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[®] (bexmarilimab) - Regulator of major inhibitory immune checkpoints and wholly-owned novel cancer immunotherapy in development

• 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.

• 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.

• 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 €2,500,000 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 €10 million top-level collaborative research and innovation project within Business Finland's Personalized Health Program, and was awarded a €800,000 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[®] - in development for the treatment of organ failures

• 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 (Human 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.

• Faron announced plans to initiate a new state-of-the-art process for Traumakine manufacturing and was awarded a €2,100,000 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 €2,500,000 loan to expand the commercial scale manufacturing.

• 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.

• 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.

• Cash balances of €11.6 million at 30 June 2020 (2019: €2.9 million).
• Operating loss of €7.1 million for the six months ended 30 June 2020 (2019: €6.3 million).
• Net assets of €7.3 million as at 30 June 2020 (2019: €-1.8 million).
• In April 2020 the Company raised a total of €14 million gross (€13 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 €3.3 million, loan of €2.1 million and a loan guarantee for €2.5 million were awarded in H1 and partially post period. Those non-diluting funds (in total of €7.9 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

€'000 Unaudited 1-6/2020 Unaudited 1-6/2019 1-12/2019
6 months 6 months 12 months
Revenue 0 0 0
Research and (5,534) (4,982) (10,237)
Development
expenses
General and (2,354) (1,361) (3,049)
Administrative
expenses
Loss for the (7,343) (6,412) (13,262)
period

Unaudited 1-6/2020 Unaudited 1-6/2019 1-12/2019
6 months 6 months 12 months

Loss per share (0.16) (0.19*) (0.36)
EUR
Number of shares 46,799,747 37,233,894 43,290,747
at end of period
Average number 44,584,199 33,819,699 36,850,577
of shares

€'000 Unaudited 30 Jun 2020 Unaudited 30 Jun 2019 31 Dec 2019
Cash and 11,627 2,892 7,059
cash
equivalents
Equity 7,313 (1,761) 1,610
Balance 14,343 5,103 10,209
sheet total
 

*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.