Hello, everyone. Thank you joining us for this webcast on H1 2023 results of the Faron Pharmaceuticals. I'm Markku Jalkanen, Faron's CEO, and I'm here with our CFO, Jim O'Brien. As always, we will be recording this, and it will be available on our webpages together with the slide deck we are using today. Also would like to inform you that there is a Q&A session, and you can send those questions in, so that they are available at the end of this presentation, and we are really happy to answer to those ones. So as you know, we are dual listed company, public one, and this is the disclaimer we would like to present, not reading it through, and you remember that. I would like to start introducing Jim. Jim joined us in April and has been our CFO since that.
Jim has a tremendous experience on the public markets in U.S., including IPO activities, and it's, he's very valuable now when we are expanding our activities in Boston. We have an office in the Seaport area, just ten minutes from the Logan Airport, very, very nice one, and you can even see Jim over there. We start with our numbers, and to begin with, I actually ask Jim really to summarize what was the first half of this year, 2023. Please, Jim.
Thank you, Markku. Hello, everybody. I'd like to refer you to our press release that we issued earlier today for a detailed report of our financial results for the first half of 2023. Let me take a moment and highlight some of the key financial items so far this year. Faron has been a very productive first half of 2023, both in terms of operating activities and in finance. The cash position in the first half of 2023 was strengthened by two private placements, totaling EUR 18.6 million of new equity. The company entered the third quarter of this year with $12.8 million of cash and has funds sufficient to support the current level of activities until the end of 2023. Research and development in our.
In research and development and G&A expenses were EUR 8.5 million and EUR 4.3 million, respectively, in the first half of the year, compared to EUR 10 million and EUR 3.8 million, respectively, in the same period last year. During the first half of 2023, nearly 70% of all of our cash expenses were directly supportive of bexmarilimab in the clinical development program, including manufacturing activities. G&A expenses were flat year- over- year when excluding one-time items and financing costs. For the six months ended June 30, 2023, the company reported a net loss of EUR 13.7 million, or EUR 0.22 a share, compared to a loss of thirteen point one million, or EUR 0.25 a share, in the same period in the prior year.
Cash used in operations for the first six months of the year was EUR 11.6 million, compared to EUR 11.1 million in the same period last year. Faron currently has 66.2 million of common shares outstanding and has 9.9 million shares available for issuance. Faron's recent financial performance has been marked by a strategic emphasis and focus on capital efficiencies, a key element of extending our cash runway and without compromising our ability to advance our clinical program. This capital efficiency has allowed us to achieve more with available resources, with a focus on clinical outcomes that Markku will speak to in a minute. It's a very exciting time for Faron, and we look forward to a very productive second half of the year. With that, I'll turn the meeting back to Markku.
Thank you, Jim. So I would like to say a few things about the other reorganizations we have done during the springtime. One of the board member, Leopoldo Zambeletti, decided to help us in our partner activities and step down from the board. Earlier during the spring, during the AGM, Tuomo Pätsi was selected as a new board member, and we then, on top of it, have a significant number of advisors, both on the mode of action side, but also on the clinical side when we do the development. The help from these people has been really significant and will be really valuable at this point. But let's move on and look at what we have really done with the, with the bexmarilimab.
There is a significant understanding that the resistance in current cancer treatments is really due to the lack of interferon beta signaling in those tumors. Those tumors are then often called cold tumors, and one really visible sign of that is lack of the lymphocytes, leukocytes, that actually could attack the cancer. Our lead asset, bexmarilimab, or bex, like we call it often, it's an antibody that can convert these immune-suppressive macrophages into immune-stimulating macrophages. And obviously, that is exactly we would like to achieve because then we know that we can upregulate the interferon production in those microenvironments where the cancer cells are located. And this change in the microenvironment is really critical to the success of the current IO treatments.
We have advanced significantly during the last 12 months, and especially this springtime, and we have now said that we plan to really file first BLA application, that is to obtain the marketing approval on the year 2025, and that would be then done with the hematological application to begin with. But before getting there, you, I need to remind you of the mode of action of this bexmarilimab. We convert these immune suppressive macrophages, which usually remove all the antigen material from the tumor environment, and that is to hinder the activation of immunity against the cancer. So they have built environment where they cannot be visible for our immune system. So they this do not show me signal has to be removed in order to get the activation, and that is exactly what bexmarilimab does.
By blocking the Clever-1 receptor function, we convert now these immunosuppressive macrophages into immune stimulating ones. Not only they activate the antigen presentation, they also start to produce chemokines that can activate additional cells around there, and that could then result in immune situation. And now all of a sudden, this silent environment is activated, and that is exactly what we have now shown already in the MATINS trial patients. This is just a summary of that material, which is also now put in the form of the manuscript and hopefully soon published. What we have really shown is that we activate the intratumoral macrophages post bexmarilimab administration. We also know that we have a clinical benefit out of that treatment.
They are described in the left-hand side, where the response rates are described up to 40% in some of the cancer types. We know that when this happens, we also extend the overall survival of these patients. So that is the benefit we have seen as a single agent treatment in the last-line cancer patients who had no other options anymore. Rather significant, really, discovery. Then in the middle bottom of the picture, you can see that the ones who respond to bexmarilimab treatment, they increase the interferon gamma production, a sign that we activated the immune system in those patients. In non-responders, it goes the other way around, and obviously, those may be already been exhausted by the previous Immuno-oncology treatments, and that is the end result, where there was very little of hope helping them even with this treatment.
On the right-hand side, we have been then looking the profile of those cells, and we have demonstrated that, yes, we do activate the immunity, increasing the interferon signaling, but some other signaling pathways which are involved in the activation of the immune reaction. So very fundamental information now to be provided for the people who are interested in the mode of action of this antibody. But then even more interesting is now when we look at the mode of action with the hematological malignancies, and I especially mean now malignancies which have a myeloid background. The word myeloid means that they have the same origin as the macrophages or monocytes in the circulation.
Not only now we activate the immunity in those patients, but we can also target the myeloid leukemia cells, and that we have learned can actually reduce the viability of these cells. This is done by shutting off the oxidative phosphorylation in those cells. They are running out of the gas, ATP, that's their gas, and then they lose their viability. So we have a dual action now on these cancer cells, and keep this in mind when we look at the data. That explains why we have a so dramatic outcome on those patients we have been now treating with the bexmarilimab. We also know from these treated patients, myeloid leukemia patients, that we do activate the immunity in the bone marrow. That is shown on the left-hand side.
So higher dose, especially from 1 to 3, increases the antigen presentation of—seen also with some of the patient at 6 mg per kg. And then at the same time, you increase the presence of these defense cells in the bone marrow. A very nice sign of, again, that we activate the immunity, and now it takes place in a tissue, bone marrow, where these malignant hematological blasts are actually multiplying and spreading to other location of the system. So absolutely, in my mind, really stunning data, and you can then easily understand that we are so excited now to move the BEXMAB trial to the next phases. And soon, we will be starting the phase II, and hopefully then also the pivotal, pivotal part next year, and I will really focus on that one. MATINS trial has provided us safety profile, which is extremely good for the bexmarilimab.
It also has provided the dosing and the frequency, which we then have applied to these other trials. Then on top of it, of the BEXMAB, we also would like to initiate the BEXCOMBO as soon as we have additional resources. That's now already in the stage where the regulatory authorities have accepted the protocol, and we are ready to go. So, looking now the BEXMAB study, I just want to repeat what we have already shown previously. We have two arms in this trial. We have a doublet, where we combine bexmarilimab with the standard of care, being a single agent azacitidine, which is a preventing cell proliferation. But we also would like to have additional effect, and that's the combination for that.
Then the triplet, where we combine it with the additional chemotherapy, azacitidine with venetoclax, because that is now the first-line treatment, and we would like to learn also how bexmarilimab is affecting in that setting. We are now focusing really to move on with the doublet and we are happy to inform that we have 4 very active sites in Finland, university hospitals, 2 open sites in U.S., City of Hope, close to L.A., and then MD Anderson in Houston. And soon we will have sites open in Yale and North Carolina and Fred Hutch in Seattle. And having that data available later in the fall, obviously, will guide us to move on. A month ago, we published very interesting data on the last 6 mg/m² dosing cohort, and it's this one in here.
As you remember, we have had 5 patients in each of these cohorts. This is now looking the data post 2-4 cycles, and keep that in mind when we look at the next one. This is very early data. But you can already see we have a complete remission in 3 out of 5 patients. Two other ones have been stabilized. But if you look at these 3 lower ones, this CR, complete remission, means when you have a small m, that bone marrow is now empty of these cancer cells, the immune blasts. And in the last one, which is without this m, means that their blood values have been normalized as well. So we have a really nice 3 objective responses among these 5 patients.
I'm really looking forward also to see what happens to those 2 other patients who have been now stabilized, if we can actually see drop in the blast number also in there in the next readout. But then, if you look at all 15 patients we have treated up this point, you can see that the 6 mg per kg is really very early readout and really promising at the moment, but really have some other interesting findings as well.
The ones who have responded is also durable, meaning that it has extended in among some of the patients past 1 year already, and that is a very significant because the prognosis of the survival is really short with these patients, and many of them have been refractory to the previous treatments, and the prediction lifetime is only from 3-6 months. Out of these patients, if you look at how many of them have started to reduce the blasts, it's almost 10 out of these 15, and you can see that before the zero line. And you can also see here that it looks to us like MDS is providing the best response at the moment.
But obviously, now, when we are expanding these cohorts into higher number, we learn more about the effect and efficacy, but also looking to biomarkers, we can then come up with the conclusion, what would be the most suitable dosings to go further in the phase II stage, where we need to run based on the guidance from FDA, two different dosing levels. But that will be done later in the fall.
To summarize, or to compare really, or put the context to these findings, it's very important to realize if you look at the standard of care responses in this table, both in the MDS, which are HMA failed, and the refractory AML, the outcome is 10%-15% who can actually have a response in any of the treatments, and you can see that the predicted lifetimes are very short. We have set up a bar for BEXMAB, and you can see these in the MDS, 20%, maybe in the RR AML, 28%. If you look at the numbers which we already have, even they are small numbers, we already have very significant findings. In MDS-HMA, all three patients have had an objective response. It is a very significant result, really.
Obviously, this we keep in mind when we are setting up the final goals for us, but already today, we can just conclude the need is the medical need to help this patient is really significant. Again, also in this setting, bexmarilimab is well tolerated. Out of those 15 patients we have now treated, 8 of them have objective response, and it's really observed across the three dosing doubled cohorts, and I'm not really predicting yet which will be the best one. Then, there are patients who have had azacitidine prior coming to the trial, and we have a significant response in those with our combination. And this is also very important because then those patients become available really to the trial.
I can also say that in this setting now, when we have sites open in U.S., we have also started to get magrolimab anti-CD47 refractory patients into our trials, and, and among those who have already objective response, there are a few of them there. So it's very interesting, really, target for us, and obviously, you also read this morning that now we have orphan drug status for AML. We are expanding the other regulatory activities as well, and the goal is to file the BLA in 2025. So the combination looks to us very attractive, just bexmarilimab and azacitidine, and it's really easy to understand why this is a superior over the other ones. It really activates the immunity and at the same time reduces the viability of these cells. This mode of action is a very unique.
There is no other treatment that has the similar one, at least we do not know. Obviously, this is something that we are pursuing really during the next two years in order to really get to the patients this type of the help. Then a few words about the combo. As I started, the cold tumors do not have activated T cells that can recognize the tumor antigens. Something has to be happen here. You have to activate the innate immunity in order to generate new T cells. So converting cold tumors with the bex treatment would allow us to have a situation where you can then target these converted hot tumors with the current checkpoint inhibitor treatments. And that is exactly what we are and would like to do with our combo treatment.
Our plan here is to first give bex one week before starting the standard of care, PD-1, PD-L1 treatment, and then continue them together. We are planning to target the head and neck cancer group as a beginning with, because they are very resistant to the current IO treatments. It's a very attractive environment, but there are some other ones as well. We also know, if it's needed, that we can enrich this population by looking the intratumoral Clever-1 expression. We have a immunohistological staining for that one, and we can build a diagnostic tool around the trials. And maybe at that point, we also would like to look what is the PD, PDL content of tumors, because that also could tell us what level of the PD-1, the targeted molecules there are in those tumors.
So this, as said earlier, is really now ready to go, and that is very important. So then moving on and looking the future outlook. On the clinical side, we really aim now to complete the dose escalation, and I'm happy to say that we have additional 15 patients or so already recruited, and they are in the trial, and we expect to have a readout of those final cohorts during the early Q4. Dose selection will be done post that one, and then we are ready to really hit the road with the phase II. And as I mentioned earlier, that will be selected to dose levels and then continue with the randomized part between those levels, and then look at the final readout for the efficacy. Then ongoing regulatory interactions, you learn about that today.
There will be hopefully something else to tell later during the quarter four. And then, if we would have additional resources, we would be ready to really initiate the BEXCOMBO . That preparation work is ongoing at the moment. Then on the corporate side, we are continuing the build, building the readiness, U.S. readiness, and build over there, the team build. It's really important for us, not only for the clinical purposes, but all the regulatory purposes, but then also really thinking the investor markets over there. We also are glad that these results we have published during this first half is really intensifying our partner discussions, and obviously, that is one of the reason why Leopoldo left the board and is now actively involved in our partner discussions.
Then, at the same time, enhancing the market access and the support of the communication activities is really critical for us in really to build Faron in on the U.S. soil as a very promising biotech coming from Europe. And that hopefully will become very visible during the second half of this year and hopefully the first half of next year. So, with this, closing this presentation, I want to thank you for your time, and we are really ready now to take your answers, and happy to answer your questions, and happy to answer. Thank you very much.
We have now reached the end of our half-year results briefing, and it is time for the Q&A portion of our webcast. Please, to ask a question, please submit it in the box at the bottom of the webcast window. So our first question comes from Miles Dixon of Peel Hunt.
And you mentioned good biomarker data in AML. We know from magrolimab how good the biomarker data is. Is there anything you've seen in the BEXMAB biomarker data that is different or surprising versus magrolimab?
Well, first of all, it's interesting that we can actually look at that in the bone marrow, and they are frequently taken, not every day, obviously, but that has provided us access really to look at what is going on within the site where the blasts are proliferating. And as showed, it's really getting the immune activation on, and hopefully that will help the patients, not only at that situation, but also for long term. Then there are some other markers we can look at, and obviously, some of them are related to the same as we used with the Matins trial. But then there are some unique ones, and that analysis is ongoing at the moment.
We believe that later in the fall, especially, when we are preparing material for the ASH meeting, which will be early December, we probably will allow, or will publish something about that, and there will be some very interesting results. I just can't say what those are, but it's really looking good at the moment. It's a really good question, Miles. Thank you very much.
Thank you, Marco. Our next question is: Would Faron consider progressing into BEXMAB phase II while maintaining 100% ownership?
Ownership of bexmarilimab is our key asset. As said earlier, there is an intense discussions at the moment around us. Would that result in a situation that we can actually move on. It's really up to the third parties. But the purpose of company is really to build at the phase II results to the point that we can understand what type of the pivotal part we need to continue. And that is really important for us because we believe that at this point, this asset is really increasing the value for the shareholders. And to make too rushed decisions and deals may not be optimal for us, and we keep that in mind while we have these discussions.
Thank you, Markku.
Maybe Jim, Jim, maybe you would like to add anything?
No, I think you exactly hit the nail on the head. We're looking at all the options, and it's a valuable asset to the company and the shareholders.
Yeah.
Thank you very much. Our next question is about whether Faron is planning to apply for orphan drug status in the EU.
That is what we plan to do, and then there are some other opportunities as well. So yes, having that document available and then converting that also to the numbers in EU, probably, I would say, would allow us really to get the orphan in Europe. Yes. The answer is yes.
Brilliant. So on Faron's o r sorry, our next question here is about in terms of bexmarilimab, for it's mentioned as an add-on to other drugs. So the maintenance therapy trial is expansive as a follow-up study and therefore significant. Do you still see bex as a monotherapy treatment in the future or only as an enhancer to other treatments?
I think that needs to be answered in the patient trial. We have an opportunity maybe to go with the refractory patient populations, then also look at the enrichment cohort, where we only would focus on high Clever-1 expressing patients and randomize those against non-Clever-1 expressing patients. We just felt that the BEXMAB and focus on myeloid leukemia is so important and would really allow us rather fast movement all the way to the marketing application, that we needed to focus on that one. At the same time, the combination is supported with so many data points at this point, and the interferon levels are really indicating what actually could be also the target patients.
Unfortunately, there is not available assay yet really to look them in the viable population, but we are collaborating with the companies that actually could provide us interferon gamma signature from the baseline levels, and maybe that could be something we actually could move on. But why not use the combination if that makes a lot of sense, like in our case, if the activation of new T-cells is needed in order to get the full capacity out of the current Immuno-oncology treatments? I'm just happy to do if we can double the efficacy levels. And I can just remind you that that is a humongous opportunity if we can really show that.
Thank you, Markku. So the next question is concerning bex and, and cold tumors as evidenced by the Matins data. So what do you think is the reason, that there seems to be a lack of efficacy in, in cold pancreatic and ovarian cancers? Does this mean that Clever-1 does not play a role in immune invasion in these cases, and that these cancers will not be considered for further study with bex? And there's a couple of other questions within this one big question, but I'll let you address that first before moving on.
Well, the BEXMAB was done with the last line, advanced cancer patients. We have no idea how exhausted their immune system already had been used. So we are looking at the patients who had been gone through several trial, almost 3 different treatments, in general. So to really make the conclusion out of these very difficult ones, like pancreas, we may need to do one day additional studies, and that is really one reason why we also have been thinking that we may need to get to the first line in order to have more intact immune system, which we are activating, and that would then really have a more significant results also.
So, for us, it was a significant increase in the overall survival because those patient groups we were treating, they all have the same progressive disease stage when they came to the trial. It's kind of unfortunate that we didn't randomize them, but we couldn't do that at that time. Now, later on, it really would have been one of the options to really move on in the randomized trial early on. But we have learned tremendously from the Matins trial that data is valuable. And one thing which I'm not presenting here is also that we are not looking the interferon signaling pathways. We are looking all the pathways from those tumor samples, which help us to really analyze the situation and add additional tools to really modify the bex effect.
Maybe that actually could provide us another way really to progress with these last-line patients.
And a continuation of that question, Markku, what about other cold tumors mentioned, like gliomas and sarcomas? Does Faron have preclinical research data on those?
I'm really looking forward to the day when we can really go into glioma or sarcoma, and maybe that is something we should actually test in small trial, and what would be the protocol for that. We have been heavily thinking that. But that is an example where we actually could have a remarkable difference and then combine that with some of the current treatments. Yes, we haven't really forgotten those. I really would like to do, especially the sarcoma next.
Thank you, Markku. Our next question is concerning overall survival for Bexmab. So what is the statistical goal for overall survival in Bexmab? Is it a percentage increase or an extension of two to three months of life?
Well, yeah, I mean, the randomized trial, you look at the extension, that's rather standardized system, and then you look at the P values, and you just increase the patient number in order to get the authorities to agree. With the randomized trial, we may have a situation that what is the other part of the randomization? If it's a doctor's choice or are there a more synchronized kind of a treatment practices in those centers we are using for that study? And what is the ratio of? Is it one to two or one to one or something else? All these are still open, and we are working on those issues, and hopefully one day we can come up with a conclusion that this is really the right way to move on with that one.
But we need some additional information from those MATINs patient tumors in order to really conclude everything.
Thank you. So how do you estimate the potential patient numbers for MDS and AML that could be treated, if bex enters a market? And if efficacy is observed in azacitidine-resistant cases, doesn't this directly imply that there's no reason not to use bex for everyone, since azacitidine efficacy is so poor alone and the disease worsens over time?
The data we are generating at the moment is mainly focusing on second and third line, and we are not really comparing the first line at the moment. We may be there one day. The population we are treating is from 10-20,000 in the Western countries. The opportunity could be more significant when we move on some MDS patients. So, the AML as such, based on the orphan drug, is 100,000 patients in the U.S. alone. So it is a significant population, if it's an orphan. And you may also recall that there are some special benefits when you have orphan return payments and some other things for the R&D. So we really, really wanted to get this done, and we are focusing on some further applications when we move on.
So the treatment price obviously is something we have no idea at the moment, but looking at what they have been predicting for other treatments, this is a significant upside alone. We talk about easily a very significant peak sales with those populations.
Thank you, Markku. And actually, speaking of orphan drug designation , can you expand on the significance and benefits of it for Faron, please?
Well, obviously, the easiest one is to explain that it can provide you exclusivity, but we eventually have that already through the IP we have placed over the years. But it provides a number of other recognitions, and one of them is recognition by the regulatory authorities. You know, in a way, you introduce the topic to the regulators, and you have further discussions with them, and that will then allow us to have additional discussions and filings, and that will speed up the treatment. And when you have rare disease application, it's speeded up, and then it comes to the point that there is a compensation possibility, which maybe you could actually elaborate.
There are also tax credits that are available.
Yeah, yeah.
To researchers, so that's a very attractive, benefit for.
Yeah.
H aving the orphan drug designation.
Right.
Very pleased to have received that.
Yeah. Our next question is concerning about being active or partnering discussions at the moment. What level of compensation are you expecting from a licensing deal, and is also M&A a possibility here or only a partnering deal?
No, like, no, no way where it ends up. Let's put it that way. No way telling it. But it's easy, easy to look at some comparable deals which companies have done, and, and there are many of them even during this H1 2023 and more previously. So those material I can provide, but obviously, can we get there? That is really what we are trying, but, maybe it requires the phase II data. Let's see what happens. Very exciting time for us. Absolutely. And busy.
Thank you very much, Markku. That was a great response. We're winding down our questions here. What is the timing for the next upcoming readout for BEXMAB?
As I said, Q4 this year is, as you may have already learned, we roughly read them every three months. There is no point to go there every month to look at the data, but that's roughly the period. With that, the latest one was in mid-July, so we are almost halfway of that. So somewhere in October, November, we should have the data. And obviously, that is extremely interesting to us because now we have a larger cohort number for those different dosing levels. So that's something we definitely are looking forward, and obviously, that is something that we are happy to release once it's all done and analyzed.
So as a reminder, please submit your questions in the box at the bottom of the webcast window, as we are approaching the end of our questions at this point. So the final question so far, until we get more, is that you obviously considering BEXMAB targets Clever-1. Can you just remind us the importance of this target? So does, does BEXMAB have certain properties that differentiate it from other targets in the space?
That's a very, very, very, very good question, and I thank whoever made it. The mode of action is very unique. There is nothing like this, and we are really reprogramming these myeloid cells, macrophages or monocytes, and in the case of the leukemia, also the immunoblasts, which have the same myeloid background. That's a very unique. If I look at some of the ones that may have not really produced a good result in the AML recently, their mode of action is completely different. They have nothing to do with the reprogramming of the macrophages. Having said that, there are a few candidates who may be doing reprogramming of macrophages, but they are targeting different signaling pathways than we do. This is a very unique way of trying to influence the bad immune suppressive cells in those tumor patients in order to activate their immunity.
So that's the aim, and it looks like we are getting there. We are extremely excited about this.
Thank you, Markku. We have now reached the end of our Q&A portion of our webcast. Thank you very much, everyone, for your questions, and I'll pass it back to Markku to close.
Yep. Thank you very much. I'm really grateful to number of people who have really participated in advancing the BEXMAB, and the most important part is obviously the patients. Also, the clinical sites are really active. As soon as we have opened a new set of the open slots, they are filled in almost immediately. So this has been so pleasant to work with those sites. I'm so thankful. Also, all the other parties, our people at the company, but also our shareholders who have supported us over the time. This is really a exciting time for the patients, for company, and hopefully for the shareholders, and we keep you informed when we progress. Thank you very much, and looking forward to see you again next time.