Translation: Original published in Finnish on 7/29/2025 at 8:00 am EEST.

Faron's share price has fallen during mid-summer without significant news. The share price decline has improved the risk/reward ratio, so we raise our recommendation to Accumulate (was Reduce) and reiterate our target price of EUR 3.0. During H2, we expect the company to provide more detailed plans regarding the implementation of the upcoming pivotal phase III BEXMAB trial, as well as final results from BEXMAB's phase II responses and overall survival. Financing solutions – including a potential commercialization agreement – naturally remain continuously under scrutiny. 

The results to date enable transition into pivotal phase

Faron also released trial results to investors in June, in connection with the ASCO meeting. The results broadcast can be viewed here. However, not all patients in the study had yet been included in the analysis of clinical responses, so the actual final response readout is still to come. However, based on the reported results, we believe that conclusions can already be drawn from the Phase II study, where Faron's bexmarilimab candidate is combined with the standard drug azacitidine.

In first-line MDS patients, overall responses were observed in 67% and CR/Creq responses, best correlating with overall survival, in 24%. The figures are slightly higher compared to the azacitidine monotherapy response seen in previous large-scale studies. When interpreting the figures, it is important to remember that the number of patients in Faron's study is small, so strong conclusions can only be drawn from the results of the next study phase.

In late-stage, more difficult-to-treat r/r MDS patients, overall responses were 47% and CR/CReq responses were 6%. The response rate in both groups may still increase as treatment continues. Regarding overall survival, we estimate that mOS results for r/r MDS patients will be available by the end of the year or, at the latest, early next year.

Overall, we believe that the results will enable the transition to phase III, the details of which will be discussed with the regulatory authority (FDA). In our view, the combination of bexmarilimab and azacitidine appears sufficiently good in terms of safety and tolerability, and we do not see any significant concerns related to it.

Finances are sufficient to complete phase II

Regarding financing, Faron's cash reserves are sufficient until Q1’26, according to the company. A convertible bond of up to 35 MEUR was added to the overall financing in spring 2025. The first 15 MEUR tranche of the loan has been drawn, which was primarily used for the repayment of IPF's loan. With the current financing, Faron can virtually complete the ongoing BEXMAB study and make preparations for the phase III trial. However, carrying out the next phase will require significant new funding, the precise amount of which will be determined once the research plan is finalized.

Risk/reward ratio has improved with share price drop

Our forecasts remain unchanged, as the company has not reported any news affecting the forecasts since our last update. We will review our estimates again no later than with the H1’25 report, which will be published on August 27.

Our DCF model gives the share a value of EUR 3.0, meaning we again see upside in the share after the share price decline. However, the share is still relatively highly valued compared to its Nordic peers. We believe that the valuation premium is partly justified based on Faron's potential to move quickly towards commercialization in MDS and the potentially large number of indications. Solid tumors bring longer-term potential to the share, but the funding for their research is still open.