Faron Pharmaceuticals Oy (FARN) Earnings Call Transcript & Summary

Hello, everyone. Welcome to the half year report conference call for Faron Pharmaceuticals. Very excited to have you all on the call. We know there are quite a few of you still joining. But we are excited to talk to you about the significant clinical and financial milestones that have been achieved in the first half of 2025 for Faron. We've got our corporate disclaimer, as we always do, included for your review. And then we've got our agenda. We have 3 presenters today. We have Dr. Juho Jalkanen, the CEO.

Hello, everyone.

We have a Head of Clinical and Regulatory, Dr. Petri Bono.

Hello, everyone.

And we have Yrjö Wichmann, who is the CFO.

Hello, everybody.

Each will be talking through a section of the presentation today. And then as always, we will have a summary from Juho and then we will have a Q&A. So again, same drill as usual for those of you who have joined before, go ahead and submit your questions. Those who are new, you can submit along the way, and then we will come back to a moderated Q&A toward the end of the session. Juho, over to you.

Thank you, Julia. Great to have you all here. It's been an exciting first half and a lot to report on. But before conventional H1 report, let's go into a lot of the recent stuff that has been happening during the silent period, the juicy stuff I know everybody has been waiting for. First of all, I'm going to start with this slide, introducing some of the new people that may be on the line to our story, which is all about high-risk myelodysplastic syndrome, which is a rare form of leukemia, one of the deadliest cancers still known to man. No real new treatments for 20 years. And we are here to serve that with bexmarilimab. We're going to call it BEX, the first-in-class anti-CLEVER-1 antibody. We've just completed our Phase I/II study and reported at ASCO and EHA. We've just been to the FDA at an end of Phase II meeting and FDA sending us into a registrational Phase II/III study in frontline high-risk MDS. But we're going to take you through that in more detail right here, and that's why we also have our Chief Medical Officer. We have got asked a lot since the recent failure of, for example, venetoclax in the same space that, since all the failures, how will a small company like Faron be successful and be able to help out? It all comes down to the core biology of the disease and the core biology we are tackling with our drug. So next slide, please. I know this is a familiar slide to a lot of you. But again, let's just recap shortly. First of all, through targeting macrophages and monocytes with BEX, we ignite the immune system. We enhance antigen presentation and T cells against the cancer. But now in MDS, for example, the cancer cells are CLEVER-1 positive. They are basically macrophages gone wild. We're going to deprive the cancer of its main source of protection. So this may actually be one of the root causes why this has been such a difficult disease to treat and conquer. But again, we're going to the root biology of disease, depriving the cancer of its main source of protection. Next slide. What we also see compared to the other failed drugs in this space is, this is a highly cytopenic patient population. So these patients suffer from neutropenia, anemia and a lot of these cancer drugs are very toxic and usually make this stuff worse. Well, we actually don't make it worse. It looks like we're making it better. So what you see here is on the left, that's a cancer patient from the trial, that's their cell populations in the bone marrow. And what you see actually after C3D28, meaning at the end of the third cycle of treatment, is you see growing populations of progenitor cells for erythrocytes. You see growing populations of progenitor cells for platelets and neutrophils. So we're not adding to the toxicity. We're actually making a lot of this crucial important stuff that's important to the patient and their well-being better and not worse like other attempts in this area have done. That's a key differentiator. So next slide, please. So again, just highlighting why we believe we'll make a difference here. And our mode of action since it's multifunctional, like I mentioned, we're going to activate the immune system. We're going to enhance antigen presentation and T cell activation against the cancer. We're going to sensitize the blast cells, the cancer cells to actually the toxic killing stuff, be it chemo or here, azacitidine. But most importantly, it really looks like we're increasing the production of hematological cells, so allowing hematological recovery to happen in these patients, which are usually deeply anemic, for example. So next slide, please. So this is what I call nowadays the X factor. Here, you see in gray, the other assets that have recently failed their Phase III trials. And in orange is our safety. This is safety parameters, especially hematological safety parameters from our Phase I/II trial. So you have to look at this from the biology of the disease. So these patients suffer from severe cytopenias, meaning neutropenia, anemia. And usually, these toxic cancer drugs just make it worse. And this frail population just cannot take it anymore. And that's the main reason why a lot of these have failed. But like I just shown, we're not likely to make it worse. We're actually even likely to make it better. And that's seen through the lower box in orange there, if you look at what the standard of care azacitidine had as neutropenia 61% in its own registrational trial, while in our BEXMAB trial adding BEX to AZA actually may even improve neutropenia. So that's the differentiator. That's why we believe we will eventually be successful. And this has actually led to a lot of these early responses we have seen to become deeper and deeper and more meaningful for the patient because of this hematological recovery, but this takes time. So actually, for our drug to work, it takes time, but our results continue to improve. And Petri Bono, our Chief Medical Officer, is going to take you through the results next.

Thank you, Juho. So next to the clinical regulatory update. So this is the most recent data from our frontline patients treated in BEXMAB trial with the combination of bexmarilimab plus azacitidine. And as you can see here, so the responses continue to deepen as the bone marrow recovers. And what actually it means in numbers, earlier at the ASCO presentation and at the EHA presentation, we had a complete remission rate, CR rate, 28%. So it has now increased to 43% in the most recent August 1 data cut. This 43% is one of the highest ever reported in the literature for this frontline HR MDS patients. And this may still improve as the data matures. And on the left side, you can see the waterfall plot analysis, which is showing the decline in the number of bone marrow blasts after patients being treated with BEX plus azacitidine. And you can actually see that half of the -- more than half of the patients do get 100% reduction in the number of the bone marrow blasts. And then if we have a more thorough look according to the protocol-specified criteria, so it's 43%, which means 9 out of 21 patients received the CR, but also other responses so that the overall response rate of this patient population is 81% in the most recent data cut. Of note, 35% of evaluable patients, they proceeded to stem cell transplant, the only curative treatment to the disease. And this is also a very high number. Next slide, please. And based on this excellent Phase II results, so we submitted a briefing document to FDA and actually had very recently the end of Phase II meeting with them. And it was a very positive outcome from the meeting and the main outcome is shown here. First of all, clear path to registration. FDA supported moving into a seamless Phase II/III trial design, enabling dose optimization and registrational study start in frontline high-risk MDS in Q2 '26. Then frontline accelerated approval possibility already at the interim readout. FDA confirmed openness to this accelerated approval in the frontline setting, contingent on interim efficacy and overall survival data with CR and CR equivalent according to the new IWG 2023 criteria as agreed endpoints. All other trials earlier have used all the criteria, typically the IWG 2006, and these newer criteria are taking into account better clinically meaningful responses among the patients. And therefore, it's very important for the whole field that now for the first time in a prospective randomized setting, this new criteria will be used and also FDA importantly agreed on the use of CR and CR equivalent as the other primary endpoint of the study. The other primary endpoint will be overall survival. Then larger immediate label potential with entire higher-risk MDS population. FDA advised focusing just on the frontline development with no expectation for separate randomized r/r MDS program. And finally, very important, what comes to the upcoming trials and also for the success of the Phase III is that they aligned everything on our nonclinical questions in the briefing document. They confirm that no changes are needed to the CMC or nonclinical plans, indicating solid foundational readiness. And actually, these were not discussed at the actual physical meeting as the preliminary response to the briefing document was already positive. Next slide, please. And this is the registrational study plan for the high-risk MDS trial per FDA. So this is a seamless adaptive Phase II/III design with accelerated approval and resizing possibilities. And these both improves the likelihood of success in this trial. The run-in phase shown here on the left side of the slide includes randomization between placebo azacitidine versus bexmarilimab plus azacitidine and BEX with 2 different doses with 1 or 3 mg per kilo and 40 patients per each arm. And after that 120 patients have been enrolled, there will be an unblinded analysis for the trial dose to be used in the next stage of the trial. And based on the PK/PD safety efficacy data as a company, we believe it's likely to be the 3 mg per kilo, but remains to be done in the run-in phase. And very importantly, so after 120 patients, so we will have randomized data showing the contribution of BEX to the efficacy of the treatment since the BEXMAB trial has been a single-arm study without randomization. Also importantly is that we do have an accelerated approval possibility based on the interim readout of the primary endpoint, CR plus CR equivalent. Thereafter, there will be survival analysis. And for that one also, there's an adaptive possibility to resize as is also in the earlier phase of the trial. Overall, this will be around 400 patients or slightly over 400-patient trial. And importantly, the -- the 80 patients treated in the placebo plus with the dose that will continue in the Phase III part. So they will be included in the final analysis. They will be included in the interim analysis, and they will be included within the 400 patients. Next slide, please. Then a little bit more in detail what does this new response criteria mean and why it's important that it will be used in the upcoming trial. And the most important is that it's patient-centric. Those criteria take better patients into account and will improve the likelihood of success. And it's important that, for example, the change in the hemoglobin threshold, so it will improve the real-world relevance. And if we compare on the left side, we can see the IWG 2006. So there was only a CR category, but not a category called CR equivalent. What is the CR equivalent? So it's worth going through since that's included in the primary endpoint of our upcoming trial. On the right side, you can see the difference between CR and CR equivalent. Patients who have at baseline, they have bone marrow blast count less than 5% are unable to achieve CR response in the 2023 criteria. Therefore, the ones who have blast less than 5% on baseline, when they get also complete recovery of all 3 lineages of blood cells and also cytogenetic response. So they are then called CR equivalent. And since at MDS, it's actually around 25 in some sources, even 30% of the patients who have at baseline less than 5% blast, it's very important that this can also be counted into the full CR rate of the trial. And this is enabled in the use of the 2023 criteria. And importantly, FDA has also agreed that the use of this new criteria, it will improve the ability to identify the most promising treatment for patients. Next slide, please. I'll let Yrjö to continue.

I will now run through the financial results for the first half of 2025. So please take the next slide. So we have continued to cost efficiently deliver our program also during this first half. We ended the first half with a cash balance of EUR 13.5 million. We need to remember, of course, that we do have the second and third tranche of the convertible loan facility still undrawn. We did -- we had an operating loss roughly in the same line level as last year, even though our activities were quite much larger this year. Our net loss remained roughly the same, and the net asset was minus EUR 16.7 million. The total R&D expenses grew with EUR 0.4 million and still we were -- and it was roughly the amount that operating loss was larger than last year. Next slide, please. What we did in the first -- the financial arrangement for the first half. Overall, we can say that our financial position continued to be very strong during the first half. We did a EUR 12 million financing round in February, and that was actually quite strongly oversubscribed. And then in April, we entered into the EUR 35 million convertible bond arrangement, where we repaid the IPF loan, which importantly also released the collateral of our intellectual property. So -- and we don't have any financial covenants anymore on the loans. And as mentioned, we still have 2 EUR 10 million tranches of the facility undrawn. The first EUR 10 million is fully at our discretion, so we can actually draw down it -- draw it down whenever we deem necessary. And the second EUR 10 million is requires both ours and Heights consent. At the end of the period, we had roughly 112 million shares outstanding, and we still have 25,000 shares of authorization left granted by the AGM 2025. And those will be available until June -- end of June next year. So over to you, Juho.

Thank you, Yrjo. So now to the conventional reporting of H1 after the juicy first bit, especially those juicy finances. So first of all, as you may remember, we even strengthened our Board and especially the management from a business development perspective. So Colin Bond, former CFO of Sandoz, joined our Board, very experienced pharma person. And then Ralph Hughes, who actually had worked with us. Some of you may know him actually from our previous webcast that he was working on the commercial modeling for BEX and already quite well familiar with the commercial opportunity around MDS. So we were lucky to get him joined the company who has been of great value in our business development activities. Then next slide. Quickly over the recent clinical stuff. As mentioned, we received orphans from both the FDA and EMA in the beginning of year-end. Just previously, we had completed enrollment in January. And 3 months from getting every patient enrolled, we announced the positive Phase II, but then we got to present them in upcoming congresses in June '25. And as Petri mentioned, since then, the data has even become stronger and stronger over time. So next slide. For us, it was quite a surprise that we got oral presentations in all the major congresses in the area, the MDS symposium, ASCO and then EHA, while also getting the Phase I results published in Lancet Hematology. I have to say, coming from an academic scientific background, that getting a royal flush like this is hardly impossible, but we were able to achieve that goes to the excitement in the scientific field around BEX and what we're doing. Next slide, please. Then actually, this has just continued, and we weren't even expecting getting orals at the most prestigious Immunology Congress in the world, then also an oral at ESMO, basically total surprise. And then as mentioned, we recently updated the efficacy towards the FDA meeting. And responses over time with hematological recovery just get better. So basically, what has happened in the population is that these composite CRs or near CRs become full-blown CRs per even the old 2006 criteria as the bone marrow recovers and all blood cell lines, be it red blood cells, white blood cells or platelets become normal again. And this is what this drug can achieve, not like the other attempts in this area. Next slide, please. So then actually a bit of a surprise to us also that the U.S. patent office granted us an extension of patent life up to 2040. And this new divisional patent actually is even broader protecting us of treating CLEVER-positive cancers with BEX. So this was a significant patent improvement as well. And as, then in August, Petri took you through, we had a very positive meeting with the FDA, setting us into a registrational trial. So I would like to conclude that H1, at least for us in the company and especially me, I think it's been a strong and steady stage of development. But now in H2, it's time for business because the great thing we've achieved here and like many who have followed us, last year, when I started as CEO, we first look to finance the company, stabilize the company, make it healthy, well functioning and cost efficient. We did that. We were doing good. We had no reason to believe why wouldn't the Phase II eventually be successful. So let's get money and go all the way to end of Phase II. And that's where we have brought the company exactly according to plan. And like Yrjö mentioned, now at the stage of end of Phase II, we're still well financed with a nice reserve of cash in the bank. Next slide, please. So we're entering the next stage of partnering discussions, and there's a lot on the table. There's a lot of options. And I have to say what keeps me up and nice is when I'm thinking of how to -- with these all options and possibilities, regional deal, global deal, what is the right balance of not giving away too much, but also derisking the development plan, but also maintaining shareholder value. As we, here in the company, believe BEX is extremely valuable, and it's not only MDS, it has great potential also in a number of other cancers. To help us navigate through this, we've actually signed up with a top-tier investment bank specialized in deal making to sort of all through the options we have and to maximize shareholder value. Nothing slowing down from the clinical perspective, either next, we will be going to EMA, MHRA on the registrational study plan. And then there's still a number of patients in the ongoing BEXMAB trial. The BEXMAB trial will not be enrolling more. FDA said, we've seen enough there, move up, move ahead. But there's a significant amount of patients still on the drug, doing well, and we will look after them. So there will be follow-up data also coming from the BEXMAB trial. Then the solid tumor stuff is progressing. But like Petri mentioned, getting a big trial started, significant trial, there's a lot of bureaucracy. But I'll let now Petri take you through on the progress we've been making on the solid tumor side.

Thank you, Juho. So let's get to the next slide, please. So this is where I get also very, very excited. So it's about our oncology pipeline. I joined the company a bit more than a year ago. And in the Capital Market Day, I told about the plans in the -- also in the solid tumors. And here, you can see how we are progressing there. So let's not mention too much about the BEXMAB. As you just heard, we just had the FDA meeting, end of Phase II meeting. Then we have the upcoming Phase III preparations that are happening according to FDA's guidance. That's BEX plus AZA. But then shown here in blue are the solid tumor trials. And it's been shown not just by us, but also by external labs that there's nice synergy between chemo plus BEX as well as anti-PD-1 antibody treatment and BEX, and that's a good reason to combine BEX with these agents. And of note, the safety profile of BEX is extremely good. In BEXMAB trial, only 36% of the patients had BEX-related adverse events. So it's actually an ideal candidate to combine. So I start with the first blue arrow there BLAZE. That's the Royal Marsden lung melanoma trial for patients who have progressed despite anti-PD-1 therapy. And their BEX is combined with anti-PD-1 antibody, and we have [ accelerated ] approval for the study protocol and the first patient in is expected at the end of this year. The second one is sarcoma trial, BEXAR trial that will be conducted in Spain and led by the Vall d'Hebron site in Barcelona, and BEX will be combined with the standard of care in sarcomas, doxorubicin frontline patients, metastatic patients. And at the moment, we are finalizing the trial protocol. We expect first patient in H1 next year. Then there's a new one that you have not heard earlier, and that's called FINPROVE. And this is the first trial that will use CLEVER-1 positivity as a selection criteria or as an inclusion criteria to the trial. This will include metastatic breast cancer patients that will be treated with taxane plus bexmarilimab. And why taxane? Since colleagues at Barts Cancer Center in London have shown that taxane plus anti-CLEVER-1 antibody treatment is synergistic. And therefore, we want to test that in the frontline chemo combo among metastatic breast cancer patients. And for that, the first patient in is expected H1 next year. And this FINPROVE trial, although there's -- it's an inclusion criteria to get enrolled to the trial. So in the BLAZE and BEXAR trial, of course, all the data that's coming will be also analyzed according to the CLEVER-1 expression level among the patients. And then finally, the PD-1 basket trial, we call it MATINS-02. So it's in planning. We have made a decision that it will wait until we see initial efficacy readouts from the solid tumor IITs. But for sure, company-sponsored BEX plus anti-PD-1 is there also on the list. And of note, the FINPROVE trial, the breast cancer trial, it's a logical continuation for the MATINS trial, where we saw very nice disease control among heavily treated metastatic breast cancer patients. In the MATINS trial, they had a median of 8 lines of therapy for the metastatic disease. And based on that encouraging single-agent result, we will now jump into the frontline treatment of metastatic breast cancer patients together with a taxane. And with this oncology pipeline, so can really be proud about the progress we've been making, ethics approval in FINPROVE contract has been already signed and steady progress and the estimated time lines or next milestones are there on the right in this slide. And with this one, we can move forward. And -- that's the Q&A slide.

Excellent. Thank you to all of the presenters. Appreciate it very much. They are all on deck now in the hot seat to answer the Q&A. So I'm going to go -- let everyone know a lot of these questions were turned in by those of you who are on the line already. So I want you to know that we absolutely are going to those questions first, but you can also submit more and they will be sent to me. So certainly, a lot of excitement, not only with the current data, but with future potential. Number 1 question we almost always get, right guys, is about time to approval. When do we think -- if we had a crystal ball, what would be our earliest time to approval that we could possibly plan for?

According to the industry standard, it takes 8 to 9 months to get the Phase III trial running and the enrollment phase. And based on that, as was shown also in one of the slides, so there's a possibility for accelerated approval in 2028.

Excellent. And Juho, one for you. The next most asked question, I believe, is about partners and partnering. So can you give us a little more detail on how those conversations are going, especially now with the trial results and the FDA meeting news?

Yes. So this has kind of been the final missing piece of information, the FDA feedback, the clear study design. So now that this is cleared and knowing partners and those of you who have followed, the clinical development plan has changed slightly, but no major significant change. Models will be updated and looking very good. This was the missing piece. Now we have it.

Excellent. So speaking of the trial and the study design, when will you be able to share more about the specifics on that design? This is a specific question. And also, I'll just kind of group these together. Number of sites, geographies, anything more, Petri, that we can share on those fronts?

Yes. We have started the preparations for the Phase III protocol after the FDA meeting feedback. But already at this stage, I can tell that we are talking about most likely about 80, 90 sites in U.S., in Europe and also very likely at least in Japan. And of course, when we move forward with the preparations and finalizing also the protocol, so -- and then also end up in the CRO selection. So this will be more exactly defined, but we are talking multicenter, multi-continental large trial, which is needed to do a very high-quality randomized double-blinded trial.

Yes. And maybe just to close off on that, there's 2 quick questions about were there biomarkers discussed with the FDA and the handling of TP53 patients as a separate entity, did any more on that?

About the biomarker. So we have shown in those meeting presentations that actually most -- all patients in practice, they express nicely CLEVER-1, these MDS patients. And we don't see any differences in the responses according to the preliminary CLEVER-1 expression levels. And that's why we didn't suggest to FDA either that the biomarker would be needed. And that's also in the briefing document, all the data, and they didn't want to discuss about a possible need for biomarker in higher-risk MDS. About TP53, we briefly touched that in our briefing document and in the meeting. We have very nice efficacy, both in TP53 mutants as well as wild-type patients, and there's no reason to restrict the trial just for the other patient population. But for sure, it will be a stratification factor in the protocol so that the results then will be stratified according to the TP53 mutant.

So did we -- it sounds like we received feedback from the FDA regarding relapsed/refractory MDS. Is there any further feedback expected for them regarding that? Or -- and also part 2 of this question is any benefit from Project FrontRunner now that approval has been granted for the first line? Kind of a group question.

Juho, do you want to take it?