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
7-12/2023 6
months
|
Unaudited
7-12/2022 6
months
|
1-12/2023 12
months
|
1-12/2022 12
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
7-12/2023 6
months
|
Unaudited
7-12/2022 6
months
|
1-12/2023 12
months
|
1-12/2022 12
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
30 June
2023
|
Unaudited
30 June
2022
|
31 December
2023
|
31 December
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
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.
For
more information please contact:
Investor Contact
LifeSci Advisors
Daniel Ferry
Managing Director
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
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.
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
7-12/2023 6
months
|
Unaudited
7-12/2022 6
months
|
1-12/2023 12
months
|
1-12/2022 12
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-
ed
equity
|
Trans- lation difference
|
Accumu-lated
deficit
|
Total
equity
|
|
|
|
|
|
|
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
|