUR 7,0 million.
GOING CONCERN
As part of their going concern review, the Directors have followed
International Accounting Standard 1, Presentation of Financial Statements (IAS
1). The Company and its subsidiaries are subject to a number of risks similar
to those of other development state 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 fulfill the
Group's commercial and development activities and generate a level of revenue
adequate to support the Group's cost structure.
The Group generated a net loss of EUR30,9 million and recorded EUR 23,8
million cash outflow from operating activities during the year ended 31
December 2023. At the end of the financial year, it had total negative equity
of EUR15,2 million including an accumulated deficit of EUR 172,2 million. As
of that date, the group had cash and cash equivalents of EUR6,9 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 Director's estimate that the
cash held by the Group, together with known receivables will be sufficient to
support the current level of activities into the second quarter of 2024. The
Group also maintains loan agreements which include financial covenants related
to minimum cash balance and thus loan amounts (EUR 9,4 million on December 31,
2023) become due if the Group is not able to maintain minimum cash balances or
negotiate a waiver with the lender. The directors are continuing to explore
sources of finance available to the Group and they believe that 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 December 31, 2023; they have therefore prepared the financial statements
on a going concern basis.
During the financial period ended 31, December 2023, the Group raised EUR 25.7
million in three successful fundraising rounds. . Subsequently, in March 2024,
the Group received EUR 3,2 million Capital Loan to secure immediate short-term
financing needs until the end of March 2024. The Capital Loan shall be
governed by the provisions of Chapter 12 of the Finnish Companies Act
(624/2006, as amended) (the "Finnish Companies Act") concerning capital loans
(in Finnish: pääomalaina).
The Loans shall be converted to new shares in the Company as a part of (and at
the subscription price of) the next investment round where shares or other
equity securities are issued by the Company to existing shareholders and/or
new third- party investors, with a minimum size of EUR 8.0 million
("Investment Round").
In the event that the subscription price in such Investment Round exceeds EUR
1.50 per share, an Investor shall have the right to postpone the conversion of
the Loan until June 10, 2024 ("Due Date"). In the event that there is no
Investment Round by the Due Date (or the subscription price of the Investment
Round exceeds EUR 1.50 per share and the respective Investor has decided to
postpone the conversion of the Loan) and the Loan has not been otherwise
repaid prior to the Due Date (subject to a subordination agreement to be
entered into between the Investors, the Company and IPF), then the Loan shall
be at the request of the Investor converted into new shares in the Company in
connection with the Due Date. In such case, the subscription price per share
shall be EUR 1.50 per share. However, if then the Investor elects not to
exercise its conversion right on the Due Date, (such option being only
available if there has not been any Investment Round), the Due Date of the
Loan will automatically be extended until December 31, 2024 ("Final Due
Date"). On such Final Due Date, the Loan shall be either repaid in full in
cash, subject to the terms of the subordination agreement, or converted into
new shares in the Company with the subscription price of EUR 1.50 per share,
subject to a valid share issue authorization being in place.
In case the Loan is converted before the Due Date, each Investor is entitled
to an arrangement fee of 15% of its respective Loan amount. If conversion has
not taken place prior to the Due Date, the arrangement fee will be 30% of the
Investor's respective Loan amount. No interest shall be payable on the Loan if
a conversion takes place before May 30, 2024, and thereafter the interest will
be 12% + 3-months Euribor and paid subject to the subordination agreement.
The Group is actively pursuing the following activities during 2024:
· Securing approximately EUR5,0 million of short-term bridge
financing to extend the Group's cash runway until longer-term financing can be
obtained.
· Securing longer-term funding of approximately EUR 35.0 million in
total. The Directors intend to propose to the Annual General Meeting on 5
April 2024 an authorization for a larger share issuance contemplated to be
launched as a public offering (with planned allocation preferences to existing
shareholders and bridge finance lenders, including the Investors to enable the
conversion of the Capital Loan and in compliance with the relevant securities
markets regulation) as soon as practicable once the required preparations and
approvals are in place. The targeted size of the contemplated share issue is
planned to be set accordingly, to meet cash runway needs for 2024.
· Evaluating and negotiating several business development
alternatives that may result in non-dilutive funding.
· Evaluating new sources of financing from third parties on
acceptable terms. With respect to the availability of additional funding from
IPF, the respective term allowing the Group to draw on Tranche B and Tranche C
has expired and the availability of Funds from IPF would be subject to further
negotiations. The Group does not anticipate, at this time, having the ability
to draw on Tranche B or Tranche C under favorable terms, in the near future.
· 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 Group's ability to
continue as a going concern. Should the Group be unable to obtain further
financing 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.
HEADCOUNT
Faron's headcount at the end of year was 34 (2022: 40).
SHARES AND SHARE CAPITAL
During the period January 1 to December 31, 2023, the Company, using the share
authorities granted at the Extraordinary General Meeting held on July 7, 2022,
issued a total of 3,692,308 new ordinary shares at an issuance price of EUR
3.25 per share to investors. During the same period, the Company, using the
share authorities granted at the Annual General Meeting held on March 24,
2023, issued a total of 2,601,510 shares at an issuance price of EUR 2.55 per
share to investors. During the same period, the Company, using the share
authorities granted at the Annual General Meeting held on March 24, 2023,
issued a total of 2,491,998 new ordinary shares at an issuance price of EUR
2.85 to investors. 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 2023 the total number of voting rights was
68,786,699.
Consolidated Income Statement, IFRS
EUR '000 Unaudited Unaudited 1-12/2023 1-12/2022
12 months 12 months
7-12/2023 7-12/2022
6 months 6 months
Other operating income 0 318 0 803
Research and development expenses (11,024) (10,683) (19,542) (20,730)
General and administrative expenses (4,732) (3,697) (9,026) (7,498)
Operating loss (15,756) (14,062) (28,568) (27,426)
Financial income 233 (596) 233 96
Financial expense (1,691) (970) (2,609) (1,400)
Loss before tax (17,214) (15,628) (30,944) (28,730)
Tax expense 0 19 0 0
Loss for the period (17,214) (15,609) (30,944) (28,730)
Other comprehensive gain/loss 2 6 2 17
Total comprehensive loss for the period (17,212) (15,603) (30,942) (28,713)
Loss per ordinary share
Basic and diluted loss per share, EUR (0.26) (0.27) (0.48) (0.52)
Consolidated Balance Sheet, IFRS
EUR '000 31 December 2023 31 December 2022
Assets
Non-current assets
Machinery and equipment 6 13
Right-of-use-assets 198 314
Intangible assets 1,088 1,154
Prepayments and other receivables 60 60
Total non-current assets 1,352 1,541
Current assets
Prepayments and other receivables 1,992 2,740
Cash and cash equivalents 6,875 6,990
Total current assets 8,868 9,730
Total assets 10,220 11,271
Equity and liabilities
Capital and reserves attributable to the equity holders of Faron
Share capital 2,691 2,691
Reserve for invested unrestricted equity 154,352 129,544
Accumulated deficit (172,208) (143,713)
Translation difference 4 2
Total equity (15,160) (11,476)
Provisions
Other provisions 0 158
Total provisions 0 158
Non-current liabilities
Borrowings 9,423 11,102
Lease liabilities 50 163
Other liabilities 895 853
Total non-current liabilities 10,369 12,118
Current liabilities
Borrowings 3,475 1,851
Lease liabilities 163 153
Trade payables 8,971 6,014
Accruals and other current liabilities 2,403 2,453
Total current liabilities 15,012 10,471
Total liabilities 25,380 22,748
Total equity and liabilities 10,220 11,271
Consolidated Statement of Changes in Equity, IFRS
EUR '000 Share capital Reserve for invested unrestrict- Trans- Accumu-lated deficit Total equity
ed equity lation
difference
Balance as at 31 December 2021 2,691 116,507 (15) (116,265) 2,919
Comprehensive loss for the year 2022 0 0 17 (28,730) (28,713)
Transactions with equity holders of the Company
Issue of ordinary shares, net of transaction costs 0 13,037 0 0 13,037
Share-based compensation 0 0 0 1,297 1,297
Other movements 0 0 0 (16) (16)
0 13,037 17 (27,448) (14,395)
Balance as at 31 December 2022 2,691 129,544 2 (143,713) (11,476)
Comprehensive loss for the year 2023 0 0 2 (30,944) (30,942)
Transactions with equity holders of the Company
Issue of ordinary shares, net of transaction costs 0 24,808 0 0 24,808
Share-based compensation 0 0 0 2,450 2,450
0 24,808 2 (28,494) (3,684)
Balance as at 31 December 2023 2,691 154,352 4 (172,208) (15,160)
Consolidated Cash Flow Statement, IFRS
EUR '000 Unaudited Unaudited 1-12.2023 1-12.2022
7-12.2023 7-12.2022 12 months 12 months
6 months 6 months
Cash flow from operating activities
Loss before tax (17,214) (15,628) (30,944) (28,730)
Adjustments for:
Received grant (33) (388) (33) (803)
Depreciation and amortization 172 149 346 300
Change in provision 0 (158) (158) (158)
Financial items 1,458 787 2,376 1,304
Tax expense 0 19 0 0
Share-based compensation 1,964 632 2,450 1,297
Adjusted loss from operations before changes in working capital (13,653) (14,587) (25,963) (26,790)
Change in net working capital:
Prepayments and other receivables (728) 2,045 300 2,864
Trade payables 3,002 (657) 2,994 719
Other liabilities 223 2,197 (50) 1,183
Cash used in operations (11,156) (11,001) (22,719) (22,023)
Transaction costs related to loans and borrowings 0 0 0 (165)
Interest received 243 11 243 11
Interest paid (548) (708) (1,330) (816)
Net cash used in operating activities (11,461) (11,698) (23,806) (22,993)
Cash flow from investing activities
Payments for intangible assets (56) (218) (123) (385)
Payments for equipment 0 0 0 0
Net cash used in investing activities (56) (218) (123) (385)
Cash flow from financing activities
Proceeds from issue of shares 13,954 8,923 26,031 13,445
Share issue transaction cost (542) (174) (1,190) (365)
Proceeds from borrowings 0 (0) 64 10,389
Repayment of borrowings (861) 0 (861) (105)
Transaction and structuring fees of borrowings (400) 0 (400) 0
Proceed from grants 99 231 481 231
Payment of lease liabilities (58) (20) (142) (116)
Net cash from financing activities 12,192 8,959 23,983 23,478
Net increase (+) / decrease (-) in cash and cash equivalents 560 (2,946) (114) 137
Effect of exchange rate changes on cash and cash equivalents (116) 11 (168) 37
Cash and cash equivalents at 1 January / 1 July 6,315 9,936 6,315 6,853
Cash and cash equivalents at 31 December 6,876 6,990 6,876 6,6990
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