TURKU, FINLAND – Faron Pharmaceuticals Ltd. (AIM: FARN, First North: FARON, “Faron” or the “Company”), a clinical-stage biopharmaceutical company developing novel immunotherapies, announced on 3 April 2025 that the Company has entered into a subscription agreement (the “Subscription Agreement”) with an entity managed by Heights Capital Management, Inc. (“HCM”) regarding the issuance and subscription of amortising senior unsecured convertible bonds with an aggregated principal amount of EUR 15 million (the “First Tranche Bonds”) with an option to issue, subject to certain conditions, two additional tranches of convertible bonds (the “Second Tranche Bonds” and “Third Tranche Bonds”, respectively) with an aggregated principal amount of EUR 10 million each, convertible into new and/or existing shares in the Company (the “Shares”).

As previously announced on 3 April 2025, the Company may, in its sole discretion, during a twelve-month period following the announcement of the Phase II topline readout in the BEXMAB r/r MDS study, which subsequently took place on 15 April 2025, request that HCM subscribes for the Second Tranche Bonds.

The Board of Directors of Faron (the “Board”) has today resolved that the Company intends to issue the Second Tranche Bonds. The Company has also today, in accordance with the Subscription Agreement, delivered a request notice concerning the Second Tranche Bonds to HCM as the initial subscriber, requesting subscription by HCM of the Second Tranche Bonds in an aggregated principal amount of EUR 10 million.

“Drawing down the second tranche of the HCM convertible bond would give the Company the required flexibility to run its operations while conducting the needed business activities ahead of the registrational study in HR MDS. This is the exact situation for which this bond structure was designed for, and we are very pleased with HCM’s continued support.”, said Dr. Juho Jalkanen, CEO of Faron Pharmaceuticals.

The issuance and subscription of the Second Tranche Bonds is still subject to certain conditions precedent, as previously announced on 3 April 2025, including that no material adverse change has occurred and that there has been no adverse change in the international financial markets. HCM may, at its discretion, waive any of the conditions precedent in respect of the Second Tranche Bonds.

Provided that such conditions precedent have been satisfied or, as applicable, waived by HCM, the Board intends to separately resolve on the issuance of the Second Tranche Bonds to HCM. Such resolution would also include the issuance to HCM of special rights entitling them to shares that would be attached to the Second Tranche Bonds and would be convertible into new and/or existing Shares in the Company. 

As previously announced on 3 April 2025, the Second Tranche Bonds are intended to be issued on substantially same terms as the First Tranche Bonds. The initial conversion price of the Second Tranche Bonds will be determined on the date of issuance of the Second Tranche Bonds.

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About BEXMAB
The BEXMAB study is an open-label Phase I/II clinical trial investigating bexmarilimab in combination with standard of care (SoC) in the aggressive hematological malignancies of acute myeloid leukemia (AML) and myelodysplastic syndrome (MDS). The primary objective is to determine the safety and tolerability of bexmarilimab in combination with SoC (azacitidine) treatment. Directly targeting Clever-1 could limit the replication capacity of cancer cells, increase antigen presentation, ignite an immune response, and allow current treatments to be more effective. Clever-1 is highly expressed in both AML and MDS and associated with therapy resistance, limited T cell activation and poor outcomes.

About bexmarilimab
Bexmarilimab is Faron’s wholly owned, investigational immunotherapy designed to overcome resistance to existing treatments and optimize clinical outcomes, by targeting myeloid cell function and igniting the immune system. Bexmarilimab binds to Clever-1, an immunosuppressive receptor found on macrophages leading to tumor growth and metastases (i.e. helps cancer evade the immune system). By targeting the Clever-1 receptor on macrophages, bexmarilimab alters the tumor microenvironment, reprogramming macrophages from an immunosuppressive (M2) state to an immunostimulatory (M1) one, upregulating interferon production and priming the immune system to attack tumors and sensitizing cancer cells to standard of care.

About Faron Pharmaceuticals Ltd
Faron (AIM: FARN, First North: 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. Further information is available at www.faron.com.

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”, “hope”, “seek”, ”envisage”, ”estimate”, ”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 Board’s 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 Board’s current beliefs and assumptions and are based on information currently available to the Board.

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 addition, other factors which could cause actual results to differ materially include the ability of the Company to successfully license its programs within the anticipated timeframe or at all, 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 or other sources of funding, 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 Board believes 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.