Faron H1'25: Raising funds for pivotal trial

Translation: Original published in Finnish on 8/28/2025 at 7:00 am EEST.

Faron's research results support advancing to the pivotal trial phase for myelodysplastic syndrome (MDS), in our opinion. The company is already preparing for the trial, which requires substantial new funding for implementation. Based on the new plans for the upcoming trial, we are pushing back our estimate for the start of commercialization from 2027 to 2029. This change is reflected in the cash flow model, according to which we are lowering our target price to EUR 2.5 (was EUR 3.0). We believe the stock is fully priced, so we lower the recommendation to Reduce (was Accumulate).

Research results support moving to pivotal phase

According to the latest readout from the BEXMAB study, complete remission (CR) was observed in 43% (9/21) of frontline MDS patients, which we consider a favorable outcome. From a tolerability and safety perspective, the results appear favorable, as the adverse events of the bexmarilimab and azacitidine combination seemed to be at an acceptable level in our assessment. We note that due to the small number of patients (21), the statistical power of the study does not allow for drawing strong conclusions about efficacy. However, the preliminary, promising results may help secure funding for the registrational phase during financing negotiations.

Regarding solid tumors, the company still expects patient recruitment for the investigator-initiated BLAZE study (lung cancer and melanoma) to begin in H2’25. In a new development, Faron joined the Finnish FINPROVE study (phase II), in which bexmarilimab is combined with chemotherapy for the treatment of breast cancer. The study will focus on patients whose cancer shows evidence of Clever-1, the target of bexmarilimab.

In terms of figures, the operating loss was slightly lower than we had expected. Conversely, earnings per share were weaker than we had expected. This was due to financing costs exceeding our forecast, primarily due to changes in the value of convertible bonds, which had no impact on cash flow.

Secured funding sufficient until Q1’26

During H1, Faron carried out a directed share issue of 12 MEUR and also agreed to a convertible bond of 35 MEUR, of which 15 MEUR has been drawn down to date. With these arrangements in place, the company states that the current cash reserves will suffice until Q1'26. Implementing the registrational phase will therefore require significant new funding. Faron is seeking a partnership agreement with a larger pharmaceutical company to fund the research, though other funding options and combinations thereof are also possible.

Our estimate for commercialization moved further into the future

Our forecast model had previously expected revenue as early as the end of 2027. This was based on Faron's previous assessment of the possibility of obtaining accelerated approval. The latest study plan following the meeting with the FDA means that the next pivotal Phase II/III will start with the dose optimization phase (Phase II), then continue seamlessly with the most appropriate dose (Phase III) after an interim analysis. Given the dosage phase and the updated schedule, we estimate that revenue based on a potential accelerated approval will not begin until 2029 at the earliest. We are extending the sales estimate for bexmarilimab under IPR to 2040 (previously 2037) based on the recently extended IPR.

The share is tightly valued

Our DCF model values the stock at EUR 2.5, so we estimate that the upside is exhausted for now. The stock is also highly valued relative to its Nordic peers. We believe that the valuation premium is partly justified based on Faron's potential to move quickly towards commercialization in MDS and the potentially large number of indications. Solid tumors increase the longer-term potential to the share.