Translation: Original published in Finnish on 4/15/2025 at 7:20 pm EEST.

Faron published data on the results of the BEXMAB trial. The release was somewhat limited in scope. More detailed results will be published in the coming weeks in connection with scientific conferences, after which a more detailed evaluation of the trial results will be possible. The treatment responses were still at a good level, which supports the transition to the pivotal phase (Phase III) of the trial and supports the share value. We raise our target price to EUR 3.2 and reiterate our Accumulate recommendation 

Treatment responses in late-stage MDS patients were now fully analyzed for the first time

According to Faron, all enrolled late-stage MDS patients (r/r MDS) were analyzed in the topline readout. The results now included the overall response rate (ORR), which was 63%. In the previous readout, the response rate was 80%, so the most recently enrolled patients have decreased the figure somewhat. The response rate may still increase as treatments continue, as responses sometimes come with a delay. Overall, we believe 63% is a good result and supports the transition of the trial to the pivotal phase (Phase III). However, the quality of the responses is of key importance, and no data on them was obtained in connection with this release. Moving to the pivotal stage requires a statement from the FDA and securing financing. The combination of bexmarilimab and azacitidine was well tolerated, which was not surprising, as there is already plenty of data on bexmarilimab's favorable safety profile. Overall, the results were reported concisely, so drawing high-quality conclusions from the readout will have to wait for future news. More detailed results are expected at the ASCO Annual Meeting (American Society of Clinical Oncology). The meeting will be held on May 30–June 3, and we believe that investors will also be given more detailed information on the results.

Preliminary treatment responses in first-line patients also promising

Faron also reported treatment responses in first-line patients to the combination of bexmarilimab and azacitidine. These patients have been recently diagnosed with MDS and have not received prior treatment, so response rates are inherently higher than in late-stage patients. The response rate for the first 20 or so patients was 76%, which can also be considered a good result. We would like to remind you that the trial is in an early stage in this respect and the time for more detailed conclusions is later.

We are increasing the probability of trial success and adding the convertible bond to our model

Our estimate for the probability of success for Faron's Phase II has been 80%. We are now raising our estimates based on 90% trial progress and clarification of the financial position.

Faron recently agreed on a 35 MEUR convertible bond, which ensures sufficient funding until at least Q1'26. Faron's management commented on the arrangement in our interview (in Finnish). An initial tranche of 15 MEUR was drawn down, which was mainly used to repay a previous IPF loan. We assume that the loan will be drawn in full and that it will be repaid in shares. We assume a conversion price of EUR 2.94. With these assumptions, the number of shares will increase by 11.9 million, or 10.6%. The conversion price may end up being even lower, which would mean a larger increase in the number of shares.

Valuation is still attractive

Based on our DCF model, the share value is EUR 3.2. The increase is based on raising the probability of success of the trial. The stock is highly valued relative to its Nordic peers. We believe that the valuation premium is justified based on Faron's potential to move quickly towards commercialization, including in first-line MDS, and the potentially large number of indications. Solid tumors bring longer-term potential.

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