contentSlug

type

ContentSlug_ContentQuery

slug

ContentPageContentQuery

content

trendingContent

query ContentSlug_ContentQuery(
  $contentSlug: String!
  $type: [ContentType!]
) {
  ...ContentPageContentQuery_13QmVO
}

fragment CompanyDetails_Content on Content {
  __isContent: __typename
  companies {
    name
    description
    pageUrl
    id
  }
}

fragment ContentBasicInfo on Content {
  __isContent: __typename
  id
  type
  title
  lang
  companies {
    viewerIsFollowing
    id
    name
    pageUrl
  }
  tags {
    viewerIsFollowing
    id
    name
    pageUrl
  }
  ...PublishingDetails
  ...Reactions
}

fragment ContentMetadata on Content {
  __isContent: __typename
  type
  title
  lang
  pageUrl
  alternatePageUrls: translations {
    __typename
    pageUrl
    lang
  }
  imgUrl
  description
  ... on Video {
    liveTime
    videoUrl
  }
  ... on Webcast {
    liveTime
    videoUrl
  }
}

fragment ContentPageContentQuery_13QmVO on Query {
  content(slug: $contentSlug, type: $type) {
    __typename
    id
    type
    title
    isPremium
    lang
    htmlBody
    summary
    companies {
      forum {
        latestPosts {
          ...ForumPosts
        }
      }
      name
      id
      viewerIsFollowing
      pageUrl
      defaultInstrument {
        isin
        id
        marketOpen
        marketClose
        marketplace {
          region
        }
        returns {
          total
        }
      }
    }
    tags {
      viewerIsFollowing
      id
      name
      pageUrl
    }
    createdAt
    ... on Video {
      liveTime
    }
    ... on Webcast {
      liveTime
    }
    slug
    ... on CompanyReport {
      reportUrl
    }
    ... on ThirdPartyCompanyReport {
      reportUrl
    }
    ... on StockExchangeRelease {
      reportUrl
    }
    ...ContentBasicInfo
    ...ContentMetadata
    ...PriceAndRecommendation_Content
    ...CompanyDetails_Content
    ...ReportLink_Content
    ...KeyFigures_Content
  }
  ...TrendingContent_1jQ2Cn
}

fragment ForumPosts on ForumPost {
  text
  likesCount
  url
  author
  postedAt
  authorImgUrl
}

fragment KeyFigures_Content on Content {
  __isContent: __typename
  companies {
    defaultInstrument {
      estimateData {
        modelType
        reportingCurrency
      }
      snapshot {
        transaction {
          date
          actualized {
            year
            quarter
            revenue
            revenueGrowth
            ebitAdjusted
            ebitReported
            ebitda
            enterpriseValue
            epsAdjusted
            dividend
            dividendYield
            sharePrice
            nav
            navPerShare
            opexOfNav
            quarterlySharePrice
          }
          estimates {
            year
            quarter
            revenue
            revenueGrowth
            ebitAdjusted
            ebitReported
            ebitda
            enterpriseValue
            epsAdjusted
            dividend
            dividendYield
            sharePrice
            nav
            navPerShare
            opexOfNav
            quarterlySharePrice
          }
        }
      }
      id
    }
    id
  }
}

fragment PriceAndRecommendation_Content on Content {
  __isContent: __typename
  createdAt
  companies {
    name
    pageUrl
    defaultInstrument {
      priceData {
        tradeCurrency
      }
      snapshot {
        priceData {
          date
          lastPrice
          tradeCurrency
        }
        transaction {
          date
          recommendation
          targetPrice
        }
        prevTransaction {
          recommendation
        }
      }
      id
    }
    id
  }
}

fragment PublishingDetails on Content {
  __isContent: __typename
  createdAt
  publishers {
    name
    imgUrl
  }
  authors {
    __typename
    id
    name
    slug
    imgUrl
    jobTitle
  }
  ... on Video {
    liveTime
  }
  ... on Webcast {
    liveTime
  }
}

fragment Reactions on Content {
  __isContent: __typename
  id
  reactionGroups {
    reactionType
    reactionsCount
    viewerReacted
  }
}

fragment ReportLink_Content on Content {
  __isContent: __typename
  type
  isPremium
  ... on CompanyReport {
    reportUrl
  }
  ... on ThirdPartyCompanyReport {
    reportUrl
  }
  ... on StockExchangeRelease {
    reportUrl
  }
}

fragment TrendingContent_1jQ2Cn on Query {
  trendingContent(type: ARTICLE) {
    __typename
    id
    title
    lang
    pageUrl
    createdAt
    type
    imgUrl
    companies {
      squareLogoUrl
      name
      id
    }
    authors {
      __typename
      imgUrl
      id
    }
    publishers {
      imgUrl
    }
  }
}


__typename

title

isPremium

lang

htmlBody

summary

companies

createdAt

publishers

authors

reactionGroups

pageUrl

translations

imgUrl

description

Analyst

Antti Siltanen

Faron is a global, clinical-stage biopharmaceutical company, focused on tackling cancers via novel immunotherapies. Its mission is to bring the promise of immunotherapy to a broader population by uncovering novel ways to control and harness the power of the immune system. The Company's lead asset is bexmarilimab, a novel anti-Clever-1 humanized antibody, with the potential to remove immunosuppression of cancers through reprogramming myeloid cell function. Bexmarilimab is being investigated in Phase I/II clinical trials as a potential therapy for patients with hematological cancers in combination with other standard treatments.

I examined this a bit critically and also made my own corresponding calculation. There are a couple of things I disagree with you on, and they affect the valuation quite significantly.  Phase 2 risk: Faron has already successfully completed Phase 2, where efficacy was demonstrated. In the upcoming dose definition study, as I understand it, they are only investigating whether it’s possible to lower the dosage in first-line treatment. In my opinion, this increases the probability of success significantly. I put 80% in my calculations, which I think is still quite conservative. If 1mg/kg isn’t enough, then they proceed with the 3mg dose. The risk of the research path being cut off at this point is quite small. I kept the Phase 3 risk the same at 50%. Revenue development: In your calculations, you started counting sales from the 5th year onwards. Why? In my own calculation, I took the view that upon entering the market, drug sales grow rapidly for the first 3 years (a conservative 10% in the calculations), growth slows slightly for the next 5 years (still a conservative 6%), and from there on, I used a 4% annual growth in my calculation until the patents expire. These growth percentages are inflation-adjusted.  To make the difference of these changes clear, I adjusted the first year’s sales so that over the average 12-year period under review, sales are about 1 billion euros, just as you had initially. In my model, sales in the first year of sales are €665,900,000 and grow from there. So, here is my corresponding calculation:  Discount rate: 7% Royalties: 10% (I calculate the present value of royalties for each year separately. I also want to believe a better deal can be reached; I’ll provide that estimate at the end.) F2 success: 80% F3 success: 50% Approval: 90%  Probability of success: 36% (80% * 50% * 90%)  Current view of value with these variables: €278M If the share issue is fully subscribed and all 80 [million] new shares are printed, then the value per share in this estimate would be €1.42 (this is the post-issue value, 195M shares).  A more optimistic view: If I change a couple of variables in the direction of what I want to believe can be achieved (while keeping them at a realistic level): If average sales were 1.5 billion instead of 1 billion over 12 years (for example, success from solid tumors or just better sales than expected) and royalties can be negotiated at 15% instead of 10%, the value looks much better. The company’s current value would be €625M, and the post-issue value per share would be €3.2. Any thoughts?

NPV 4.8B, from which Faron gets 10% royalties. Total p for market entry: 50% Phase 2 x 50% Phase 3 x 90% FDA approval.  This calculation assumes a partnering deal. If the calculation is adjusted so that Faron does not partner, the WACC is significantly higher than 7%. This can be seen from the recent movements in the stock price.

Did you calculate in your example that approval occurs with a 10% probability? Was that intentional - or were you supposed to calculate with a 90% probability?

You can make a model like that look however you want. But I’ve used very generous assumptions just as a basis for discussion. My own % assumptions for phase success rates are lower. Above, there was talk about giving away shares for cheap, but this doesn’t look dirt cheap by any means. Sales starting in 2028 includes Accelerated Approval for r/r patients at the current pace, and peak sales assumes that 100% of HR MDS patients receive the drug. Of course, solid tumors are missing from the equation; they could be added with some small multiplier… considering the time required for trials, sales would start in 2030-something at the earliest. There isn’t much NPV to be gained from that yet.

No, because every Big Pharma company first wants certainty that OS is removed from the endpoints. Clark Kent wrote about the procedure with the FDA. I am fine with Bex’s value being increased first with a placebo-controlled dosing study.

It’s starting to get restless again. Let’s refine this model in light of current knowledge. Let’s set some quite GENEROUS assumptions for now. HR MDS patients USA+EU 10,000/yr. Pricing 100k / yr (CR-label, no premium pricing for life extension)  Median time on treatment 12 months (for simplicity’s sake)  Sales start 2028. Peak sales 2033. Patent 2040. J-shaped sales growth, after 2033 -5% yoy  7% discount  NPV = 4.8 B  Royalties 10% = 480 M  Phase 2 success: 50%  Phase 3 success: 50%  Approval 90%  108 M Discuss.

My father used to say about “what ifs” that if your aunt were your uncle, she’d have… She isn’t, however—at least not yet—so if a shareholder hasn’t sold their shares, they still have the exact same stake in Faron and its future returns as they did before the announcement of the share issue. If they sold cheap, they have gifted someone else a significant discount compared to their previous share of the company. If/when new shares are issued, the owner must subscribe to their share of the total amount sought if they want to maintain their ownership stake at the same level. For example, if one’s share of the total stock was 0.1 per mille before the issue, i.e., 11,500 shares out of 115 million. Of the 40 million euros being raised in the issue, 0.1 per mille is €4,000. By subscribing with that amount, one will still own the same proportion of Faron after the issue. And the company’s value indeed increases by that same 40 million euros. The company’s value is then divided by the new number of shares. If the delay in MDS is factored into future potential returns, the potential income decreases slightly due to discounting, but the r/r MDS probability just increased, and if the new FDA discussion is successful, the realization of returns could also accelerate. Did the company’s value really drop this much? Without downplaying the financial uncertainty. If we factor in psychology, the fluctuation in the company’s value gets crazy. If people start selling subscription rights, many things will affect the movement of money… If there had been some significant setback in Faron’s science, I would understand the current share price reaction better. If the aunt, etc.

Faron Pharmaceuticals

Faron Pharmaceuticals is a clinical stage biopharmaceutical company whose three drug candidates relate to the modulation of immune system or inflammatory response. Faron is a very high-risk ...

<p>Faron Pharmaceuticals is a clinical stage biopharmaceutical company whose three drug candidates relate to the modulation of immune system or inflammatory response. Faron is a very high-risk investment as drug development requires frontloaded investments in research, while the success of commercialization is very uncertain. If the drug candidates enter the market, the invested capital can be multiplied. However, failure of drug development is frequent and, in that case, the invested capital may be partially or totally lost. We believe the share provides sufficient expected return to counterbalance the high risk. The share is suitable for a long-term investor that tolerates high risk as part of a well-diversified portfolio. A person investing in Faron must also be prepared for share issues.</p> 

	2021	22e	23e
Revenue	0.0	0.0	0.0
growth-%
EBIT (adj.)	-21.1	-22.0	-0.8
EBIT-% (adj.)	-527,700.0 %	-550,000.0 %	-19,500.0 %
EPS (adj.)	-0.40	-0.40	-0.02
Dividend	0.00	0.00	0.00
Dividend %
P/E (adj.)	neg.	neg.	neg.
EV/EBITDA	neg.	neg.	neg.

Risky investment with huge potential

Key Estimate Figures2022-08-08

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