Faron Pharmaceuticals Ltd. Proposed Placing And Subscription To Raise Up To £10.0 Million
TURKU – FINLAND, 7.00 A.M. GMT, 5 October 2017 – Faron Pharmaceuticals Oy (“Faron” or "Company") (LON: FARN), the clinical stage biopharmaceutical company, is pleased to announce a proposed placing of up to 1,123,750 new ordinary shares in the capital of the Company (the "Placing Shares") and a proposed subscription of up to 126,250 new ordinary shares in the capital of the Company (the “Subscription Shares”) at a price of 800 pence per share (the "Issue Price") to raise, in aggregate, up to approximately £10.0 million before expenses.
KEY HIGHLIGHTS
• Proposed conditional placing of up to 1,123,750 Placing Shares with institutional and other investors (“Placing”) and conditional subscription of up to 126,250 Subscription Shares with certain Scandinavian based investors and a Director (“Subscription”), each intending to invest at the Issue Price, in order to raise, in aggregate, up to approximately £10.0 million before expenses
• The Placing Shares and Subscription Shares if subscribed for in full will represent, in aggregate, approximately 4.3% of the Company’s registered number of shares as enlarged by the Placing and Subscription
• The Issue Price of 800 pence per share represents a discount of 2.1% to the closing mid-market price of 817.5 pence on 4 October 2017, being the last practicable date prior to this announcement
• The net proceeds of the proposed Placing and Subscription (of approximately £9.4 million if fully subscribed) would be used to fund:
o the Company’s Traumakine commercialisation preparations and support the launch of an expanded access program for Traumakine on the successful conclusion of the INTEREST trial
o the expedited expansion of the Clevegen clinical development program and manufacturing of Clevegen GMP material
• The proposed Placing and Subscription is to be implemented through a private placement with a limited number of institutional and other investors. It is expected that finalisation of the proposed Placing and Subscription will commence immediately following this announcement. As soon as practicable after the Placing and Subscription have been finalised, a further announcement will be made containing details of the final number of Placing Shares and Subscription Shares to be issued at the Issue Price by the Company (together with the approximate gross proceeds of the Placing and Subscription). Further terms of the proposed Placing and Subscription are set out below
• Panmure Gordon (UK) Limited (“Panmure Gordon”) is acting as Sole Bookrunner and Corporate Broker to the Company and Cairn Financial Advisers LLP (“Cairn”) as Nominated Adviser to the Company
Commenting on the proposed Placing and Subscription, Dr Markku Jalkanen, CEO of Faron, said: “Given the recent positive advice from the FDA, Faron is now rapidly preparing to become a commercialisation-stage company moving its focus for Traumakine towards the market. This funding round will help us to commence commercialisation preparations ahead of read-out from the INTEREST trial and expedite our clinical development activities for Clevegen®. We are very excited about the value inflection horizon for Faron and are determined to bring our important and life-changing products to patients as quickly as possible.”
REASONS FOR THE PROPOSED PLACING AND SUBSCRIPTION
Support the Company’s preparation for the commercialisation of Traumakine
• Traumakine®, the Company’s lead product, could be the first ever drug for Acute Respiratory Distress Syndrome (ARDS) upon approval with blockbuster potential.
• In anticipation of the pivotal clinical results for its INTEREST Phase III study for Traumakine for the treatment of ARDS, and following advice from the FDA that Faron can proceed directly to Biologics License Application (BLA) submission pending positive results from its two on-going Phase III trials, the Company wishes to accelerate the preparation for the commercialisation of Traumakine by raising capital to support the outsourcing costs related to preparation of the BLA for FDA and the Marketing Authorisation Application (MAA) for EMA in collaboration with a global commercial service house.
o Faron anticipates that recruitment of the targeted 300 patients to the INTEREST Phase III trial will complete during the fourth quarter of 2017. Subject to positive results, the Company will submit its conditional MAA filing. Any requirement for a second Phase III trial will be determined by the EMA following analysis of the primary endpoint of the INTEREST Phase III trial, and would likely include an interim stop for early efficacy if the trial is required.
• Faron plans to initiate an expanded access program for Traumakine to start once the INTEREST trial is closed to new patients, and will utilise additional working capital from the Placing and Subscription to create the infrastructure for this expanded access program and support the supply of Traumakine to its participants. This will allow compassionate use of Traumakine in eligible named patients at European and North-America intensive care unit (ICU) hospitals who may benefit from Traumakine treatment ahead of the product's potential regulatory approval, in addition to generating late phase data on the benefit of the treatment outside a clinical trial.
Advance the clinical development of Clevegen® in several indications
• In advance of the Company’s first clinical trial program in cancer patients for Clevegen®, its novel immune switch antibody, which is expected to commence in 2018, the Directors require additional capital in order to undertake the first full scale GMP production of Clevegen.
• Faron intends to expedite the expansion of its planned Clevegen clinical development program in several solid tumours (liver, pancreas, ovarian and melanoma) in order to obtain accelerated safety and clinical data read-outs, with the protocol design to be submitted to the UK regulatory authorities MHRA later this year.
• The Directors believe that Clevegen's ability to remove local immune suppression by targeting pro-tumoural type-2 macrophages, while leaving intact the type-1 macrophages that support immune activation against tumours, could help the human body's own immune system to combat cancer.
DETAILS OF THE PROPOSED PLACING AND SUBSCRIPTION AND ISSUE OF EQUITY
Subject to the Placing Shares and Subscription Shares being subscribed for in full, they are to be issued by the Company pursuant to the Directors' existing authority to allot ordinary shares in the capital of the Company (“Ordinary Shares”) for cash on a non-pre-emptive basis, as approved by shareholders at the Company's last annual general meeting which was held on 16 May 2017. The Company has received non-binding indications of interest from potential institutional investors and a Director for the Placing and Subscription during a pre-marketing process.
In connection with the proposed Placing, the Company has entered into a placing agreement with Panmure Gordon and Cairn (together the "Placing Advisers") (the “Placing Agreement”). Pursuant to the terms of the Placing Agreement, Panmure Gordon has agreed to use its reasonable endeavours to procure placees for the Placing Shares at the Issue Price. The Placing is conditional upon, inter alia:
• the Placing Agreement having become unconditional in all respects;
• the Company having performed, in all material respects, its obligations under the Placing Agreement and not being in material breach of the Placing Agreement;
• legally binding commitments being received in respect of all of the Placing Shares and the Subscription Shares (the “Placee Condition”); and
• the Placing Shares and the Subscription Shares being issued and being registered at the Finnish Trade Registry (the “Issue Condition”).
The Placing is being implemented through a private placement with a limited number of institutional and other investors. The Placing Agreement contains customary warranties and an indemnity from the Company in favour of the Placing Advisers together with provisions which enable the Placing Advisers to terminate the Placing Agreement in certain circumstances before satisfaction of the Issue Condition in respect of each stage of the Placing, including where there has been a material breach of any of the warranties in the reasonable opinion of any Placing Adviser or where there is a material adverse change in the business or financial affairs of the Company. The Company has agreed to pay Panmure Gordon and Cairn certain commissions and fees for their respective appointments in connection with the Placing. In order to comply with local securities law in Finland, the Issue Condition will be satisfied prior to Admission. Accordingly, pursuant to the terms of the Placing Agreement, Panmure Gordon has agreed to underwrite the subscription for and payment to the Company of the Issue Price for the Placing Shares upon satisfaction of the Placee Condition.
Assuming that the Placing Shares and Subscription Shares (“New Shares”) are subscribed for in full, the Placing and Subscription is expected to be effected in two stages in anticipation of allowing investments made by certain venture capital trust and enterprise investment scheme funds, (the “VCT Investors” and the “EIS Investors” respectively) to qualify under VCT and EIS legislation. Certain of the Placing Shares, including those to be issued to the VCT Investors and the EIS Investors, and certain of the Subscription Shares are expected to be issued (the “First Issue Shares”) and an application made for admission of the First Issue Shares to trading on AIM (“Admission”). It is expected that Admission of the First Issue Shares will become effective and that dealings in the First Issue Shares will commence on or around 8.00 a.m. on 11 October 2017. A further announcement will be made to confirm the outcome of the Placing and Subscription (subject to, inter alia, satisfaction of the Issue Condition and Admission) and to confirm the application has been made to AIM for the Admission of the First Issue Shares in due course, but by no later than 4.30 p.m. on 9 October 2017.
Immediately following Admission of the First Issue Shares, the remaining Placing Shares and Subscription Shares are expected to be issued (the “Second Issue Shares”) and an application will be made for Admission of the Second Issue Shares. It is expected that Admission of the Second Issue Shares will become effective and that dealings in the Second Issue Shares will commence on or around 8.00 a.m. on 13 October 2017. The issue and allotment of the Second Issue Shares is conditional upon, inter alia, Admission of the First Issue Shares taking place, the Issue Condition relating to the Second Issue Shares being satisfied and the Placing Agreement otherwise remaining in full force and no material breach of its terms having occurred. A further announcement will be made to confirm Admission of the First Issue Shares and to confirm the application has been made to AIM for the Admission of the Second Issue Shares.
The Board believes this fundraise will enhance working capital to support the Company’s corporate strategy to maximise shareholder value in the longer term, and accordingly will continue to evaluate funding options over the medium term.
MARKET ABUSE REGULATION
Market Soundings, as defined in the Market Abuse Regulation ("MAR"), were taken in respect of the proposed Placing and Subscription with the result that certain persons became aware of inside information, as permitted by MAR. That inside information in relation to the Placing and Subscription is set out in this announcement and has been disclosed as soon as possible in accordance with paragraph 7 of article 17 of MAR. Therefore, those persons that received inside information in a Market Sounding are no longer in possession of inside information relating to the Company and its securities.
Panmure Gordon (UK) Limited, which is regulated in the UK by the Financial Conduct Authority, is acting as sole bookrunner and corporate broker to the Company and no one else in connection with the Placing. Accordingly, it will not be responsible to any person other than the Company for providing the regulatory and legal protections afforded to its clients nor for providing advice in relation to the contents of this Announcement or any matter, transaction or arrangement referred to in it.
Cairn Financial Advisers LLP, which is regulated in the UK by the Financial Conduct Authority, is acting as nominated adviser for the Company and no one else in connection with the Placing. Accordingly, it will not be responsible to any person other than the Company for providing the regulatory and legal protections afforded to its clients nor for providing advice in relation to the contents of this Announcement or any matter, transaction or arrangement referred to in it.
ENDS
For more information please contact:
Faron Pharmaceuticals Oy
Dr Markku Jalkanen, Chief Executive Officer
E-mail: investor.relations@faron.com
Consilium Strategic Communications
Mary-Jane Elliott, Chris Welsh, Philippa Gardner, Lindsey Neville
Phone: +44 203 709 5700
E-Mail: faron@consilium-comms.com
Westwicke Partners, IR (US)
Chris Brinzey
Phone: +1 339 970 2843
E-Mail: chris.brinzey@westwicke.com
Cairn Financial Advisers LLP, Nominated Adviser
Emma Earl, Tony Rawlinson
Phone: +44 207 213 0880
Panmure Gordon (UK) Limited, Sole Bookrunner and Corporate Broker
Freddy Crossley, Duncan Monteith (Corporate Finance)
Tom Salvesen (Corporate Broking)
Phone: +44 207 886 2500
Whitman Howard Limited, Joint Corporate Broker
Ranald McGregor-Smith, Francis North
Phone: +44 207 659 1234
About Faron Pharmaceuticals Ltd
Faron (AIM:FARN) 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, vascular damage and cancer immunotherapy. The Company's lead candidate Traumakine, to prevent vascular leakage and organ failures, is currently the only treatment for Acute Respiratory Distress Syndrome (ARDS) undergoing Phase III clinical trials. There is currently no approved pharmaceutical treatment for ARDS. An additional European Phase II Traumakine trial is underway for the Rupture of Abdominal Aorta Aneurysm (“RAAA”). Faron’s second candidate Clevegen is a ground breaking pre-clinical anti-Clever-1 antibody. Clevegen has the ability to switch immune suppression to immune activation in various conditions, with potential across oncology, infectious disease and vaccine development. This novel macrophage-directed immuno-oncology switch called Tumour Immunity Enabling Technology ("TIET") may be used alone or in combination with other immune checkpoint molecules for the treatment of cancer patients. Faron is based in Turku, Finland. Further information is available at www.faron.com
KEY HIGHLIGHTS
• Proposed conditional placing of up to 1,123,750 Placing Shares with institutional and other investors (“Placing”) and conditional subscription of up to 126,250 Subscription Shares with certain Scandinavian based investors and a Director (“Subscription”), each intending to invest at the Issue Price, in order to raise, in aggregate, up to approximately £10.0 million before expenses
• The Placing Shares and Subscription Shares if subscribed for in full will represent, in aggregate, approximately 4.3% of the Company’s registered number of shares as enlarged by the Placing and Subscription
• The Issue Price of 800 pence per share represents a discount of 2.1% to the closing mid-market price of 817.5 pence on 4 October 2017, being the last practicable date prior to this announcement
• The net proceeds of the proposed Placing and Subscription (of approximately £9.4 million if fully subscribed) would be used to fund:
o the Company’s Traumakine commercialisation preparations and support the launch of an expanded access program for Traumakine on the successful conclusion of the INTEREST trial
o the expedited expansion of the Clevegen clinical development program and manufacturing of Clevegen GMP material
• The proposed Placing and Subscription is to be implemented through a private placement with a limited number of institutional and other investors. It is expected that finalisation of the proposed Placing and Subscription will commence immediately following this announcement. As soon as practicable after the Placing and Subscription have been finalised, a further announcement will be made containing details of the final number of Placing Shares and Subscription Shares to be issued at the Issue Price by the Company (together with the approximate gross proceeds of the Placing and Subscription). Further terms of the proposed Placing and Subscription are set out below
• Panmure Gordon (UK) Limited (“Panmure Gordon”) is acting as Sole Bookrunner and Corporate Broker to the Company and Cairn Financial Advisers LLP (“Cairn”) as Nominated Adviser to the Company
Commenting on the proposed Placing and Subscription, Dr Markku Jalkanen, CEO of Faron, said: “Given the recent positive advice from the FDA, Faron is now rapidly preparing to become a commercialisation-stage company moving its focus for Traumakine towards the market. This funding round will help us to commence commercialisation preparations ahead of read-out from the INTEREST trial and expedite our clinical development activities for Clevegen®. We are very excited about the value inflection horizon for Faron and are determined to bring our important and life-changing products to patients as quickly as possible.”
REASONS FOR THE PROPOSED PLACING AND SUBSCRIPTION
Support the Company’s preparation for the commercialisation of Traumakine
• Traumakine®, the Company’s lead product, could be the first ever drug for Acute Respiratory Distress Syndrome (ARDS) upon approval with blockbuster potential.
• In anticipation of the pivotal clinical results for its INTEREST Phase III study for Traumakine for the treatment of ARDS, and following advice from the FDA that Faron can proceed directly to Biologics License Application (BLA) submission pending positive results from its two on-going Phase III trials, the Company wishes to accelerate the preparation for the commercialisation of Traumakine by raising capital to support the outsourcing costs related to preparation of the BLA for FDA and the Marketing Authorisation Application (MAA) for EMA in collaboration with a global commercial service house.
o Faron anticipates that recruitment of the targeted 300 patients to the INTEREST Phase III trial will complete during the fourth quarter of 2017. Subject to positive results, the Company will submit its conditional MAA filing. Any requirement for a second Phase III trial will be determined by the EMA following analysis of the primary endpoint of the INTEREST Phase III trial, and would likely include an interim stop for early efficacy if the trial is required.
• Faron plans to initiate an expanded access program for Traumakine to start once the INTEREST trial is closed to new patients, and will utilise additional working capital from the Placing and Subscription to create the infrastructure for this expanded access program and support the supply of Traumakine to its participants. This will allow compassionate use of Traumakine in eligible named patients at European and North-America intensive care unit (ICU) hospitals who may benefit from Traumakine treatment ahead of the product's potential regulatory approval, in addition to generating late phase data on the benefit of the treatment outside a clinical trial.
Advance the clinical development of Clevegen® in several indications
• In advance of the Company’s first clinical trial program in cancer patients for Clevegen®, its novel immune switch antibody, which is expected to commence in 2018, the Directors require additional capital in order to undertake the first full scale GMP production of Clevegen.
• Faron intends to expedite the expansion of its planned Clevegen clinical development program in several solid tumours (liver, pancreas, ovarian and melanoma) in order to obtain accelerated safety and clinical data read-outs, with the protocol design to be submitted to the UK regulatory authorities MHRA later this year.
• The Directors believe that Clevegen's ability to remove local immune suppression by targeting pro-tumoural type-2 macrophages, while leaving intact the type-1 macrophages that support immune activation against tumours, could help the human body's own immune system to combat cancer.
DETAILS OF THE PROPOSED PLACING AND SUBSCRIPTION AND ISSUE OF EQUITY
Subject to the Placing Shares and Subscription Shares being subscribed for in full, they are to be issued by the Company pursuant to the Directors' existing authority to allot ordinary shares in the capital of the Company (“Ordinary Shares”) for cash on a non-pre-emptive basis, as approved by shareholders at the Company's last annual general meeting which was held on 16 May 2017. The Company has received non-binding indications of interest from potential institutional investors and a Director for the Placing and Subscription during a pre-marketing process.
In connection with the proposed Placing, the Company has entered into a placing agreement with Panmure Gordon and Cairn (together the "Placing Advisers") (the “Placing Agreement”). Pursuant to the terms of the Placing Agreement, Panmure Gordon has agreed to use its reasonable endeavours to procure placees for the Placing Shares at the Issue Price. The Placing is conditional upon, inter alia:
• the Placing Agreement having become unconditional in all respects;
• the Company having performed, in all material respects, its obligations under the Placing Agreement and not being in material breach of the Placing Agreement;
• legally binding commitments being received in respect of all of the Placing Shares and the Subscription Shares (the “Placee Condition”); and
• the Placing Shares and the Subscription Shares being issued and being registered at the Finnish Trade Registry (the “Issue Condition”).
The Placing is being implemented through a private placement with a limited number of institutional and other investors. The Placing Agreement contains customary warranties and an indemnity from the Company in favour of the Placing Advisers together with provisions which enable the Placing Advisers to terminate the Placing Agreement in certain circumstances before satisfaction of the Issue Condition in respect of each stage of the Placing, including where there has been a material breach of any of the warranties in the reasonable opinion of any Placing Adviser or where there is a material adverse change in the business or financial affairs of the Company. The Company has agreed to pay Panmure Gordon and Cairn certain commissions and fees for their respective appointments in connection with the Placing. In order to comply with local securities law in Finland, the Issue Condition will be satisfied prior to Admission. Accordingly, pursuant to the terms of the Placing Agreement, Panmure Gordon has agreed to underwrite the subscription for and payment to the Company of the Issue Price for the Placing Shares upon satisfaction of the Placee Condition.
Assuming that the Placing Shares and Subscription Shares (“New Shares”) are subscribed for in full, the Placing and Subscription is expected to be effected in two stages in anticipation of allowing investments made by certain venture capital trust and enterprise investment scheme funds, (the “VCT Investors” and the “EIS Investors” respectively) to qualify under VCT and EIS legislation. Certain of the Placing Shares, including those to be issued to the VCT Investors and the EIS Investors, and certain of the Subscription Shares are expected to be issued (the “First Issue Shares”) and an application made for admission of the First Issue Shares to trading on AIM (“Admission”). It is expected that Admission of the First Issue Shares will become effective and that dealings in the First Issue Shares will commence on or around 8.00 a.m. on 11 October 2017. A further announcement will be made to confirm the outcome of the Placing and Subscription (subject to, inter alia, satisfaction of the Issue Condition and Admission) and to confirm the application has been made to AIM for the Admission of the First Issue Shares in due course, but by no later than 4.30 p.m. on 9 October 2017.
Immediately following Admission of the First Issue Shares, the remaining Placing Shares and Subscription Shares are expected to be issued (the “Second Issue Shares”) and an application will be made for Admission of the Second Issue Shares. It is expected that Admission of the Second Issue Shares will become effective and that dealings in the Second Issue Shares will commence on or around 8.00 a.m. on 13 October 2017. The issue and allotment of the Second Issue Shares is conditional upon, inter alia, Admission of the First Issue Shares taking place, the Issue Condition relating to the Second Issue Shares being satisfied and the Placing Agreement otherwise remaining in full force and no material breach of its terms having occurred. A further announcement will be made to confirm Admission of the First Issue Shares and to confirm the application has been made to AIM for the Admission of the Second Issue Shares.
The Board believes this fundraise will enhance working capital to support the Company’s corporate strategy to maximise shareholder value in the longer term, and accordingly will continue to evaluate funding options over the medium term.
MARKET ABUSE REGULATION
Market Soundings, as defined in the Market Abuse Regulation ("MAR"), were taken in respect of the proposed Placing and Subscription with the result that certain persons became aware of inside information, as permitted by MAR. That inside information in relation to the Placing and Subscription is set out in this announcement and has been disclosed as soon as possible in accordance with paragraph 7 of article 17 of MAR. Therefore, those persons that received inside information in a Market Sounding are no longer in possession of inside information relating to the Company and its securities.
Panmure Gordon (UK) Limited, which is regulated in the UK by the Financial Conduct Authority, is acting as sole bookrunner and corporate broker to the Company and no one else in connection with the Placing. Accordingly, it will not be responsible to any person other than the Company for providing the regulatory and legal protections afforded to its clients nor for providing advice in relation to the contents of this Announcement or any matter, transaction or arrangement referred to in it.
Cairn Financial Advisers LLP, which is regulated in the UK by the Financial Conduct Authority, is acting as nominated adviser for the Company and no one else in connection with the Placing. Accordingly, it will not be responsible to any person other than the Company for providing the regulatory and legal protections afforded to its clients nor for providing advice in relation to the contents of this Announcement or any matter, transaction or arrangement referred to in it.
ENDS
For more information please contact:
Faron Pharmaceuticals Oy
Dr Markku Jalkanen, Chief Executive Officer
E-mail: investor.relations@faron.com
Consilium Strategic Communications
Mary-Jane Elliott, Chris Welsh, Philippa Gardner, Lindsey Neville
Phone: +44 203 709 5700
E-Mail: faron@consilium-comms.com
Westwicke Partners, IR (US)
Chris Brinzey
Phone: +1 339 970 2843
E-Mail: chris.brinzey@westwicke.com
Cairn Financial Advisers LLP, Nominated Adviser
Emma Earl, Tony Rawlinson
Phone: +44 207 213 0880
Panmure Gordon (UK) Limited, Sole Bookrunner and Corporate Broker
Freddy Crossley, Duncan Monteith (Corporate Finance)
Tom Salvesen (Corporate Broking)
Phone: +44 207 886 2500
Whitman Howard Limited, Joint Corporate Broker
Ranald McGregor-Smith, Francis North
Phone: +44 207 659 1234
About Faron Pharmaceuticals Ltd
Faron (AIM:FARN) 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, vascular damage and cancer immunotherapy. The Company's lead candidate Traumakine, to prevent vascular leakage and organ failures, is currently the only treatment for Acute Respiratory Distress Syndrome (ARDS) undergoing Phase III clinical trials. There is currently no approved pharmaceutical treatment for ARDS. An additional European Phase II Traumakine trial is underway for the Rupture of Abdominal Aorta Aneurysm (“RAAA”). Faron’s second candidate Clevegen is a ground breaking pre-clinical anti-Clever-1 antibody. Clevegen has the ability to switch immune suppression to immune activation in various conditions, with potential across oncology, infectious disease and vaccine development. This novel macrophage-directed immuno-oncology switch called Tumour Immunity Enabling Technology ("TIET") may be used alone or in combination with other immune checkpoint molecules for the treatment of cancer patients. Faron is based in Turku, Finland. Further information is available at www.faron.com