Faron Pharmaceuticals Regulatory News (FARN)

Faron Pharmaceuticals Oy

("Faron" or the "Company")

MATINS study update

- High Clevegen dosing well tolerated: 9 patients dosed to date

- Switch of immune cell profiles towards immune activation seen across all study subjects immediately post dosing

- Filing of pre-IND package with the FDA

TURKU - FINLAND, 12 July 2019 - Faron Pharmaceuticals Oy (AIM: FARN), the clinical stage biopharmaceutical company, today announces additional data from the open label phase I/II MATINS clinical trial investigating the safety and efficacy of Clevegen, Faron's wholly-owned novel precision cancer immunotherapy, in selected metastatic or inoperable solid tumours.

Dr Markku Jalkanen, Chief Executive Officer of Faron, said: "We are thrilled with the progress the MATINS study has made during the last few months. We believe we have the first macrophage immune checkpoint drug in clinical development promoting immune activation and are encouraged by the latest data indicating potential early efficacy and good tolerability. We expect to progress the cohort expansion phase of the study in Q3 2019 in patients with late-stage colorectal cancer and as more data are generated we will seek guidance from regulators regarding the best and fastest pathway to secure initial approval of Clevegen as a single-agent treatment.

"We also hope to conclude partnering discussions during H2-2019, which should enable us to expand clinical development to include combination studies exploring the potential of Clevegen in combination with existing immunotherapies."

· Clevegen well tolerated also at high doses

Clevegen dosing reached its planned maximum of 10mg/kg in mid-June, which has continued to be well tolerated. No dose limiting toxicity (DLT) nor maximally tolerated dose (MTD) has been observed so far. The trial includes an option to administer a 20mg/kg dose, which the Company intends to propose to the trial's independent data monitoring board. Safe administration of this higher dose would demonstrate a high tolerability and an unusually wide safety margin for Clevegen compared to other immuno-oncology (IO) products. This Directors believe this could allow the Company to move forward rapidly and initiate new clinical studies in first-line and neo-adjuvant study settings and would, in turn, help to demonstrate the full potential of Clever-1 blockade early in the treatment pathway, accelerate time-to-market and increase the market potential of Clevegen.

· Continuous induction of immune activation

All MATINS study subjects have consistently shown a switch in their immune cell profiles towards increased immune activation, observed by an increase in CD8+ cells, an increased in the CD8+/CD4+ ratio, a decrease in regulatory T-cells (T-regs) and a substantial increase in mobile natural killer (NK) cells in the blood. These changes are measurable immediately post-dosing, indicating a dynamic response in the immunological switch to immune-activation after the immunotherapeutic blockade of Clever-1.

Latest data also show that dose escalation results in prolonged Clever-1 occupancy of the blood monocytes during the first two weeks of the three-week dosing cycle before a decrease to baseline levels prior to the next dosing cycle. Longer exposure of blood monocytes to Clevegen is also expected to induce a stronger pro-inflammatory response in study subjects.

· Further molecular evidence of immune activation

A new discovery following study of subjects' cellular responses, has been the identification of an increase in interferon gamma (IFNγ) production by the host immune system, accompanied by an increase in circulating Th1 differentiated CD4+ and CD8+ T cells. The Company believes the decrease in tumour burden seen in the partial responder is partially (if not completely) explained by this effect of Clevegen on the immune system. Blood myeloid cell analyses also indicate that the proportion of CD163/CD206 positive cells (considered as M2 type immunosuppressive myeloid cells) decrease, as expected, among the whole CD14 positive monocytes of the responder. This is consistent with the M2 to M1 immune switch in their immune profile towards more immune activation, induced by Clevegen, which has been previously observed in animal models.

· Anti-cancer responses continue in the clinics

Among the nine subjects dosed so far, across three clinical trial sites in Finland and the UK, two subjects have shown clinical anti-cancer responses. The first patient, a partial responder with colorectal cancer (CRC) whose initial treatment progress was announced on 11 April 2019, showed a continuation of lung metastasis shrinkage according to the latest tumour imaging report at the end of May. The subject's tumour load marker CEA (carcinogenic embryonal antigen), which measures tumour mass of CRC, has also normalised. A second subject with CRC has shown an initial decrease in CEA (-40%) and tumour stabilization.

Faron is investigating why the observed immune activation has not turned into anti-tumour activity in all study subjects. In part, the Company believes the patient's immune system receiving Clevegen as a last line of therapy could have been adversely affected by the underlying therapies they have received prior to taking part in the MATINS study, as previous chemotherapies can inactivate bone marrow, preventing revitalization of the immune system. Majority of patients have received 5-7 different treatment lines prior entering the MATINS study.

· Expanding clinical development plans

These data support Clevegen's potential, with promising single-agent activity as a last-line therapy in CRC patients who are refractory to all other treatment options. The Company intends to keep the CRC expansion cohort open and enrolling and while more data is generated, to approach regulatory authorities to seek scientific advice regarding the path to regulatory approval. On the basis of Clevegen's current safety profile and potential in patients who have exhausted by all other treatment options, the Company believes it may seek initial regulatory approval supported by data from the expanding MATINS trial by 2022. Faron also intends, subject to regulatory approval, to amend the MATINS trial to allow inclusion of hormone receptor-positive breast cancer, gastric cancer and uveal melanoma, based on striking translational data on CLEVER-1 positive cancer types and current poor survival rates. The Directors believe that earlier lines of treatment for these illnesses which currently lack successful treatments may be possible based on the safety profile of Clevegen seen to date and would allow Clevegen to activate more naïve and responsive immune systems.

Faron has recently also filed a pre-IND package to the FDA. If accepted, Faron plans to open new sites in the US and facilitate expansion of the CRC cohort as fast as possible. Similarly, Faron is planning to include top cancer centres in France and Spain as the next European countries to join the MATINS trial.

· Clever-1 expression predicts resistance to other immune-oncology (IO) treatments

Increasing data from IO-treated patients has become available through publicly-accessible data sources. Interestingly, data from The Cancer Genome Atlas (TCGA, the National Cancer Institute, USA) indicate that tumours with high Clever-1 (also known as Stab-1) expression do not respond to current IO treatments (p

About the MATINS study

The MATINS study is the first-in-human open label Phase I/II clinical trial with an adaptive design to investigate the safety and efficacy of Clevegen in selected metastatic or inoperable solid tumours. The selected tumours under investigation are cutaneous melanoma, hepatobiliary/hepatocellular, pancreatic, ovarian and colorectal cancer, all known to host a significant number of Clever-1 positive tumour associated macrophages (TAM). All together these five target groups consist of approximately 2 million annual cases worldwide. Cancer patients with high Clever-1 expression are identified with a simple blood myeloid cell staining with Clevegen ("liquid biopsy").

Part I of the trial deals with tolerability, safety and dose escalation to optimize dosing. As the trial is an open label study, the Company expects to report findings as the dosing progresses. The cohort expansion during part two will focus on identification of patients who show an increased number of Clever-1 positive circulating monocytes and the safety and efficacy of the treatment. The Company has already announced that colorectal cancer (CRC) has been selected as the first expansion cohort in Part II. During Part III, the main focus will be on assessing the efficacy of Clevegen on study subjects who show an increased number of Clever-1 positive circulating monocytes, making the treatment precisely targeted and maximizing the chances of success for efficacy. The treatment, if successful, may ultimately be used as a standalone therapy or in combination with other immunotherapies like PD-1 inhibitors.

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 ("MAR").

For more information please contact:

Faron Pharmaceuticals Oy

Dr Markku Jalkanen, Chief Executive Officer

investor.relations@faron.com 

Panmure Gordon (UK) Limited, Nomad and Broker

Emma Earl, Freddy Crossley (Corporate Finance)

James Stearns (Corporate Broking)

Phone: +44 207 886 2500

Consilium Strategic Communications

Mary-Jane Elliott, David Daley, Lindsey Neville

Phone: +44 (0)20 3709 5700

E-mail: faron@consilium-comms.com

Westwicke Partners, IR (US)

Chris Brinzey

Phone: 01 339 970 2843

E-Mail: chris.brinzey@westwicke.com

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 based on the endothelial receptors involved in regulation of immune response, in oncology and organ damage. Clevegen, its precision immunotherapy, is a novel anti-Clever-1 antibody with the ability to switch immune suppression to immune activation in various conditions, with potential across oncology, infectious disease and vaccine development. Currently in phase I/II clinical development as a novel macrophage checkpoint immunotherapy for patients with untreatable solid tumours, Clevegen has potential as a single-agent therapy or in combination with other immune checkpoint molecules. Traumakine, the Company's pipeline candidate to prevent vascular leakage and organ failures, has completed a phase III clinical trial in Acute Respiratory Distress Syndrome (ARDS) and progressing in phase II trial for the Rupture of Abdominal Aorta Aneurysm ("RAAA"). Plans for its future development are being finalised to avoid interfering steroid use together with Traumakine. Faron is based in Turku, Finland. Further information is available at www.faron.com

Caution regarding forward looking statements

Certain statements in this announcement, are, or may be deemed to be, forward looking statements. Forward looking statements are identified by their use of terms and phrases such as ''believe'', ''could'', "should", "expect", ''envisage'', ''estimate'', "hope", ''intend'', ''may'', ''plan'', ''potentially'', ''will'' or the negative of those, variations or comparable expressions, including references to assumptions. These forward looking statements are not based on historical facts but rather on the Directors' current expectations and assumptions regarding the Company's future growth, results of operations, performance, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, business prospects and opportunities. Such forward looking statements reflect the Directors' current beliefs and assumptions and are based on information currently available to the Directors.

A number of factors could cause actual results to differ materially from the results and expectations discussed in the forward looking statements, many of which are beyond the control of the Company. In particular, the early data from initial patients in the MATINS trial may not be replicated in larger patient numbers and the outcome of clinical trials may not be favourable or clinical trials over and above those currently planned may be required before the Company is able to apply for marketing approval for a product. In addition, other factors which could cause actual results to differ materially include risks associated with vulnerability to general economic and business conditions, competition, environmental and other regulatory changes, actions by governmental authorities, the availability of capital markets, reliance on key personnel, uninsured and underinsured losses and other factors. Although any forward looking statements contained in this announcement are based upon what the Directors believe to be reasonable assumptions, the Company cannot assure investors that actual results will be consistent with such forward looking statements. Accordingly, readers are cautioned not to place undue reliance on forward looking statements. Subject to any continuing obligations under applicable law or any relevant AIM Rule requirements, in providing this information the Company does not undertake any obligation to publicly update or revise any of the forward looking statements or to advise of any change in events, conditions or circumstances on which any such statement is based.