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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Faron Pharmaceuticals Oy | LSE:FARN | London | Ordinary Share | FI4000153309 | ORD NPV (DI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 7.50 | 6.25% | 127.50 | 120.00 | 135.00 | 127.50 | 120.00 | 120.00 | 1,464 | 11:10:56 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Pharmaceutical Preparations | 0 | -28.73M | -0.4177 | -3.05 | 87.7M |
From Apr 2019 to Apr 2024
TIDMFARN
RNS Number : 6574A
Faron Pharmaceuticals Oy
13 September 2018
Faron Pharmaceuticals Ltd
("Faron" or the "Company")
Interim Results for the six months ended 30 June 2018
TURKU - FINLAND, 13 September 2018 - Faron Pharmaceuticals Ltd ("Faron") (LON: FARN), the clinical stage biopharmaceutical company, today announces its unaudited Interim Results for the six months ended 30 June 2018 (the "Period").
HIGHLIGHTS
Operational (including post period-end)
-- Traumakine - lead product in development for the treatment of organ failures
o The Company has continued the analysis of INTEREST trial data following the finding that Traumakine treatment produced inconsistent interferon beta-1a bioactivity across the treatment group.
o The Company intends to present an overview of the trial and data analysis at the ESICM (European Society for Intensive Care Medicine) conference on October 22, 2018.
o Further recommendations were received from the Independent Monitoring Committee (IDMC) to continue the Phase II INFORAAA study for the prevention of Multi-Organ Failure (MOF) and associated mortality of surgically operated Ruptured Abdominal Aorta Aneurysm (RAAA). The Company has decided to continue the trial to the first advanced interim analysis. This analysis is expected to take place in Q1-2019.
o EMA approved paediatric development plan for Traumakine in paediatric ARDS and updated orphan definition of orphan status in Europe, in which the patient population is now defined according to the Berlin classification of ARDS patients.
o Patents to use certain biomarkers to measure the severity and treatment efficacy of ARDS patients were granted in Europe, Japan and Canada. Similar is also expected to be granted in the US.
o Top-line data from the Phase III ARDS trial with Japanese partner Maruishi are expected in H2 2018.
-- Clevegen - wholly-owned novel cancer immunotherapy in development
o Completion of successful preclinical toxicity studies which showed good safety profile and potential to block Clever-1 on circulating monocytes.
o On track to file first-in-human open label Phase I/II MATINS clinical trial application (CTA) during Q3 2018 and initiate patient recruitment in Q4 2018 to investigate the safety and efficacy of Clevegen in selected metastatic or inoperable solid tumours.
o Patent granted by the European Patent Office for the use of Clever-1 antibodies, the mechanism behind Clevegen, for the treatment of cancer, extending the existing patent estate for Clevegen until 2030.
o Clever-1 control of B-cell mediated antibody formation in vivo is re-enforcing the importance of Company's program on turning immunity on which could lead to enhanced Clevegen use outside cancer areas.
Financial
o Raised GBP15.0 million (net EUR 15.9 million) through a placing in February 2018.
o Cash balances of EUR 11.2 million at 30 June 2018 (2017: EUR 10.3 million).
o Operating loss of EUR 14.0 million for the six months ended 30 June 2018 (2017: EUR 6.8 million).
o Net assets of EUR 6.7 million (2017: EUR 7.7 million) as at 30 June 2018.
o Cash preservation program implemented to reduce cash burn and preserve existing resources in order to deliver value to shareholders.
Commenting on the results, Dr Markku Jalkanen, CEO of Faron, said: "Whilst we were disappointed with the results from the INTEREST study, we have made, and are continuing to make, efforts to fully understand the data in order to define the next steps in the Company's strategy for Traumakine. The Company will closely collaborate with the clinical community to complete this analysis and plan to provide full analysis of these findings in October.
"We have continued to make good progress with our Clevegen programme and are very excited to start the first human clinical trial later this year. Our focus for the remainder of 2018 will be to continue to rapidly progress Clevegen through the clinic whilst also continuing to preserve cash in order to deliver value to shareholders."
For more information please contact:
Faron Pharmaceuticals Ltd
Dr Markku Jalkanen, Chief Executive Officer
investor.relations@faron.com
Consilium Strategic Communications
Mary-Jane Elliott, 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
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
Chairman's and Chief Executive Officer's Review
Introduction
The first half of 2018 has been a challenging period for the Company during which we announced that Traumakine did not meet the primary outcome in the Phase III INTEREST trial. As you would expect, these results have required the Company to shift its focus and, whilst we are continuing to complete further detailed analysis in order to fully understand the data, we have also had to take the necessary steps to significantly reduce our cash burn by initiating a cash preservation program and by halting the commercial, manufacturing and regulatory activities underway for Traumakine. We are encouraged by the progress made with Clevegen and with successful preclinical toxicity studies now completed, we remain on track to initiate the MATINS trial in Q4 2018. We remain cautiously optimistic about the future and still believe Faron has the potential to become a leading company in relation to organ protection in cardiovascular surgery, transplantation, and other ischemic-reperfusion injuries of vital central organs.
Traumakine - further detailed analysis of the Phase III INTEREST trial data
Traumakine did not meet the primary end-point in the pivotal, pan-European, Phase III INTEREST trial for the treatment of Acute Respiratory Distress Syndrome ("ARDS"). The data showed that treatment with Traumakine did not result in a reduced mortality rate, or an increased number of ventilator free days compared to placebo, however there were no safety concerns and administration of Traumakine was well tolerated.
Following announcement of these initial results, the Company conducted early analysis of certain biomarker indicators which suggested that the treatment did not produce the expected interferon-beta bioactivity in the treatment group that was previously seen in Faron's Phase I/II trial for Traumakine. We believe that the inconsistent biomarker expression may be explained through on going further analysis. We have observed a significant effect on the mortality in the INTEREST trial related to other concurrent and widely used ARDS treatments. Further experiments are ongoing and the results of these and analysis of the INTEREST trial will be presented at the ESICM in October.
The Company is pleased to report that the paediatric investigational plan (PIP) for Traumakine use has been accepted by the European Medicine Agency (EMA), as was the updated orphan application to comply with the new Berlin definition of ARDS patients.
Our partner Maruishi expects to complete their phase III data analysis later this year.
The Company's patent protecting the use of certain biomarkers to estimate the severity and treatment efficacy of ARDS has been granted in Europe, Japan and Canada, further protection for TRAUMAKINE to potentially be used as a significant proprietary monitoring tool for intensivists.
Whilst the Company's primary focus has been on developing Traumakine for the treatment of ARDS, we also believe that the product has the potential for application in additional disease areas and we initiated a Phase II INFORAAA clinical trial of Traumakine for the treatment of Multi-Organ Failure (MOF) and mortality prevention of surgically repaired Ruptured Abdominal Aortic Aneurysm (RAAA). RAAA is a surgical emergency with an overall mortality of 70 to 80% and requires immediate surgery and aortic repair. The main cause of death for these patients is multiple organ failure following a post-operative reperfusion injury of ischemic organs including kidneys, liver, brain and intestines. In July, we received a second recommendation from the IDMC to continue the INFORAAA trial and will take the study to the first interim point.
Clevegen - novel cancer immunotherapy approaching start of first Phase I/II trials
Clevegen (FP-1305), Faron's pre-clinical immunotherapy candidate, causes conversion of the immune environment around a tumour from immune suppressive to immune stimulating by reducing the number and function of tumour-associated macrophages (TAMs). Recent developments in the exciting field of cancer immunotherapy have been well documented with a number of important indications of clinical success. We believe that Clevegen is differentiated from other immunotherapies through its specific targeting of M2 TAMs which facilitate tumour growth, while leaving intact the M1 TAMs that support immune activation against tumours.
Successful preclinical toxicity studies of Clevegen have been completed. Clevegen showed no toxicity in dose escalation studies in large preclinical models and also blocked Clever-1 on circulating monocytes as expected. The Company remains on track to file the clinical trial application (CTA) for the MATINS study, a first-in-human open label Phase I/II adaptive clinical trial in selected metastatic or inoperable solid tumours in Q3 2018 with patient recruitment expected to initiate in Q4 2018. The selected tumours are cutaneous melanoma, hepatobiliary, pancreatic, ovarian or colorectal cancer, which are all known to contain high amounts of Clever-1 positive TAMs. The trial is to be run in three parts. Part I will be conducted to determine the safe and tolerable dose of Clevegen, which will then be used in Part II to expand the cohorts of individual tumour types. Part III of the trial aims to confirm the efficacy of Clevegen with the cohorts selected based on Part II.
The Company believes Clevegen could also be beneficial in other disease areas where a temporary reduction of immune suppression could help to fight the disease or prevent its formation. As such, the Company believes Clevegen could be used as an adjuvant in vaccinations to boost their response. A recent article, which supports this use and demonstrates Clever-1 role in the control of antibody formation by B cells, has recently been published by Faron's scientific network (Dunkel et al. 2018). This ground-breaking finding of macrophages controlling B cell antibody production could result in numerous medical applications and will be tested in the future development of Clevegen.
Financial Review
During the period, Faron initiated a cash preservation program, suspending all Traumakine commercialization, manufacturing and regulatory filing activities to reduce cash burn and preserve existing resources. In February 2018, the Company raised approximately GBP15.0 million through a placing of 1,729,350 Placing Shares and the Subscription of 134,000 Subscription Shares at the Issue Price of 805 pence per share.
The Company has executed a significant savings program throughout the whole organization including management and Board members
Statement of Comprehensive Income
The loss from operations for the six months ended 30 June 2018 was EUR 14.0 million (six months ended 30 June 2017: loss of EUR 6.8 million). The Company's revenue for the period was EUR 0.0 million (2017: EUR nil) from product sales to Maruishi Pharmaceutical. The Company also recorded EUR 0.0 million (2017: EUR 0.7 million) of other operational income from the various sources. Research and development expenditure increased by EUR 5.7 million to EUR 11.7 million (2017: EUR 6.0 million) as a result of the increased costs associated with clinical trial costs related to the end phase of the INTEREST study as well as an increase in development activities for Clevegen. Administrative expenses increased by EUR 0.9 million to EUR 2.4 million (2017: EUR 1.5 million) mainly due to external costs related to the development of internal accounting, financial and reporting processes. Both the research and development and the administrative expenses include the IFRS charge resulting from the options allocated by the Board to the personnel. This had no impact on the cash flow nor the Company's equity.
The loss after tax for the period was EUR 14.1 million (2017: loss of EUR 7.2 million) and the basic loss per share was 0.45 (2017: loss per share of 0.26).
Statement of Financial Position and Cash Flows
At 30 June 2018, net assets amounted to EUR 6.7 million (30 June 2017: EUR 7.7 million). The net cash flow for the first six months in 2018 was EUR 1.8 million positive (2017: EUR 1.1 million negative). As at 30 June 2018, total cash and cash equivalents held were EUR 11.2 million (2017: EUR 10.3 million).
Events after the interim period
There have been no major events after the end of the interim period.
Corporate
As part of the Company's re-focus, Faron today announces that Dr Jonathan Knowles has resigned from the Board to take up a position as Chair of the newly formed Clevegen Scientific Advisory Board and Dr Huaihzeng Peng has resigned from the Board but will continue as an invited Board Observer.
Both Jonathan and Huaizheng have been invaluable to Faron and we are grateful to them for their time, expertise and commitment to the Company.
Summary & Outlook
We have a number of important inflection points expected to occur during the remainder of 2018. We are particularly excited to start our first-in-human MATINS trial with Clevegen later this year. On behalf of the Board, I would like to take this opportunity to thank our shareholders for their continued support and patience during this period whilst we have continued to analyse results from the Phase III INTEREST trial.
Our focus for the remainder of 2018 will be to continue to rapidly progress Clevegen through the clinic whilst also continuing to preserve cash in order to deliver value to shareholders. We hope to be able to communicate a new strategy and commercial pathway for Traumakine over the coming months and remain optimistic about our future.
Caution regarding 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", "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 Directors' 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 Directors' current beliefs and assumptions and are based on information currently available to the Directors.
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 particular, the outcome of clinical trials may not be favourable or clinical trials over and above those currently planned may be required before the Company is able to apply for marketing approval for a product. In addition, other factors which could cause actual results to differ materially include 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, 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 Directors believe 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. Subject to any continuing obligations under applicable law or any relevant AIM Rule requirements, in providing this information the Company does not undertake any obligation to publicly update or revise any of the forward looking statements or to advise of any change in events, conditions or circumstances on which any such statement is based.
Hot Features
Premium
Statement of comprehensive income
EUR '000 Note Unaudited Unaudited For the
six months six year ended
ended months 31 December
30 Jun ended 2017
2018 30 Jun
2017
(Restated)
------------------------------------------------ ------ ------------ ------------ -------------
Revenue 20 0 -
Other operating income 14 665 1,495
Research and development expenses (11,701) (5,996) (19,100)
General and administrative expenses (2,368) (1,505) (3,054)
Operating loss (14,034) (6,835) (20,659)
Financial expense (327) (319) (408)
Financial income 305 6 7
-------------------------------------------------------- ------------ ------------ -------------
Loss before tax (14,055) (7,149) (21,060)
Tax expense - (1) (1)
-------------------------------------------------------- ------------ ------------ -------------
Loss for the period (14,055) (7,150) (21,061)
Comprehensive loss for the period attributable
to the equity holders of the Company (14,055) (7,150) (21,061)
-------------------------------------------------------- ------------ ------------ -------------
Loss per ordinary share
Basic and diluted loss per share, EUR (0,45) (0,26) (0.76)
======================================================== ============ ============ =============
Balance Sheet
EUR '000 Note Unaudited Unaudited For the
six months six months year
ended 30 ended 30 ended
Jun 2018 Jun 2017 31 December
(Restated) 2017
----------------------------------- ------ ------------ ------------ -------------
Assets
Non-current assets
Machinery and equipment 20 18 22
Subsidiary shares 18 0 -
Intangible assets 419 313 325
Prepayments and other receivables 1,305 1,527 1,310
------------------------------------------- ------------ ------------ -------------
Total non-current assets 1,761 1,858 1,657
Current assets
Prepayments and other receivables 3,805 2,845 3,920
Cash and cash equivalents 11,155 10,333 9,310
------------------------------------------- ------------ ------------ -------------
Total current assets 14,960 13,178 13,230
Total assets 16,721 15,036 14,887
=========================================== ============ ============ =============
Equity and liabilities
Capital and reserves attributable
to the equity holders of the
Company
Share capital 2,691 2,691 2,691
Reserve for invested unrestricted
equity 64,464 38,161 48,576
Accumulated deficit (60,429) (33,201) (46,524)
------------------------------------ --------- --------- ---------
Total equity 6,727 7,650 4,743
Non-current liabilities
Borrowings 2,105 2,451 2,088
Other liabilities - - 0
------------------------------------ --------- --------- ---------
Total non-current liabilities 2,105 2,451 2,088
Current liabilities
Borrowings - 65 338
Trade payables 4,869 2,011 3,196
Other current liabilities 3,020 2,859 4,522
------------------------------------ --------- --------- ---------
Total current liabilities 7,889 4,936 8,056
Total liabilities 9,994 7,386 10,144
Total equity and liabilities 16,721 15,036 14,887
==================================== ========= ========= =========
Statement of Changes in Equity
EUR '000 Note Share Reserve for Accumulated Total
capital invested unrestricted deficit equity
equity
----------------------------------- ------ --------- ----------------------- ------------ ---------
Balance as at 1 January 2017 2,691 32,362 (26,652) 8,401
Comprehensive loss for the
first six months 2017 - - (7,150) (7,150)
Transactions with equity holders
of the Company
Issue of ordinary shares,
net of transaction costs EUR
388 thousand - 5,448 - 5,448
Share options exercised - 97 - 97
Warrants exercised - 254 - 254
Share-based compensation - 0 600 600
----------------------------------- ------ --------- ----------------------- ------------ ---------
- 5,799 600 6,399
Balance as at 30 June 2017 2,691 38,161 (33,201) 7,650
=================================== ====== ========= ======================= ============ =========
Comprehensive loss for the
last six months 2017 - - (13,911) (13,911)
Transactions with equity holders
of the Company
Issue of ordinary shares,
net of transaction costs EUR
423 thousand - 10,415 - 10,415
Share options exercised - - - -
Warrants exercised - - - -
Share-based compensation - - 589 589
----------------------------------- ------ --------- ----------------------- ------------ ---------
- 10,415 589 11,004
Balance as at 31 December
2017 2,691 48,576 (46,524) 4,743
=================================== ====== ========= ======================= ============ =========
Comprehensive loss for the
first six months 2018 - - (14,055) (14,055)
Transactions with equity holders -
of the Company
Issue of ordinary shares,
net of transaction costs EUR
1,135 thousand - 15,888 - 15,888
Share options exercised - - - -
Warrants exercised - - - -
Share-based compensation - - 150 150
----------------------------------- ------ --------- ----------------------- ------------ ---------
- 15,888 150 16,038
Balance as at 30 June 2018 2,691 64,464 (60,429) 6,727
=================================== ====== ========= ======================= ============ =========
Statement of Cash Flows
EUR '000 Note Unaudited Unaudited For the
six months six months year ended
ended ended 31 December
30 Jun 30 Jun 2017
2018 2017
(Restated)
---------------------------------------- ------ ------------ ------------ -------------
Cash flow from operating activities
Loss before tax (14,056) (7,150) (21,060)
Adjustments for:
Depreciation and amortisation 42 35 76
Interest expense 47 36 75
Unrealised foreign exchange loss
(gain), net (35) 283 290
Share-based compensation 150 589 1,189
------------------------------------------------ ------------ ------------ -------------
Change in net working capital: (13,852) (6,207) (19,430)
Prepayments and other receivables
(increase -) 120 (429) (1,286)
Trade payables (increase +) 1,668 (10) 1,175
Other liabilities (1,502) (288) 1,189
------------------------------------------------ ------------ ------------ -------------
Cash used in operations (13,566) (6,934) (18,352)
Taxes paid 0 (1) (1)
Interest paid (13) (36) (10)
------------------------------------------------ ------------ ------------ -------------
Net cash used in operating activities (13,579) (6,970) (18,363)
Cash flow from investing activities
Payments for intangible assets (150) (41) (90)
Payments for equipment (2) - (8)
------------------------------------------------ ------------ ------------ ------------- Net cash used in investing activities (152) (41) (98) Cash flow from financing activities Proceeds from issue of shares 17,023 6,197 17,362 Share issue transaction cost (1,135) (388) (1,148) Proceeds from borrowings - 368 453 Repayment of borrowings (347) (28) (84) ------------------------------------------------ ------------ ------------ ------------- Net cash from financing activities 15,541 6,149 16,583 Net increase (+) / decrease (-) in cash and cash equivalents 1,810 (863) (1,878) Effect of exchange rate changes on cash and cash equivalents 35 (283) (290) Cash and cash equivalents at 1 January 9,310 11,478 11,478 Cash and cash equivalents at the end of period 11,155 10,333 9,310 ================================================ ============ ============ =============
Notes to the financial statements
1 Corporate information
Faron Pharmaceuticals Ltd. (the "Company") is a clinical stage biopharmaceutical company incorporated and domiciled in Finland, with its headquarters at Joukahaisenkatu 6 B, 20520 Turku, Finland. The Company has two major drug development projects focusing on acute trauma, cancer growth and spread and inflammatory diseases.
The Company is listed on the London Stock Exchange's AIM market since 17 November 2015, with a ticker FARN.
2 Summary of significant accounting policies 2.1 Basis of preparation
The unaudited interim financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) of the International Accounting Standards Board (IASB) and the interpretations of the International Financial Reporting Standards Interpretations Committee (IFRS IC). The financial statements have been prepared on a historical cost basis, unless otherwise stated.
The interim financial statements have been prepared on the basis of a full retrospective application of IFRS 15, Revenue from Contracts with Customers, with the adoption date as of 1 January 2017. These policies are consistent with those used in the financial statements for the year ended 31 December 2017 and with those that the Company expects to apply in its financial statements for the year ending 31 December 2018.
The interim financial statements do not include all of the information required for full annual financial statements and do not comply with all the disclosures in IAS 34 "Interim Financial Reporting". Additionally though the interim financial statements have been prepared in accordance with IFRS, they are not in full compliance with IFRS.
All amounts are presented in thousands of euros, unless otherwise indicated, rounded to the nearest euro thousand
2.2 Restatements of previously issued financial statements
Subsequent to the original issuance of the Company's interim financial statements for the period ended 30 June 2017, the Company has adopted new and amended accounting standards and corrected certain prior period (2015 and 2016) errors in its accounting. The 30 June 2017 interim financial statements, as initially reported, have therefore been amended and restated as follows.
In the process of adopting IFRS 15 Revenue from contracts with customers (see note 2.23) we identified errors in the application of IAS 18, which resulted in the following corrections to our previously issued 30 June 2017 financial statements:
Under IAS 18, the Company deferred EUR 750 thousand upfront fee from Korean license partner Pharmbio Korea Inc. ("Pharmbio") as at 31 December, 2016. This was not consistent with the revenue recognition policy that the Company had applied earlier on a license agreement with similar characteristics. Consequently, this recognition of upfront fee as revenue resulted in a EUR 750 thousand decrease in accumulated deficit as well as in a reduction of advances received in the 1 January 2017 opening balance sheet.
The Company entered into a joint purchase agreement with a third party pharmaceutical company whereby they agreed to purchase Active Pharmaceutical Ingredient ('API') from a supplier. Under this arrangement, the Company received cash from the pharmaceutical company that it passed on to the supplier. In 2016 the Company had recognised this cash receipt as revenue and recorded the cost of both Company's and the third party's API in research and development expenses, which had zero net impact on equity. Further, the correction of the related VAT posting of EUR 68 thousand resulted in an increase in current prepayments and other receivables and decrease in research and development expenses and in accumulated deficit in the 1 January 2017 opening balance sheet. For the period ending 30 June 2017 the correction resulted in a reduction of revenue by EUR 7 thousand and research and development expenses by the same amount.
The Company revisited the substance and the accounting treatment of its financing agreement with A&B (HK) Company Limited ("A&B") entered into in May 2015 and concluded that the share subscription by A&B comprised of a linked transaction, whereby A&B simultaneously acquired a license to the Company's intellectual property. Management has assessed that the consideration received in excess of the estimated fair value of the Company's ordinary shares subscribed for by A&B should have been allocated to the transaction price for the sale of the licensed intellectual property. The Company has determined that the license to intellectual property is a right to use type license and the transaction price should have been recognised in revenue at the point in time when control to the intellectual property transferred in May 2015. Therefore the transaction price for the sale of the licensed intellectual property EUR 690 thousand has been reclassified in the opening balance of 1 January 2017 within equity reducing the reserve for invested unrestricted equity and reducing accumulated deficit.
The Company has corrected amounts in its previous years' accounting for government grants received in the form of direct funding from the European Commission and in the form of indirect government assistance through the below-market rate government loans. The corrections for direct funding from the European Commissions related to the timing of the recognition of the eligible costs and to matching of the grant income to incurred eligible costs. The correction for the below-market rate government loans related to recognition of the grant income based on an accrual basis, instead of recognition upon proceeds received. In addition, the Company has corrected the carrying value of the government loans recognised at amortised cost due to an error in the effective interest rate calculation. These restatements resulted in EUR 369 thousand decrease in prepayments and other receivables with corresponding increase in the deficit. The other operating income in the comprehensive statement of income is restated and adjusted by EUR 717 thousand with EUR 1 thousand decrease in financial expense, with a corresponding adjustment in accumulated deficit, EUR 629 thousand decrease prepayments in other receivables, EUR 50 thousand increase in the borrowings and EUR 36 thousand increase in other current liabilities. The impact of all these restatements are reflected in the opening balance of 1 January 2017. During the six months period ended in 30 June 2017, the amount of direct funding from the European Commissions was adjusted based on correct recognition of the eligible costs and to matching of the grant income to incurred eligible costs. This resulted in an increase of EUR 398 thousand in prepayments and other receivables and corresponding decrease in accumulated deficit in closing balance 30 June 2017. During the same period the correction for the below-market rate government loans related to recognition of the grant income based on an accrual basis, instead of recognition upon proceeds received. This resulted in a further increase of EUR 58 thousand in prepayments and other receivables and corresponding decrease in accumulated deficit, a decrease of EUR 34 thousand in non-current borrowings and a decrease of EUR 52 thousand in other current liabilities in the closing balance 30 June 2017.
The Company has incorrectly capitalised in-process research and development expenditures, which had not met the capitalisation criteria in IAS 38. Consequently, the asset of EUR 718 thousand was derecognised and the amortization of EUR 90 thousand has been reversed in the statement of comprehensive income. Thus the opening balance 1 January 2017 was adjusted accordingly. During six months period ended in 30 June 2017 the amortization of EUR 45 thousand has been reversed in the statement of comprehensive income decreasing the value of intangible assets.
In the balance sheet, EUR 1,212 thousand relating to prepayments to a third party Contract Research Organisations and EUR 24 thousand rental deposits have been reclassified from current prepayments and other receivables to non-current prepayments and receivables due to the long-term nature of the items. In 30 June 2017 closing balance EUR 52 thousands of prepayments have been reclassified from current to non-current.
The Company has revised its previous balance sheet classification of inventories and re-classified the balances previously presented as inventory prepayments and finished goods to prepayments and other receivables as such goods are not held for sale in the Company's ordinary course of business, but will be used in the Company's research and development activities. This reclassification totalled to EUR 1,451 thousand in the opening balance of 1 January 2017.
The Company has corrected the effects of certain prior period cut-off errors related to charges by vendors and their sub-contractors in its restated financial statements resulting in an increase of EUR 614 thousand in non-current other liabilities, EUR 845 thousand increase in other current liabilities, EUR 146 thousand net increase in trade payables, EUR 19 thousand increase in prepayments and other receivables and corresponding increase of EUR 1 586 thousand in accumulated deficit as at 1 January 2017. During the six months period ended in 30 June 2017 the correction of cut-off errors resulted in a decrease of other non-current liabilities of EUR 613 thousand and an increase of Other current liabilities of EUR 686 thousand and a EUR 74 thousand increase in accumulated deficit.
The Company has also revised the presentation of share-based compensation of EUR 954 thousand in the balance sheet as at 1 January 2017 from reserve for invested unrestricted equity to accumulated deficit
The Company has corrected the proceeds from borrowings in the statement of cash flow for the financial year ended 31 December 2016 by EUR 339 thousand to reflect gross proceeds received. The cash flows for the withdrawal of the borrowings in the form of R&D loans were previously presented net of grant benefit. In addition, the Company has revised the presentation of the statement of cash flows for the financial year ended 31 December 2016 relating to unrealised foreign exchange gains amounting to EUR 627 thousand, interest expense of EUR 24 thousand and the interest paid of EUR 357 thousand, previously presented on a combined basis as financial items. The Company corrected its presentation to disclose share issue transaction cost and the proceeds from issue of shares on a gross basis.
Statement of comprehensive income
EUR'000 Reference As originally Restatement Amount
within reported as adjusted
note June June
2.2 2017 2017
------------------------------------------------ ----------- -------------- ------------ -------------
Revenue 1b 7 (7) 0
Other operating income 2 103 562 665
Research and development expenses 1b,3,5,6,7 (5,709) (287) (5,996)
General and administrative expenses 7 (1,320) (185) (1,505)
Operating loss (6,919) 84 (6,835)
Financial expense 2 (299) (20) (319)
Financial income 6 - 6
------------------------------------------------ ----------- -------------- ------------ -------------
Loss before tax (7,212) 63 (7,149)
Tax expense (1) - (1)
------------------------------------------------ ----------- -------------- ------------ -------------
Loss for the period (7,213) 63 (7,150)
Comprehensive loss for the period attributable
to the equity holders of the Company (7,213) 63 (7,150)
------------------------------------------------ ----------- -------------- ------------ -------------
Loss per ordinary share
Basic and diluted loss per share, EUR (0,26) (0,26)
================================================ =========== ============== ============ =============
EUR'000 Reference As originally Restatements Amount as
within reported, by 30.6.2017 adjusted,
note 2.2 as at (cumul.) as at 31 June
June 2017
30, 2017
Assets
Non-current assets
Machinery and equipment 18 18
Intangible assets 3 897 -584 313
Prepayments and other receivables 4,5 0 1 527 1 527
Total non-current assets 915 943 1 858
Current assets
Inventories 4,5 1 503 -1 503 0
1b), 2,
Prepayments and other receivables 4, 6 3 333 -487 2 845
Cash and cash equivalents 10 333 0 10 333
Total current assets 15 169 -1 990 13 178
Total assets 16 084 -1 047 15 036
Equity and liabilities
Capital and reserves
Share capital 2 691 0 2 691
Reserve for invested unrestricted
equity 39 815 -1 654 38 161
1,2,3,
Accumulated deficit 6, 7 -33 027 -176 -33 202
Total equity 9 480 -1 830 7 650
Non-current liabilities
Borrowings 2 2 434 16 2 450
Other liabilities 6 1 1
Total non-current liabilities 2 434 17 2 451
Current liabilities
Borrowings 65 0 65
Trade and other payables 6 2 011 1 2 011
1a), 2,
Other current liabilities 6 2 094 765 2 859
Total current liabilities 4 170 766 4 936
Total liabilities 6 604 783 7 386
Total equity and liabilities 16 084 -1 047 15 036
2.3 Going Concern
The Company has forecast its estimated cash requirements over the next twelve months. In order to make these forecasts the Company has made a number of assumptions regarding the quantity and timing of future expenditure and income as well as other key factors. Though these estimates have been made with caution and care, they continue to contain significant amount of uncertainty. Based on the forecast the Company believes that it has adequate financial resources to continue its operations for the foreseeable future (at least twelve months from the date of this report) and therefore these interim financial statements have been prepared on a going concern basis. In its meeting on 12 September 2018 the Board of Directors of Faron Pharmaceuticals Ltd. approved the publishing of interim financial statements.
3 Revenue
The revenue for the first six months in 2018 was EUR 20,424 euro. This consisted of sales of clinical study material to Maruishi.
4 Other operating income
Other operating income of EUR 13,850 consists of income from various sources.
5 Tekes loans
On 30 June 2018 the total amount of all Tekes loans was EUR 2,487,160. The loans have a maturity of 10 years from the first instalment, of which the first five years are free of repayment. The Interest of all Tekes loans is currently one per cent. Loans are unsecured and if the projects fall short of their goals and results cannot be commercialised, part or all of the loans may afterwards be converted into a grant.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
IR UOVVRWRAKARR
(END) Dow Jones Newswires
September 13, 2018 02:01 ET (06:01 GMT)
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