Financing of up to EUR 30 million through a loan from IPF Partners
Initial tranche consists of EUR 10 million
Proceeds from first tranche provide the Company with sufficient working capital through Q4 2022
The utilization of two additional tranches of EUR 5 million and EUR 15 million, respectively, is subject to certain conditions precedent
IPF Partners will also be granted warrants entitling them to subscribe for ordinary shares and have the right to appoint a board observer
Company announcement, February 28, 2022 at 02:00 AM (EST) / 07:00 AM (GMT) / 09:00 AM (EET)
TURKU, Finland and BOSTON, Feb. 28, 2022 /PRNewswire/ — Faron Pharmaceuticals Ltd. (AIM: FARN) (First North: FARON), a clinical stage biopharmaceutical company focused on building the future of immunotherapy by harnessing the power of the immune system to tackle cancer and inflammation, announces that it has entered into a secured debt agreement (“Funding Agreement”) with IPF Partners (“IPF”) to advance and accelerate its pipeline programs. The first tranche of EUR 10 million is agreed to be drawn today and is to be repaid quarterly over a five year term. Subject to certain conditions being met, Faron may have access to an additional EUR 20 million in funding until mid-2023 on a four and one-half year term under the Funding agreement. The Funding Agreement is subject to minimum cash and gross gearing covenants.
“This funding agreement strengthens our financial position and adds flexibility to our funding strategy by adding a debt instrument into our funding tools,” said Toni Hänninen, Chief Financial Officer of Faron. “We are excited to be working with IPF Partners, one of the leading alternative financing providers focused on the healthcare sector, and thank them for their partnership.”
The Funding Agreement is for up to EUR 30 million in three tranches. The first tranche of EUR 10 million will be drawn down on the date of this announcement. The second tranche of EUR 5 million may be drawn down on or before June 30, 2023 if Faron raises at least EUR 15 million of new gross equity, has sufficient funding until March 31, 2023 and has received an approval from the Food and Drug Administration of the U.S. Department of Health and Human Services regarding the protocol for a pivotal clinical trial of bexmarilimab in an oncology indication. The third, yet uncommitted tranche of up to EUR 15 million could be utilized after the drawdown of tranche two, subject to the IPF investment committee’s prior approval on or before June 30, 2023. Each tranche carries an annual cash interest of three-month EURIBOR + 9.00% in addition to customary structuring and legal fees. The total cash cost of the arrangement is dependent on whether the debt is repaid on each maturity date or earlier.
As part of the arrangement, IPF will also be granted special rights which entitle them to subscribe for new ordinary shares in the Company against payment (“Warrants”) for a period of seven years following the drawdown of each tranche except for the first drawdown, for which the subscription period will commence on March 25, 2022 and end on the date falling seven years after such date. The subscription price per share on the basis of these Warrants will equal the 30-day volume-weighted average price of an ordinary share of Faron on the Nasdaq Helsinki First North exchange immediately preceding the drawdown date of the respective tranche. The number of shares to be subscribed for under the Warrants will be calculated by dividing 10.0% of each tranche amount by the strike price defined above, subject to standard adjustments. For the first tranche the subscription price is calculated to be EUR 3.126 per share. Accordingly, IPF will have 319,944 Warrants giving them the right to subscribe for up to 319,944 ordinary shares in Faron following the drawdown of the first tranche. The issuance of Warrants in connection with the drawdown of the first tranche is carried out within the authorization granted to the Board by shareholders at the Company’s Annual General Meeting held on April 23, 2021. Additionally, according to the Funding Agreement, IPF has the right to appoint a board observer in Faron.
“This year will be critical for the bexmarilimab development program as we expect updated survival and biomarker data from our Phase I/II MATINS trial, the initiation of our first hematologic Phase I/II trial, enrollment of patients in the first study evaluating bexmarilimab in combination with an anti-PD-1 molecule, and a meeting with the US FDA to discuss our data and path towards a regulatory filing,” said Dr. Markku Jalkanen, Chief Executive Officer of Faron. “This financing agreement will notably help us continue to accelerate our ambitious bexmarilimab development program, which has the potential to bring the promise of immunotherapy to a much broader patient population compared to the relatively small percentage of cancer patients benefiting from checkpoint inhibitor therapies today.”
Source : https://www.prnewswire.com/news-releases/faron-obtains-debt-funding-from-ipf-partners-301491281.html