Faron Pharma Regulatory News (FARN)

Faron Pharmaceuticals Ltd

("Faron" or the "Company")

Faron Licenses Traumakine® Korean Rights to Pharmbio Korea Inc. ("Pharmbio")

TURKU - FINLAND 13 June 2016 - Faron Pharmaceuticals Ltd (LON: FARN), the clinical stage biopharmaceutical company, announces today that it has entered into a licensing agreement with Pharmbio Korea Inc., for the development and commercialisation of Traumakine® in Korea. Pharmbio is based in Seoul and specialises in hospital sales of novel pharmaceutical products. Traumakine is in development for the treatment of Acute Respiratory Distress Syndrome (ARDS), a rare, severe, life threatening medical condition for which there is currently no approved pharmaceutical treatment. Traumakine is now in the pivotal pan-European Phase III INTEREST trial.

Under the terms of the agreement Pharmbio will obtain exclusive Korean rights to Traumakine. Faron will receive an initial signing fee of €750,000, which will be recorded as a revenue in H1-2016 financial results, and is entitled to receive additional, undisclosed development based milestones. In addition, Pharmbio will pay Faron one third of Traumakine profits, representing a double digit royalty on net sales, depending on end user pricing, and has agreed to cover development costs for Traumakine in Korea. Additionally, Faron will provide European approval material for Pharmbio to obtain market authorisation in Korea and will also supply Traumakine drug product to Pharmbio at an agreed transfer price.

Dr. Markku Jalkanen, CEO of Faron, said: "We are very pleased to have signed this agreement with Pharmbio which represents a great opportunity for Traumakine to enter the Korean market. Given the successful track record of Pharmbio sales team, achieving a steady 30% sales growth over the last five years, it is an excellent partner for Traumakine in the Korean market. This licensing deal follows our growth strategy to partner Traumakine in territories where Faron has limited presence, while maintaining rights in major territories including Europe and North America. We believe this agreement represents the best way to accelerate the development of Traumakine and create long term value for our shareholders."

Dr. Junsang Nam, CEO of Pharmbio, said: "We are very excited to license Traumakine in Korea and for the opportunity to introduce this product targeting significant unmet medical need to Korean hospitals and ARDS patients. During the MERS virus outbreak in South Korea, a year ago many people suffered from serious lung infections and acute loss of respiration. We believe Traumakine, offers a new treatment option for these patients as well as ARDS patients with other underlying conditions."

For more information, please contact:

Faron Pharmaceuticals Oy

Katja Wallenlind

Phone +358 (50) 577 4807E-mail: katja.wallenlind@faronpharmaceuticals.com

Hume Brophy, PR

Mary Clark, Eva Haas, Hollie Vile

Phone: +44 207 862 6390

E-mail: faron@humebrophy.com

Cairn Financial Advisers LLP, Nominated Adviser

Emma Earl, Tony Rawlinson and Rebecca Anderson

Phone: +44 207 148 7900

Panmure Gordon (UK) Limited, Joint Broker

Freddy Crossley, Duncan Monteith (Corporate Finance)

Tom Salvesen (Corporate Broking)

Phone: +44 207 886 2500

Whitman Howard Limited, Nominated Broker

Ranald McGregor-Smith, Francis North

Phone: +44 207 659 1234

About Faron Pharmaceuticals Ltd

Faron is a drug discovery and development company focused on creating novel treatments for medical conditions with significant unmet needs. The Company is based in Turku, Finland. The Company currently has a pipeline of clinical stage products focusing on acute organ traumas, cancer immunotherapy and vascular damage. The Company's lead candidate Traumakine®, has been developed to treat Acute Respiratory Distress Syndrome ("ARDS"), a rare, severe, life-threatening medical condition characterised by widespread inflammation in the lungs. Traumakine® is now in a pan-European pivotal Phase III study (INTEREST). Besides Traumakine®, Faron's pipeline consists of early stage assets including a pre-clinical anti-Clever-1 antibody named Clevegen®. Clevegen is focused on converting the immune environment around a tumour from being immune suppressive to immune stimulating and represents a novel immuno-oncology approach called TIET (Tumour Immunity Enabling Technology). Faron Pharmaceuticals Ltd is listed on AIM under the ticker 'FARN'. Further information is available at www.faronpharmaceuticals.com

About Pharmbio Korea Inc

Pharmbio started business in 1999 in South Korea and claims to have annual turnover of over USD 47 million. It has continued expanding its scope of services and growing its revenue by 24% (8-year CAGR). Pharmbio developed the first treatment of urinary stone in Korea, UROCITRA, and has provided a pipeline of innovative products in urology, gastroenterology, general surgery, ob-gyn among others. Pharmbio has licensed and marketed products in a close collaboration with pharmaceutical companies in the EU, Japan, and Canada and has exported its patent products to SE Asian countries including Myanmar, Philippines, Vietnam, and Pakistan to fulfill unmet worldwide medical needs. Further information is available at www.pharmbio.co.kr

About Traumakine®

Faron completed a Phase I/II trial in respect of Traumakine® in 2011 where treatment with Traumakine® was associated with an 81% reduction in the odds of 28 day mortality in patients with ARDS. These data were published in The Lancet Respiratory Medicine, a leading medical journal (Bellingan et al. 2014) 1. Comparable results were obtained from Traumakine Phase II Japanese study conducted by Faron´s Japanese licencing partner Maruishi Pharmaceutical Co. Ltd. in Japan, as announced in January 2016.

The presently ongoing pivotal Phase III trial called INTEREST is to be conducted in about 55 ICUs (Intensive Care Units) in seven European countries: Belgium, Finland, France, Germany, Italy, Spain and UK. A total of 300 adult patients with moderate or severe ARDS will be enrolled, and the first patient was enrolled in December 2015. INTEREST has received €6 million funding from the European Union Seventh Framework Programme (FP7).

The scientific rationale for Traumakine treatment is based on the proprietary use of room temperature stable formulation of interferon-beta-1a (FP-1201-lyo) for the restoration of the endothelial barrier function in ARDS patients. In Phase I/II trials interferon-beta was found to be safe and well tolerated in ARDS patients and the optimal tolerated dose was established. The selected pharmacodynamic marker for interferon-beta bioactivity showed clear dose response and the treatment target molecule CD73 levels were induced during the dosing period.

References:

1. Bellingan, G., Maksimow, M., Howell D.C., Stoltz, M., Beale, R., Beatty, M., Walsh, T., Binning, A., Davidson, A., Kuper, M., Shah, S., Cooper, J., Waris, M., Yegutkin, G.G., Jalkanen, J., Salmi, M., Piippo, I., Jalkanen, M., Montgomery, H., Jalkanen, S.: "The effect of intravenous interferon-beta-1a (FP-1201) on lung CD73 expression and on acute respiratory distress syndrome mortality: an open-label study". Lancet Respiratory Medicine 2014.