Faron Pharmaceuticals Oy (FARN) Earnings Call Transcript & Summary

Good afternoon, now, everyone. Welcome to the final day of the JPMorgan conference. I'm Josh Bowers from the London Healthcare team. It's my absolute pleasure today to welcome Dr. Markku to present to you today. We'll have 20, 25 minutes, and then we'll open it up to some questions, and then he'll stick around afterwards if you have any follow-ups. And with that, I'll hand it over to you, Markku.

Thank you, Joshua. I understand that this is a really privilege. So I would really thank also JPMorgan management really getting this opportunity to talk about Faron. As you may already noticed we are a listed company both in London, AIM and then Helsinki First North. And obviously, I would show this disclaimer really because I'm going to say something about the future of the company as well. So I believe that we are the world leader at the moment in reprogramming myeloid cells. Why want to do that? They are the cells which are on over us. And one very interesting thing is that they accumulate into tumors. Is that a good thing or bad thing? Well, it's a good thing for somebody and that somebody are cancer cells. Because what they can do when they go to the tumor and go out tumor associated macrophages, they set off the immune or the immunity within that micro environment. And obviously, that would be very beneficial for the tumor to grow locally first. And when they grow enough, then they can start to metastasis. There are some attempts in the past to control these macrophages, but that has been mainly depleting them. I wouldn't do that because some of the tumors may have half of their tumor mass, these macrophages. So there is no reason to kill them. We have to reprogram them so that they could be beneficial back to us, not to the cancer cells. And that's really what we do. And I'm really excited really to show the results that we have obtained in 2 of the trials, one which we have completed the MATINS trial with advanced solid tumors and the second one on the hematological applications, it's called BEXMAB. The way we do this is to target a receptor called CLEVER-1. It's a historical name, but I really like the name. It's a functional antibody rather regular one [ ITC-4 ], the immunized so there's no complement receptor because we do not like to have any lytic activity with the antibody when it binds to something. That converts these immunosuppressive macrophages within the tumor into immune activators, and I'm going to show in vivo data to you that it really takes place. And obviously, that really tells us that it provides immediate applications in the combination therapies, for example, with the PD-1. The Bex has gone now through 200 solid -- based solid cancer patients and a bit more than 30 patients in the hematologic applications is completely safe. And obviously, all these applications what we have now so far done, it's first, building up the data, which we can then use to plan the next steps. I would like to start by showing the study which we have started from the first mode of action. And this is to demonstrate that we really reprogram these macrophages into a immune activators. Normally, CLEVER-1 is a scavenging receptor, a rather big one, taking with many of the domains material in and then trick trade in everything. They also maintained the very acetic environment, the lysosomal degradation pathway. Everything is degraded. Nothing is presented to our immune system. When you block CLEVER-1, it's then completely different readout of the genome. Now we have activating couple -- a couple of PP [indiscernible] which means that you are now activating the immune components in these cells. And when that takes place, you have increased presentation and activation to immunity. This always started from the animals, but now we have been moving on into humans. And the results of that trial was recently published in Cell Reports Medicine. It's a very comprehensive analysis of the material from the trial at 200 patients, then different cancer indications, last line with the patients who have no options anymore. And as you can see, we already have initial response clinical benefit from this single agent treatment, which varies depending on the [indiscernible] but was already very significant in some of these like hepatocellular carcinoma, refractory melanoma and so on. But what was more important when we look at the pure biopsies from these patients, pre and post administration of bexmarilimab, we actually saw the intratumoral activation of these macrophages when we look at the CD68 positive cells, indicating that, yes, we do get the same effect we observed previously in the ex vivo situations. Now what happens in that microenvironment when we get this activation will take place, it's completely now converted into an immune activator environment, meaning that you have a now high, interferon signature, which was baseline level and rather low. And those are the patients who actually benefit this treatment. And you can see on the right hand that we increased also the overall survival of these patients by 3.5 fold, very significant benefit to those patients. PD-1 blockade does not work if you don't have interferon, sickness up. So obviously, again, this supports directly the combination opportunity what we may have within this space. And obviously, we have been designing that already, and I will come to that part. But then comes to even more exciting part. We have leukemia, which is called myeloid leukemias. And the word myeloid again gives a reference to the fact that the origin from the bone marrow are the same parietal cells. They are in different forms in us. They are very severe conditions. And this is just saw sustaining of them and the red dots over here tell you that those are the positive individuals. And you can see that there are acute myeloid leukemia group, there are less differentiated leukemia called MDS and some other ones. So the same target molecule, we now targeted in the solid cancer on the surface of these macrophages. They are now present on the surface of these leukemic cells. And obviously, this is a tremendous opportunity now really directly influence on those leukemic cells. And what we have learned shown here on the left-hand side, there is an additional mode of action on these leukemic cells. When you let bexmarilimab to bind a -- to CLEVER-1, it will induce a signaling pathways, which start to control the oxidation [indiscernible] within the mitochondria. And obviously, when that goes down, you start to lose the ATP production, and that will reduce the viability in those cells. This, together with one of the standard component used or drug used with these patients hypomethylating agent called azacitidine, you actually see significant reduction in the viability of these cells. So we activate the immunity. In this time, it should take place in the bone marrow. And on the other hand, we reduced the viability of these cancer cells, which often are called blasts because they really look like they have blasted. So this is very dramatic condition. I'm giving you one example. This is the MDS. And the reason I'm giving this is that there is no treatment for this condition. It's HMA or nothing, which is really dramatic if you think about it. We have lethal leukemia, and we have not been able to produce any new drugs into this space yet. You can also see that this is sort of significant in size. We could easily talk 100,000 patients in U.S., Europe alone, and many of them really go without any effective treatment. The only total cure is the bone marrow transplantation, but there's just a very little -- few people that actually get that far because the previous treatments are rather strong, and there are a lot of side effects. And then on the other hand in order to get the donor really at the right time is really also affecting the availability. These patients are very expensive to the society, even the outcome is this bad. Those who actually go to bone marrow transplantation, we spent roughly EUR 1 million on them. So along those 5% of these patients could cost EUR 5 billion to our health care system, insurance and National Healthcare Systems. So it is a very dramatic and people are saying that this market is small, but it's not small, it's just small because there are no drugs yet. We need to get something done. So obviously, we have been very kind of a happy to get a network which has been very effective in recruiting these type of patients to our trial. The trial is ongoing at the moment in Finland and U.S., roughly 10 sites. And with the Phase I part where we dose escalated the bexmarilimab treatment once a week with these patients was really based on the previous MATINS trial that gave us a dosing. It's 1, 3 and 6 mgs per kg we started with. And now we have already very good and very interesting results from these patients. We have a refractory AML, and we have high-risk MDS or then refractory MDS. All these patients have very few options really to have additional health. So the Part 1 with 28 patients, we had overall response rate 50%. Half of them responded. It's unheard. If you look at the MDS alone, we have a respond rate 100%. I couldn't believe and have seen these results, 100%. I know that the numbers are still low, but that is a tremendous kind of a thing now that we may be really finding a good indication for bexmarilimab to help these people. We then have moved on to the Phase II part. Typically, FDA guides you to do a project Optimus with 2 dosing levels, and that's ongoing. We just announced that the first patient was dosed. That is an additional 32 patients unless we already learned earlier that 306 would be better to go on. And then that patient population and the results will be taken to the FDA and then discuss further what would be the registrational study to move on. So we start to see the end. If all this goes we are planning, we actually will be filing BLA early in '25. It may require us to do some additional pivotal part also later on, but obviously, it's really important for us to get to the market. As with the solid cancer tumor patients, which had hardly any side effects, I'm happy to say also the same with these hem patients. There are very few severe drug-related adverse events, which is again amazing. This CLEVER-1 may be the reason why this is so safe. It's in [ visiological ] use in us on every time. If you get the wound, you don't want to be immunized against those fragments of the proteins you have at the wound side. Our system brings in the same CLEVER-1 positive macrophages to wound side to really slow down the immunity. But even better example is pregnancy. You know that the fetus of the foreign material to the mothers' immune system. There, we need to bring these cells to the placenta. And when that happens, the fetus is protected against the mothers' immune system. And to be honest, the first CLEVER-1 molecule was isolated from the human placenta, then we obtained a sequence -- proto sequence and then clone the molecule. So that may be the reason why we have so good safety profile with this one. We have been looking at the bone marrow activation from these patients. And yes, we can demonstrate that we increase the antigen presentation as assumed. We also bring in an increased level of CD8 positive cells into the bone marrow and other indication that, yes, we are activating the immunity in these patients. We also know, as we predicted from the MATINS trial, that 3 and 6 mgs per kg will provide the maximum occupancy of the receptor itself. So there is no really need to go further. So my prediction is that when we move on, it's either 3 or 6 mgs per kg in the pivotal pathway as well. This is now the Phase I part population. You can learn 2 things from here. As I said earlier, 50% of the patients have response rate, the objective response rate and it's durable. Some of the patients have been already on this drug for maybe 1.5 years, maybe 18 months. And normally, the expectation is that these patients target in the first 4 to 6 months. So we have an extended survivor already very visible in here. And as I said earlier, the refractory AML, we had roughly 30% response rate and 100% with the MDS. And obviously, now when we are looking the MDS part, we have this high risk MDS at the first line and then the refractory MDS where there are no options. And you can see that all of them have responded, either very strong loss of the blasts, taking patients to the complete remission. We can also see the remission in the bone marrow or then we have also a recovery of the plate values. And obviously, this recovery of the plate values is another sign of the improvement of life of these patients because then they do not need any substitute care -- plate substitutes or any other growth factors to stimulate their bone marrow because bexmarilimab already has done it. This is really amazing. And maybe that is another application really with the bexmarilimab, really also help those patients who have difficulties to maintain their bone marrow activity. As you can see, 100% respond rate. I'm not expecting that we will have that. But I just wanted to show that the blast disappearance is really true with this waterfall plot. So really, really interesting findings. So just to summarize that part, the overall respond rate around 50%, which many of them are really complete remissions or bone marrow remissions and then also plate recovery. And within the MDS, we have 7 of those. So it's unheard in these populations. And these patients were progressive when they came to the trial. They had previous treatments, which are failed and then they come to the trial. So this is really a serious improvement in their conditions. So some of these -- I'm not going to -- so I just want to look the last one of these points. We had a discussion about this data also with the clinical network when we presented the data during the recent ASH in San Diego in December a month ago. And obviously, that has provided us a lot of insight also how we could go and move further on. The first part is obviously now take the MDS study as fast as possible to the market. We are done Part 1, which is on the left, the dark blue. Then in the middle, we have 2 dosing levels, and that's now progressing. We hopefully get that done this year and get the material to the FDA then to ask what is this -- the registrational pathway [indiscernible] the market. If they accept single-arm accelerated approval, obviously, we'll execute that as fast as possible, but we also are ready to accept the fact that we have to make a randomized trial where the randomized other part will be doctor's choice. But practically, there's really nothing with these patients. So it will be interesting discussion with the FDA how this actually comes out. If the accelerated approval is doable, then we will file the BLA in '25 and hopefully then be on the market in '26, really fast development. So we will report later this year in quarter 2. The first results from this Phase II part, should be able to do the final ones in the quarter 3. We also look at, obviously, the Phase I part patients, the durability and outcome of those patients, we could report those, and then just move on really to the pivotal part. We have aimed also regulatory interactions with the FDA. And obviously, with the Phase II data, if it stays this good breakthrough status is something that we are aiming and some other regulatory benefits and those are all ongoing. So we do have ongoing discussion with FDA all the time. We will increase the site number in U.S. We will also have another very active area, and that's the partnering. We have roughly, I don't know, maybe 20 companies really interested in this project because this space has very little activities at the moment. And yet, as you saw, we have a tremendous commercial opportunity there as well. So this all is not really stopping here. Based on the discussion with the clinicians during the ASH meeting, they indicated their interest that we actually should expand the program quite a number of other indication within this hem space. And obviously, here, you may have a first line, second line. And one thing which you hopefully noticed when I presented the material with all the patients that there are quite high frequency of p53 mutated patients as well. P53 mutation is considered almost a death sentence with these patients because they are the ones who usually saw the refractory profile rather fast. All of 4 patients we had in this trial responded. So this would also mean that we could even go to the first line with the patients who have this type of the condition. But this opportunity really is still under a kind of a planning, and let's see how it comes out later on. With the solid cancer tumor, we have plans really to move on with the combination. There, the idea is that we activate the immunity first with PAX and then comes the combo PD-1 blockade, then later on. And in that setting, you could target the refractory populations but maybe even go to the first line with those patients who have a very low portion of the patients responding to the PD-1 treatment alone. So a very significant opportunity there. So I think getting more close to the conclusions, significant, a totally new platform. It's patent-protected up to 2037 at least because main filings were done in 2017, but we have done a lot of additional filings later on. And this kind of together with the possible partner activities somewhere within the whatever the months are and then obtaining the milestones will be a very significant potential increase in the share value of the company. At the moment, we have roughly EUR 0.25 billion company. But obviously, the potential to grow from that with this business opportunities will be very significant. Then just to complete very competent management. I have Jim O'Brien here with me for the financial questions and then an even more dramatic and significant and experienced management at our Board membership and advisers. If you look at the Board members, tremendous experience in the pharma business. And then I also want to point out 2 key important for the BEXMAB study. Mika Kontro based in Helsinki is the PI for the BEXMAB study and Naval Daver from MD Anderson has been a key person also really to participate in all these planning and execution. And MD Anderson is one of the sites in U.S. City of Hope, Yale and North Carolina and Fred Hutch are the other ones. So very significant size will involve in this development as well. So I stop here, and I want to thank all of you and happy to answer all the questions you may have. Thank you.

Great. Thanks. So macrophages play a key role in cancer quality. But they're notoriously difficult to target. What makes you different? How are you differentiating versus others? And why will you be successful?

We know quite a lot of the other compounds. It's -- the reason why we are so confident is that we have been really looking the signaling pathways within those patients we have been treating with the Bex. The current technology is really allowing to do that. A lot of people are asking that is this something related to anti-CD47? It's not. Anti-CD47 is not activate macrophage, it's just blocking the target molecule receptors so that the [ eating ] activity will be increased. If you look at the activation of tumor tissue with the Bex, there are 20 to 30 components, which are the same, you would do with LPS. And LPS is considered as a molecule you can probably use innate immunity. So I think we are really now in the place where we activate the naive cells. And if that happens, you have a new set of T cells to attack the tumor, which the patients didn't have. And we all know that the cold tumors what people are referring to and which are resistant to the current PD-1 blockade, they may have some bistandard lymphocytes, but they cannot be activated because they don't know what to attack. There's no target signal for them really provide it ever. So we believe that we can really increase the immunity by providing a new type of activity, which is not present. And this tumor microenvironment is really critical to control in order to optimize the current therapies, and we are totally brand new. And I think we are the only one who are really targeting the CLEVER-1 at the moment, at least we don't know anybody else. So it's a novel target. Novel signaling pathways, very unique one. And obviously, we got lucky with the antibody at the very beginning, but let's just move on and take it to the market.

Yes. Great. That's helpful. And then you've got a very vast kind of applicability for your products. What's your strategy? Are you looking broad? Or are you looking to target specific areas? Where are you guys?

We focus now to this MDS as there's nothing really. And if that holds up, that we really get the same level of the efficacy with the next pool of the patients, it's becoming very clear that the authorities have a very, very kind of a favorable position led us to the accelerated approval process. Doing that, obviously, look the other opportunities. And I wanted to say that we do have a lot of partnering discussions ongoing at the moment. And obviously, that could also help bring in further resources because now initiating additional trials, you need a different resources than we have at the moment. And obviously, that has to be taken care of at the same time.

And just on resources -- capital requirements, what do you need? What are you thinking?