Faron Pharmaceuticals Oy (FARN) Earnings Call Transcript & Summary

Hello, everyone. My name is Juho Jalkanen. I'm the CEO of Faron Pharmaceuticals. Welcome to a very important business update. On to the next slide and to the next. A lot has been going on during the past months. The purpose of today is to go through the key learnings we have the impact it has had on our development plan, then go through what we have on the table, how we plan to go forward. But first, before going into more details, we will start by recapping on what has led us to today. So on to the next slide then, highlights of 2025. We started the year by completing the enrollment of the BEXMAB Phase I/II study in relapsed/refractory MDS and frontline high-risk MDS. Three months after first response rate readouts came, we announced the top line and then presented the data back to back at ASCO and EHA. It was some of the best data so far seen, especially in last line high-risk MDS, but also in frontline. CR rate at that time point was 28%. As time flew by, our data just continued improving. Our CR rate eventually even increased to 45%. We also met with the FDA in late summer. FDA guided us to move into a registrational Phase II/III study that would also test even a lower dose, 1 mg per kilo. Ultimately, the purpose of the study would be to test BEX plus AZA against placebo and AZA to definitely define the contribution of each agent in this combination. A very positive thing was that accelerated approval possibility was given by response rate. Later in the fall, our biggest competitor, AbbVie reported their Phase III venetoclax plus AZA, the VERONA trial. Unfortunately, for patients, that trial was negative. It did cast a shadow to the area. But most importantly, its recent learnings have been reported in December, together with our results at American Society for Hematology Annual Conference. So let's move to the next slide and the events at ASH. We continued to report strong data and missing piece in our data was this high CR rate we're seeing, is it lasting? Yes, it seems to be very well lasting. Follow-up is still immature, but median duration of CR is already over 12 months and follow-up is to continue and possibly that is still increasing. In TP53, mutated patient CR rate was an astonishing 70%, and duration CR again over 10 months and possibly still increasing. Historically, usually, this patient population lives 8 to 10 months. Again, for our differentiated biology and mode of action, a lot of transfusion independence which is a lot of patient benefit, highlighting the safety and profile of the drug. Also, the survival was updated for the last line population and even further increased from an earlier reported 13.4 months -- sorry, 13.4 to 14.5 months, it's certainly only 5 to 6 months. But this astonishing data wasn't actually the most important discussions at ASH. Let's move on to the next slide. The most important discussions with investigators, key physicians in the field at MDS evolved around our last line data and getting bexmarilimab to these last line patients. As I mentioned, FDA is still looking for a frontline study to ultimately test BEX plus AZA against AZA alone. Investigators believe that the benefit of BEX in last line on top of AZA is clear and direct proof of the contribution of BEX in this combination. Hence, investigators do not see eye-to-eye with the FDA. Investigators want to produce more data in the last-line setting and take that data back to the FDA and test their view. So led by the City of Hope in the U.S.A. a new investigator-initiated trial in relapsed refractory MDS is being planned. It will be conducted with BEX plus oral HMAs. Oral HMAs are believed to take more and more of the market. Hence, it is also very important to generate data with oral HMAs. But then number two here, probably the most important discussion, in the field of MDS is why do these Phase III front-line studies fail. They categorically fail on the overall survival OS endpoint. This is mainly to post-study treatments, transplantations. So what this actually means that after the response rate readout, the OS gets confounded by what is tried by physicians after failing the study drug. For example, in VERONA, ven plus AZA is not necessarily a comparison to placebo and AZA regarding OS. So I'm going to walk you through why VERONA failed. Because it's filled with important learnings. One, it was a relatively toxic combination. So a lot of treatment interruptions, dose reductions led to a drop in efficacy. So efficacy was negative. Two, it didn't work in low blast count patients. These are seen as a hard-to-treat subpopulation in MDS. We, again, in the ESMO data show that we work well in low blast count patients. Then number three is that in the placebo arm of the VERONA trial, 20% of patients ended up receiving after failing study drug, again, blinded study drug, patients ended up receiving venetoclax plus AZA as their follow-on treatment. So in a sense, 20% of the VERONA trial was a comparison of ven plus AZA against ven plus AZA. Next slide, please. So here, we have listed what the field of MDS has identified as the main reasons of why frontline Phase III studies fail and especially on OS. First of all, MDS is a heterogenic population with different mutations. So cytogenic abnormalities, they are the mutations. BEX has shown that it can clear even complex mutations like TP53 mutated patients. Then as just mentioned, there's subpopulation and responses have seem to vary based on your blast counts. BEX again does not really seem to have this problem as reported at ESMO, which actually leads to the third bullet of different bone marrow microenvironments again, in this heterogenic patient population. We believe that BEX is the first truly disease-modifying agent and we have shown that it normalizes the bone marrow, so making the bone marrow microenvironment healthy again. Then number four, MDS patients are older and frail, deep anemic, neutropenic. They cannot really take toxic treatments, already on a regime of toxic azacitidine. This, we haven't seen a problem with BEX, except with the highest dose 6 mg per kilo. But then underlined most importantly, the reliance on overall survival as the approval endpoint. Alluding to above added toxicity erodes the OS benefit. BEX really does not seem to have this problem, except with the highest dose of 6 mg per kilo. OS is influenced by subsequent therapies, transplantation practices. This is also a problem for BEX, which we cannot avoid. I'm going to give you an example. Since there is really nothing new available for high-risk MDS, it is off-label standard practice in the U.S. after failing frontline patients received venetoclax plus AZA. So ultimately, in the planned Phase III study of BEX plus AZA against placebo and AZA, after failing again, blinded study drug. Around 30% of patients, especially patients coming to the U.S. would after study drug, very likely received ven plus AZA. So the OS read out even for the BEX trial would not be BEX against single agent. AZA will be BEX plus AZA against ven plus AZA or around 30% of patients. This is an unnecessary risk to take. So the solution is going for approval without relying on OS. Also last year, the FDA issued their first guidance for industry concerning MDS. The guidance states probably because FDA has been seeing this issue that CR alone with duration can be used as the approval end point. There's already precedents in the field from a drug named Pevonedistat from Takeda. This is actually not a new thing. This is already very well-known and understood in solid tumors. And in front-line solid tumor trials instead of OS, it's allowed to use PFS or CR with duration. On to the next slide. So with these learnings, we have taken the planned Phase II/III trial and adjusted to mitigate the OS risk. First of all, we're not looking to use OS, but instead, we're looking to use CR with duration for the actual approval endpoint. For that, FDA will require new meeting. They already want us to come after the Phase II part. So it's not actually a new meaning they wanted us to come anyway. But instead of doing 400 patients blinded, we will do the Phase II part unblind, have a thorough analysis of data, sit down with the FDA, get approval for CR as the approval endpoint. At that time point, at the Phase II readout after the blue part, depending on the data, we may have also answered FDA's remaining question on the contribution of agents, which could open up the discussion again for actual approval for the last line patients, which are in the most need of something new. So basically, this is not a big change to what we have planned but we see this as a staged more derisked approach that eventually, if CR is the final approval is more cost efficient than the original framework set at the FDA meeting. Because using CR is going to cut away the OS follow up. By powering, it's actually going to require less patients. So that's why we believe it is more cost effective. It's even further derisked. What is also very important in this decoupling of the Phase II from the Phase III and having a thorough analysis of that data, we can make further better adjustments to get the Phase III part right. There is nothing more expensive than a failed Phase III. Now we have worked with this plan with regulatory experts in the field, even a former division head from the FDA, all the physicians, key opinion leaders in MDS and also our potential pharma partners. Pharma partnering by far, is not over. It's been delayed and it now is reopened regarding this new development plan. And pharma has been with us designing this. We, at Faron are actually super happy about this. This looks like something that's even within our reach. Next slide, please. So the fundamentals around the core business are strong, and nothing has changed in those. HR MDS remains an area of persistent and profound unmet need. We have reported some of the best data ever seen in this area. We have reported one of the best safety profiles for any drug candidate for high-risk MDS. And we have reported this in one of the worst populations. So compared to the data sets with the other agents, our data set is clearly the worst. And now we believe we have the best possible development plan to mitigate all known and possibly even unknown risk for the Phase III with this staged approach of a Phase II confirming the signal approval endpoints before entering the last stage. With this change in development plan, we are offering a new value inflection point with randomized Phase II data in frontline high-risk MDS. In addition to that, like we have many times discussed, we see this has great potential also in a number of other cancers where macrophages are the source of treatment resistance. So if we move on to the next slide, what we are bringing to the table is this highly meaningful new readout for the industry, for the MDS community. Then also, as mentioned, not by us, by investigators. They want to pursue and push this to the last line patients. We are absolutely and totally supportive of that. Then we want to show to the world that this could overcome treatment resistance also in very difficult to treat cancers like soft tissue sarcomas, metastatic breast, the melanoma, non-small cell lung cancer and AML. But we will come later on and present these plans in more detail during the spring. Thank you. And then we will do this same in Finnish for our Finnish audience. And after that, we will have a Q&A. So we're going to start from the top. And meanwhile, the U.S. audience or U.K. audience, English-speaking audience can type in their questions for the Q&A. But let's move on, and I will change to Finnish now. [Foreign Language] And now to the Q&A. Thank you for waiting our English-speaking audience.

Thank you for the excellent presentation. There is still a lot of questions about partnering. So what details can you provide to us time lines? What's the feedback from partners for this new development plan and so on.

Like I mentioned, it really seems that pharma likes this new development plan and a lot of pharma companies, the most knowledgeable ones have been even in putting into this. So some are already very close to this. Discuss terms. I may mention that we came to discuss terms even in late '25, actually, we feel comfortable with terms discussed. But this changes the game. There's slightly change in approval time line, trial costs and so forth. So this is basically a reset and on we go again. So that's where we are currently. Important for us as a pharma company and one of the leading companies in MDS is not to stand still and rely on partnering discussions. We need to drive this program forward. So that's why we're coming with this offering and a new value inflection point for our shareholders.

Thank you. What are your expectations on the cost of this new trial design? And could there be possibility or some additional savings for this new trial design?

There is -- as the company has announced, we're looking to raise $40 million, at least is part of the trial, I may say, it's a bit over. They're saving possibilities. Then the Phase III part would be $100 million, basically, but we're not going for that. Savings could be that this isn't, for example, blinded. It could be open label. We could -- we cannot continuously be looking at the data. But let's say, for example, that we're not able to raise enough. We can do this open label and raise along the way with interim readouts. That is not the preferred way to have a golden standard blinded trial for pharma. So that is another saving. Another saving is running it in cheaper countries, but we do want a high-quality trial again and work with high-quality sites in the U.S. and EU. But that's an alternative to generate patients, generate data in some low-cost countries. That's another possibility. We are looking into absolutely any possibility.

Thank you. When do you think you can provide the Phase II randomized data in high-risk MDS?

November '27.

Has the market size of high-risk MDS changed?

No, it hasn't. But now that venetoclax trial failed, market is unchanged, but now competition is extremely limited, leaving us more market basically.

What gives you the confidence for initiating IIT trial in relapsed and refractory MDS?

It's not actually the confidence we have, it's the confidence doctors that have treated patients with the BEX plus AZA have, which, to us, again, is a very strong sign on what they have seen and witnessed and the patient benefit they can bring out. I'll give an example of a discussion we had when City of Hope approached to do this trial. We said, could it have a control arm to make it stronger, for example, investigator's choice as a control arm. City of Hope said, no, they believe even that control arm would be unethical given that BEX be plus HMA is available. That gives us confidence.

Thank you. On the business update that was published on Monday evening that you also said that there would be some IIT with BEX. Can we speak a bit more about these? What are these for? Did the investigators come to you? Who are they?

Yes. Many have come to us and we're constantly actually approached for new IITs, but there's just a limited number that we can support. So we actually have more proposals that we can support. We have taken -- the problem with IIT is that they may be slow. These are usually academic institutes, they have their daily work. So we have picked the ones we are known to be very good, have dedicated people to do clinical trials, so that they wouldn't be slow and preferably also people we have worked with. So I'm going to give a couple of examples again. For the FINPROVE breast cancer trial, and a University Hospital, one of the best clinical oncology sites in this country, very well recruiting. We work with them a lot. Then again, the BLAZE trial, which we have announced in melanoma and lung, we're working with Royal Marsden in London. It was a site for the first in-human MATINS trial, a very good site, very good PI, we have worked with for many years, just to give a couple of examples.

Thank you. I guess that the Phase II and Phase III will be separate, but do you believe it's possible to implement an adaptive protocol for a smooth transition into Phase III? And how many clinical sites are you considering in Phase II?

That is an excellent question. That's currently something we're looking into. Actually, this could possibly be. There's also Long answer. It could be under the same protocol, make it possibly smoother. But then actually separating the protocols allows us to have a more cost-efficient Phase II. A Phase II doesn't need all the bells and whistles of our Phase III. So actually separating them you could make the Phase II more cost efficient. And then you could overlay the studies. We can have that Phase III preparation ongoing and ready to go as soon as we feel confident that it's there and we launch it. So then separating you could overlay. When one protocol you're aligning, there's advantages to both. And then what was the question at the end again. There's something else on that question.

We should move forward for the next question.

Okay. All right.

Is there any risk that patients on placebo arm will be also given venetoclax plus AZA?

Yes, after failing study drug, that is what they will receive, especially in the U.S., and that will destroy our OS readout.

Thank you. Are there any new trials emerging in MDS space that we should know about?

There is Chinese BCL-2 inhibitor, so that's basically the same as venetoclax. So I hate to call it the Chinese venetoclax. But that is entering Phase III. Physicians do not expect much. Again, the profile is very similar to venetoclax, and that already failed. It has a similar trial design as venetoclax. That is the most advanced. Then there is early Phase I stuff emerging, but they're still pretty high. That's why it's also important to stay ahead of the pack and keep this program going forward and running for approval.

Thank you. What gives you confidence that complete response is an achievable and appropriate approval endpoint in frontline high-risk MDS?

Just based on the guidelines FDA has issued for the industry and then actually in our own FDA minutes, they do bring that up. That may be the actual approval end point. So both documents in writing statement.

Thank you. And then for the final question, what is the status of the accelerated approval? And what you're thinking around that?

So for frontline, we're basically going where we would have had accelerated approval, we're going for full approval based on CR in frontline. But then again, for last line, we shouldn't build our hopes and dreams on it. But in last line after the Phase II, which has possibly addressed FDA's question on contribution of each agent, possibly for last line that could be achieved then. But again, let's not build on it. Let's build on this frontline program. And it's actually where actual approval was planned on CR. That go for approval.

Thank you, Juho. That was last question.

Thank you, everyone. Have a nice day.