TIDMFARN
RNS Number : 9406Z
Faron Pharmaceuticals Oy
24 September 2020
Faron Pharmaceuticals Oy
("Faron" or the "Company")
Half-year report 1 January to 30 June 2020 (unaudited)
- Development of novel cancer immunotherapy Clevegen(R)
(bexmarilimab) continues in Phase I/II MATINS trial across 10
tumour types
- IV interferon beta-1a, Traumakine (R) , being investigated as
potential COVID-19 treatment in two ongoing global trials with
preparations for US trial underway
- Successful EUR14 million placing in April strengthens Company's balance sheet
- Additional grants of EUR3.3 million and EUR4.6 million loans
awarded to drive R&D and CMC programmes
Half-year report, 24 September 2020 at 9.00 AM (EEST)
TURKU, FINLAND - Faron Pharmaceuticals Oy (AIM: FARN, First
North: FARON), the clinical stage biopharmaceutical company , today
announces its unaudited half-year report for 1 January to 30 June
2020 (the "period").
HIGHLIGHTS
Operational (including post period):
Clevegen(R) (bexmarilimab) - Regulator of major inhibitory
immune checkpoints and wholly-owned novel cancer immunotherapy in
development
Clinical Development Updates:
-- Dosing of Part II of the ongoing MATINS trial commenced in
February, with strong patient recruitment across 10 cancer types (
ER-positive breast cancer, cholangiocarcinoma (bile duct cancer)
and gall bladder cancer, colorectal cancer, gastric cancer,
hepatocellular carcinoma, cutaneous melanoma, uveal melanoma,
ovarian cancer, pancreatic ductal adenocarcinoma and anaplastic
thyroid cancer). This basket trial also has three dosing levels for
colorectal cancer (CRC) at 0.3, 1.0 and 3.0 mg/kg.
-- A comprehensive review and analysis of data from the
completed Part I (dose finding) stage of the trial was completed by
the data monitoring committee ("DMC") with a recommendation from
the DMC to rapidly expand into additional tumour types. As of
today, and based on early clinical benefits, four cancer types
(colorectal, ovarian, cutaneous melanoma and uveal melanoma) have
been selected as the candidate expansion cancer types for Part
III.
-- The World Health Organization (WHO) approved bexmarilimab as
the International Nonproprietary Name (INN) for Clevegen.
-- Further detail was provided on clinical expansion plans for
bexmarilimab, which will include the investigation of alternative
dosing cycles, as pharmacodynamic (PD) markers may indicate a need
for shorter frequencies, as well as further studies in additional
clinical settings - in combination with standard of care (SOC) as a
first-line therapy in selected advanced solid tumours and as a
standalone neoadjuvant therapy for patients with early stage colon
cancer.
-- The Company expects to announce topline data from its first
expansion cohorts of the MATINS trial in the fourth quarter of 2020
and determine the final dosage, and dosing frequency for the
expansion cohorts, in the first quarter of 2021.
Data Presentations:
-- Previously announced safety and efficacy data from Part I of
the MATINS trial were presented at the virtual American Society of
Clinical Oncology (ASCO20) Annual Meeting, showing that
bexmarilimab was well tolerated without dose-limiting toxicities;
CLEVER-1 inhibition led to immune cell activation and
downregulation of several checkpoint molecules; and interferon
gamma and chemokine CXCL10 responses were associated with clinical
responses observed in target or non-target lesions.
-- Data from Part I of the trial were also presented at the
European Society of Medical Oncology (ESMO) Virtual Congress 2020,
including key pharmacokinetics and Clever-1 occupancy data,
evidence of very good tolerability across all dosing levels, immune
activation in all subjects, promising clinical anti-tumour activity
and the conversion of immunologically non-inflamed (cold) tumours
into inflamed (hot) tumours in patients traditionally not
responsive to currently available checkpoint inhibitors.
Business Development and Manufacturing:
-- AGC Biologics, a global contract development and
manufacturing organization, was selected as the commercial scale
manufacturer of bexmarilimab. The commercial scale manufacturing
process established by AGC Biologics will also provide a dossier to
support future regulatory filings in Europe and the US.
-- A EUR2,500,000 grant from the European Innovation Council
(EIC) Accelerator pilot scheme was awarded to the Company to
progress the MATINS trial and related business activities. The EIC
Accelerator pilot scheme supports top-class innovators,
entrepreneurs, small companies and scientists with funding
opportunities to support developing and bringing to the market new
breakthrough products, services and business models that would
become future drivers of economic growth for Europe.
-- Faron joined the Finnish Cancer IO consortium, a new cancer
immunotherapy-focused EUR10 million top-level collaborative
research and innovation project within Business Finland's
Personalized Health Program, and was awarded a EUR800,000 grant
from Business Finland to conduct a detailed, state-of-the-art
characterization of the immunological responses seen in cancer
patients in the MATINS trial. Bexmarilimab will be studied in
experimental combinations with anti-cancer molecules from other
consortium members.
Traumakine(R) - in development for the treatment of organ
failures
Clinical Development:
-- Faron's intravenous (IV) interferon (IFN) beta-1a,
Traumakine, was selected to be part of the two global trials
investigating potential treatments for COVID-19.
-- WHO's global Solidarity trial began in April 2020
investigating four treatment options against SOC to assess their
relative effectiveness against COVID-19 - remdesivir;
lopinavir/ritonavir; lopinavir/ritonavir with IFN beta-1a; and
chloroquine or hydroxychloroquine. In July, WHO removed the
hydroxychloroquine and lopinavir/ritonavir treatment arms from the
trial due to insufficient evidence of benefit leaving IFN beta-1a
and remdesivir as the only two drugs remaining in the trial,
subject to WHO announcing further new compounds for inclusion. IFN
beta-1a now remains as a monotherapy. The WHO expects to provide a
readout from the SOLIDARITY trial in the fourth quarter of
2020.
-- The global REMAP-CAP (Randomized, Embedded, Multifactorial Adaptive Platform Trial for Community-Acquired Pneumonia) investigating potential treatments for patients with community acquired pneumonia, including COVID-19 patients, introduced a new treatment arm to include Faron's IV IFN beta-1a. The study is directly comparing the treatment effect of Traumakine, hydrocortisone treatments, and other study treatment options on the clinical outcomes of COVID-19 patients and those with other causes of pneumonia requiring intensive care unit ( ICU) care.
-- Faron announced that a third trial will investigate the
potential of Traumakine to treat COVID-19. HIBISCUS (H uman
Interferon Beta In Severe CoronavirUS) will be an
investigator-initiated study at the Harvard Medical School's Beth
Israel Deaconess Medical Center (BIDMC), focused on ICU patients
with ARDS caused by viral infection (e.g. COVID-19, influenza).
Commencement of the phase II/III pivotal, randomized, placebo
controlled study, which aims to recruit 350 patients, remains
subject to finalisation of funding arrangements and regulatory
approval. Faron expects to initiate this study in the fourth
quarter of 2020.
-- Detailed analyses into the effects of glucocorticoids on IV
IFN beta-1a activity, which arose following the INTEREST trial in
2018, were published in Intensive Care Medicine, a world leading
journal in the field of critical care. The results showed that the
desired mechanism of action of IV IFN beta-1a in the lung
vasculature - the upregulation of CD73 - is blocked by the
administration of glucocorticoids, and co-administration of
glucocorticoids with IV IFN beta-1a increases mortality in patients
with acute respiratory distress syndrome (ARDS) compared to
patients administered with IV IFN beta-1a alone.
Business Development and Manufacturing:
-- Faron announced plans to initiate a new state-of-the-art
process for Traumakine manufacturing and was awarded a EUR2,100,000
low interest rate loan from Business Finland, the governmental
innovation financing agency of Finland, which will be used to
develop and select a new cell line that can be used for future
commercial scale production of the Company's IV IFN beta-1a. The
Company subsequently received a loan guarantee from Finnvera
(official Export Credit Agency of Finland) for EUR2,500,000 loan to
expand the commercial scale manufacturing.
AOC3 Antagonist Platform Technology (Haematokine(TM) )
-- In March 2020, Faron acquired rights for the potential new
use of AOC3 inhibitors. Faron will be responsible for the future
development of the AOC3 protein inhibitor and for the management,
prosecution, maintenance and filing of patent applications. The
project is now named Haematokine(TM) as the Company believes that
the use of AOC3 inhibitors could regulate the expansion of
hematopoietic stem cells and could become a life saving treatment
for patients who have lost their bone morrow for various reasons
such as hematological cancers. The Company is continuing
IND-enabling studies for this program, however, the recent first
review by the Finnish patent office has made the Company believe
that global patent protection could be possible for the
Haematokine(TM) project.
Corporate
-- Faron hosted a virtual R&D Day presenting the Company's
R&D strategy and insights into its two clinical stage
programmes. In addition to Faron Management, three external experts
provided additional perspectives on both programmes. Alongside
Markku Jalkanen, Chief Executive Officer, and members of the
Executive Leadership and senior management teams, external
perspectives were provided by Prof. Alberto Mantovani, Humanitas
University, Milan, Italy; Ass. Prof. Maija Hollmén, MediCity, Turku
University, Finland and Dr. Petri Bono, Terveystalo, Helsinki,
Finland.
-- The Company's Annual general meeting (AGM) was held on 18 May
2020. The AGM approved all the proposals of the board of directors
and its committees set out in the notice of the AGM published on 14
April 2020. The number of members of the Board was confirmed as
six. Frank Armstrong, Markku Jalkanen, Matti Manner, Leopoldo
Zambeletti, Gregory Brown and John Poulos were re-elected to the
Board for a term that ends at the end of the next AGM.
-- Faron announced on 27 July 2020 that Cairn Financial Advisers
LLP had been appointed as Nominated Adviser to the Company with
immediate effect. Panmure Gordon (UK) Limited continues to act as
the Company's Broker.
Impact of COVID-19
During the pandemic our ability to secure funding and remote
working operations to our portfolio companies is key to continued
success. Even during exceptional circumstances, we were able to
continue to operate our business almost normally and the
development of our clinical trials proceeded as planned.
Additionally, Faron closely followed and strictly complied to
the regulations and recommendations of the Finnish National
Institute for Health and Welfare (THL) and other relevant
authorities to ensure the safety for its employees, study subjects
and partners.
Financial
-- Cash balances of EUR11.6 million at 30 June 2020 (2019: EUR2.9 million).
-- Operating loss of EUR7.1 million for the six months ended 30
June 2020 (2019: EUR6.3 million).
-- Net assets of EUR7.3 million as at 30 June 2020 (2019: EUR-1.8 million).
-- In April 2020 the Company raised a total of EUR14 million
gross (EUR13 million net) in a share placing, effected via a
private placement of new Ordinary Shares to a limited number of
institutional investors in the Nordic region and a concurrent
proposed private placement of new Ordinary Shares to UK
institutional investors.
-- Additional grants of EUR3.3 million, loan of EUR2.1 million
and a loan guarantee for EUR2.5 million were awarded in H1 and
partially post period. Those non-diluting funds (in total of EUR7.9
million) funds will be dispersed to the Company in H2 and
thereafter, and thus are not included in H1 cash balances.
Consolidated key figures, IFRS
EUR'000 Unaudited Unaudited 1-12/2019
1-6/2020 1-6/2019 12 months
6 months 6 months
------------------------------------- ----------- ----------- -------------
Revenue 0 0 0
Research and Development expenses (5,534) (4,982) (10,237)
General and Administrative expenses (2,354) (1,361) (3,049)
Loss for the period (7,343) (6,412) (13,262)
Unaudited Unaudited 1-12/2019
1-6/2020 1-6/2019 12 months
6 months 6 months
----------------------------------- ----------- ----------- -------------
Loss per share EUR (0.16) (0.19*) (0.36)
Number of shares at end of period 46,799,747 37,233,894 43,290,747
Average number of shares 44,584,199 33,819,699 36,850,577
EUR'000 Unaudited Unaudited
30 Jun 2020 30 Jun 2019 31 Dec 2019
--------------------------- ------------- ------------- --------------
Cash and cash equivalents 11,627 2,892 7,059
Equity 7,313 (1,761) 1,610
Balance sheet total 14,343 5,103 10,209
*correction to interim results announced on 23 September 2019,
the Loss per share is EUR 0.19 instead of EUR 0.17
Commenting on the results, Dr Markku Jalkanen, CEO of Faron,
said: "I am delighted to report the significant progress we have
made so far in 2020, advancing the Faron pipeline and investing to
secure the future of our clinical programmes. Our novel precision
cancer immunotherapy, bexmarilimab, continues to deliver very
promising results in a development programme that has rapidly
expanded this year and our confidence in this novel therapy has
been strengthened by the MATINS Part I data, showing that
bexmarilimab has led to CLEVER-1 inhibition with immune cell
activation and downregulation of several checkpoint molecules. With
the MATINS trial now advancing across ten cancer cohorts we stand
to learn much more about the potential of this novel therapy in the
coming months and we look forward to continuing our discussions
with regulators about the future development plan of this
program.
"As the scientific community has rallied in 2020 to identify
therapies for COVID-19 patients, I am proud that Faron has been
able to support two global initiatives and a planned US trial, to
investigate the potential of Traumakine for the treatment of ARDS
and COVID-19. We look forward to the upcoming WHO SOLIDARITY trial
data in fourth quarter of this year and expect to initiate our
HIBISCUS US study with Harvard University in the fourth quarter of
this year.
"The Company's successful fundraise in April and a number of
additional non-dilutive funds put the Company in a strong financial
position to progress our clinical programmes and I would like to
thank all our shareholders for their continued support."
September 24, 2020
Faron Pharmaceuticals
Board of Directors
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014 ("MAR").
Conference call information
Faron will host a webcast and conference call for analysts to
provide an update on the results, followed by a Q&A session, at
7.30am EST / 12:30pm BST / 2:30pm EEST. A presentation to accompany
the call will be available on the Faron website (
https://www.faron.com/investors/results ) at 7.00am EST / 12.00pm
BST / 2.00pm EEST
The webcast can be accessed here
https://www.lsegissuerservices.com/spark/FaronPharmaceuticalsOy/events/f2025553-c840-4c5c-9f34-d6e3b6d58fa3
Dial-in details are:
UK: 0800 028 8438
Finland: 0931 583 827
US: (918) 922-6506
Conference ID: 5946048
For more information please contact:
Faron Pharmaceuticals Oy
Dr Markku Jalkanen, Chief Executive Officer
investor.relations@faron.com
Cairn Financial Advisers LLP, Nomad
Sandy Jamieson, Jo Turner, Mark Rogers
Phone. +44 207 213 0880
Panmure Gordon (UK) Limited, Broker
Rupert Dearden
Phone: +44 207 886 2500
Sisu Partners Oy, Certified Adviser on Nasdaq First North
Juha Karttunen, Jussi Majamaa
Phone: +358 (0)40 555 4727
Consilium Strategic Communications
Mary-Jane Elliott, David Daley, Lindsey Neville
Phone: +44 (0)20 3709 5700
E-mail: faron@consilium-comms.com
Stern Investor Relations, Inc.
Julie Seidel
Phone: +(1)212 362 1200
Email: Julie.Seidel@sternir.com
About Faron Pharmaceuticals Ltd
Faron (AIM: FARN, First North: FARON) is a clinical stage
biopharmaceutical company developing novel treatments for medical
conditions with significant unmet needs. The Company currently has
a pipeline based on the receptors involved in regulation of immune
response in oncology and organ damage. Clevegen, its precision
immunotherapy, is a novel anti-Clever-1 antibody with the ability
to switch immune suppression to immune activation in various
conditions, with potential across oncology, infectious disease and
vaccine development. Currently in phase I/II clinical development
as a novel macrophage checkpoint immunotherapy for patients with
untreatable solid tumours, Clevegen has potential as a single-agent
therapy or in combination with other standard treatments including
immune checkpoint molecules. Traumakine, the Company's pipeline
candidate to prevent vascular leakage and organ failures, has
completed a phase III clinical trial in Acute Respiratory Distress
Syndrome (ARDS). Plans for its future development are being
finalised to avoid interfering steroid use together with
Traumakine. Faron is based in Turku, Finland. Further information
is available at www.faron.com .
Caution regarding forward looking statements
Certain statements in this announcement, are, or may be deemed
to be, forward looking statements. Forward looking statements are
identified by their use of terms and phrases such as "believe",
"could", "should", "expect", "hope", "seek", "envisage",
"estimate", "intend", "may", "plan", "potentially", "will" or the
negative of those, variations or comparable expressions, including
references to assumptions. These forward-looking statements are not
based on historical facts but rather on the Directors' current
expectations and assumptions regarding the Company's future growth,
results of operations, performance, future capital and other
expenditures (including the amount, nature and sources of funding
thereof), competitive advantages, business prospects and
opportunities. Such forward looking statements reflect the
Directors' current beliefs and assumptions and are based on
information currently available to the Directors.
A number of factors could cause actual results to differ
materially from the results and expectations discussed in the
forward-looking statements, many of which are beyond the control of
the Company. In particular, the early data from initial patients in
the MATINS trial may not be replicated in larger patient numbers
and the outcome of clinical trials may not be favourable or
clinical trials over and above those currently planned may be
required before the Company is able to apply for marketing approval
for a product. In addition, other factors which could cause actual
results to differ materially include the ability of the Company to
successfully licence its programmes within the anticipated
timeframe or at all, risks associated with vulnerability to general
economic and business conditions, competition, environmental and
other regulatory changes, actions by governmental authorities, the
availability of capital markets or other sources of funding,
reliance on key personnel, uninsured and underinsured losses and
other factors. Although any forward-looking statements contained in
this announcement are based upon what the Directors believe to be
reasonable assumptions, the Company cannot assure investors that
actual results will be consistent with such forward looking
statements. Accordingly, readers are cautioned not to place undue
reliance on forward looking statements. Subject to any continuing
obligations under applicable law or any relevant AIM Rule
requirements, in providing this information the Company does not
undertake any obligation to publicly update or revise any of the
forward-looking statements or to advise of any change in events,
conditions or circumstances on which any such statement is
based.
Chairman's and Chief Executive Officer's Review
Introduction
The first half of 2020 has continued to build further excitement
around Faron's pipeline, which we saw gain momentum in 2019.
Clevegen(R) (bexmarilimab), by providing significant immune
activation for cancer patients, has delivered solid achievements
against our objectives for the period. Traumakine(R) (intravenous
interferon-beta 1a) in turn has become a key candidate as a
potential COVID-19 treatment due to its ability to act as an
anti-viral and lung function supportive agent. We also announced a
new pre-clinical project, now called Haematokine(TM) , a treatment
involving the regeneration of haematopoietic stem cells. Faron also
attracted a total of EUR22 million in new funding, which includes a
significant amount of non-dilutive funds (EUR7.9 million). In this
report we are pleased to provide further information on our H1 2020
progress and also give insights into our plans and intended
progress for the second half of the year.
Clevegen (bexmarilimab) - Commencement of Part II of MATINS
study with strong patient recruitment and encouraging Part I
results
Driving the clinical development of Clevegen has been Faron's
priority and in the first six months of the year we have delivered
strong results, with the programme continuing apace. Bexmarilimab
is our wholly-owned novel precision cancer immunotherapy candidate,
which causes conversion of the immune environment around a tumour
from immune-suppressive to immune-stimulating by reducing the
number and function of immune suppressive tumour-associated
macrophages (TAMs) by inactivating the function of CLEVER-1
receptor. Bexmarilimab is differentiated from other immunotherapies
through its specific targeting of M2 TAMs, which facilitate tumour
growth. Through myeloid cell plasticity, bexmarilimab can convert
these M2 TAMs to M1s, leaving existing M1 TAMs intact and allowing
both to support immune activation against tumours. We believe it
has the potential to function as a novel macrophage checkpoint
immunotherapy, both as a monotherapy and in combination with other
immuno-oncology therapies or standard of care treatments.
The ongoing MATINS trial, our first-in-human open label phase
I/II clinical trial with an adaptive design, is investigating the
safety and efficacy of bexmarilimab in selected metastatic or
inoperable solid tumours. The completed Part I of the MATINS trial,
primarily intended to investigate safety and tolerability, has
already shown that bexmarilimab administration promoted immune
activation in all dosed patients, with data also indicating that
bexmarilimab can down regulate a range of major inhibitory immune
checkpoints (like PD-1, CTLA-4, etc.) that current immuno-oncology
therapies aim to suppress. Bexmarilimab has also been well
tolerated, showing no significant adverse events even at the
highest dosing levels.
Clinical progress accelerated early in 2020 when the MATINS
trial's data monitoring committee (DMC) approved the first
expansion cohort for Part II of the trial in patients suffering
from late-stage colorectal cancer (CRC). A second expansion cohort,
in patients with ovarian cancer, quickly followed. Ovarian cancer
is a tumour type known to host a significant number of Clever-1
positive TAMs and it presents a high unmet medical need with few
available treatments for patients. As of today, additional clinical
benefits have been observed in cutaneous melanoma and uveal
melanoma. All these four cancer types are primary candidates to
become expansion cohorts for the Part III of the MATINS study.
In March 2020, a comprehensive review and analysis of data from
the completed Part I stage of the trial was undertaken by the DMC.
Key findings presented to the committee included evidence of immune
activation in all subjects (except those receiving the lowest 0.1
mg/kg dose) following treatment with bexmarilimab and emerging
evidence of clinical responses. According to the RECIST response
evaluation criteria, bexmarilimab treatment showed a clinical
effect of two partial responses and seven cases of stable disease,
which equated to a response rate in Part I of 36 per cent (9/25)
among 0.3-10 mg/kg dose levels.
In light of these findings, the DMC recommended a rapid
expansion of the study to include all cancer cohorts in the study
protocol, beyond the CRC and ovarian cancer cohorts previously
selected. The committee also recommended that patient recruitment
for the expansion cohorts should follow standard of care for each
cancer type and enable subjects with less compromised immune
systems to be enrolled to the trial (i.e. earlier treatment lines
whenever possible, according to the study protocol).
In total, bexmarilimab is now being investigated in ten cancer
cohorts: ER-positive breast cancer, cholangiocarcinoma (bile duct
cancer) and gall bladder cancer, colorectal cancer, gastric cancer,
hepatocellular carcinoma, cutaneous melanoma, uveal melanoma,
ovarian cancer, pancreatic ductal adenocarcinoma and anaplastic
thyroid cancer.
At a time when health systems have been stretched to their
limits by the ongoing global COVID-19 pandemic, we have been
particularly pleased that patient recruitment into the MATINS trial
has not been affected and we look forward to learning more about
bexmarilimab's potential as the trial progresses. Our confidence in
bexmarilimab has only strengthened this year. Despite the MATINS
trial patients' very advanced stage of disease and several lines of
previous therapies, including PD-1 and CTLA-4 inhibitors, we remain
very encouraged by the evidence emerging of this candidate's single
agent efficacy. That is why we also announced this year that c
linical expansion plans for bexmarilimab will include the
investigation of alternative dosing cycles, as pharmacodynamics
markers may indicate a need for shorter frequencies, as well as
further studies in additional clinical settings. The Company also
intends to investigate bexmarilimab in combination with standard of
care, as a first-line therapy in selected advanced solid tumours,
and as a standalone neoadjuvant therapy for patients with early
stage colon cancer.
Patient recruitment for the several cohorts has already
completed and the rest are expected to follow in the next few
months. The data from these cohorts will allow the Company to
obtain advice from regulatory authorities for the continuation into
Part III of the study. Patient recruitment for a small number of
additional cohorts is expected to complete around early Q4 2020 and
discussions with the FDA likely to follow in early 2021.
Alongside bexmarilimab's clinical progress in 2020, the Company
has undertaken further work to prepare for its future, by
appointing global contract development and manufacturing
organisation, AGC Biologics, as the commercial scale manufacturer.
This is a significant milestone in our bexmarilimab programme. AGC
Biologics has decades of experience in manufacturing of
biotechnological products, including commercial market supplies of
FDA, PDMA and EMA approved products. The commercial scale
manufacturing process it establishes for bexmarilimab will provide
a dossier to support future regulatory filings in Europe and the
US.
We have also continued our partnering discussions with third
parties, including leading pharmaceutical companies, with the aim
of supporting expansion of clinical development and exploring the
potential of bexmarilimab in combination with existing
immunotherapies and other cancer therapies. While these remain
important to our strategy, Faron's strong financial position does
provide the Company with greater flexibility to independently
advance this candidate further in its development programme.
Traumakine - Lung protection and anti-COVID-19 in one treatment
under development
Traumakine is currently involved in three major clinical studies
sponsored by the global scientific community in its search for
therapies against COVID-19. These explore the potential of the
Company's intravenous (IV) interferon (IFN) beta-1a, Traumakine, to
reduce intensive care need and mortality for COVID-19 patients but
also as a future treatment for acute respiratory distress syndrome
(ARDS) and one that could have significant impact on the
intensive-care burden from COVID-19. This is well justified, and
our greater understanding from previous trials on the interference
from corticosteroids on the efficacy of our investigational IV IFN
beta-1a has enabled us to refocus our efforts on this asset, which
we continue to believe holds great potential as a future treatment
for ARDS. Alongside the acceleration of bexmarilimab's development
programme, Faron began 2020 continuing to work with regulatory
authorities to determine the next steps in Traumakine's future
development pathway. We were pleased therefore, when in March the
U.S. Food and Drug Administration (FDA) accepted the Company's
proposed protocol design for the next Traumakine study in ARDS
patients. That trial protocol reflected the feedback and
conclusions from the FDA that further studies with our IV IFN
beta-1a should exclude the use of concomitant glucocorticoids since
they are likely to block its desired therapeutic effect, and may
have a potentially deleterious impact on patient survival. Since
March, the FDA has indicated that a separate arm in this study is
required, to test a separate effect of a corticosteroid called
dexamethasone. This study called HIBISCUS has now been designed
together with Harvard University in the US. The Company expects
approval of this study in due course and for recruitment to start
during Q4 2020.
In April we joined two global initiatives investigating the
potential of multiple therapies to treat COVID-19, by providing
supplies of Traumakine to REMAP-CAP, the Randomized, Embedded,
Multifactorial Adaptive Platform Trial for Community-Acquired
Pneumonia program, and the World Health Organization's (WHO's)
Solidarity trial.
One of the body's main first lines of defence against viral
infection is endogenous IFN-beta production, but recent findings
have shown that seriously ill COVID-19 patients have compromised
interferon responses. We believe Traumakine treatment can further
strengthen the body's natural defences. Specifically, the
intravenous dosing of Faron's IFN beta-1a provides the lung
vasculature with optimal exposure to IFN, which we believe is a
critical aspect of Traumakine's potential to increase protection
against serious lung complications.
While both global initiatives are ongoing, Faron is also
supporting a third trial to investigate the potential of the
Company's IV IFN beta-1a to treat COVID-19. HIBISCUS (Human
Interferon Beta In Severe CoronavirUS), will be an investigator
initiated study at Harvard Medical School's Beth Israel Deaconess
Medical Center (BIDMC), focused on ICU patients with ARDS caused by
viral infection (e.g. COVID-19, influenza). Commencement of this
Phase II/III pivotal, randomized, placebo-controlled study, remains
subject to finalisation of funding arrangements and regulatory
approval. The study will test Traumakine against both placebo and
dexamethasone, which is now a part of the standard of care in the
US.
Subject to data from these trials supporting Traumakine's
profile, the Company will work with regulatory authorities and
other parties to identify the best path to ensure its future
availability to patients.
As a sign of our continued commitment to the Traumakine
programme and looking ahead to its future, the Company announced
(August, post-period) that AGC Biologics, the commercial scale
manufacturer of bexmarilimab, will be the new manufacturing house
for the commercial scale production of Traumakine's active
pharmaceutical ingredient - interferon beta-1a.
Haematokine(TM) - Hematopoietic stem cell expansion
In March the Company acquired rights for the potential new use
of AOC3 inhibitors. The AOC3 enzymatic domain, a
semicarbazide-sensitive amine oxidase, is known to produce hydrogen
peroxide, a potent inflammatory mediator. AOC3 in vivo, ex vivo and
in vitro studies have revealed that ACO3 enzymatic end product
hydrogen peroxide (H(2) O(2) ) controls expansion of hematopoietic
stem cells. Hematopoietic Stem Cell Transplantation (HSCT) is today
the standard of care in all haematological malignancies. This is
due to the fact that transplant failure is a lethal complication
and a result of poor expansion of transplanted cells, which can
occur in up to 30 per cent of patients. In addition, secondary
transplantation and treatments reviving failing transplants are
expensive and often unsuccessful. With Haematokine, the Company
believes, we can expand stem cells by regulating AOC3 activity.
Financial review
In April the Company successfully raised approximately EUR14
million (GBP12.9 million) through a private placement of new
ordinary shares to institutional investors in the UK and the Nordic
region. The majority of these proceeds are being used to advance
our bexmarilimab clinical programme and expand manufacturing, while
also significantly strengthening the Company's balance sheet to
support other ongoing activities.
During the period the Company was awarded two grants to support
its activities: An EUR0.8 million grant from Business Finland to
conduct detailed, state-of-the-art characterization of the
immunological responses seen in cancer patients in the bexmarilimab
MATINS trial and a EUR2.5 million grant from the European
Innovation Council (EIC) Accelerator pilot scheme to progress the
MATINS trial and related business activities.
The Company was also awarded a EUR2.1 million low interest rate
loan from Business Finland, which is being used to develop and
select a new cell line for use in the future commercial scale
production of Traumakine. Additionally, post period, the Company
received a loan guarantee for a EUR2.5 million loan, which will be
used to further expand that cell line. The Company has partnered
with Danske Bank A/S Finland Branch for the loan arrangement.
These grants and loans, totalling EUR7.9 million, are
non-dilutive. Proceeds of these grants and loans are not included
in the H1 cash balances as the proceeds will be dispersed to the
Company post period.
Statement of comprehensive income
The loss from operations for the six months ended 30 June 2020
was EUR 7.1 million (six months ended 30 June 2019: loss of EUR 6.3
million). No revenue was generated during the period or prior
revenue. Research and development expenditure increased by EUR 0.5
million to EUR 5.5 million (2019: EUR 5.0 million). Administrative
expenses increased by EUR 1.0 million to EUR 2.4 million (2019: EUR
1.4 million).
The loss after tax for the period was EUR 7.3 million (2019:
loss of EUR 6.4 million) and the basic loss per share was EUR 0.16
(2019: loss per share of EUR 0.19).
Statement of financial position and cash flows
At 30 June 2020, net assets amounted to EUR 7.3 million (30 June
2019: EUR-1.8 million). The net cash flow for the first six months
in 2020 was EUR 4.4 million (2019: EUR -1.1 million). As at 30 June
2020, total cash and cash equivalents held were EUR 11.6 million
(2019: EUR 2.9 million).
Legal proceedings
As announced by the Company on 2 October 2019 and 30 December
2019, the Company has received a letter from Rentschler Biopharma
SE in which Rentschler stated that it was terminating the agreement
concerning Traumakine API manufacturing. The Company considers that
this statement is without merit and that Rentschler has breached
the agreement. Faron has filed a request for arbitration to seek
damages. The arbitration proceeding is ongoing and the final
arbitration award is expected to be issued by the arbitration
tribunal during mid year 2021. To fund the proceedings, the Company
has entered into a litigation funding agreement with a third-party
recovery services provider offering non-recourse financing services
which, subject to final quantum, is expected to cover both the
Company's and the adverse party's legal expenses and which, in the
event of success, would receive a typical portion of any damages
awarded.
Corporate
On 16 June 2020, the Company hosted a virtual R&D Day
presenting its R&D strategy and insights into the Clevegen and
Traumakine programmes. Faron management representatives were joined
by Prof. Alberto Mantovani, Humanitas University, Milan, Italy;
Ass. Prof. Maija Hollmén, MediCity, Turku University, Finland, and
Dr. Petri Bono, Terveystalo, Helsinki, Finland, who provided
additional perspectives on both programmes. The event, well
attended, was an opportunity for the Company to showcase the
strength of its clinical programmes and plans for the future.
The Company's Annual general meeting (AGM), held on 18 May 2020,
approved all the proposals of the board of directors and its
committees set out in the notice of the AGM published on 14 April
2020. The number of members of the Board was confirmed as six.
Frank Armstrong, Markku Jalkanen, Matti Manner, Leopoldo
Zambeletti, Gregory Brown and John Poulos were re-elected to the
Board for a term that ends at the end of the next AGM.
Summary & outlook
Our focus for H2 2020 will be the expedition of Clevegen's
clinical development through Parts II and III of the MATINS trial
and to report these data to regulatory authorities. We will also
continue to support the ongoing COVID-19 research initiatives
investigating the potential of the Company's IV IFN beta-1a,
Traumakine. The successful financing undertaken in H1 and post
period 2020 puts the Company in a strong financial position to
progress both clinical programmes and related business activities,
while partnering discussions continue.
On behalf of the Board we would like to thank the whole Faron
team for their commitment, resilience and agility during the
challenging times of 2020. Their response has enabled the Company
to make significant achievements against its objectives and has
secured a strong position for the second half of 2020.
We look forward to updating the market on our progress
throughout the course of the year.
Consolidated Income Statement, IFRS
EUR'000 Unaudited Unaudited
1-6/2020 1-6/2019 1-12/2019
6 months 6 months 12 months
Revenue 0 0 0
Other operating income 743 0 185
Research and development expenses (5,534) (4,982) (10,237)
General and administrative expenses (2,354) (1,361) (3,049)
Operating loss (7,145) (6,343) (13,101)
Financial expense (230) (73) (224)
Financial income 31 5 74
Loss before tax (7,343) (6,411) (13,251)
Tax expense 0 (0) (11)
Loss for the period (7,343) (6,412) (13,262)
Other comprehensive income -
Total comprehensive loss for the
period (7,343) (6,412) (13,262)
Loss per ordinary share
Basic and diluted loss per share,
EUR (0.16) (0.19*) (0.36)
Consolidated Balance Sheet, IFRS Unaudited Unaudited
30 June 30 June 31 December
EUR'000 2020 2019 2019
--------------------------------------- ----------- ---------- --------------
Assets
Non-current assets
Machinery and equipment 13 14 13
Right-of-use-assets 456 0 386
Intangible assets 560 522 529
Prepayments and other receivables 80 595 77
Total non-current assets 1,109 1,131 1,005
Current assets
Prepayments and other receivables 1,607 1,080 2,145
Cash and cash equivalents 11,627 2,892 7,059
Total current assets 13,234 3,972 9,204
Total assets 14,343 5,103 10,209
Equity and liabilities
Capital and reserves attributable
to the equity holders of the Company
Share capital 2,691 2,691 2,691
Reserve for invested unrestricted
equity 91,960 68,695 78,916
Accumulated deficit (87,339) (73,146) (79,997)
Translation difference 1 0 -
Total equity 7,313 (1,761) 1,610
Non-current liabilities
Borrowings 2,303 2,363 2,263
Lease liabilities 288 0 261
Total non-current liabilities 2,591 2,363 2,524
Current liabilities
Borrowings 0 0 163
Lease liabilities 181 0 135
Trade payables 2,729 2,868 2,967
Other current liabilities 1,529 1,633 2,810
Total current liabilities 4,439 4,501 6,075
Total liabilities 7,030 6,864 8,599
Total equity and liabilities 14,343 5,103 10,209
Consolidated Statement of Changes in Equity, IFRS
EUR '000 Share capital Reserve Translation Accumulated Total equity
for invested difference deficit
unrestricted
equity
----------------------------------- -------------- -------------- ------------ ------------ -------------
Balance as at 1 January 2019 2,691 64,464 (66,786) 369
Comprehensive loss for the
first six months 2019 - - (6,412) (6,412)
Transactions with equity holders
of the Company
Issue of ordinary shares, net
of transaction costs EUR 230
thousand - 4,230 - 4,230
Share-based compensation - - 51 51
----------------------------------- -------------- -------------- ------------ ------------ -------------
- 4,230 51 4,281
Balance as at 30 June 2019 2,691 68,695 (73,146) (1,761)
=================================== ============== ============== ============ ============ =============
Comprehensive loss for the
last six months 2019 - - (6,850) (6,850)
Transactions with equity holders
of the Company
Issue of ordinary shares, net
of transaction costs EUR 919
thousand - 10,222 - 10,222
Share-based compensation - - - -
----------------------------------- -------------- -------------- ------------ ------------ -------------
- - - -
Balance as at 31 December 2019 2,691 78,916 (79,997) 1,610
=================================== ============== ============== ============ ============ =============
Comprehensive loss for the
first six months 2020 - - 1 (7,343) (7,342)
Transactions with equity holders -
of the Company
Issue of ordinary shares, net
of transaction costs EUR 952
thousand - 13,044 - 13,044
Share-based compensation - - - -
----------------------------------- -------------- -------------- ------------ ------------ -------------
- 13,044 0 - 13,044
Balance as at 30 June 2020 2,691 91,960 1 (87,339) 7,313
=================================== ============== ============== ============ ============ =============
Consolidated Cash Flow Statement, IFRS
EUR'000 Unaudited Unaudited
1-6/2020 1-6/2019 1-12/2019
6 months 6 months 12 months
---------------------------------------- ----------- ----------- -------------
Cash flow from operating activities
Loss before tax (7,343) (6,411) (13,251)
Adjustments for:
Depreciation and amortisation 130 48 238
Interest expense 93 39 158
Tax expense 0 11
Unrealised foreign exchange loss
(gain), net (125) 29 (7)
Share-based compensation 0 51 51
Adjusted loss from operations before
changes in working capital (7,245) (6,245) (12,800)
Change in net working capital:
Prepayments and other receivables 534 1,679 1,173
Trade payables (237) (641) (567)
Other liabilities (1,333) (334) 731
---------------------------------------- ----------- ----------- -------------
Cash used in operations (8,281) (5,541) (11,463)
Taxes paid 0 0 (9)
Interest paid (29) (26) (51)
---------------------------------------- ----------- ----------- -------------
Net cash used in operating activities (8,310) (5,567) (11,523)
Cash flow from investing activities
Payments for intangible assets (77) (41) (100)
Payments for equipment (2) (0) -
---------------------------------------- ----------- ----------- -------------
Net cash used in investing activities (79) (41) (100)
Cash flow from financing activities
Proceeds from issue of shares 13,997 4,461 15,627
Share issue transaction cost (952) (230) (1,175)
Proceeds from borrowings 0 231 307
Repayment of borrowings (122) (0) -
Payment of lease liabilities (91) (151)
---------------------------------------- ----------- ----------- -------------
Net cash from financing activities 12,832 4,461 14,608
Net increase (+) / decrease (-) in
cash and cash equivalents 4,443 (1,147) 2,985
Effect of exchange rate changes on
cash and cash equivalents 125 (29) 7
Cash and cash equivalents at 1 January 7,059 4,067 4,067
---------------------------------------- ----------- ----------- -------------
Cash and cash equivalents at the
end of period 11,627 2,892 7,059
Notes to the financial statements
1. Corporate information
Faron Pharmaceuticals Ltd (the "Company") is a clinical stage
biopharmaceutical company incorporated and domiciled in Finland,
with its headquarters at Joukahaisenkatu 6, 20520 Turku, Finland.
The Company currently has a pipeline based on the endothelial
receptors involved in regulation of immune response, in oncology
and organ damage.
The Company has been listed on the London Stock Exchange's AIM
market since 17 November 2015, with a ticker FARN, and since 3
December 2019, the Company has been listed on the Nasdaq First
North Growth Market list with a ticker FARON.
2. Summary of significant accounting policies
2.1. Basis of preparation
The unaudited H1 report have been prepared in accordance with
the International Financial Reporting Standards of the
International Accounting Standards Board (IASB) and as adopted by
the European Union (IFRS) and the interpretations of the
International Financial Reporting Standards Interpretations
Committee (IFRS IC) . The financial statements have been prepared
on a historical cost basis, unless otherwise stated.
The H1 report has been prepared on the basis of a full
retrospective application of IFRS 15, Revenue from Contracts with
Customers, with the adoption date as of 1 January 2017.
The principal accounting policies applied in the preparation of
these interim financial statements are set out below. The Company
has consistently applied these policies to all the periods
presented, unless otherwise stated. The areas of the financial
statements involving a higher degree of judgment or complexity, or
areas where assumptions and estimates are significant to the
financial statements, are disclosed in note 2.2 .
The unaudited consolidated financial statements incorporate the
parent company, Faron Pharmaceuticals Ltd, and all subsidiaries in
which it holds over 50% of the voting rights (the "Group").
All amounts are presented in thousands of euros, unless
otherwise indicated, rounded to the nearest euro thousand.
2.2. Going concern
The Company has forecasted its estimated cash requirements over
the next twelve months. In order to make these forecasts the
Company has made a number of assumptions regarding the quantity and
timing of future expenditure and income as well as other key
factors. Though these estimates have been made with caution and
care, they continue to contain a significant amount of uncertainty.
Based on the forecast the Company believes that it has adequate
financial resources to continue its operations into Q1 2021 and
therefore these unaudited financial statements have been prepared
on a going concern basis. In its meeting on 23 September 2020 the
Board of Directors of the Company approved the publishing of these
interim financial statements.
Company has taken several acts to secure further financing
during rest of the year 2020. The Directors believe that the
Company can gain access to further resources to sustain operations
over the next 12 months. At this stage the Company can not disclose
any of these options.
Because the additional finance is not committed at the date of
issuance of these H1 reports, these circumstances represent a
material uncertainty that may cast significant doubt on the
Company's ability to continue as going concern. Should the Group be
unable to obtain further finance such that the going concern basis
of preparation were no longer appropriate, adjustments would be
required, including to reduce balance sheet values of assets to
their recoverable amounts, to provide for further liabilities that
might arise.
AIM Rules for Companies disclosure
Frank Armstrong, Chairman of the Company, was Chairman of Redx
Pharma plc from 1 September 2014 until his resignation on 20 April
2017. On 24 May 2017, Redx Pharma plc was put into administration
by Liverpool City Council as a result of non-payment of an
outstanding loan of GBP2 million and the ordinary shares in Redx
Pharma plc were suspended from trading on AIM. On 3 November 2017,
Redx Pharma plc exited administration with all creditors paid and
trading in the shares of Redx Pharma plc resumed on AIM.
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IR KKNBBDBKBNCB
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