TIDMFARN
RNS Number : 4127T
Faron Pharmaceuticals Oy
25 March 2021
Faron Pharmaceuticals Oy
("Faron" or the "Company")
Financial statement release January 1 to December 31, 2020
- Clevegen(R) (bexmarilimab) Phase I/II MATINS study has shown
early clinical benefits in six hard-to-treat solid cancers with
further combination studies planned
- Intravenous interferon beta-1a Traumakine (R) , for organ
damage protection , now also investigated as potential COVID-19
treatment
- Company's balance sheet strengthened by successful share
placings of EUR14 million and EUR15 million (post period)
- Additional grants of EUR3.3 million and EUR4.6 million loans
and loan guarantees awarded to drive R&D and CMC programmes
Financial statement release, 25 March 2021 at 9.00 AM (EET)
Inside information
TURKU - FINLAND - Faron Pharmaceuticals Oy (AIM: FARN, First
North: FARON), the clinical stage biopharmaceutical company, today
reports its financial statements for the year ended 31 December
2020 and H2 2020.
HIGHLIGHTS
Operational (including post period):
Clevegen(R) (bexmarilimab) - Faron's wholly-owned, novel
precision cancer immunotherapy candidate, in Phase I/II development
for difficult-to-treat cancers.
-- Strong patient recruitment continues in Part II of the Phase
I/II MATINS trial, investigating the potential of bexmarilimab in
patients with solid tumours who have exhausted all treatment
options. 10 cancer types - cutaneous melanoma, uveal melanoma,
ovarian cancer, colorectal cancer (CRC), hepatocellular cancer, ER+
breast cancer, pancreatic cancer, gastric cancer,
cholangiocarcinoma, anaplastic thyroid carcinoma - are currently
under investigation.
-- Clinical benefits have been observed across six cancer types
to date - CRC, ovarian cancer, cutaneous melanoma, hepatocellular
cancer, cholangiocarcinoma and gastric cancer. These are primary
candidates to become expansion cohorts for Part III of the
study.
-- More frequent dosing , beyond the original three week dosing
interval, is being explored in all six cohort types showing early
signs of clinical benefit in order to confirm the optimum dosing
regimen for pivotal studies, following analysis of key
pharmacokinetic and pharmacodynamic biomarkers indicating the
potential for increased bexmarilimab efficacy.
-- Clinical expansion trials will investigate bexmarilimab's
potential in additional clinical settings, with trials expected to
start later in 2021 - in combination with standard of care (SOC) as
a first-line therapy in selected advanced solid tumours and
haematological malignancies . Additionally, trials will also
investigate bexmarilimab as a standalone neoadjuvant therapy for
patients with early stage CRC and and clear cell renal cell
carcinoma.
-- Established soluble Clever-1 as potential inhibitor of T cell
activation through the testing of MATINS patients' plasma . New
findings suggest that their high levels of free, soluble Clever-1
can act as a direct inhibitor of T cell activation, thereby
providing a broader immunosuppressive effect than previously
expected. This suggests that the inactivation of Clever-1 could be
more broadly applicable, potentially enabling patients to benefit
from immuno-oncology therapies which have previously been
ineffective. A new patent application has been filed seeking global
protection for these findings and related applications.
-- Commercial scale manufacturing contract for the development
and manufacturing of bexmarilimab was established with AGC
Biologics.
-- EUR3.3 million grants to support the development of
bexmarilimab were received in 2020 from the European Innovation
Council (EIC) Accelerator pilot scheme (EUR2.5 million) and the
Finnish Cancer IO consortium (EUR0.8 million).
-- Scientific learnings on bexmarilimab were shared at key
global conferences including the virtual American Society of
Clinical Oncology (ASCO20) Annual Meeting, the European Society of
Medical Oncology (ESMO) Virtual Congress and ESMO's Immuno-Oncology
Virtual Congress 2020.
Traumakine(R) - Faron's investigational intravenous (IV)
interferon beta-1a therapy is in development for the treatment of
acute respiratory distress syndrome (ARDS) and other ischemic or
hyperinflammatory conditions.
-- Supported the global search for potential treatments for
COVID-19 , with Traumakine 's inclusion in two global initiatives
in 2020 - the global REMAP-CAP (Randomized, Embedded,
Multifactorial Adaptive Platform Trial for Community-Acquired
Pneumonia), which is ongoing across more than 200 sites and 19
countries, and the WHO's Solidarity trial . The WHO trial
determined in October 2020 that subcutaneous IFN beta-1a was
ineffective in reducing overall mortality in hospitalised COVID-19
patients. At the time of analysis, too few patients had received an
IV formulation of IFN beta to enable interpretation of the data and
to draw any conclusions on its effect. WHO has yet to provide the
Company with detailed dosing and safety information which is a
normal regulatory requirement for drug testing and use.
-- On track to initiate a Faron-sponsored trial investigating
the potential of Traumakine to treat COVID-19 . The Phase II/III
HIBISCUS (Human intravenous Interferon Beta-Ia Safety and
preliminary efficacy in hospitalised subjects with CoronavirUS)
study will be conducted in approximately 5-10 study sites across
the US in hospitalised patients with COVID-19, who do not yet
require mechanical ventilation, but maximally low flow oxygen
support. Use of corticosteroids concomitantly with Traumakine is
not possible in the study setting but enabled in a sequenced
manner, following Traumakine treatment. Post period the Company
received $6.1 million of funding from the Coronavirus Aid, Relief,
and Economic Security (CARES) Act, granted by the US Department of
Defense, to support HIBISCUS.
-- Building on Faron's already strong IP portfolio for
Traumakine , the Company applied for additional patent protection
for Traumakine relating to the induction of CD73 for organ
protection, followed by the use of corticosteroids for the
treatment of systemic inflammation. In this sequence, the best
effects of both drugs are optimised in a sequence for patient
benefit. This order is strongly supported by molecular analysis of
IFN-beta signaling pathways in many published articles over recent
months.
-- Partnership established with the 59(th) Medical Wing of the
U.S. Air Force and U.S. Army and U.S. Army Institute of Surgical
Research to explore the use of Traumakine for organ protection in
combat wounds leading to multi-organ failure from ischemia and
reperfusion.
-- To support Traumakine's potential future commercial use , AGC
Biologics was selected to be the new manufacturing house for
commercial scale production. A EUR2.1 million low interest rate
loan from Business Finland and a EUR2.5 million loan guarantee from
Finnvera, the official Export Credit Agency of Finland, are
supporting the establishment of a new cell line for the
manufacturing process.
-- Detailed analyses into the deleterious effects of
glucocorticoids on Traumakine activity, undertaken following the
INTEREST trial results in 2018, were published in Intensive Care
Medicine, a world-leading journal in the field of critical care, in
May 2020.
Haematokine(R) - An AOC3 (amine oxidase copper containing 3)
protein inhibitor in development for use in regenerative medicine
and to treat hematological malignancies.
-- Faron acquired rights for this potential use of AOC3
inhibitors in March 2020 and will be responsible for the future
development of Haematokine and for the management, prosecution,
maintenance and filing of patent applications.
-- IND-enabling studies for this programme are continuing and,
following a first review by the Finnish patent office, the Company
believes global patent protection could be possible for the
Haematokine project.
Corporate
-- Faron hosted a virtual R&D Day presenting the Company's
R&D strategy and insights into its two clinical stage
programmes. Alongside Dr 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.
Impact of COVID-19
-- During the pandemic the Company's ability to secure funding
and remote working operations has been key to continued success.
Even during exceptional circumstances, Faron has been able to
continue to operate its business almost normally and the
development of its clinical trials proceeded as planned.
-- Additionally, Faron closely followed and strictly complied
with the regulations and recommendations of the Finnish National
Institute for Health and Welfare (THL) and other relevant
authorities to ensure the safety for its employees, study subjects
and partners.
Financial
-- On 31 December 2020, the Company held cash balances of EUR4.1
million (2019: EUR7.1 million).
-- Loss for the period for the financial year ended 31 December
2020 was EUR16.9 million (2019: EUR13.3
million).
-- Net assets on 31 December 2020 were EUR-1.8 million (2019: EUR1.6 million).
-- In April 2020, the Company successfully raised a total of
EUR14.0 million gross (EUR13.0 million net) from new and existing
shareholders, through issuance of total of 3,500,000 new ordinary
shares. The majority of these proceeds are being used to expand
Clevegen in additional targets in the MATINS trial, support
Traumakine in the ongoing REMAP-CAP trial and to strengthen the
Company's balance sheet.
-- The Company received a combination of grants, loans and loan
guarantees totalling EUR7.9 million from Business Finland (May
2020: Grant EUR0.8 million, June 2020: Loan EUR2.1 million), The
European Innovation Council (June 2020: Grant EUR2.5 million),
Finnvera (Aug 2020: Loan guarantee EUR2.5 million). A total of
EUR2.2 million of these funds were received during the period and
the rest will continue to be received post period.
-- Post period in February 2021, the Company raised EUR15
million gross (approximately EUR14.4 million net) from new and
existing shareholders through an issuance of 3,521,127 new ordinary
shares.
Consolidated key figures, IFRS
EUR'000 Unaudited Unaudited 1-12/2020 1-12/2019
7-12/2020 7-12/2019 12 months 12 months
6 months 6 months
---------------------------- ----------- ----------- ------------ ------------
Revenue 0 0 0 0
Other operating income 1,379 185 2,122 185
Research and Development
expenses (8,345) (5,255) (13,879) (10,237)
General and Administrative
expenses (2,543) (1,688) (4,897) (3,049)
Loss for the period (9,603) (6,850) (16,946) (13,262)
Unaudited Unaudited 1-12/2020 1-12/2019
7-12/2020 7-12/2019 12 months 12 months
6 months 6 months
-------------------------- ----------- ----------- ------------ ------------
Loss per share EUR (0.22) (0.18) (0.37) (0.36)
Number of shares at
end of period 46,896,747 43,290,747 46,896,747 43,290,747
Average number of shares 44,606,204 38,551,293 45,712,111 36,850,577
EUR'000 Unaudited Unaudited 31 Dec 2020 31 Dec 2019
30 Jun 2020 30 Jun 2019
--------------------------- ------------- ------------- ------------ ------------
Cash and cash equivalents 11,627 2,892 4,108 7,059
Equity 7,313 (1,761) (1,849) 1,610
Balance sheet total 14,343 5,103 8,367 10,209
Commenting on the results, Dr Markku Jalkanen, CEO of Faron,
said: "The past year has been one of the most significant in
Faron's history, with rapid expansion of our clinical development
programme for bexmarilimab, our novel Clever-1 targeting precision
immunotherapy. Seeing the latest data from the MATINS trial,
showing clinical benefit across six different tumour types, has
been highly rewarding and gives us great confidence in the future
of this next-generation immunotherapy. Our growing understanding of
Clever-1 as an immune suppressive molecule and its role in the
systemic inhibition of T-cells only adds to our confidence in
bexmarilimab and its potential as a breakthrough therapy with broad
application for patients with hard-to-treat cancers or those who no
longer respond t o current immunotherapies.
"I am very pleased that we have been able to support ongoing
global research efforts to find the much needed, effective
treatments for COVID-19 patients. The science behind Traumakine,
our intravenous interferon (IFN) beta-1a, and its potential to
prevent multi-organ failure by upregulating the key endothelial
enzyme CD73, is compelling. We continue to believe that an
intravenous formulation of IFN beta-1a is what patients need, to
strengthen the body's own IFN beta signaling - the first line of
defence against viral infection - and provide optimal exposure to
the lung vasculature. With evidence emerging of increased
interferon resistance among COVID-19 variants, suggesting the virus
is evolving with new ways to evade our innate immune defences,
research into the potential of exogenous interferon to reduce
severe disease and mortality in COVID-10 patients remains
critical.
"The Company's successful fundraising in 2020 and, post period,
in February this year, puts us in a strong position to continue the
progress of our pipeline and brings us closer to our goal of
developing ground-breaking new treatments from our unique
scientific discoveries. I'd like to thank our shareholders for
their continued support and the entire team at Faron for their
exceptional efforts during a challenging year."
Board of Directors' Proposal on the Dividend
The Group's loss for the accounting period was 16,946,261.84
euro (2019: 13,261,911.93 euro).
The Board of Directors does not recommend the payment of a
dividend (2019: nil).
24 March 2021
Faron Pharmaceuticals
Board of Directors
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014 ("MAR").
Conference call information
A virtual briefing and Q&A session for analysts will be
hosted by Dr. Markku Jalkanen, Chief Executive Officer, and Toni
Hänninen, Chief Financial Officer, at 12:00 pm GMT / 2:00 pm EET /
8:00 am EST on the day of results. The Full-year results release
for 2020, presentation, webcast details, and Annual Report 2020
will be made available at www.faron.com/investors. A replay of the
analyst briefing will be made available shortly afterwards.
Webcast link :
https://www.lsegissuerservices.com/spark/FaronPharmaceuticalsOy/events/04110470-3c65-4dad-ba56-54b27e83f27f
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 (0)20 7213 0880
Panmure Gordon (UK) Limited, Broker
Rupert Dearden
Phone: +44 207 886 2500
Sisu Partners Oy, Certified Adviser on Nasdaq First North
Juha Karttunen
Phone: +358 (0)40 555 4727
Jukka Järvelä
Phone: +358 (0)50 55 38 990
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
Julie Seidel
Phone: +1 212 362 1200
Email: julie.seidel@sternir.com
Publication of financial information during year 2021
The half-year financial report for the period 1 January to 30
June 2021 is scheduled to be published on 26 August 2021. Faron's
financial statements for full year 2020 will be published on 25
March 2021 and will also be available on the Company's website at
https://www.faron.com/investors/results .
The Annual General Meeting is planned for 23 April 2021. A
separate stock exchange notice will be issued by Faron's Board of
Directors to convene the meeting.
About Faron Pharmaceuticals Ltd
Faron (AIM: FARN, First North: FARON) is a clinical stage
biopharmaceutical company developing novel treatments for medical
conditions with significant unmet needs caused by dysfunction of
our immune system. The Company currently has a pipeline based on
the receptors involved in regulation of immune response in
oncology, organ damage and bone marrow regeneration. Bexmarilimab,
a novel anti-Clever-1 humanised antibody, is its investigative
precision immunotherapy with the potential to provide permanent
immune stimulation for difficult-to-treat cancers through targeting
myeloid function. Currently in phase I/II clinical development as a
potential therapy for patients with untreatable solid tumours,
bexmarilimab has potential as a single-agent therapy or in
combination with other standard treatments including immune
checkpoint molecules. Traumakine is an investigational intravenous
(IV) interferon beta-1a therapy for the treatment of acute
respiratory distress syndrome (ARDS) and other ischemic or
hyperinflammatory conditions. Traumakine is currently being
evaluated in global trials as a potential treatment for
hospitalised patients with COVID-19 and with the 59th Medical Wing
of the US Air Force and the US Department of Defense for the
prevention of multiple organ dysfunction syndrome (MODS) after
ischemia-reperfusion injury caused by a major trauma. Faron is
based in Turku, Finland. Further information is available at
www.faron.com
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 statement
2020 was a year of significant activity for Faron. Despite the
challenges that the global pandemic presented to business
continuity and clinical trials across the life sciences sector, the
Company's focus on pipeline delivery continued unabated and
delivered impressive results.
The development programme for bexmarilimab, Faron's wholly-owned
novel precision cancer immunotherapy candidate, made important
clinical progress in 2020 following completion of the dose-finding
Part I of the MATINS clinical trial. While intended to investigate
safety and tolerability, this part of the trial also delivered
exciting data on the potential of this therapy to promote immune
activation, and early signs of clinical benefit. With ten different
hard-to-treat cancers now under investigation in the second part of
the trial, the Company is gaining greater insights into the future
clinical use and commercial potential of this unique Clever-1
targeting therapy, with a clear focus on patient populations whose
cancers are known to demonstrate significant levels of the Clever-1
receptor.
The Faron team's analyses of data from the trial, alongside the
broader scientific community's growing understanding of the role of
Clever-1 as an immune suppressive molecule, have provided a much
clearer understanding of the next steps required for bexmarilimab's
clinical development and support its potential as a breakthrough
therapy for the future. Harnessing the immune system to fight
cancer using immunotherapy has, undoubtedly, been one of the most
exciting breakthroughs in modern science and the first wave of
pioneering treatments changed the face of cancer treatment. We know
these therapies do not work for everyone and many patients who
initially respond will eventually relapse. Combining
immunotherapies with complementary approaches is becoming
increasingly important in cancer treatment and bexmarilimab's
expanded clinical development programme, investigating its
combination with existing treatments, will provide important
evidence of its potential use as a future combination therapy.
The emergence of COVID-19 and its serious complications,
including acute respiratory distress syndrome (ARDS), mobilised
medical and scientific communities in 2020. I was very pleased that
Faron answered the global call for potential therapies that might
contribute to the fight against the pandemic, by providing
Traumakine, Faron's intravenous (IV) interferon (IFN) beta-1a, to
two global initiatives investigating multiple therapies to treat
severe COVID-19 patients - the REMAP-CAP (Randomized, Embedded,
Multifactorial Adaptive Platform Trial for Community-Acquired
Pneumonia) and the World Health Organization's (WHO) Solidarity
trial.
Faron has generated a wealth of data to support the hypothesis
that Traumakine can strengthen the body's
natural defences and provide increased protection against
serious lung complications. Sadly, the first global initiative to
report data -WHO's Solidarity trial - did not generate supportive
results, with too few patients receiving an IV formulation of IFN
beta to enable interpretation of the data and to draw any
conclusions on the effect of IV IFN beta.
Faron's earlier observations from Traumakine's development
programme in ARDS patients, that corticosteroid use interferes with
Traumakine's efficacy, are a significant consideration in trialling
the potential of this therapy in COVID-19 patients. A third trial
investigating Traumakine in COVID-19 patients, the Company's US
phase II/III HIBISCUS trial, in which the use of corticosteroids is
only possible following treatment with Traumakine, will yield
important results. Interest in IFN beta as a COVID-19 therapy
continues to be strong and I am proud that Faron remains actively
involved in research to further build the treatment armamentarium
against COVID-19.
Through 2020, as the world adapted to life during a pandemic,
Faron as a company showed remarkable resilience in the face of such
unexpected pressures. Thanks to the strength shown by everyone
across the Company, who quickly responded to a very different
working environment, all business operations were maintained,
clinical progress accelerated and engagement with the scientific
community continued at a number of virtual congresses.
Faron's successful financing, both the capital fundraising and
securing non-dilutive funding, was a major undertaking,
particularly in a virtual world. It puts the Company in a strong
financial position to progress its clinical programmes and related
business activities, as well as to explore further scientific
opportunities within the Faron pipeline.
On behalf of the Board, I would like to thank everyone who has
contributed to Faron maintaining its momentum in a difficult year -
each and every member of staff and my colleagues on the Board for
their commitment to the Company; our partner organisations and
steering committee members for their support and expertise; Faron's
investors for showing continued confidence in the Company and,
importantly, the clinicians and patients across our trial network.
Particular thanks must also go to our Chief Executive Officer,
Markku Jalkanen, and Chief Financial Officer, Toni Hänninen, for
their leadership throughout 2020.
We look forward to continued progress in 2021.
Dr Frank Armstrong
Chairman
24 March 2021
Chief Executive Officer's Review
Overview
Faron has three assets (Clevegen(R) - bexmariliumab;
Traumakine(R) and Haematokine(R) ), all focusing on harnessing our
immune system. We believe that the three target molecules Clever-1,
CD73 and AOC3 provide new medical treatment options either to
activate, suppress or maintain the power of our immune system. Our
goal is to save lives by developing unique scientific discoveries
into ground-breaking new treatments for hard-to-treat and rare
diseases. Our work is rooted in two scientific principles. First, a
deep knowledge of the pharmacology of our drug candidates. And
second, understanding the science of the targeted conditions at the
molecular level, to most effectively influence their underlying
causes.
Our focus for 2020 has been to continue to progress our
wholly-owned novel precision cancer immunotherapy candidate,
bexmarilimab, through the first-in-human clinical study, MATINS, in
selected metastatic or inoperable solid tumours. We have also been
working closely with the regulatory authorities to finalize the
HIBISCUS study protocol for Traumakine in acute respiratory
distress syndrome (ARDS) and organ failures, and were pleased to
provide Traumakine to global initiatives investigating multiple
therapies to treat severe COVID-19 patients, although our focus to
protect central organ provides significant wider application
potential. The third asset around AOC3, Haematokine, could help to
recover lost renewal of blood cells and activate our immune defence
and other vital blood functions.
Bexmarilimab ( Clevegen)
During 2020, we have continued to make strong progress in
accelerating the clinical development of bexmarilimab despite the
challenges of COVID-19. 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
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.
MATINS study
The ongoing Phase I/II MATINS (Macrophage Antibody To INhibit
immune Suppression) study is a first-in-human open label Phase I/II
clinical trial with an adaptive design to investigate 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 MATINS
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 and today six out of
10 test cohorts have demonstrated early clinical benefits, being
currently primary candidates to become expansion cohorts for Part
III of the MATINS study as a monotherapy in patients who have
exhausted all treatment options. All these solid cancer types
(colorectal cancer, ovarian cancer, cutaneous melanoma,
hepatocellular cancer, cholangiocarcinoma - also known as bile duct
cancer - and gastric cancer) require additional treatment options
and therefore present a significant commercial opportunity.
As a result of key pharmacokinetic and pharmacodynamic
biomarkers indicating that more frequent dosing could potentially
increase bexmarilimab treatment efficacy, compared to the original
dosing interval of every three weeks, the regulatory authorities
approved an expansion of MATINS to include two additional CRC
cohorts receiving 1 mg/kg dosed at either weekly or two week
intervals, which are on-going currently. The aim is to reach enough
data to finalise dosing regimen for bexmarilimab prior entering
pivotal studies. Recently the MATINS study data monitoring
committee (DMC) also proposed to study more frequent dosing and
higher doses across all six cohort types showing early signs of
clinical benefit and plans for this are underway.
An additional post period important finding was the discovery of
an abundant amount of free, soluble Clever-1 in the plasma of
MATINS study patients. Further experimental testing of isolated
Clever-1 has indicated that this soluble form is a direct inhibitor
of T cell activation and its inactivation could potentially result
in an improved immune response and therefore enable patients to
benefit from immuno-oncology therapeutics which have previously
been ineffective. A new patent application has been filed seeking
global protection for these findings and related applications.
Clinical expansion
Many findings support bexmarilimab combination with negative
immune check point inhibitors: i) synergistic effect has been
observed in animal models, ii) human tumours with high Clever-1
transcript are resistant to current immuno-oncology therapies and
iii) bexmarilimab administration can down regulate these
inhibitors. These facts have led Faron to design bexmarilimab
combination studies with standard of care, as a first-line therapy
in selected advanced solid tumours and haematological malignancies,
and as a standalone neoadjuvant therapy for patients with early
stage colon cancer, all of which Company hopes to start in
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.
AGC Biologics has decades of experience in manufacturing of
biotechnological products, including commercial market supplies of
FDA (US), PDMA (Japan), MHRA (UK) and EMA (continental Europe)
approved products.
Traumakine
Faron is encouraged by recent vaccine developments to curb the
spread of COVID-19 but the need for effective treatment options to
reduce intensive care need and mortality for COVID-19 and other
virally infected (e.g. influenza) patients remains critical. As
such, the Company remains involved in international efforts
supported by the global scientific community to explore the
therapeutic and antiviral effects of the Company's intravenous (IV)
interferon (IFN) beta-1a, Traumakine, and to continue to develop
the asset as a future treatment for acute respiratory distress
syndrome (ARDS).
Having demonstrated a compelling argument as one of the body's
main first lines of defence against viral infection, recent
findings have also shown that seriously ill COVID-19 patients have
compromised interferon responses (Feulliet et al. 2021). These
findings continue to drive confidence that treatment with
Traumakine can strengthen the body's natural defences if
administered intravenously. 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.
In 2020, we joined two global initiatives investigating the
potential of multiple therapies to treat COVID-19, by providing
supplies of Traumakine to the REMAP-CAP programme and the World
Health Organization's (WHO) Solidarity trial. The data readout from
the WHO Solidarity trial was announced in October 2020 and
concluded that subcutaneous IFN beta-1a was ineffective in treating
hospitalised COVID-19 patients. Interestingly, the use of
concomitant steroids had no impact on this outcome, confirming
again that subcutaneous dosing has limited exposure to the lungs
and should not be practiced. Traumakine continues to be
investigated as part of the ongoing global REMAP-CAP programme,
which is evaluating potential treatments for community-acquired
pneumonia, including in COVID-19 patients, and is currently ongoing
across more than 200 sites and 19 countries.
Faron is also initiating a third trial investigating the
potential of Traumakine to treat COVID-19 - the US Human
intravenous Interferon Beta-Ia Safety and preliminary efficacy in
hospitalised subjects with CoronavirUS (HIBISCUS) trial - which, in
January 2021, received $6.1 million from the US Department of
Defense (DOD) as part of the Coronavirus Aid, Relief, and Economic
Security (CARES) Act. The HIBISCUS trial is a phase II/III study to
evaluate the potential of Traumakine to treat COVID-19 and will be
conducted in approximately 5-10 study sites across the US in
hospitalised patients with COVID-19, who do not yet require
mechanical ventilation, but maximally low flow oxygen support. Use
of corticosteroids concomitantly with Traumakine is not possible in
the study setting but enabled in a sequenced manner after
Traumakine. Supporting this protocol, a detailed analysis into the
effects of glucocorticoids on IV IFN beta-1a activity, which arose
following the INTEREST trial in 2018, was published in Intensive
Care Medicine, a world leading journal in the field of critical
care, in May 2020. 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 ARDS compared to patients administered
with IV IFN beta-1a alone.
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.
To progress Traumakine manufacturing and support its potential
future commercial use, in August 2020 Faron announced plans to
initiate a new state-of-the-art process for Traumakine
manufacturing with a EUR2.1 million low interest rate loan from
Business Finland, the governmental innovation financing agency of
Finland. This will be used to develop and select a new cell line
that can be used for future commercial scale production of
Traumakine. The Company subsequently received a loan guarantee from
Finnvera for EUR2.5 million to expand the commercial scale
manufacturing.
Haematokine
In March 2020, Faron announced it had 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's enzymatic end product
hydrogen peroxide (H2O2) 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 to revive failing transplants are
expensive and often unsuccessful. With Haematokine, we believe we
can expand stem cells by regulating AOC3 activity.
Pre-clinical studies with humanised AOC3 mice and with ex vivo
human cells are currently ongoing and further information will be
provided later in the year.
Corporate
In June 2020, we hosted a virtual R&D Day presenting the
Company's R&D strategy and insights into our clinical stage
programmes. In addition to Faron's management, 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.
At the Annual General Meeting held on 18 May 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.
The Company also announced in July 2020 that Cairn Financial
Advisers LLP had been appointed as Nominated Adviser to the Company
with immediate effect with Panmure Gordon (UK) Limited continuing
to act as the Company's Broker.
Financial
During the period, the Company successfully raised approximately
EUR14.0 million (gross), EUR13.0 million (net) from new and
existing shareholders. Additionally, the Company was also awarded
grants and loans from Business Finland and from the European
Innovation Council (EIC) Accelerator pilot scheme and a Finnvera
loan guarantee in total of EUR7.9 million.
Post period in February 2021, the Company raised EUR15.0 million
gross (approximately EUR14.4 million net) from new and existing
shareholders through an issuance of 3,521,127 new ordinary
shares.
Outlook
Our focus for 2021 will be to continue to progress
bexmarilimab's clinical development through Part II and Part III of
the MATINS trial and new combination studies, to further develop
our understanding of its potential future clinical use and
commercial potential. We are excited to commence the HIBISCUS trial
for Traumakine in the US and will continue to provide assistance
with global efforts in fighting COVID-19. We are continuing to make
progress with potential partners regarding both Clevegen and
Traumakine, whilst also exploring funding opportunities to ensure
we can continue to progress both products. I would like to thank
our shareholders for their continued belief in the Company and the
management team and all the employees at Faron for their hard-work
and dedication during this challenging year and look forward to
updating the market on our progress throughout the course of
2021.
The Board anticipates the following pipeline progress and
catalysts during 2021:
Clevegen:
-- Summary of data from MATINS Part I
-- Final CLEVER-1 occupancy data
-- Top line data from MATINS Part II
-- First patient in neoadjuvant CRC and RCC
-- Final dosage and dose frequency decision
-- Selection of first pivotal cohort from MATINS trial
-- First patient in NSCLC PD(L)1 combination
-- First patient in haematological malignancies
-- Pre-clinical evaluation in multiple new tumour types
Traumakine:
-- Initiation of HIBISCUS
-- Anticipated REMAP-CAP interim read out
-- Formation of a Traumakine Scientific Advisory Board
-- Interim analysis from HIBISCUS
-- Preclinical work on solid organ transplant
-- Partnering update during 2021
AOC3 Antagonist Platform Technology:
-- Additional information from pre-clinical studies with
humanised AOC3 mice and with ex vivo human cells during 2021
Dr Markku Jalkanen
Chief Executive Officer
24 March 2021
Financial review
KEY PERFORMANCE INDICATOR
As a clinical stage drug development company, Faron's primary
interconnected KPIs are cash burn and cash
position. The Company conducted a successful fundraise during
2020. The Company's net cash flow showed EUR2.8 million negative
due to an increase of R&D and G&A expenditure, partially
offset by other income. The Board will consider the appropriateness
of monitoring additional KPIs as the Company's operations
advance.
REVENUE AND OTHER OPERATING INCOME
The Company's revenue was EUR0.0 million for the year ended 31
December 2020 (2019: EURnil).
The Company recorded EUR2.1 million (2019: EUR0.2 million) of
other operating income. This consisted of the
reimbursement of already occurred legal expenses by the
third-party recovery services provider as announced by the Company
on 30 December 2019.
RESEARCH AND DEVELOPMENT COSTS
The R&D costs increased by EUR3.6 million from EUR10.2
million in 2019 to EUR13.9 million in 2020. The costs of outsourced
clinical trial services were increased by by EUR2.5 million from
EUR1.9 to EUR4.4 million. The cost of employee benefits in the
R&D was increased by EUR0.8 million from EUR2.1 to EUR2.9
million, mainly driven by additional headcount.
GENERAL AND ADMINISTRATION COSTS
Administrative expenses increased by EUR1.9 million from EUR3.0
million in 2019 to EUR4.9 million in 2020. The increase was mainly
due to the EUR1.2 million increase in other G&A costs, mainly
driven by legal expenses, which were offsed by other income.
Futher, employee benefits increased by EUR0.5 million mainly driven
by additonal headcount.
TAXATION
The Company's tax credit for the fiscal year 2020 can be
recorded only after the Finnish tax authorities have
approved the tax report and confirmed the amount of
tax-deductible. The total amount of cumulative tax
losses carried forward approved by tax authorities on 31
December 2020 was EUR38.2 million (2019: EUR16.1 million). The
Company estimates that it can utilise most of these during the
years 2020 to 2021 by offsetting them against future profits. In
addition, Faron has EUR55.0 million of R&D costs incurred in
the financial years 2010 - 2020 that have not yet been deducted in
its taxation. This amount can be deducted over an indefinite period
at the Company's discretion.
LOSSES
Loss before income tax was EUR16.9 million (2019: EUR13.3
million). Net loss for the year was EUR16.9 million (2019: EUR13.3
million), representing a loss of EUR0.37 per share (2019: EUR0.36
per share) (adjusted for the changes in number of issued
shares).
CASH FLOWS
Net cash flow was EUR2.8 million negative for the year ended 31
December 2020 (2019: EUR3.0 million positive). Cash used for
operating activities increased by EUR6.0 million to EUR17.5 million
for the year, compared to EUR11.5 million for the year ended 31
December 2019. This increase was mostly driven by a increase in
R&D investments. Net cash inflow from financing activities was
EUR14.8 million (2019: EUR14.6 million) mainly due to the
successful equity placing completed in April 2020.
FUNDRAISING
In April 2020, the Company successfully raised a total of
EUR14.0 million gross (EUR13.0 million net) through a fundraise
from new and existing shareholders. The majority of these proceeds
are being used to commence expansion of Clevegen through the MATINS
trial, to support Traumakine in the ongoing REMAP-CAP trial and to
strengthen the Companys balance sheet.
Post period in February 2021, the Company raised EUR15.0 million
gross (approximately EUR14.4 million net) from new and existing
shareholders through an issuance of 3,521,127 new ordinary
shares.
FINANCIAL POSITION
As at 31 December 2020, total cash and cash equivalents held
were EUR4.1 million (2019: EUR7.1 million).
GOING CONCERN
As part of their going concern review, the Directors have
followed the Finnish Limited Liability Companies Act, the Finnish
Accounting Act and the guidelines published by the Financial
Reporting Council entitled "Guidance on the Going Concern Basis of
Accounting and Reporting on Solvency and Liquidity Risks - Guidance
for directors of companies that do not apply the UK Corporate
Governance Code". The
Company and its subsidiaries (the "Group") are subject to a
number of risks similar to those of other development stage
pharmaceutical companies. These risks include, amongst others,
generation of revenues in due course from the development portfolio
and risks associated with research, development, testing and
obtaining related regulatory approvals of its pipeline products.
Ultimately, the attainment of profitable operations is dependent on
future uncertain events which include obtaining adequate financing
to fulfil the Group's commercial and development activities and
generating a level of revenue adequate to support the Group's cost
structure.
The Group made a net loss of EUR16.9 million during the year
ended 31 December 2020. It had a negative equity of EUR1.8 million
including an accumulated deficit of EUR96.6 million. As at that
date, the Group had cash and cash equivalents of EUR4.1
million.
The Directors have prepared detailed financial forecasts and
cash flows looking beyond 12 months from the date of the approval
of these financial statements. In developing these forecasts, the
Directors have made assumptions based upon their view of the
current and future economic conditions that are expected to prevail
over the forecast period. The Directors estimate that the cash held
by the Group together with known receivables will be sufficient to
support the current level of activities into the fourth quarter of
2021. The Directors are continuing to explore sources of finance
available to the Group and they believe they have a reasonable
expectation that they will be able to secure sufficient cash
inflows for the Group to continue
its activities for not less than 12 months from the date of
approval of these financial statements; they have therefore
prepared the financial statements on a going concern basis.
Because the additional finance is not committed at the date of
issuance of these financial statements, these circumstances
represent a material uncertainty that may cast significant doubt on
the Company's ability to continue as going concern. Should the
Group be unable to obtain further finance such that the going
concern basis of preparation were no longer appropriate,
adjustments would be required, including to reduce balance sheet
values of assets to their recoverable amounts, to provide for
further liabilities that might arise.
HEADCOUNT
Average headcount of the Company for the year was 30 (2019:
24).
SHARES AND SHARE CAPITAL
During the period 1 January to 31 December 2020, the Company,
using the share authorities granted at the Extraordinary General
Meetings held on 25 October 2019, issued a total of 3,500,000 new
ordinary shares at an issuace price of EUR4.00 (GBP3.48) per share.
The subscription price net of costs was credited in full to the
Company's reserve for invested unrestricted equity, and the share
capital of the Company was not increased.
The Company has no shares in treasury; therefore at the end of
2020 the total number of voting rights was
46,896,747.
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 terminates the agreement
concerning the Traumakine API manufacturing. The Company considers
that this statement is without merit and has filed a request for
arbitration to seek damages. To fund the proceedings, the Company
has entered into a litigation funding agreement with a third-party
recovery services provider which, in the event of success, would
receive a typical portion of any damages awarded. The arbitration
is ongoing and the final
arbitration award is expected to be issued by the arbitration
tribunal during the autumn 2021.
Toni Hänninen
Chief Financial Officer
24 March 2021
Consolidated Income Statement, IFRS
EUR'000 Unaudited Unaudited 1-12/2020 1-12/2019
7-12/2020 7-12/2019 12 months 12 months
6 months 6 months
---------------------------- ----------- ----------- ------------ ------------
Revenue 0 0 0 0
Other operating income 1,379 185 2,122 185
Research and development
expenses (8,345) (5,255) (13,879) (10,237)
General and administrative
expenses (2,543) (1,688) (4,897) (3,049)
Operating loss (9,509) (6,758) (16,654) (13,101)
Financial expense (160) (151) (389) (224)
Financial income 76 69 107 74
Loss before tax (9,593) (6,840) (16,936) (13,251)
Tax expense (10) (10) (10) (11)
Loss for the period (9,603) (6,850) (16,946) (13,262)
Other comprehensive - -
income
Total comprehensive
loss for the period (9,603) (6,850) (16,946) (13,262)
Loss per ordinary share
Basic and diluted loss
per share, EUR (0.22) (0.16) (0.37) (0.36)
Consolidated Balance Sheet, IFRS
EUR'000 31 December 2020 31 December 2019
--------------------------------------- ----------------- -----------------
Assets
Non-current assets
Machinery and equipment 14 13
Right-of-use-assets 361 386
Intangible assets 565 529
Prepayments and other receivables 56 77
Total non-current assets 996 1,005
Current assets
Prepayments and other receivables 3,263 2,145
Cash and cash equivalents 4,108 7,059
Total current assets 7,371 9,204
Total assets 8,367 10,209
Equity and liabilities
Capital and reserves attributable
to the equity holders of the Company
Share capital 2,691 2,691
Reserve for invested unrestricted
equity 92,015 78,916
Accumulated deficit (96,557) (79,997)
Translation difference 2 -
Total equity (1,849) 1,610
Non-current liabilities
Borrowings 2,728 2,263
Lease liabilities 199 261
Other liabilities 786 0
Total non-current liabilities 3,713 2,524
Current liabilities
Borrowings 122 163
Lease liabilities 176 135
Trade payables 4,608 2,967
Other current liabilities 1,597 2,810
Total current liabilities 6,503 6,075
Total liabilities 10,216 8,599
Total equity and liabilities 8,367 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 31
December 2018 2,691 64,464 - (66,786) 369
Comprehensive loss
for the period - - - (13,262) (13,262)
Transactions with
equity holders
of the Company
Issue of ordinary
shares, net of
transaction costs
EUR 1,149 thousand - 14,452 - - 14,452
Share-based compensation - - - 51 51
-------------- -------------- ------------ ------------ -------------
- 14,452 - 51 14,503
-------------- -------------- ------------ ------------ -------------
Balance as at 31
December 2019 2,691 78,916 - (79,997) 1,610
Comprehensive loss
for the period - - 2 (16,946) (16,944)
Transactions with
equity holders
of the Company
Issue of ordinary
shares, net of
transaction costs
EUR 1,004 thousand - 13,098 - - 13,098
Share-based compensation - - - 386 386
-------------- -------------- ------------ ------------ -------------
- 13,098 - 386 13,484
-------------- -------------- ------------ ------------ -------------
Balance as at 31
December 2020 2,691 92,015 2 (96,557) (1,849)
Consolidated Cash Flow Statement, IFRS
Unaudited Unaudited 1-12/2020 1-12/2019
7-12/2020 7-12/2019 12 months 12 months
EUR'000 6 months 6 months
--------------------------------- ----------- ----------- ------------ ------------
Cash flow from operating
activities
Loss before tax (9,593) (6,840) (16,936) (13,251)
Adjustments for:
Received grant (587) - (587) -
Depreciation and amortisation 153 190 283 238
Interest expense 56 119 149 158
Tax expense 10 11 10 11
Unrealised foreign
exchange loss (gain),
net 242 (36) 117 (7)
Share-based compensation 386 - 386 51
Adjusted loss from
operations before changes
in working capital (9,333) (6,556) (16,578) (12,800)
Change in net working
capital:
Prepayments and other
receivables (1,631) (547) (1,097) 1,173
Trade payables 1,878 99 1,641 (567)
Other liabilities (83) 1,081 (1,416) 731
Cash used in operations (9,169) (5,923) (17,450) (11,463)
Taxes paid (1) (9) (1) (9)
Interest paid 1 (25) (28) (51)
--------------------------------- ----------- ----------- ------------ ------------
Net cash used in operating
activities (9,169) (5,957) (17,479) (11,523)
Cash flow from investing
activities
Payments for intangible
assets (60) (59) (137) (100)
Payments for equipment (3) - (5) -
Net cash used in investing
activities (63) (59) (142) (100)
Cash flow from financing
activities
Proceeds from issue
of shares 106 11,166 14,103 15,627
Share issue transaction
cost (52) (944) (1,004) (1,175)
Proceeds from borrowings 630 76 630 307
Repayment of borrowings - - (122) -
Proceed from grants 1,375 - 1,375 -
Payment of lease liabilities (104) (151) (195) (151)
--------------------------------- ----------- ----------- ------------ ------------
Net cash from financing
activities 1,955 10,147 14,787 14,608
Net increase (+) /
decrease (-) in cash
and cash equivalents (7,277) 4,131 (2,834) 2,985
Effect of exchange
rate changes on cash
and cash equivalents (242) 36 (117) 7
Cash and cash equivalents
at 1 January 11,627 2,892 7,059 4,067
--------------------------------- ----------- ----------- ------------ ------------
Cash and cash equivalents
at 31 December 4,108 7,059 4,108 7,059
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FR DGGDXGBDDGBS
(END) Dow Jones Newswires
March 25, 2021 03:00 ET (07:00 GMT)
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