Source - RNS
RNS Number : 8706I
Faron Pharmaceuticals Oy
05 September 2016
 



Faron Pharmaceuticals Ltd

("Faron" or the "Company")

 

Interim Results for the six months ended 30 June 2016

 

Progress continued in Traumakine® Phase III and with Clevegen® indications extended

 

TURKU - FINLAND, 5 September 2016 - Faron Pharmaceuticals Ltd ("Faron") (LON: FARN), the clinical stage biopharmaceutical company, today announces its unaudited Interim Results for the six months ended 30 June 2016 (the "Period").

 

KEY HIGHLIGHTS

 

Operational Highlights (including Post Period-end)

 

Traumakine® - for treatment of Acute Respiratory Distress Syndrome ("ARDS")

Continued to progress the Phase III pan-European INTEREST trial as planned. In June 2016, Faron received the first IDMC (Independent Data Monitoring Committee Chaired by Prof. Arthur Slutsky from Toronto, Canada) recommendation to continue the study.

Announced positive results from the Phase II Japanese study for Traumakine conducted by Faron's Japanese licensing partner, Maruishi Pharmaceutical Co., Ltd. ("Maruishi"), in January 2016.

Filed a patent application in Finland in March 2016 to further strengthen the Company's protection of its novel Traumakine formulation (FP-1201-lyo) for the intravenous treatment of ARDS and other vascular diseases. The patent filings will be expanded over the next 2 years to most countries worldwide under the Patent Co-operation Treaty ("PCT"). Through its patent filings Faron is seeking to protect its rights to this discovery for the next 20 years.

Entered into a licensing agreement in June 2016 with Pharmbio Korea Inc. ("Pharmbio") for the development and commercialisation of Traumakine in Korea to supplement the agreements in place for Japan and China.

 

Clevegen® - novel cancer immunotherapy checkpoint antibody

Filed two new patent applications for novel cancer immunotherapy candidate Clevegen in April 2016 in Finland. Under the PCT patent filings will be expanded globally over the next few years. The applications open up new opportunities for wider application of this antibody in conditions where removal of  suppression of the local or systemic immunity is desired.

Expanded the development strategy for Clevegen indications by extending the range through the Tumour Immunity Enabling Technology Platform ("TIET"), the Company's new technology platform announced in May 2016, and presented at an R&D Day in London in June 2016, which can be evaluated alone or in combination with other immune checkpoint molecules in the treatment of common cancers.

Entered into an agreement with Abzena plc (AIM: ABZA) for the manufacture of Clevegen for clinical development in July 2016.

 

Financial Highlights

Received a €750,000 fee from the licensing agreement with Pharmbio Korea Inc. for the development and commercialisation of Traumakine in Korea. The Company will be entitled to receive further development milestone payments and one third of the profits from Traumakine in Korea.

Recorded significant other operating income of €1.0 million for the period from the Company's existing European Union FP7 Traumakine grant, in-line with the Company's strategy to utilise non-dilutive funding sources to support the Company's R&D program where possible.

As at Period-end, the Company held cash balances of €8.9 million.

The cash position at the end of the Period was stronger than anticipated. In the future, the Company will continue its active and successful strategy to utilise various forms of public funding - both grants and loans.

The operating loss for the Period was €2.6 million.

Net assets as at Period-end were €8.4 million.

 

Commenting on the results, Dr Markku Jalkanen, CEO of Faron, said:

"Faron has delivered on its key strategic aims for the first half of 2016. We have clear plans to advance our exciting pipeline over the next two to three years, maintaining our focus on the most advanced projects Traumakine and Clevegen, which we believe have tremendous potential for expansion into new indications and territories. Our lead product, Traumakine for acute lung injury, is progressing well. The pivotal pan-European Phase III INTEREST trial is underway at more than 50 sites and we have received encouraging Phase II data from our Japanese partner Maruishi. The Korean licensing deal with Pharmbio is in-line with our growth strategy to partner Traumakine in territories where both clinical and financial impact can be optimised in conjunction with a local partner.

 

"We have also made substantial progress with our immunotherapy candidate Clevegen through the development of our new TIET platform. In addition to its potential use in combination cancer therapies, new opportunities include chronic infections and vaccination enhancement. We believe the approach offers significant advantages to future collaborators and licensing partners."

 

For more information please contact:

 

Faron Pharmaceuticals Ltd

Katja Wallenlind

Phone +358 (50) 577 4807
E-mail: [email protected]

Hume Brophy, PR

Mary Clark, Eva Haas, Hollie Vile

Phone: +44 207 862 6390

E-mail: [email protected]

 

 

Cairn Financial Advisers LLP, Nominated Adviser

Emma Earl, Tony Rawlinson, Rebecca Anderson

Phone: +44 207 148 7900

 

Panmure Gordon (UK) Limited, Joint Broker

Freddy Crossley, Duncan Monteith (Corporate Finance)

Tom Salvesen (Corporate Broking)

Phone: +44 207 886 2500

 

Whitman Howard Limited, Nominated Broker

Ranald McGregor-Smith, Francis North

Phone: +44 207 659 1234

 

 

About Faron Pharmaceuticals Ltd

 

Faron is a clinical stage biopharmaceutical company developing novel treatments for medical conditions with significant unmet needs. The Company currently has a pipeline focusing on acute organ traumas, cancer immunotherapy and vascular damage. The pipeline is built on Faron's scientific knowledge and control of the endothelial barrier, the membrane of cells lining blood and lymphatic vessels to separate blood content from tissues. The Company's lead candidate Traumakine® is in development for the treatment of Acute Respiratory Distress Syndrome ("ARDS"), a rare, severe, life-threatening medical condition characterised by widespread inflammation in the lungs. Traumakine is currently in a pan-European pivotal Phase III study (INTEREST). Additionally, Faron is developing Clevegen® a ground breaking pre-clinical anti-Clever-1 antibody. Clevegen has the ability to convert the immune environment around a tumour from being immune suppressive to immune stimulating. This novel macrophage-directed immuno-oncology approach is called Tumour Immunity Enabling Technology ("TIET") and can be used alone or in combination with other immune checkpoint molecules for the treatment of cancer patients. New application opportunities related to TIET cover chronic infections and inefficient vaccination. Based in Turku, Finland, Faron Pharmaceuticals is listed on AIM under the ticker 'FARN'. Further information is available at www.faronpharmaceuticals.com



 

Chairman's and Chief Executive Officer's Review

 

 

INTRODUCTION

We are pleased to report on the progress of Faron Pharmaceuticals for the six months ended 30 June 2016.

Implementing a strategy of bringing novel treatments for significant unmet medical needs to market in a timely and cost-effective manner, Faron's pipeline is built on its thorough scientific knowledge regarding control of the endothelial barrier, a membrane of cells lining blood and lymphatic vessels to separate blood content from tissues. Both lead indications - acute lung injury and intervening in tumour immune suppression - are based on controlling malfunction of the endothelial barrier.

We continue to strengthen our business and support our objectives of progressing our lead programme, Traumakine, through the on-going pan-European pivotal Phase III INTEREST trial, and the development of our pre-clinical cancer immunotherapy candidate, Clevegen.

 

OPERATIONAL REVIEW

 

Pipeline developments

 

Traumakine® - targeting a breakthrough for ARDS and initiating RAAA plans

 

 

 

 

 

New indications for macrophage-directed immunotherapy candidate Clevegen®

 

 

Faron intends to develop Clevegen in-house for immune dependent cancers such as hepatocellular carcinoma, a significant unmet medical need, and other cancers known to depend on tumour associated macrophages ("TAM").

 

 

FINANCIAL REVIEW

 

 

Statement of Comprehensive Income

 

 

Statement Of Financial Position and Cash Flows

 

 

 

OUTLOOK

 

 

Frank M Armstrong                                   Markku Jalkanen

Chairman                                                    Chief Executive Officer

5 September 2016



Statement of comprehensive income

(Stated in 1,000 euros)

Note

Unaudited six months ended 30 Jun 2016



Unaudited six months ended 30 Jun 2015


Year ended 31 Dec 2015









Revenue

2

 1,169



 454


 520

Cost of sales


(357)



(50)


(25)

Gross profit


 813



 404


 496

Other operating income

3

 968



 - 


 701

Administrative expenses


(974)



(1,074)


(3,061)

Research and development expenses


(3,439)



(1,681)


(3,971)

Operating result


(2,632)



(2,350)


(5,835)









Financial income


 0



 - 


 0

Financial expenses


(305)



(40)


(311)

Net financial costs


(305)



(40)


(311)

















Loss before income taxes


(2,936)



(2,390)


(6,146)









Income tax expense


(75)



(42)


(42)

Total comprehensive income for the period


(3,011)



(2,432)


(6,188)

Total comprehensive income, attributable to:








Equity holders of the Company


(3,011)



(2,432)


(6,188)









Loss per share attributable to equity holders of the Company








Basic and diluted loss per share, euro

5

(0.13)



(0.15)


(0.30)

















 

 



Unaudited

Unaudited


Balance sheet

(Stated in 1,000 euros)

Note

30 Jun
2016

30 Jun
2015

31 Dec
2015






Assets





Non-current assets





Propertly, plant and equipment


 24

 0

 28

Intangible assets


 926

 1,180

 1,001



 950

 1,180

 1,029

Current assets





Inventories


 1,021

 649

 649

Trade and other receivables


 3,836

 647

 2,074

Cash and cash equivalents


 8,862

 2,276

 11,068



 13,719

 3,572

 13,791






Total assets


 14,669

 4,753

 14,821






Equity and liabilities





Capital and reserves attributable to equity holders of the Company





Share capital


 2,691

 2,691

 2,691

Reserve for invested non-restricted equity


 24,533

 11,503

 24,533

Retained earnings


(18,820)

(12,764)

(16,046)

Total equity


 8,404

 1,431

 11,178






Non-current liabilities





Interest-bearing financial liabilities

4

 2,057

 1,691

 1,446



 2,057

 1,691

 1,446

Current liabilities





Interest-bearing financial liabilities


 93

 - 

 245

Non-interest-bearing financial liabilities


 1,009

 - 

 436

Other current liabilities


 3,105

 1,631

 1,517



 4,207

 1,631

 2,197






Total liabilities


 6 265

 3 322

 3 643






Total equity and liabilities


 14 669

 4 753

 14 821











 

Statement of changes in equity

(Stated in 1,000 euros)

Share capital

Reserve for invested non-restricted equity

Retained earnings

Total equity

 

Balance at 1 January 2015

 2,691

 6,453

(10,332)

(1,188)

 


Total comprehensive income for the first six months 2015

-

-

(2,432)

(2,432)

 

Increase of share capital

-

 5,050

 - 

 5,050

 



 5,050

(2,432)

 2,618

 

Balance at 30 June 2015

 2,691

 11,503

(12,764)

 1,431

 






 

Total comprehensive income for the financial year 2015

-

-

(6,188)

(6,188)

 

Share base payment

-

-

 474

 474

 

Increase of share capital

-

 19,261

 - 

 19,261

 

Transaction costs on share capital issued

-

(1,181)

-

(1,181)

 


 - 

 18,080

(5,714)

 12,366

 

Balance at 31 December 2015

 2,691

 24,533

(16,046)

 11,178

 






 

Total comprehensive income for the first six months 2016

-

-

(3,011)

(3,011)

 

Share base payment

-

-

237

 237

 


 - 

 - 

(2,774)

(2,774)

 

Balance at 30 June 2016

 2,691

 24,533

(18,820)

 8,404

 






 

 

Statements of cash flows

(Stated in 1,000 euros)


Unaudited 1 Jan - 30 Jun
2016

Unaudited 1 Jan - 30 Jun
2015

1 Jan - 31 Dec
2015

Cash flow from operating activities





Loss(-) / profit(+) attributable to equity holders of the Company


(3,011)

(2,432)

(6,188)

Adjustments for





Depreciation and amortization


 79

 74

 184

Financial items


 305

 40

 298

Income taxes


 75

 42

 42

Expensed R&D


 - 

-

 78

Non-cash items (options granted)


 237

-

 474

Change in net working capital:





Trade and other receivables


(1,761)

(608)

(2,035)

Inventories


(372)

 50

 50

Trade and other current liabilities


 2,162

(30)

 278

Interest and other financial costs paid


(305)

(40)

(285)

Interest and other financial income received


 0

 0

 0

Income taxes paid


(75)

(42)

(42)

Net cash used in / from operating activities (A)


(2,666)

(2,945)

(7,146)






Cash flow from investment activities





Investments in machinery and equipment and intangible assets


 - 

(70)

(107)

Net cash from/used in investing activities (B)


 - 

(70)

(107)






Cash flow from financing activities


 



Proceeds from issue of share capital issue, net


 - 

 5,050

 18,080

Proceeds from issue of convertible notes


 - 

-

-

Proceeds from current borrowings


 - 

 - 

 - 

Proceeds from non-current borrowings


 611

 - 

 - 

Repayment of current borrowings


(151)

 - 

 - 

Net cash used in financing activities (C)


 460

 5,050

 18,080






Net increase(+) / decrease (-) in cash and cash equivalents (A+B+C)


(2,206)

 2,034

 10,827

Cash and cash equivalents at 1 January


 11,068

 242

 242

Cash and cash equivalents at end of period


 8,862

 2,276

 11,068






 

 

Note 1  Basis of Preparation

 

Corporate information

Faron Pharmaceuticals Ltd (hereafter "Faron" or "Company") is a Finnish limited liability company organised under the laws of Finland and domiciled in Turku, Finland. The Company's registered address is Joukahaisenkatu 6 B, 20520 Turku, Finland. Faron Pharmaceuticals Ltd is a privately owned clinical stage drug discovery and development company. Currently Faron has two major drug development projects focusing on: acute trauma, inflammatory diseases and cancer growth and spread.

 

Basis of accounting

The unaudited interim financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and as published by the International Accounting Standards Board (IASB) and in force as at 30 June 2016. In the EU IFRS are standards and their interpretations adopted in accordance with the procedure laid down in regulation (EC) No 1606/2002 of the European Parliament and of the Council. These policies are consistent with those used in the financial statements for the year ended 31 December 2015 and with those that the Company expects to apply in its financial statements for the year ending 31 December 2016.

The interim financial statements do not include all of the information required for full annual financial statements and do not comply with all the disclosures in IAS 34 "Interim Financial Reporting". Additionally though the interim financial statements have been prepared in accordance with IFRS, they are not in full compliance with IFRS.

 

Going Concern

The Company has prepared forecasts to estimate the cash requirements over the next twelve months. In order to make these forecasts the Company has made a number of assumptions regarding the quantity and timing of future expenditure and income as well as other key factors. Though these estimates have been made with caution and care, they continue to contain significant amount of uncertainty. Based on the forecast the Company believes that it has adequate financial resources to continue its operations for the foreseeable future (at least twelve months from the date of this report) and therefore these interim financial statements have been prepared on a going concern basis. 

 

 

Note 2  Revenue

 

The revenue for the first six months in 2016 totalled EUR 1,169,494. This consisted of EUR 750,000 signing fee from Pharmbio Korea, EUR 356,500 payment of IFN-beta production and EUR 62,994 from sales of active drug product and placebo to Maruishi.

 

 

Note 3  Other operating income

 

Other operating income totalling EUR 967,557 consists almost entirely of the EU FP7 grant income. Of this EUR 620,459 is grant income that is recorded based on the eligible project costs for the first six months of 2016. The next EUR 343,448 is grant income for project expenses for year 2015, for which Faron did not record grant income in 2015 as those expenses had not been budgeted or pre-approved by EU. After the date of publishing the annual accounts for 2015, EU approved all the reported expenses for the year 2015 and thus Faron has recorded that part of the 2015 grant income as other operating income for the first six months in 2016. When recording grant income, Faron has consistently followed the same accounting practice where it records 75% of the eligible project expenses for each period as grant income.

The remaining other operating income is income that derives from a tax-litigation that Faron won, where the court ordered the Finnish tax authorities to cover some of Faron's legal expenses.

 

 

Note 4  Tekes loans

 

In March 2016, Faron utilised a possibility to apply for two additional amortisation-free years for the first of its two Tekes development loans. The application was approved and Tekes granted two additional amortisation-free years for the loan. Thus the first amortisation of the loan EUR 244,720 will be due in March 2018. Additionally in April 2016, Faron raised the first instalment of the Tekes loan for the Clevegen development work. The loan has a maturity of 10 years of which first five years are amortisation-free. The interest is currently one per cent. The loan is unsecured and if the project falls short of its goals and results cannot be commercialised, part of the loan may afterwards be converted into a grant.

 

 

Note 5  Loss per share

1H2016

1H2015

2015


€ '000

€ '000

€ '000

Basic




Basic loss per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year.








Loss attributable to equity holders of the Company
(EUR 1,000)

(3,011)

(2,432)

(6,188)

Weighted average number of ordinary shares in issue

 23,111,704

16,606,406

 20,686,854

Basic (and dilutive) loss per share, EUR

(0.13)

(0.15)

(0.30)





Weighted-average number of ordinary shares




Issued ordinary shares at 1 January

 23,111,704

15,456,250

 15,456,250

Effect of shares issued

 - 

1,150,156

 5,230,604

Weighted-average number of ordinary shares at end of period

 23,111,704

 16,606,406

 20,686,854





Diluted




Diluted loss per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares.








Loss attributable to equity holders of the Company
(EUR 1,000)

(3,011)

(2,432)

(6,188)

Interest adjustment

 - 

9

 9

Convertible loan interest adjusted loss attributable to equity holders

(3,011)

(2,423)

(6,179)

Diluted weighted average number of ordinary shares in issue

 23,164,610

 16,606,406

 20,686,854

Basic loss per share, EUR

(0.13)

(0.15)

(0.30)





Weighted-average number of ordinary shares




Issued ordinary shares at 1 January

23,111,704

15,456,250

 15,456,250

Effect of shares issued

-

1,150,156

 5,230,604

Weighted-average number of ordinary shares at end of period

 23,111,704

 16,606,406

 20,686,854

Dilution effect of convertible loans

 52,906

 - 

 - 

Diluted weighted-average number of ord. shares at end of period

 23,164,610

 16,606,406

 20,686,854

 

 

FURTHER INFORMATION TO SHAREHOLDERS

 

AIM:                                     FARN

Company number:                 (ISIN) FI4000153309

Investor website:                    http://www.faronpharmaceuticals.com/investor-relations

Registered office:                   Joukahaisenkatu 6, 20900 Turku, FINLAND

Directors:                              Frank Armstrong (Non-Executive Chairman)

                                            Matti Manner (Non-Executive Vice-Chairman)

                                            Markku Jalkanen (CEO)

                                            Juho Jalkanen (Non-Executive Director)

                                            Jonathan Knowles (Non-Executive Director)

                                            Huaizheng Peng (Non-Executive Director)

Leopoldo Zambeletti (Non-Executive Director)

Yrjö Wichmann (CFO)

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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