Faron Pharmaceuticals Oy (FARN) Earnings Call Transcript & Summary

Hello, everyone. Welcome to the Faron Pharmaceuticals Annual Results Webcast for 2025. My name is Juho Jalkanen, the CEO of the company. Here with me today are new CFO, Jurriaan.

Hi. So my name is Jurriaan Dekkers. I started as CFO on the 1st of December 2025, replacing Yrjo, who decided to retire by the end of March this year. I've been working in different global, regional and local finance roles over the last 25 years with a focus on health care and biotech. My last role was at ProQR Therapeutics, CFO of a Dutch-based Nasdaq-listed company. Before that, I've been working at AstraZeneca, CFO in the Netherlands, but also for Acerta and DaVita Medical Group. Together with my wife, I have two daughters, and I enjoy sailing a lot.

Thank you, Jurriaan. All right, everybody. Great to be here with you today. I think we have some fabulous results to go over for the past year. We will be making forward-looking statements also into the future, so our basic disclaimer. And on today's agenda, I'll be taking you first on the main events of the year. Jurriaan will cover the financial results and then into the outlook and Q&A. First of all, '25 has been a remarkable year for us, putting us in a leading position in the treatment of high-risk MDS. We have delivered outstanding clinical results in both frontline and last-line populations with deep and durable complete remissions and transfusion independence. This translates to significant long-lasting patient benefit. Actually, looking back at our dataset, we have been treating a very severely ill population with a high risk score, even highlighting these results further. Meanwhile, unfortunately, some of our competitors in this space have unfortunately failed, making us now a leading candidate for this indication. In the second half of this year, we had a successful end of Phase II meeting with the FDA, setting us moving into a Phase II/III trial in the frontline setting. Ultimately, what the FDA wants us to answer is bex plus aza against aza and placebo in a blinded manner, the ultimate test for a drug for approval. With our differentiated biology and despite the setbacks in the field with our differentiated development plan, which we will go through in more detail, we believe we are positioned for success. We have been doing this all with a solid cash position, even repaying our IPF debt facility in a challenging equity market for biotechs. So truly a strong year of performance in some challenging times. And talking about flying the airplane, we have been building the airplane while we fly it, strengthening both our Board and management team. So as Jurriaan mentioned, we want to thank our long-time CFO, a true Faronian, Mr. Yrjo Wichmann, who actually will be here with us today handling the Q&A. and welcoming Jurriaan in his position. Then we've strengthened the Management Board and our BD team with Ralph Hughes, former Pfizer, Mundipharma and PharmaVentures. And to our Board, an absolutely marvelous chap, Colin Bond, a big heavyweight. So truly a great team taking the company further. But let's then go in more detail on the events, especially the clinical and regulatory events of the year. So we started the year in January by completing the enrollment of the BEXMAB Phase I/II open-label trial, then received orphans from EMA and FDA. Fast Track had already been given previous year. After completing enrollment, some 3 months later, you start seeing the responses. Top line was reported in April and then presented back-to-back in oral sessions at ASCO and EHA. First of all, last-line response rate, 63%, survival at 13.4 months. Frontline response rate, 72% and CR rate at 28%. We actually hit exactly our mark because at this similar stage, our closest competitor, venetoclax, BCL-2 inhibitor had 75% ORR and 29% CR before moving into their Phase III trial. But what we actually saw over the year is that already at EHA there's more happening in the new frontline population. ORR increased first. But later on, our CR, complete remission, kept on increasing. We saw the responses deepen. We saw the bone marrow become healthy. It started producing more blood cells. So what we actually witnessed over the year was a truly disease-modifying drug with bex. And at the end of the year, our CR landed at 45%, pretty exceptional and the duration of CR being over 12 months and counting. And the majority of patients also became transfusion independent, which is a very important factor in this indication. Meanwhile, as mentioned, unfortunately, venetoclax failed in their Phase III effort due to multiple reasons. We have taken these learnings and now are mitigating the risk of these learnings going further. So this is comparing our data to what has been trialed or what could one expect from aza. So the upper part, our CR rate, again, 45% with good duration. And previous failures, magrolimab, venetoclax, sabatolimab, they were at this point with their Phase Ibs or Phase I/IIs, seeing CRs from 28% to 33% basically. And they went mainly directly into a big Phase III trial after that. We are not now taking that approach. Then on the lower part, I just want to also highlight our last-line survival, which truly stands out. And usually, if you can make it in last line, you can make it anywhere. So as mentioned, other drugs in development move directly with this level of margin compared to aza into their frontline trials against single-agent aza. Have a look at our margin. We're still not making that step, thanks to the recent learnings. So instead, what we're going for is a Phase IIb in blue here of 90 patients. We are still going to do 2 doses by the request of the FDA, even going 1 dose lower to 1 mg per kilo, our chosen dose already being 3 mgs per kilo. So that's what we're aiming for. And that is a significant derisking step for entire program and ultimately, a very important step also to answer the question of what is the contribution of each agent in this combination treatment. So that could possibly address FDA's question, and we could open the dialogue also for the relapsed/refractory population where there's nothing available that when they should be available to getting this treatment combo. Then to the financial results and over to you, Jurriaan.

Thank you, Juho. We ended the year with a cash position of EUR 12.3 million, which is slightly higher than the EUR 9.5 million at the end of 2024. This is mainly driven by the successful raise of EUR 12 million in February 2025 through a private placement, but also the combination of the convertible bond arrangement for up to EUR 35 million in April '25. The first tranche of that convertible bond was drawn in April '25 and partly used to repay the IPF loan. The second tranche was drawn in December '25 for the amount of EUR 10 million. We ended the year with a loss of EUR 27.3 million and net assets of minus EUR 18.5 million. At the end of the year, we had 114.4 million shares outstanding. A couple of highlights I want to share about 2026. In January and February '26, the company approved the subscriptions based on the special rights in connection with the amortization of the first and second tranche bonds. In February, we announced the plan for the rights offering, approximately EUR 40 million, to strengthen our capital structure and drive our lead asset, bex, to key milestones. In addition, the company may conduct a directed share issue. Early this week, on the 2nd of March, the EGM authorized the Board to resolve on the issuance of a maximum of 80 million new shares. On the 3rd of March yesterday, the company had 119.5 million shares outstanding.

Thank you, Jurriaan. So Building on our hard work and success in 2025, what do we plan to do next? As Jurriaan already alluded to, we plan to go for more. We plan to raise EUR 40 million to deliver that Phase IIb gold standard randomized trial showing bex plus aza against aza alone. Further, physicians in the field of MDS, especially relapsed/refractory MDS feel that it is clear that the benefit in last line comes from bex. They want to produce more data in this, so led by City of Hope, there will be a trial producing also more data for regulatory purposes in the last-line setting. With these excellent results we have been seeing, there's a lot of interest among physicians to investigate bex further in a number of indications. So we have what we call investigator-initiated trials, IITs. It means a physician wants to test in the patients they see, the drug. This is a very cost-efficient way to generate good data, and we're looking at indications from soft tissue sarcoma to breast cancer, melanoma, lung cancer and AML. We will come back later this spring to give you more details on these upcoming trials. Just to mention, a lot of these are already in regulatory submission, looking to get first patient in still the first half this year. So a strong set of deliverables. So this is the anticipated news flow. And a company our size, our resources producing this wave of data, I say, is amazing. But this is what we're going for because as often mentioned in the past, we believe bex is not only a drug for MDS, but it is a drug to overcome treatment resistance where macrophages are the problem of cancer spread and metastasis. So a very busy schedule ahead for us and our team. Just to wrap up, the concluding slide, highlighting the essentials. This is what I call the fact sheet, high-risk myelodysplastic syndrome, absolutely deadly form of leukemia, remains a profound need, nothing really out there. Now we seem to be in leading position. Let's go for it. We have shown some of the best results so far in this indication. We have shown the best efficacy among the drugs in development for this indication in one of the worst populations reported. And now we have what we believe is the best possible development plan to mitigate all known and possibly even unknown risk. So what we're offering is a considerable value inflection with not a crazy amount of money to deliver the Phase II in frontline high-risk MDS as well as a number of new indications to prove that bex works. Thank you. Over to Q&A then.

Okay. There has been a number of questions coming in. And the first one goes to Jurriaan. What is the timetable of the offering planned?

Yes, I can share that we are progressing well, and we will announce more in due course.

The next one comes to Juho. What does the City of Hope want to run as -- why does the City of Hope want to run an R/R-MDS trial? Have you considered running one yourself despite what the FDA has said?

There's multiple reasons for still running a trial in the last-line setting. Ultimately, I feel most important is there's nothing really out there. So a trial as such gives a possibility for last-line patients to receive bex plus aza, hopefully getting benefit at that point. So that is for me and I think for the physicians, one of the most important things. Then discussing with the physicians, especially at ASH, they see that it is very clear that the benefit in last line comes from bex. We actually did discuss with the investigators who are putting together the trial that would they consider having a control arm of investigator's choice, which actually would increase the meaning or the power from a regulatory perspective of this dataset. They actually felt that that's even unethical considering that bex and aza is available. So they didn't even consider it ethical giving investigator's choice or best supportive care in comparison. And ultimately, actually, it's not about aza. So they're planning to run it with oral HMAs. What the physicians in the U.S. are saying that oral HMAs are getting more and more ground. They're likely to become the new standard of care instead of aza. So actually, for us as a company, looking to become the new standard of care agent with HMAs, it is also very important to generate data with these oral new HMAs.

And then we have an analyst question. As you observe responses deepening over the time in the Phase I/II data that you see, shall we expect that the CR rates for the randomized Phase II portion will be mature enough at year-end '27? Or shall we expect more during the follow-up period?

We are looking into that closely. We believe the readout is positioned where we will have, I would say, the far majority. Everybody should be at their CR at the time of the readout. Because again, it's going to be a very important readout. So let's not take it too early.

Then the following question also to Juho. Updated BEXMAB data show strong signals in frontline HR-MDS, including TP53-mutated patients. What's your biomarker-driven strategy for enrichment or companion diagnostic development?

So in MDS, everybody is basically Clever-1 positive. So there really doesn't seem to be a need for patient selection. So we're not running a diagnostic with it, but there are very interesting subpopulations, as mentioned in the question, for example, the TP53 mutated, where we had an astonishing CR of 70%, so 7-0. And that's an interesting population where really nothing works. Then there's another very interesting subpopulation, which is what the area calls or the field calls low blast count patients, meaning that there's not a lot of those blasts or cancer cells to be killed. We actually seem to work very well in this population, which is seen as a very difficult population because cancer-killing drugs don't really benefit in this population, but we, as a disease-modifying agent, really seem to work in this difficult population. So this is why actually this Phase II part of the Phase II/III is very important that we could look into then doing the final Phase III in a specific subpopulation, be it, for example, the low blast count population or the TP53 population, because actually, then you could get an even more cost-efficient, smaller Phase III in a subpopulation and get approval with a very limited Phase III because ultimately, you want your first approval. We have already shown that this is still an all-comer drug, but seems to work very well in the subpopulation. So go for a first approval, go for it quick. It will be used in this entire population.

Okay. You report that the bexmarilimab-azacitidine combination is very well tolerated in a frail population. What are the most frequent adverse events observed to date, their grades and any emerging risk signals with longer follow-up?

Excellent question. Now with substantially longer follow-up, we're not seeing anything more in the safety signals. So it's remained constant. So nothing new even you're long on the treatment. Then still, as seen already in this population, the most frequent adverse event is neutropenia and severe neutropenia. It comes with the disease and aza usually makes it worse. But to give light and understanding on it, what we're seeing actually with bex plus aza that severe grade 3 to 4 neutropenia is around 34%. And even with single-agent aza, it's been around 60%. So crazy enough, it looks like the bex-aza combination is improving the safety profile of aza. And this actually will be then possibly proven in the randomized dataset planned next. And if that is true, that's going to be truly amazing. But there is a biological rationale for this because we are inducing hematopoiesis in these patients and making neutropenia and anemia better.

Okay. A couple of more questions. Beyond the planned rights issue, what -- and this goes to Jurriaan. Beyond the planned rights issue, what contingencies are in place, e.g. bridge debt, cost deferrals, business development milestones, to secure over the 12 months runway?

Based on the current status of the process, we are comfortable we can extend our cash runway by more than 12 months until the readout of the Phase II. But the company continuously evaluates all available resources for funding to be able to act in case needed, but more information will be given in due course.

And then to Juho, back. You've decided to run the Phase II portion separately before finalizing Phase III in frontline high-risk MDS. What are the exact decision gates and success criteria that would trigger a Phase III?

Excellent question. So as seen with previous agents, let's say, aza alone would be 17% CR, an increase of 10% to that, so to 27%, 28% is seen as positive, and this is what led the others to move into a Phase III. But that was those open-label datasets compared to historical comparison. We will now have a randomized dataset real time. So that is the comfort level of moving into Phase III and announcing positive. So let's take the aza 17% CR to 27%. But ultimately, what -- we're going to go for doubling the CR because then the Phase II dataset would have sufficient power to have some very interesting and meaningful regulatory discussions. So we're looking to double it. So let's give an example how we're actually powering it is that aza would be 17% and we would be 35% in CR.

And the final question to conclude this 2025 Q&A is: an outlook to the '26, what catalysts should investors track during 2026?

During '26, especially that we get first patients in, in the solid tumor trials, of course, our offering that is planned. That is one big, major event coming very soon, then that we get also the first patient in into the Phase II in high-risk MDS. And then towards the end of the year, the IITs are going to be open label again. I can't really say yet when data will come or will be reported, but they will be open label. So they will be reporting data more constantly while we wait for the readout of the actual frontline randomized MDS trial.

So that was all from the Q&A.

Thank you, everyone. Have a great day.

Thank you.