Faron Pharmaceuticals

1. CONQUERING ACUTE
RESPIRATORY DISTRESS
SYNDROME (ARDS) AND
CANCER IMMUNITY
Experiences from an IPO at AIM (London)
Dr. Juho Jalkanen, Non-executive Board Member
06 September 2016

2. DISCLAIMER
2
The contents of this presentation have not been approved by an authorised person within the meaning of Section 21 of the Financial Services and Markets Act
2000 (as amended) ("FSMA"). Reliance on the contents of this presentation for the purpose of engaging in any investment activity may expose an individual to a
significant risk of losing all of the property or other assets invested.
This presentation has been produced by Faron Pharmaceuticals Oy (the “Company” or “Faron”) and has not been, and will not be, reviewed or approved by the
Financial Conduct Authority of the United Kingdom (“FCA”), London Stock Exchange plc ("LSE"), the Finnish Financial Supervisory Authority or any other
authority or regulatory body.
This presentation is being supplied or made to you solely for your information and does not constitute or contain any invitation, solicitation, recommendation,
offer or advice to any person to subscribe for, otherwise acquire, or dispose of any securities in the Company or any other entity in any jurisdiction. Neither the
presentation nor any part of it, nor the fact of its distribution, shall form the basis of, or be relied on in connection with, any contract or investment decision in
relation to the Company or any other entity.
No undertaking, representation, warranty or other assurance, express or implied, is made or given by or on behalf of Faron or any its respective directors,
officers, partners, employees, agents or advisers or any other person as to the accuracy or completeness of the information or opinions contained in this
presentation and no responsibility or liability is accepted by any of them for any such information or opinions or for any errors, omissions, misstatements or for
any other communication written or otherwise. No statement in the presentation is intended to be, nor should be construed, as a profit forecast. Neither the
Company nor its directors will be obliged to provide the recipient with access to any additional information or to update this presentation with additional
information or to correct any inaccuracies which may become apparent. The information and opinions contained in this presentation are provided as at the date
of this presentation and are subject to change without notice. The contents of this presentation have not been independently verified.
The contents of this presentation are being supplied to you solely for your information and may not be reproduced, re-distributed or passed to any other person
or published in whole or in part for any purpose. If this document has been received in error, it must be returned immediately to the Company.
Certain statements included herein express Faron’s expectations or estimates of future performance and constitute “Forward-looking Statements”. Forward-
looking Statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by Faron are inherently subject to
significant business, economic and competitive uncertainties and contingencies. Such Forward-looking Statements involve known and unknown risks,
uncertainties and other factors that may cause the actual financial results, performance or achievements to be materially different from estimated future
results, performance or achievements expressed or implied by those Forward-looking Statements and, as such, the Forward-looking Statements are not
guarantees of future performance. Faron expressly disclaims any intention or obligation to update or revise any Forward-looking Statements whether as a result
of new information, events or otherwise. No person is authorised to give any information or to make any representation other than as contained in this
presentation and, if given or made, such information or representation must not be relied upon as having been authorised by the Company.
The foregoing applies to this presentation, any oral presentation of the information in this document by any person on behalf of the Company and any question-
and-answer session that follows any such oral presentation (collectively, the "Information"). By accepting this presentation, you agree to be bound by the
foregoing instructions and limitations in respect of the Information.
05/09/2016

3. FARON
• Faron started operations in 2007 with only 4 people
• Outsourcing where ever possible, keeping the costs at minimum
• Gathering money from ”friends, family and fools”
• Initial plan was to take innovations to “proof of concept” and sell them of
• Slogan: “Taking innovations further”
• Experienced Management Team and Board with successful track record in Drug
Development
Within 10 years from ZERO to a company with a phase III product and significant
immune-oncology program
305/09/2016

4. EXECUTIVE DIRECTORS & SENIOR MANAGEMENT TEAM
Experienced Team with Successful Track Record in Drug Development
4
Dr Markku Jalkanen, Chief Executive Officer & Founder
• Over 25 years’ experience in biomedical research, biotech development and the biopharmaceutical industry
• Former CEO of Biotie Therapies Corp., NASDAQ-listed life science company. Adviser to Finnish Life Sciences Fund, Inveni
Capital
• PhD in Medical Biochemistry and Docent (lecturer) in Biochemistry and Molecular and Cell Biology
Yrjö Wichmann, Chief Financial Officer
• Over 20 years’ experience in financing and investment banking in the life science and biotechnology sector
• Member of Investment Committee at Dasos Timberland Fund I and the Innovation Board of Helsinki University which
oversees the venture capital portfolio of Helsinki University Funds
• Public company experience with London, Stockholm and Helsinki stock exchanges. Masters in Economics
EXECUTIVE DIRECTORS
SENIOR MANAGEMENT
• MD with expertise in Pharmaceutical Medicine
and holds an MSc in Pharmaceutical Chemistry
• Over 30 years’ experience in drug
development both with NCEs and biologics
• Numerous drugs to different stages of
development
Dr Mikael Maksimow,
VP Operations
Dr Ilse Piippo,
VP Drug Development,
Chief Medical Officer
• Expert in autoimmune diseases and
T cell biology
• Manages Faron’s scientific network,
collaborators and out-sourcing
operations
Dr Matti Karvonen,
VP Medical Director
• Background in clinical neurology
• Held several positions in
international pharmaceutical
organisations, including Roche,
Biogen Idec and Novartis
05/09/2016

5. FARON
• Successful IPO November 2015, raising €14.2 million (£10 million)
• Lead drug Traumakine® in Phase III INTEREST trial in Acute Respiratory Distress Syndrome
(ARDS)
• Generated strong results in UK-based Phase I/II trial, including a 81% reduction in the odds of
mortality; data published in The Lancet Respiratory Medicine 2014
• European Orphan Drug Designation status granted; 10 years market exclusivity from marketing
approval +2 years subject to making a paediatric application
• Three regional pharma licensing deals: Maruishi in Japan, China Medical Systems in Greater
China and Pharmbio in Korea
• Pipeline includes novel cancer immunotherapy – Clevegen®, to remove immune
suppression around tumours caused by tumour associated macrophages (TAM)
• Clevegen indication expansion + value creation through platforms available for licensing or
partnering
– Tumour Immunity Enabling (TIET)
– Chronic Infection Removal therapy Program (CIRT)
– Vaccination Response Enhancement Technology (VRET)
Late Stage Clinical Development Pipeline Targeting Significant Unmet Medical Needs
505/09/2016

6. INTERFERON-BETA
TREATMENT OF ARDS
AND OTHER ISCHAEMIC
REPERFUSION INJURIES
6
TRAUMAKINE®
05/09/2016

7. ACUTE RESPIRATORY DISTRESS SYNDROME
• ARDS is the leading cause of respiratory failure in ICU patients who require mechanical
ventilation
• Annual ARDS incidence in Europe is 170,000 and in the US is nearly 200,000 patients
• High mortality rate of 30 to 45% and survivors suffer long term mental and physical
problems
• Significant unmet medical need – currently no approved drug treatment
Orphan Lung Disease with No Available Drug Treatment
7
ARDS is a rare disease characterised by
vascular leakage and inflammation of the
lungs and acute but persistent loss of lung
function
Causes include: pneumonia (bacteria/virus), sepsis,
aspiration of fumes, food or stomach contents into the
lung and trauma (e.g. accidents) Normal Lung
Chest X-ray of ARDS patient i.e. “white lung”
ARDS Patient Lung

8. DEVELOPMENT STATUS UPDATE FOR TRAUMAKINE
Currently in Pivotal Stage in Europe and Japan
8
UK Phase II - FPCLI001 (completed)
• Preliminary evaluations of safety, pharmacodynamics and efficacy in UK ALI/ARDS patients with
significant reduction in D28 mortality (Lancet Res. Med. 2014: 2: 98)
Japanese Phase II - MR11A8 (completed)
• Preliminary evaluations of safety, pharmacodynamics and efficacy in Japanese moderate and
severe ARDS patients, comparable results with FPCLI001 study
Pan-European Phase III INTEREST - FPCLI002 (on-going)
• A phase III double-blind, randomised, parallel-group comparison of efficacy and safety of FP-1201-
lyo and placebo in 300 moderate and severe ARDS patients
• Pan-European recruitment on-going, results expected in H2-2017
Japanese Phase III - MR11A8 (planned H2 2016)
• Based on FPCLI002 protocol and aiming at metric combination with FPCLI002 study via meta-
analysis
• Trial planned and approved by PMDA. Patient recruitment expected to be initiated in H2-2016
05/09/2016

9. NEW TECHNOLOGIES TO CONTROL IMMUNE
SUPPRESSION IN VARIOUS CONDITIONS
CLEVEGEN®
905/09/2016

10. CANCER IMMUNOTHERAPY BASED ON TAM ELIMINATION
Promising Approaches to Intervene in Tumour Immune Suppression
M1
Bone marrow
Circulation
Stem cell Monocyte
TAM-2
Tumour
cell
ThymusT helper cells
Memory T cells
Natural killer T cells
Regulatory T cells+
Tumour
Clevegen limits function of tumour activated macrophages (TAM), a known
immunosuppressive cell group in tumours
Faron: Blocking
macrophage
penetration and
function*
*Karikoski et al. (2014) Clin. Cancer Res. 20:6452-64 25
CURRENT LANDSCAPE
Activation of T-cells
(eACT), ~$3 billion
market cap
Activation of T-cells
(T-CAR), $3+ billion
market cap
CAR-T
technology,
~$1.0 billion
market cap
PD-1 inhibitors, sales and
sales potential, $30.0+ billion
Activation of T-cells
(ImmTACs), Private, est.
Recent series A raised
$320 million
05/09/2016

11. 11
MACROPHAGE M2  M1 CONVERSION IS AN IMPORTANT
IMMUNE CHECKPOINT EVENT
05/09/2016

12. FARON PIPELINE BASED ON FARON R&D DAY ON JUNE 14, 2016 19.9.2016
1205/09/2016 12

13. WHY AN IPO AND WHY OVERSEAS?
Capital
• Faron was financed by
• Soft money from several sources but these need matching funds
• Equity investments by “Family, Friends and Fools” but their pockets were not deep enough to
finance pan-European phase III trial
• No cornerstone investors (life science) available from Finland
Valuation
• Founders interest to create value should be motivated
• Net present valuation model does not work in Finland
• Valuations in Finland are significantly lower than in Sweden but increases even further when
one goes more West (US NASDAQ)
• Nothing beats US market in good and bad
• Overseas capital markets include small biotech and pharma giants and significant number of
M&A’s
13
Can somebody tell where the equity capital is hidden in Finland?
05/09/2016

14. WHY (PROS) AIM IN LONDON?
Capital
• London is one of largest concentration of capital in the whole world
• Life science sector is truly recognized and functional
• Life science infrastructure (Banks, IR, PR, media, etc.) is most developed in Europe
• High quality Analysts guide the institutional and retail markets
Recognition
• The above mentioned infrastructure provide significant promotion for the Company
• Pipeline and progress are more important than company domicile
• Board plays an important role
• Non-executive directors complement the management
• High quality Investors can promote significantly company recognition
• Company awareness increases, supporting also commercialization of the pipeline
• London AIM welcomes also non-UK companies
14
Good City to do shopping!
05/09/2016

15. NON-EXECUTIVE DIRECTORS
15
Dr Frank Armstrong, Non-Executive Chairman
• Significant industry experience at big pharma including Bayer and Zeneca as well as CEO roles with five biotechnology
companies (public and private). Also holds several Chairmanships and Non-Executive positions
• Member of the Scientific Advisory Board of Healthcare Royalty Partners, a Fellow of the Royal College of Physicians
Matti Manner, Vice-Chairman
• Significant experience in national and international business deals, corporate law and M&A
• Holds several trustee posts including Presidency of the Finnish Bar Association during 2001-04
Dr Juho Jalkanen, Non-Executive Director
• Consultant in vascular surgery at Turku University Hospital
• Degree in International Marketing
Leopoldo Zambeletti, Non-Executive Director
• Long standing career in investment banking having led the European Healthcare Investment Banking team at JP
Morgan and Credit Suisse
• Non-Executive Director of Summit, Nogra Pharma
Dr Huaizheng Peng, Non-Executive Director
• General Manager of China Medical System Holdings
• Former global investor and investment banker specialising in life science, biotechnology and pharmaceuticals
Dr Jonathan Knowles, Non-Executive Director
• Former President of Group Research and a Member of the Executive Committee at Roche for 12 years
• Chairman of Adaptimmune and Immunocore, and a Director of several public and private companies
• Distinguished Professor in Personalized Medicine at the University of Helsinki, Finland
05/09/2016

16. 19.9.2016
Footnotes 16
Sunday Times, Sep 6, 2015

17. NEGATIVE EXPERIENCES OF AN AIM LISTING?
IPO process
• UK legislation differs significantly from Finnish one
• The settlement for new shares is complex but can be handled with (soft) underwriting
• Successful book building requires a well known broker (also potential for further fund raising)
• Advisors are expensive and data verification process tedious
• Requires constant presence close to markets
Everyday life on AIM
• Trading requires Broker use
• Lock-ups are long
• The AIM market is rigid and day-to-day turnovers are small
• It is a “professional market” and not for your “everyday Joe”
• Difficulties to obtain stock from Finland
• Friends should have put their money in before
17
Requires presence, building up your board and interaction with stakeholders
05/09/2016

18. USE OF PROCEEDINGS AND POST IPO LIFE
05/09/2016 18

19. TRAUMAKINE PHASE III TRIALS – ROAD TO COMMERCIALISATION
Trials Phased According to Regions – Enables a Cost Controlled Approach
19
Pivotal pan-European trial with 300 patients. CRO appointed and
first patient recruited in December 2015. If statistically significant
28 day reduction of mortality then a conditional MAA filing will be
pursued as advised by the EMA
If conditional MAA granted, a post-approval pharmacovigilance
study will take place (Phase IV) in order to collect additional data
relating to the safety of Traumakine
Tox
(completed)
Phase II Phase III/3FDA advice BLA
Potential
Phase I/II
(completed)
INTEREST
(on going)
MAA
Phase III/2
If compelling results
Conditional MAA filing if overwhelmingly
positive Phase III/1 results
Phase IV
Post-approval pharmacovigilance
cohort trial
Size depends on
Phase III/1 data
2
3
4
5
The size of the Phase III/2 trial is expected to be determined following
interim analysis of the Phase III/1 trial (28 day mortality). The Phase III/2 trial
includes an interim stop for early efficacy
Primate tox trial completed. Small Phase II safety trial in the US. Seek FDA
advice in the US if the Phase III/1 provides positive indications in order to
clarify the need and structure of a Phase III/3 trial to obtain a BLA, which if
granted, provides 12 years of data exclusivity
Potential for trials following the pan-European Phase III/1 to become a global
trial combining several territories at the same time via meta-analyses
1 2
3
4 4 4 5
1
Phase II
(completed)
Phase III
(under planning) 5
05/09/2016

20. NEWS FLOW SINCE IPO (NOV 2015)
Traumakine
• Pan-European INTEREST clinical trial set up
• First patient recruited in December 2015
• Phase II results in Japan (Maruishi)
• New formulation patent filed in Q1-2016
• Korean licensing deal
• Recruitment completion anticipated during 2016–2017, efficacy results expected H2-2017
• FDA feedback for orphan status and IND
Significant news on Clevegen
• Clever-1 suppresses the activation of Th1-lymphocytes
• Non-dilutive funding from Tekes for €1.5 million to cover 50% of the budgeted pre-clinical
costs
• Important further patent filings in Q2-2016
• Introduction of TIET-program
• GMP manufacturing agreement with Abzena
• Clinical development plans (H2-2016)
Focus on Project Progress (Traumakine® and Clevegen®)
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21. KEY FINANCIAL HIGHLIGHTS (POST IPO)
• Received a €750,000 upfront fee from Pharmbio Korea Inc. as part of the licensing agreement for
the development and commercialisation of Traumakine in Korea; recorded as H1 2016 revenue.
• Faron will be entitled to receive further development milestone payments and one third of
the profits from Traumakine sales in Korea.
• Recorded significant other operating income of €1.0 million for the period from the Company’s
existing European Union FP7 Traumakine grant, in-line with the Company’s strategy to utilise non-
dilutive funding sources to support the Company’s R&D program where possible.
• As at Period-end, the Company held cash balances of €8.9 million.
• The operating loss for the Period was €2.6 million.
• Net assets as at Period-end were €8.4 million.
2105/09/2016
REPORTING: Clearly stating your financial position (cash burn rate vs. assets at the moment)

22. IMPORTANT ASPECTS OF AN AIM LISTING
• Prepare the Company for the next step:
• Where will the proceedings take us, what will be needed then.
• Company take over risk increases significantly
• AIM is to raise equity not to provide exit for shareholders
• TIMING OF FUND RAISING!
22
AIM IPO is a first step of a wider process!
05/09/2016

23. 2305/09/2016

24. SUMMARY
05/09/2016 24
 Faron offers investors multiple opportunities through Traumakine® and Clevegen®
 Traumakine® can cure patients rather than just slow disease progression
 Huge unmet need among critically ill patients
 De-risked: Drug substance already used in MS treatment with no adverse effects
 Significant IP protection and EU Orphan status gives further 10 years market exclusivity
 Positive phase I/II results –> mortality in ARDS reduced by over 80% = lives saved
 Substantial market with up to 400,000 patients globally; potential $bn opportunity
 No competition – Faron are the sole player in the ARDS pharmaceutical market
 Clevegen® represents further long-term upside with potential immunotherapy
products across oncology, infectious disease, and vaccination
Faron represents a de-risked near market opportunity offering patients hope