Biomarker analysis of Phase III INTEREST trial

Faron Pharmaceuticals Ltd

("Faron" or the "Company")

Traumakine biomarker analysis of the Phase III INTEREST trial

· Sub-group of patients with elevated interferon-beta biomarkers show a reduced mortality

· This sub-group of patients (n=48) showed a reduced Day 28 (D28) mortality rate of 14.6% compared to 32.3% (p=0.02) in Traumakine treated patients without a defined biomarker response (n=96).

· The sub-group of patients with a defined biomarker response also demonstrated an increase in ventilator free days to 16 days compared to 6.5 days (p=0.06)

· Analyses are ongoing to understand the underlying causes of the inconsistent biomarker response of the Traumakine treatment group

TURKU - FINLAND, 14 June 2018 - Faron Pharmaceuticals Ltd ("Faron") (AIM: FARN), the clinical stage biopharmaceutical company, today announces preliminary biomarker data from its Phase III INTEREST trial of Traumakine for the treatment of ARDS. Top-line trial data were previously reported on 8 May 2018 and an update was provided on 11 May 2018.

The biomarker data confirms that Traumakine treatment did not produce consistent interferon-beta bioactivity across the treatment group. A retrospective stratification of Traumakine treated patients has been conducted, based on subjects in the INTEREST trial that demonstrated a defined biomarker response. These were defined as patients with a 2-fold increase in CD73 serum levels during the first seven days of treatment and 3-fold MxA activation (during the first four days of treatment) in peripheral blood cells.

This sub-group of patients (n=48) demonstrated a reduced D28 all-cause mortality, with a mortality rate of 14.6% compared to 32.3% in the remaining patients (n=96) in the Traumakine treatment arm (p=0.02). In addition, this sub-group of patients demonstrated a trend toward an increase in ventilator free days at D28, with 16 ventilator free days (VFDs) compared to 6.5 days (p=0.06).

While these remain initial findings, this data suggests a correspondence to previous results observed in the Phase II study. In the Phase II trial patients with an elevated MxA and CD73 biomarker response also demonstrated an improved D28 mortality and reduced need for ventilation compared to patients with low or no increase in biomarkers.

Dr Markku Jalkanen, CEO of Faron, said: "We have observed that a sub-group of patients with higher levels of biomarkers in the INTEREST trial did demonstrate reduced mortality and increased ventilator free days, as expected based on the positive Phase II study. While this is encouraging this still does not explain many of the other results observed from the trial including why Traumakine activity was variable in the INTEREST trial compared to previous studies nor the low mortality of the placebo group. This analysis will continue and we will keep our shareholders and the market informed with progress in due course."

The INTEREST trial was a Phase III double-blind, randomised, parallel-group comparison to assess the efficacy and safety of Traumakine® (FP-1201-lyo) versus placebo in the treatment of patients with moderate to severe Acute Respiratory Distress Syndrome (ARDS). The study, which recruited 300 patients, was conducted in 64 hospital intensive care units (ICU) in Belgium, the Czech Republic, Finland, France, Germany, Italy, Spain and the UK.

ARDS is a severe orphan disease with a reported mortality rate of approximately 30-45%1,2,3 for which there is currently no approved pharmacological treatment. It is characterised by widespread capillary leakage and inflammation in the lungs, most often as a result of pneumonia (e.g. following a pandemic influenza), sepsis, or significant trauma. Faron estimates there are around 300,000 plus annual cases in Europe and US alone.

The Company has initiated a cash preservation program by suspending the Traumakine commercialization activities and regulatory filings and minimizing the cost burden on Traumakine manufacturing and general and administrative costs. The Management and Directors are working to ensure that the Company's cash position is preserved and that value is delivered to shareholders. The Company had €18.7 million of cash at the end of Q1 2018.

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 Ltd

Dr Markku Jalkanen, Chief Executive Officer

investor.relations@faron.com 

Consilium Strategic Communications

Mary-Jane Elliott, Philippa Gardner, Matthew Neal, 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

Panmure Gordon (UK) Limited, Nomad and Broker

Freddy Crossley, Emma Earl, Ryan McCarthy

Phone: +44 207 886 2500

1 JAMA. 2016 Feb;315(8):788-800

2 Intensive Care Med. 2011;37(12):1932

3 N Engl J Med. 2005;353(16):1685

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, has completed a Phase III clinical trial in Acute Respiratory Distress Syndrome (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