THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS
RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN
WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE
UNITED STATES, AUSTRALIA, NEW ZEALAND, CANADA, JAPAN, THE REPUBLIC
OF SOUTH AFRICA, SINGAPORE, HONG KONG OR ANY OTHER JURISDICTION IN
WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE
UNLAWFUL.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF EU REGULATION 596/2014 ("MAR") AND ARTICLE 7 OF MAR
AS IT FORMS PART OF DOMESTIC LAW IN THE UNITED KINGDOM BY VIRTUE OF
THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("UK
MAR").
Faron Pharmaceuticals
Ltd
("Faron"
or the "Company")
Inside Information: The
Company has received binding commitments for convertible loans in
the total amount of EUR 3.2 million enabling the Company to make
critical payments and to continue preparing alternative short- and
long-term financing options.
Company announcement, 4 March 2024 at 7:00 a.m. GMT / 9:00
a.m. EET
Inside information
Key
highlights
- Binding commitments for convertible loans obtained from
certain existing shareholders allowing the Company to make critical
payments to third parties under agreed waivers with IPF.
- Active participation in the round by early investors of the
Company.
- Receipt of the EUR 3.2 million committed funding enables the
Company to secure its immediate short-term financing needs until
the end of March 2024, in addition to which approximately EUR 5
million of further short-term bridge financing is
required.
- The Company continues active endeavors
and is in continuous discussions to secure longer term funding. In
addition to the short-term bridge financing, the Board intends to
propose to the Annual General Meeting an authorization for a larger
share issue.
- The next BEXMAB readout will be provided to markets in
mid-March. To complete the enrolment of the phase 2 of the BEXMAB
study with interim and final readouts and to obtain regulatory
feedback from the FDA, the Company expects to need EUR 35 million
in total.
- The unaudited total cash and cash equivalents held by the
Company was ca. EUR 4.3 million as of 19 February 2024.
The Company further
provides certain unaudited preliminary financial information in the
announcement.
TURKU, FINLAND / BOSTON, MA -
Faron Pharmaceuticals Ltd (First North: FARON, AIM:
FARN), a clinical stage biopharmaceutical
company pioneering macrophage
reprogramming for effective anticancer
immunotherapies, today announces that it has obtained binding and irrevocable
commitments amounting to a total of EUR 3.2 million ("Commitments")
from a limited number of the Company's existing shareholders
("Investors") to subscribe for convertible loan instruments to be
issued by the Company ("Loans").
As was announced by the Company on
19 February 2024, the Company was in breach of several undertakings
agreed in the secured debt agreement with IPF Fund II SCA, SICAV-FIAR ("IPF") as
Lender and Faron Pharmaceuticals Ltd as Borrower ("Facilities
Agreement"), and as a result of such Events
of Default, IPF blocked the Company's bank accounts which are
pledged to IPF.
Based on the Commitments, IPF has
allowed the Company to make certain
critical payments and, upon the Company's receipt of the Loan funds
in full no later than 8 March 2024, agreed
to waive certain Events of Default under the terms of the
Facilities Agreement ("Waiver") and to
unblock the Company's bank accounts,
allowing the Company to make payments to third parties without a
separate consent from IPF. The Loans are
fully subordinated to the Facilities Agreement and the Company will
not make any extraordinary payments to IPF other than agreed waiver
fees. As part of the Waiver the minimum cash covenant will be
lowered to EUR 4.5 million until 30 April 2024 and thereafter it
returns to the previously agreed level. In accordance with the
Waiver, the Company shall issue to IPF additional special rights
which entitle them to subscribe for new ordinary shares in the
Company ("Warrants"), with an exercise price equal to the
volume-weighted average price of the Company's share during the
three trading days preceding the date of the Waiver ("Strike
Price"). The number of Warrants is calculated by dividing 10% of
the original loan amount (EUR 10 million) by the Strike Price. The
Warrants are exercisable for a period of seven years and the
Company will separately publish an announcement on the issuance of
the Warrants. Simultaneously, the Company and IPF have agreed on
certain amendments to the fee structure under the Facilities
Agreement.
Receipt of the EUR 3.2 million
pursuant to the Loans enables the Company to secure its immediate
short-term financing needs until the end of March 2024. The Company
continues active endeavors and is in discussions to secure its
short and longer-term financing needs, including first additional
bridge financing of approximately EUR 5 million, to secure
publishing of the Company's annual accounts for the year 2023 on 13
March 2024 and continued compliance with the cash covenants agreed
in the Waiver.
Further, the Board of Directors of
Faron intends to propose to the Annual General Meeting (scheduled
to be held on 5 April 2024) an authorization for a larger share
issue, contemplated to be launched as a public offering (with
planned allocation preferences to existing shareholders and bridge
finance lenders (including the Investors to enable the conversion
of the Loans) and in compliance with the relevant securities
markets regulation) as soon as practicable once the required
preparations and approvals are in place. The receipt of long-term
financing is necessary to secure funding for 2024 and especially
the uninterrupted continuation of the Company's BEXMAB study to
full read out of the Phase II study and FDA feedback on
registrational study design during 2024. The targeted size of the
contemplated share issue is planned to be set accordingly, to meet
these cash runway needs for 2024. The Company is also evaluating
and continuously negotiating several business development
alternatives that may result in non-dilutive funding.
"This fundraise will enable us to meet our
immediate financing needs and continue our ambitious bexmarilimab
development program, with a focus on delivering next
milestones," said Dr. Markku Jalkanen, Chief Executive
Officer of the Company. "These
funds are part of the larger financing plan to secure cash runway
for 2024 and to complete Phase II study and receive FDA's guidance
for the pivotal study part. We would like to thank support from our
investors in developing this novel immunotherapy, especially for
myeloid leukemia with very few treatment options". To
support the Company's short-term financing, the Company's CEO has
agreed to give up his salary for the coming three
months.
The Company expects to
publish the next BEXMAB phase I read out in
mid-March with special
focus on durability of bexmarilimab efficacy on HMA-failed
MDS patients known to have very short life expectancy post HMA
failure. To complete the enrolment into the
ongoing phase 2 of the BEXMAB study, to produce interim and final
readouts from the study and to get regulatory feedback from the
FDA, the Company expects to need EUR 35 million in
total.
The unaudited total cash and cash
equivalents held by the Company was ca. EUR 4.3 million as of 19
February 2024. The Company also provides the following preliminary,
unaudited financial information: on 19 February 2024 the Company's
gross debts were around EUR 13.8 million and net debts around EUR
9.4 million. The Company's financial statements bulletin for the
financial year ended 31 December 2023 is planned to be published on
13 March 2024 subject to the receipt of the approximately EUR 5
million of additional bridge financing.
DETAILS OF THE EUR 3.2 MILLION LOAN
ARRANGEMENT
In accordance with the Commitments
from several Investors, the Company will by 8 March 2024 obtain
Loans amounting to a total of approximately EUR 3.2 million which
are fully subordinated to the Facilities Agreement. The Loans shall
be converted to new shares in the Company as a part of (and at the
subscription price of) the next investment round where shares or
other equity securities are issued by the Company to existing
shareholders and/or new third- party investors, with a minimum size
of EUR 8 million ("Investment Round"). In the event that the
subscription price in such Investment Round exceeds EUR 1.50 per
share, an Investor shall have the right to postpone the conversion
of the Loan until 10 June 2024 ("Due Date"). In the event that
there is no Investment Round by the Due Date (or the subscription
price of the Investment Round exceeds EUR 1.50 per share and the
respective Investor has decided to postpone the conversion of the
Loan) and the Loan has not been otherwise repaid prior to the Due
Date (subject to a subordination agreement to be entered into
between the Investors, the Company and IPF), then the Loan shall be
at the request of the Investor converted into new shares in the
Company in connection with the Due Date. In such case, the
subscription price per share shall be EUR 1.50 per share. However,
if then the Lender elects not to exercise its conversion right on
the Due Date, (such option being only available if there has not
been any Investment Round), the Due Date of the Loan will
automatically be extended until 31 December 2024 ("Final Due
Date"). On such Final Due Date, the Loan shall be either repaid in
full in cash, subject to the terms of the subordination agreement,
or converted into new shares in the Company with the subscription
price of EUR 1.50 per share, subject to a valid share issue
authorization being in place. In case the Loan is converted before
the Due Date, each Investor is entitled to an arrangement fee of
15% of its respective Loan amount. If conversion has not taken
place prior to the Due Date, the arrangement fee will be 30% of the
Investor's respective Loan amount. No interest shall be payable on
the Loan if a conversion takes place before 30 May 2024, and
thereafter the interest will be 12% + 3-months Euribor and paid
subject to the subordination agreement.
RELATED PARTY TRANSACTION
Timo Syrjälä, an existing
shareholder in the Company, has committed to participate in the
Loan in the amount of EUR 600,000. Mr. Syrjälä's total holding in
the Company's shares, which includes his indirect holding through
Acme Investments SPF Sarl ("Acme"), an entity wholly owned by Mr.
Syrjälä, is on the date of this release
13,410,336 shares, representing 19.5 % of
all shares and votes in the Company. Mr Syrjälä is a "Substantial
Shareholder" in the Company for the purposes of the AIM Rules for
Companies (the "AIM Rules"). His commitment to participate in the
Loan is a related party transaction for the purposes of the AIM
Rules, the First North Rulebook and the Finnish Limited Liability
Companies Act. The members of the Board of Directors of the
Company, all of whom are independent of Mr. Syrjälä, having
consulted with Cairn Financial Advisers LLP, the Company's
nominated adviser for the purposes of the AIM Rules, consider the
terms of the participation by Mr. Syrjälä in the Loan to be fair
and reasonable insofar as shareholders are concerned.
For
more information please contact:
Investor Contact,
US
LifeSci Advisors
Daniel Ferry
Managing Director
daniel@lifesciadvisors.com
+1 (617) 430-7576
Investor Contact, EUR
Faron Pharmaceuticals
Yrjö E K Wichmann
SVP, Funding & Investor
Relations
yrjo.wichmann@faron.com
investor.relations@faron.com
Phone: +358 (0) 40 5868
979
Cairn Financial Advisers LLP, Nomad
Sandy Jamieson, Jo Turner
Phone: +44 (0) 207 213
0880
Sisu Partners Oy, Certified Adviser on Nasdaq First
North
Juha Karttunen
Phone: +358 (0)40 555
4727
Jukka Järvelä
Phone: +358 (0)50 553
8990
ICR
Consilium
Mary-Jane Elliott, David Daley,
Lindsey Neville
faron@consilium-comms.com
Phone: +44 (0)20 3709
5700
THIS ANNOUNCEMENT IS NOT FOR PUBLICATION OR DISTRIBUTION,
DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OF AMERICA.
THIS ANNOUNCEMENT IS NOT AN OFFER OF SECURITIES FOR SALE INTO THE
UNITED STATES. THE LOANS, ANY SECURITIES ISSUED UPON CONVERSION OF
THE LOANS AND ANY SECURITIES ISSUED IN THE INVESTMENT ROUND
(COLLECTIVELY, THE "SECURITIES") HAVE NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR UNDER THE SECURITIES LAWS OF ANY
STATE OR OTHER JURISDICTION OF THE UNITED STATES, AND MAY NOT BE
OFFERED, SOLD OR TRANSFERRED, DIRECTLY OR INDIRECTLY, IN OR INTO OR
FROM THE UNITED STATES EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN
A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN COMPLIANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES. THERE
IS NO INTENTION TO REGISTER THE SECURITIESIN THE UNITED STATES OR
TO MAKE A PUBLIC OFFERING IN THE UNITED STATES. ANY SALE OF THE
SECURITIES IN THE UNITED STATES WILL BE MADE SOLELY TO "QUALIFIED
INSTITUTIONAL BUYERS" AS DEFINED IN RULE 144A IN RELIANCE ON AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES
ACT.
About Bexmarilimab
Bexmarilimab is Faron's wholly owned,
investigational immunotherapy designed to overcome
resistance to existing treatments and optimize clinical outcomes,
by targeting myeloid cell function and igniting the immune
system. Bexmarilimab binds to Clever-1,
an immunosuppressive receptor found on macrophages leading to tumor
growth and metastases (i.e. helps cancer evade the immune system).
By targeting the Clever-1 receptor on
macrophages, bexmarilimab alters the tumor microenvironment, reprogramming macrophages
from an immunosuppressive (M2) state to an immunostimulatory (M1)
one, upregulating interferon production and priming the immune
system to attack tumors and sensitizing cancer cells to standard of
care.
About Faron Pharmaceuticals Ltd.
Faron (AIM: FARN, First North:
FARON) is a global, clinical-stage biopharmaceutical company,
focused on tackling cancers via novel immunotherapies. Its mission
is to bring the promise of immunotherapy to a broader population by
uncovering novel ways to control and harness the power of the
immune system. The Company's lead asset is bexmarilimab, a novel anti-Clever-1
humanized antibody, with the potential to remove immunosuppression
of cancers through targeting myeloid cell
function. Bexmarilimab is being
investigated in Phase I/II clinical trials as a potential therapy
for patients with hematological cancers in combination with other
standard treatments. Further information is available
at www.faron.com.
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", ''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 completion and use of
proceeds from the Placing, the Company's future growth, results of
operations, performance, future capital and other expenditures
(including the amount, nature and sources of funding thereof),
competitive advantages, business prospects and opportunities. Such
forward-looking statements reflect the Directors' current beliefs
and assumptions and are based on information currently available to
the Directors.
A number of factors could cause
actual results to differ materially from the results and
expectations discussed in the forward-looking statements, many of
which are beyond the control of the Company. In addition, other
factors which could cause actual results to differ materially
include the ability of the Company to successfully licence its
programmes, 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.