TIDMFARN
RNS Number : 8965G
Faron Pharmaceuticals Oy
20 March 2020
Faron Pharmaceuticals Oy
("Faron" or the "Company")
Financial statement release January 1 to December 31, 2019
Financial statement release, Turku, 20 March 2019 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
2019 and H2 2019.
HIGHLIGHTS
Operational (including post period):
Clevegen(R) - Regulator of major inhibitory immune checkpoints
and wholly-owned novel cancer immunotherapy in development
-- Part I of the open label phase I/II MATINS trial, initiated
across multiple sites through Europe and primarily intended to
investigate safety and tolerability, was completed with dose
escalation reaching its planned maximum level of 10mg/kg. Clevegen
demonstrated good tolerability at all dosing levels (0.1 to 10
mg/kg) without dose limiting toxicity.
-- Clevegen promoted immune activation in all dosed patients,
measured following treatment with Clevegen and observed as
increased circulating CD8+ T cells and CD8+/CD4+ ratio, decreased
regulatory T-cells (T-regs) or a substantial increase in mobile
natural killer (NK) cells in the blood.
-- Partial responses were observed in two patients. The first, a
colorectal cancer (CRC) patient, showed a continuation of lung and
lymph node metastasis shrinkage and their tumour load biochemical
marker, carcinoembryonic antigen (CEA), also normalised. The
second, a heavily pre-treated melanoma patient, showed a reduction
in the size of the target lesion tumour (a lung metastasis) by 44
percent and other non-target lesions stabilized. Their biochemical
tumour load marker also declined and clearance of pleura fluid was
observed.
-- Data showing Clevegen's potential early efficacy and good
tolerability were presented at the European Society of Medical
Oncology (ESMO) 2019 Congress in Barcelona, Spain. At the Society's
subsequent Immuno-Oncology Congress 2019 in Geneva, Switzerland,
more detailed cell surface biomarker data were presented for the
first time showing Clevegen's potential to downregulate a range of
inhibitory immune checkpoints commonly targeted by current
immuno-oncology (IO) therapies.
-- The US Food and Drug Administration (FDA) approved Faron's
Investigational New Drug (IND) application for Clevegen, enabling
expansion of the MATINS trial into the US.
-- CRC and ovarian cancer were selected by the MATINS data
monitoring committee as the first and second expansion cohorts in
part II of the study. Both cancer types are known to host a
significant number of Clever-1 positive tumour-associated
macrophages (TAM) which correlates with increased mortality
rates.
-- New experimental data supporting the immunotherapeutic
blockade of Clever-1 as an alternative to, or in combination with
PD-1 checkpoint inhibition to reactivate immunity against
immunosuppressive tumours were published in Clinical Cancer
Research, a journal of the American Association for Cancer
Research.
-- Several new patent filings were carried out during the period
to further strengthen the existing IP around Clevegen use in
conditions where harmful immune suppression causes serious
diseases.
-- bexmarilimab is under consideration by the World Health
Organization as the Proposed International Nonproprietary Name.
-- Manufacturing was established to supply drug product for
cohort expansions in part II of the MATINS study.
-- Partnering discussions continued with the aim of supporting
expansion of clinical development and exploring the potential of
Clevegen in combination with existing immunotherapies and other
cancer therapies.
Traumakine(R) - in development for the treatment of organ
failures
-- Faron remains focused on developing Traumakine as a treatment
for acute respiratory distress syndrome (ARDS) taking into account
the high levels of concomitant corticosteroids used as a standard
of care for ARDS and some ruptured abdominal aorta aneurysm (RAAA)
patients.
-- Following feedback from the FDA regarding trial design, Faron
submitted an amended protocol to the FDA, reflecting the FDA's
feedback that further studies with interferon-beta (IFN-beta)
should exclude the use of overlapping corticosteroids since they
are likely to block the desired therapeutic effect of Traumakine
and may have a potentially deleterious impact on patient
outcomes.
-- The FDA accepted Faron's proposed study protocol for the new
Traumakine trial, which excludes the use of concomitant
corticosteroids and which will be split in two steps. The first
step will commence with INTEGRITY, a pilot randomised and placebo
controlled study, which will serve as final adjustment for adequate
statistical powering and sample size justification for the pivotal
second step, CALIBER.
-- The Company envisages that further Traumakine trials are
likely to be funded through a third party.
-- Top-line data from the phase III ARDS trial with Japanese
partner Maruishi Pharmaceutical Co., Ltd were, as expected,
consistent with the INTEREST study results, showing that treatment
with Traumakine did not result in reduced mortality or an increased
number of ventilator-free survival days when compared to placebo.
In the study, very high concomitant corticosteroids use (77%) was
observed.
-- A phase I study in healthy volunteers (pharmacokinetic/dynamic YODA study), examining the administration and concomitant use of corticosteroids with Traumakine, confirmed observations previously seen in the INTEREST study. Traumakine produced the expected levels of bioactivity, suggesting drug formulation was not a factor in the outcome of that trial and that concomitant corticosteroids use interferes in the desired IFN-beta effect on CD73.
-- Interim results from the phase II INFORAAA study examining
the effect of Traumakine on mortality (predominantly for
multi-organ failure, MOF) and on pharmacodynamic biomarkers in
surgically operated RAAA patients, showed biomarker (MxA and CD73)
responses indicating a good IFN-beta response from Traumakine. A
trend towards reduction of mortality was seen in patients
increasing their CD73 plasma levels.
-- Based on the advice from the INFORAAA independent data
monitoring committee and investigators, the Company decided to
close the INFORAAA trial, as unexpected high use of concomitant
corticosteroids prevent the scientific implementation of the
INFORAAA protocol.
-- Faron filed a request for arbitration with the Arbitration
Institute of the Stockholm Chamber of Commerce seeking damages from
Rentschler Biopharma SE for terminating the API manufacturing
process for Traumakine.
-- It is the understanding of the Company that the current API
manufacturing process used to manufacture Traumakine requires
significant upgrading to secure MAA/BLA approval. Various options
for manufacturing are currently being explored.
AOC3 Antagonist Platform Technology
-- 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.
Corporate
-- Yrjö Wichmann took up the new position of Vice President,
Financing and Investor Relations and Toni Hänninen was appointed as
Faron's new Chief Financial Officer.
-- Faron's shares were listed on Nasdaq First North Growth
Market Helsinki as of 3 December 2019.
Financial
-- On 31 December 2019, the Company held cash balances of EUR7.1
million (2018: EUR4.1 million).
-- Loss for the period for the financial year ended 31 December
2019 was EUR13.3 million (2018: EUR20.1 million loss).
-- Net assets on 31 December 2019 were EUR1.6 million (2018: EUR0.4 million).
-- During the period, in November, August, May and March 2019,
the Company successfully raised a total of EUR15.6 million gross
(EUR14.5 million net) from new and existing shareholders, employees
and Company Directors through issuance of a total of 12,262,853 new
ordinary shares. The majority of these proceeds are being used to
advance Clevegen through the MATINS trial, further Traumakine
development through the design and preparation of the next clinical
trials and advance partnering discussions in respect of both
Traumakine and Clevegen.
FINANCIAL
Consolidated key figures, IFRS
EUR'000 Unaudited Unaudited 1-12/2019 1-12/2018
7-12/2019 7-12/2018 12 months 12 months
6 months 6 months
---------------------------- ----------- ----------- ------------ ------------
Revenue 0 (1) 0 19
Research and Development
expenses (5,255) (4,762) (10,237) (16,463)
General and Administrative
expenses (1,688) (1,378) (3,049) (3,750)
Loss for the period (6,850) (6,026) (13,262) (20,086)
Unaudited Unaudited 1-12/2019 1-12/2018
7-12/2019 7-12/2018 12 months 12 months
6 months 6 months
-------------------------- ----------- ----------- ------------ ------------
Loss per share EUR (0.16) (0.19) (0.31) (0.65)
Number of shares at
end of period 43,290,747 31,027,894 43,290,747 31,027,894
Average number of shares 35,533,179 30,749,648 35,533,179 30,749,648
EUR'000 Unaudited Unaudited 31 Dec 2019 31 Dec 2018
30 Jun 2019 30 Jun 2018
--------------------------- ------------- ------------- ------------ ------------
Cash and cash equivalents 2,892 11,168 7,059 4,067
Equity (1,761) 6,722 1,610 369
Balance sheet total 5,103 16,716 10,209 8,002
Commenting on the results, Dr Markku Jalkanen, CEO of Faron,
said: "Our priority in 2019 was to rapidly accelerate our
immunotherapy candidate, Clevegen, through the clinic. With the
continued progression of the phase I/II MATINS trial, we are very
encouraged by its results so far. Clevegen is clearly exhibiting
exciting properties as a potential immunotherapy capable of down
regulating a range of major inhibitory immune checkpoints (PD-1,
PD-L1, CTLA-4) across several cancers. With our two cohort
expansions in colorectal and ovarian cancer, we will continue to
rapidly progress the development of Clevegen in patients with
limited effective treatment options.
"We are also pleased that, following feedback from the FDA, we
have agreed the trial design for the continued clinical development
of Traumakine, which we continue to believe holds great potential
as a future treatment for ARDS, regardless of the underlying
condition.
"We are very pleased to also have secured a further EUR 8
million through our series of fundraises in late 2019, further
supporting the progress of our pipeline. I would like to thank our
new and existing shareholders, and the entire team at Faron, for
their continued support."
Board of Directors' Proposal on the Dividend
The Group's loss for the accounting period was 13,261,911.93
euro (2018: 20,086,402.60 euro).
The Board of Directors does not recommend the payment of a
dividend (2018: nil).
March 19, 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 conference call for analysts to provide an
update on the results followed by a Q&A session at 09:30 GMT /
11:30 EET. A presentation to accompany the call will be available
on the Faron website ( https://www.faron.com/investors/results ) at
09:00 GMT / 11:00 EET
Dial-in details are:
International: +44 (0) 20 7192 8000
Finland: (09) 4245 0806
Conference ID: 7377079
For more information please contact:
Faron Pharmaceuticals Oy
Dr Markku Jalkanen, Chief Executive Officer
investor.relations@faron.com
Panmure Gordon (UK) Limited, Nomad and Broker
Emma Earl, Freddy Crossley (Corporate Finance)
James Stearns (Corporate Broking)
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
Publication of financial information during year 2020
The half-year financial report for the period 1 January to 30
June 2020 is scheduled to be published on 24 September 2020.
Faron's financial statements for full year 2019 will be published
on 25 March and will also be available on the Company's website at
https://www.faron.com/investors/results .
The Annual General Meeting is planned for 15 April 2020. 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. 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 immune checkpoint molecules or
standard of care therapies. 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 statement
2019 was a significant year for Faron. The highly experienced
management team made significant progress executing the Company's
strategy and maintaining momentum in the delivery of its novel
pipeline.
The development programme for Faron's wholly-owned novel
precision cancer immunotherapy candidate, Clevegen, has accelerated
rapidly. Promising early clinical data continued to give us
confidence in the potential of Clevegen as a next-generation
immuno-oncology therapy and one that could potentially be used in
combination therapy. The strength of the early clinical data
generated in 2019 enabled the Clevegen team to quickly identify a
group of patients thought most likely to respond to treatment.
Selection of the first expansion cohort in colorectal cancer was a
significant achievement and is testament to the focus Faron has
placed on Clevegen's development this year. The US Food and Drug
Administration (FDA) approval of the Company's Investigational New
Drug (IND) application for Clevegen was a major development
milestone enabling expansion of Clevegen's clinical development in
the US.
Harnessing the immune system to fight cancer has transformed the
way patients are treated and scientists continue to make new
discoveries in the field of immune-oncology every day. It is
exciting to see the Clevegen programme generating such interest in
this field, from the scientific community and commercial
organisations. The wealth of data generated in 2019 strengthens
Faron's confidence in the programme's future.
Alongside Clevegen's development progress in 2019, the Company
continued to build on its understanding of the results from
Traumakine's INTEREST trial. Data from a late-stage trial
undertaken by our Japanese partner Maruishi were consistent with
our study results a year earlier and supported our observation that
corticosteroid use interferes with Traumakine efficacy. This
observation has since been confirmed by the FDA who, following
discussions about the future development path for Traumakine,
advised that further studies should exclude the concomitant use of
steroids. The body of evidence generated during Traumakine's
development programme is clearly a matter of interest for opinion
leaders involved in the treatment of acute respiratory distress
syndrome (ARDS) patients and the debate around whether
corticosteroids have any beneficial role in ARDS patients
continues.
Recent guidance from the World Health Organization (WHO) on the
clinical management of severe acute respiratory infection related
to the novel coronavirus that emerged in China at the end of 2019
advises against the routine use of corticosteroids. The emergence
of this novel virus, and the risk of ARDS among infected patients,
is a reminder of the need for new treatments to tackle this
potentially fatal condition.
During the year our fundraising activities and our listing on
the Nasdaq First North Growth Market in Finland received strong
shareholder support enabling us to build a more secure financial
position for the Company and give the pipeline its greatest chances
of success. It was also encouraging to see the Company's share
price performance in 2019, its growth reflecting the progress of
the business and the strength of Faron's pipeline potential.
On behalf of the Board, I would like to thank all those who have
played a part in Faron's progress in 2019 - the management team,
staff and Board for their hard work and commitment, our partners
and steering committee members for their support and expertise, and
the investigators and patients involved in our clinical trials. I
would also like to pay particular thanks to our CEO, Markku
Jalkanen who, while guiding Faron through difficult circumstances,
has successfully led its transition to becoming a leading
immunotherapy company.
We look forward to continued progress with our pipeline products
Clevegen and Traumakine in 2020.
Dr Frank Armstrong
Chairman
March 19, 2020
Chief Executive Officer's Review
Overview
Faron is focused on immuno-oncology, organ trauma and vascular
damage. 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 2019 has been to continue to progress our
wholly-owned novel precision cancer immunotherapy candidate,
Clevegen, 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 determine the
future development pathway for Traumakine in ARDS and organ
failures.
Clevegen Development
We have made significant, and exciting, clinical progress with
Clevegen during 2019. Clevegen 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). Clevegen is differentiated
from other immunotherapies through its specific targeting of M2
TAMs which facilitate tumour growth. Through myeloid cell
plasticity, Clevegen 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 Trial
The 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
Clevegen in selected metastatic or inoperable solid tumours. The
selected tumours under investigation are cutaneous melanoma,
hepatobiliary/hepatocellular, pancreatic, ovarian and colorectal
cancer, all known to host a significant number of Clever-1 positive
TAMs. Together these five target groups consist of approximately 2
million annual cases worldwide. Cancer patients with high Clever-1
expression are identified with a simple blood myeloid cell staining
with Clevegen ("liquid biopsy").
Part I of the MATINS study was conducted to establish
tolerability, safety and dose escalation to optimize dosing.
Subjects in Part I of the study received doses of 0.1 mg/ kg, 0.3
mg/kg, 1.0 mg/kg, 3.0 mg/kg and 10 mg/kg. All dose levels tested
showed good tolerability with no dose limiting toxicity signals and
all subjects dosed in the study experienced a switch in their
immune cell profiles following treatment with Clevegen towards
increased immune activation, observed as increased circulating CD8+
T cells and CD8+/CD4+ ratio, decreased regulatory T-cells (T-regs)
or a substantial increase in mobile natural killer (NK) cells in
the blood.
Based on results from the initial part of the MATINS trial,
Faron announced in April 2019 that late-stage colorectal cancer
(CRC) had been chosen for the first expansion cohort for the second
part of the trial. Following the successful conclusion of the dose
escalation in Part I, and with approval from the MATINS trial's
data monitoring committee (DMC), Faron initiated this first
expansion cohort, Part II, in January 2020. A total of 10
late-stage CRC patients are expected to be dosed at the approved
initial dose level of 0.3 mg/kg cohort, including two patients who
had previously received this dose in the earlier Part I of the
study. Furthermore, in January 2020, we announced that ovarian
cancer has been selected as the second expansion cohort in the
trial. Both these tumour types are known to host a significant
number of Clever-1 positive TAMs which correlates with increased
mortality rates among these patients.
In November 2019, the FDA approved the Company's Investigational
New Drug (IND) application for Clevegen (FP-1305), enabling
expansion of the MATINS trial into the US. We anticipate opening
the first site in mid-2020. In due course, we also plan to file
applications for Breakthrough Therapy status in the US and PRIME
status in Europe, further facilitating regulatory interactions
during the development of Clevegen.
Clevegen's ability to down regulate a range of major inhibitory
checkpoints reaffirms our belief in its potential as a master
regulator of immunity and a highly effective immunotherapy. It
indicates that Clevegen treatment could potentially allow increased
efficacy of other immuno-oncology therapies through the biomarker
analysis of patient's blood cells post Clevegen induced immune
activation, finally offering a biological rationale to guide
combination therapies. Due to high interest in the potential for
new combination therapies in the immuno-oncology field, we are
currently engaged in partnering discussions with several parties
and hope for a positive outcome from these negotiations during
2020.
Traumakine Development
With no currently approved pharmacological treatments available,
acute respiratory distress syndrome (ARDS) remains a significant
problem for patients and healthcare systems. During 2019, the
Company has continued to further understand the correlation between
the combined use of corticosteroids and IFN-beta and has been
working closely with the regulatory authorities in order to
determine the next steps in Traumakine's future development
pathway.
In April 2019, Faron announced top-line data from the Phase III
trial with Japanese partner Maruishi Pharmaceutical Co., Ltd.
Results from this trial were in line with the Company's
expectations, and previously announced results observed in the
INTEREST trial, showing that treatment with Traumakine did not
result in reduced mortality or an increased number of ventilator
free survival days when compared to placebo. In order to further
examine the effects of concomitant steroid use and Traumakine, as
seen in both the INTEREST trial and the Japanese study, Faron
conducted the pharmacokinetic/dynamic YODA study in healthy
volunteers. Results from this study, announced in June 2019, were
consistent with the INTEREST data, supporting the conclusion that
coadministration of steroids with Traumakine in patients inhibits
IFN-beta action.
Also, in June 2019, Faron announced interim results from the
Phase II INFORAAA study, which examined the effect of Traumakine on
mortality (predominantly for multi-organ failure, MOF) and
pharmacodynamic biomarkers of surgically operated ruptured
abdominal aorta aneurysm (RAAA) patients. Based on the advice from
the INFORAAA independent data monitoring committee and
investigators, the Company decided to close the INFORAAA trial, as
unexpected high use of concomitant corticosteroids was preventing
the scientific implementation of the INFORAAA protocol.
Interestingly, in January 2020, the World Health Organization
(WHO) published a recommendation recognising the risk of using
corticosteroids on patients with coronavirus. This recommendation
aligns with our findings from the post-hoc analysis of the INTEREST
study and strengthens our belief that the whole medical community
should be more diligent with regard to the combined use of
corticosteroids and type I interferons. Faron's scientific network
has also confirmed this interaction at a molecular level in lung
endothelial cells.
The Company remains committed to progressing Traumakine for the
treatment of ARDS and, following the Company's revised protocol
submission in February 2020, the FDA have now accepted the protocol
design for the next Traumkine study. The study design reflects the
feedback and conclusions from the FDA that further studies with IFN
beta should exclude the use of concomitant glucocorticoids since
they are likely to block the desired therapeutic effect of
Traumakine and may have a potentially deleterious impact on patient
survival. We are planning to split the clinical development of
Traumakine in ARDS into two steps, commencing with INTEGRITY, a
pilot randomised and placebo controlled study with approximately 60
patients. The INTEGRITY data will then serve as final adjustment
for adequate statistical powering and sample size justification for
the pivotal CALIBER study, subjected for FDA review. We expect that
the sample size of the CALIBER study will not exceed 200 patients
based on the post hoc analysis of the INTEREST trial data. We
envisage that future Traumakine trials (including INTEGRITY and
CALIBER) are likely to be funded through a third party or
parties.
AOC3 Antagonist Platform Technology
In March 2020, Faron announced it had acquired rights for the
potential new use of AOC3 inhibitors covered by a recently filed
patent application. The AOC3 enzymatic domain, a
semicarbazide-sensitive amine oxidase, is known to produce hydrogen
peroxide, a potent inflammatory mediator. Being expressed by many
inflamed vascular endothelial cells, the AOC3 overexpression has
been connected with many vascular diseases.
Faron will be responsible for future development of the
invention and for the management, prosecution and maintenance of
any patent applications as well as for the filing of new patent
applications for the AOC3 protein inhibitor. Pre-clinical studies
with humanized AOC3 mice and with ex vivo human cells in relation
to the Invention are currently ongoing and further information will
be provided later in the year.
Corporate
On 3 December 2019, Faron started trading on Nasdaq First North
Growth Market ("Nasdaq First North"), a multilateral trading
facility operated by Nasdaq Helsinki Ltd. The ISIN code of Faron's
ordinary shares is FI4000153309 and the trading code on Nasdaq
First North is FARON. This is in addition to Faron's listing, since
November 2015, on AIM.
In October 2019, Faron received a letter from Rentschler
Biopharma SE ("Rentschler") in which Rentschler stated that it was
terminating the agreement concerning the API manufacturing for
Traumakine. Following a detailed investigation by Faron into the
circumstances around manufacturing arrangements, the Company has
since concluded that, in its view, Rentschler was in breach of the
underlying agreement between the parties. Faron has filed a request
for arbitration, funded by a third party on a non-recourse basis,
with the Arbitration Institute of the Stockholm Chamber of Commerce
seeking damages.
In May 2019, Yrjö Wichmann left his role as the Company's Chief
Financial Officer to take up the new position of Vice President,
Financing and Investor Relations. Mr Wichmann remains a member of
the senior management team but stepped down from the Board with
effect from 28 May 2019. We were delighted to welcome Mr Toni
Hänninen as Faron's new CFO, effective from 1 June 2019, being
responsible for both internal and external reporting.
The Annual General Meeting held on 28 May 2019 resolved the
number of members of the Board 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.
Financial
During the period, the Company successfully raised approximately
EUR 15.6 million (gross), EUR 14.5 million (net) from new and
existing shareholders, employees and Company Directors. The
majority of these proceeds are being used to advance Clevegen
through the MATINS trial, further Traumakine development through
the design and preparation of the next clinical trials and advance
partnering discussions in respect of both Traumakine and
Clevegen.
Outlook
Our focus for 2020 will be to continue to expedite Clevegen's
clinical development through part II and part III of the MATINS
trial and to report these data to regulatory authorities. We will
also continue to work in close collaboration with the regulatory
authorities in order to progress the INTEGRITY and CALIBER clinical
trials and secure Traumakine's future development pathway. 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 for their hard-work and
dedication and look forward to updating the market on our progress
throughout the course of the year.
The Board anticipates the following pipeline progress and
catalysts during 2020:
Clevegen:
-- Completion of all biomarker analyses from MATINS Part I patients to guide Clevegen dosing
-- Initiation of the second expansion cohort, ovarian cancer, during H1-2020
-- Initial data from the first expansion cohort (CRC) expected in Q2-2020
-- Expansion of the MATINS trial to leading cancer centres in France and Spain in Q2-2020
-- Opening of US study sites to facilitate rapid expansion of the MATINS trial in Q2-2020
-- Partnering update during 2020
Traumakine:
-- Further updates in relation to INTEGRITY and CALIBER during 2020
-- Continuation plans to be announced in H2-2020
AOC3 Antagonist Platform Technology:
-- Additional information from pre-clinical studies with
humanized AOC3 mice and with ex vivo human cells during 2020
Dr Markku Jalkanen
Chief Executive Officer
March 19, 2020
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 several successful fundraises during 2019. The Company's
net cash flow showed EUR3.0 million positive due to a reduction in
expenses and said fundraises. 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 2019 (2018: EURnil).
The Company recorded EUR0.2 million (2018: 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 decreased by EUR6.3 million from EUR16.5
million in 2018 to EUR10.2 million in 2019. The costs of outsourced
clinical trial services were reduced by EUR3.4 million from EUR5.3
to EUR1.9 million. The cost of materials and services used in the
R&D was reduced by EUR1.7 million from EUR7.3 to EUR5.6
million.
General and administration costs
Administrative expenses decreased by EUR0.8 million from EUR3.8
million in 2018 to EUR3.0 million in 2019. The decrease was mainly
due to the EUR1.4 million decrease in external costs related to the
development of internal financial and reporting processes during
2018, but this was partially offset by an increase of EUR0.7
million in the other administrative expenses.
Taxation
The Company's tax credit for the fiscal year 2019 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 2019 was EUR16.1 million (2018: EUR11.2
million). The Company estimates that it can utilise most of these
during the years 2020 to 2028 by offsetting them against future
profits. In addition, Faron has EUR58.6 million of R&D costs
incurred in the financial years 2010 - 2019 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 EUR13.3 million (2018: EUR20.1
million). Net loss for the year was EUR13.3 million (2018: EUR20.1
million), representing a loss of EUR0.31 per share (2018: EUR0.65
per share) (adjusted for the changes in number of issued
shares).
Cash Flows
Net cash flow was EUR3.0 million positive for the year ended 31
December 2019 (2018: EUR5.3 million negative). Cash used for
operating activities decreased by EUR9.0 million to EUR11.5 million
for the year, compared to EUR20.5 million for the year ended 31
December 2018. This decrease was mostly driven by a decrease in
R&D investments.
Net cash inflow from financing activities was EUR14.5 million
(2018: EUR15.5 million) due to the successful equity placings
completed in during 2019.
Fundraising
During the period, 1 January to 31 December 2019, the Company
successfully raised a total of EUR15.6 million gross (EUR14.5
million net) across several fundraises from new and existing
shareholders, employees and Company Directors. The majority of
these proceeds are being used to advance Clevegen through the
MATINS trial, further Traumakine development through the design and
preparation of the next clinical trials and advance partnering
discussions in respect of both Traumakine and Clevegen.
-- In March 2019, EUR3.1 million gross (EUR2.9 net) through issuance of new ordinary shares.
-- In May 2019, EUR1.3 million gross (EUR1.3 net) through issuance of new ordinary shares.
-- In August 2019, EUR2.5 gross (EUR2.2 net) million through
issuance of new ordinary shares.
-- In November 2019, EUR8.7 million gross (EUR8.0 net) through
issuance of new ordinary shares.
Financial Position
As at 31 December 2019, total cash and cash equivalents held
were EUR7.1 million (2018: EUR4.1 million). The Company continues
to exercise tight cost control to keep the cash burn as low as
possible for preservation of existing resources.
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 EUR13.3 million during the year
ended 31 December 2019. It had total equity of EUR1.6 million
including an accumulated deficit of EUR80.0 million. As at that
date, the Group had cash and cash equivalents of EUR7.1
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
2020. 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 24 (2018:
25).
Shares and Share Capital
During the period 1 January to 31 December 2019, the Company,
using the share authorities granted at the Annual General Meetings
held on 31 May 2018 and on 28 May 2019, as well as at an
Extraordinary General Meeting held on 25 October 2019, issued a
total of 12,262,853 new ordinary shares.
-- On 28 March 2019, 4,448,625 shares at an issuance price of EUR 0.7020 (GBP0.60) per share.
-- On 13 May 2019, 1,757,375 shares at an issuance price of EUR 0.7598 (GBP0.65) per share.
-- On 5 August 2019, 941,840 shares at an issuance price of EUR 1.1900 (GBP1.06) per share.
-- On 27 August 2019, 1,179,513 shares at an issuance price of EUR 1.1900 (GBP1.06) per share.
-- On 12 November 2019, 3,935,500 shares at an issuance price of EUR2.1980 (GBP1.90) 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
2019 the total number of voting rights was 43,290,747.
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.
Toni Hänninen
Chief Financial Officer
March 19, 2020
Consolidated Income Statement, IFRS
EUR'000 Unaudited Unaudited 1-12/2019 1-12/2018
7-12/2019 7-12/2018 12 months 12 months
6 months 6 months
----------------------------------------- ----------- ----------- ------------ ------------
Revenue 0 (1) 0 19
Other operating income 185 191 185 205
Research and development expenses (5,255) (4,762) (10,237) (16,463)
General and administrative expenses (1,688) (1,378) (3,049) (3,750)
Operating loss (6,758) (5,951) (13,101) (19,989)
Financial expense (151) (70) (224) (397)
Financial income 69 (3) 74 302
Loss before tax (6,840) (6,024) (13,251) (20,084)
Tax expense (10) (2) (11) (2)
Loss for the period (6,850) (6,026) (13,262) (20,086)
Other comprehensive income - - - -
Total comprehensive loss for the period (6,850) (6,026) (13,262) (20,086)
Loss per ordinary share
Basic and diluted loss per share, EUR (0.16) (0.19) (0.31) (0.65)
Consolidated Balance Sheet, IFRS
EUR'000 31 December 2019 31 December 2018
--------------------------------------- ----------------- -----------------
Assets
Non-current assets
Machinery and equipment 13 17
Right-of-use-assets 386 -
Intangible assets 529 525
Prepayments and other receivables 77 636
Total non-current assets 1,005 1,177
Current assets
Prepayments and other receivables 2,145 2,759
Cash and cash equivalents 7,059 4,067
Total current assets 9,204 6,825
Total assets 10,209 8,002
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 78,916 64,464
Accumulated deficit (79,997) (66,786)
Translation difference - -
Total equity 1,610 369
Non-current liabilities
Borrowings 2,263 1,887
Lease liabilities 261 -
Total non-current liabilities 2,524 1,887
Current liabilities
Borrowings 163 245
Lease liabilities 135 -
Trade payables 2,967 3,534
Other current liabilities 2,810 1,967
Total current liabilities 6,075 5,745
Total liabilities 8,599 7,633
Total equity and liabilities 10,209 8,002
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 2017 2,691 48,576 - (46,524) 4,743
Comprehensive loss
for the period - - - (20,086) (20,086)
Transactions with
equity holders of
the Company
Issue of ordinary
shares, net of transaction
costs EUR 1,149
thousand - 15,888 - - 15,888
Share-based compensation - - - (176) (176)
-------------- -------------- ------------ ------------ -------------
- 15,888 - (176) 15,712
-------------- -------------- ------------ ------------ -------------
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
Consolidated Cash Flow Statement, IFRS
Unaudited Unaudited 1-12/2019 1-12/2018
7-12/2019 7-12/2018 12 months 12 months
EUR'000 6 months 6 months
--------------------------------- ----------- ----------- ------------ ------------
Cash flow from operating
activities
Loss before tax (6,840) (6,024) (13,251) (20,084)
Adjustments for:
Depreciation and amortisation 190 58 238 100
Interest expense 119 74 158 121
Tax expense 11 - 11 -
Unrealised foreign exchange
loss (gain), net (36) (1) (7) (36)
Share-based compensation 0 (326) 51 (176)
Adjusted loss from operations
before changes in working
capital (6,556) (6,220) (12,800) (20,075)
Change in net working
capital:
Prepayments and other
receivables (547) 1,716 1,173 1,836
Trade payables 99 (1,368) (567) 338
Other liabilities 1,081 (1,053) 731 (2,595)
Cash used in operations (5,923) (6,926) (11,463) (20,496)
Taxes paid (9) (2) (9) (2)
Interest paid (25) (14) (51) (27)
--------------------------------- ----------- ----------- ------------ ------------
Net cash used in operating
activities (5,957) (6,042) (11,523) (20,525)
Cash flow from investing
activities
Payments for intangible
assets (59) (161) (100) (293)
Payments for equipment - - - (2)
Net cash used in investing
activities (59) (161) (100) (295)
Cash flow from financing
activities
Proceeds from issue
of shares 11,166 - 15,627 17,023
Share issue transaction
cost (944) - (1,175) (1,135)
Proceeds from borrowings 76 - 307 -
Repayment of borrowings - - - (347)
Payment of lease liabilities (151) - (151) -
--------------------------------- ----------- ----------- ------------ ------------
Net cash from financing
activities 10,147 - 14,608 15,541
Net increase (+) / decrease
(-) in cash and cash
equivalents 4,131 (7,103) 2,985 (5,279)
Effect of exchange rate
changes on cash and
cash equivalents 36 1 7 36
Cash and cash equivalents
at 1 January 2,892 11,168 4,067 9,310
--------------------------------- ----------- ----------- ------------ ------------
Cash and cash equivalents
at 31 December 7,059 4,067 7,059 4,067
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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