Proactive Investors - Faron Pharmaceuticals Ltd (LON:FARN) has successfully secured €3.2 million through convertible loans from a group of existing shareholders as a first step towards securing its financial future.
The move addresses the company's immediate short-term requirements, enabling critical payments to third parties under agreed waivers with IPF Fund II SCA, SICAV-FIAR.
In an update, the company said it faced challenges, including a breach of several undertakings in its secured debt agreement, leading to lender IPF blocking Faron's bank accounts.
However, with the newly obtained commitments, IPF has granted the aforementioned waivers for certain defaults, allowing Faron to proceed with necessary payments and secure its bank account access until 8 March 2024.
Faron said it is actively pursuing short- and long-term financing options to sustain its operations. It requires around €5 million more in short-term bridge financing to ensure the publication of its annual accounts for 2023 and maintain compliance with cash covenants.
Looking ahead, it said it plans to propose a significant share issue at the annual meeting on April 5.
This move is aimed at launching a public offering to meet the company's financial needs for the year, particularly to continue the BEXMAB study without interruption.
As of February 19, Faron has cash and equivalents of approximately €4.3 million. It told investors it is committed to completing the enrollment for the phase II trial of the BEXMAB study, requiring a total investment of €35 million for interim and final readouts and to secure US regulatory feedback on the study's design.
"This fundraise will enable us to meet our immediate financing needs and continue our ambitious bexmarilimab development program, with a focus on delivering the next milestones," said Dr Markku Jalkanen, Faron's chief executive.
"These funds are part of the larger financing plan to secure a cash runway for 2024 and to complete the phase II study and receive FDA's guidance for the pivotal study part.
"We would like to thank support from our investors in developing this novel immunotherapy, especially for myeloid leukaemia with very few treatment options". To support the Company's short-term financing, the Company's CEO has agreed to give up his salary for the coming three months.