Translation: Original published in Finnish on 8/27/2026 at 9:31 am EEST.

Faron's early part of the year proceeded largely in line with our expectations, both operationally and financially. The most significant event of the period was the rights issue carried out in the spring, which removed the acute funding pressure and shifted the focus of the investment story back to the clinical program. The company's outlook remains essentially unchanged, so we reiterate our recommendation and target price. In our view, the key near-term risks relate to adherence to the BEXERA trial schedule and, consequently, the sufficiency of financing.

New trials are starting in the coming months

Faron is a clinical-stage drug development company with no revenue, and its value creation is based on the development of the investigational drug bexmarilimab (BEX). The company is preparing to start patient recruitment for the important Phase 2b BEXERA trial (in frontline high-risk MDS*) during H2'26. In this study, BEX is combined with the standard-of-care azacitidine. With the current funding, the first readout should take place in Q4’27. We believe the schedule is tight, and there is a possibility of delays. Regarding other blood cancers, Faron supports investigator-initiated trials in AML* and r/r MDS.

In solid tumors, the early-stage trials BEXAR and BLAZE have received trial approvals, and the company expects patient recruitment to begin during Q3’26. The BEXAR trial is investigating the safety and efficacy of BEX in combination with chemotherapy (doxorubicin) in soft tissue sarcoma. BLAZE, in turn, combines BEX with an immune checkpoint inhibitor (PD-1 inhibitor) in melanoma and advanced lung cancer. The FINPROVE breast cancer trial was canceled for BEX after the review period because it did not fit into the scope of the broader academic project. The core of value creation lies in the Faron-funded BEXERA trial, while other projects bring additional optionality.

Costs in line with expectations

EBIT was -11.1 MEUR (Q2’25: -11.8 MEUR). The loss was in line with our forecast (-10.7 MEUR). R&D expenses rose to 7.6 MEUR (7.1 MEUR), driven by the completion of the BEXMAB trial, the ramp-up of BEX manufacturing, and preparation costs for BEXERA. Administrative costs, on the other hand, fell to 3.5 MEUR (4.7 MEUR). The net result exceeded our expectations, which was partly due to the change in the fair value of the IPF options and the convertible bond. However, these items had no cash flow effect. The liquidation of subsidiaries also contributed 0.4 MEUR to the earnings.

We find the risk/reward ratio to be attractive

We made no significant changes to our forecasts, as the operating costs and the progress of the clinical program were in line with our expectations.

The baseline scenario in our DCF model gives the stock a value of EUR 0.75. We estimate the fair value range of the share to be roughly EUR 0.3–1.5. Our assessment is based on DCF scenarios, where the positive scenario relies on favorable clinical readouts, non-dilutive trial financing, and the schedule according to the company's plans. The negative scenario, on the other hand, represents weaker results, a greater increase in the number of shares than our estimates, and a delay in commercialization. Following the recent share issue, the financial position enables the full advancement of the trial program and limits near-term risks. Therefore, we believe the risk/reward ratio is attractive. However, we flag that in drug development, weak research results can lead to a permanent loss of capital.

Based on our estimate, the implementation of the research program will also require additional funding at the latest in H2’27, which the company is seeking through a partnership agreement. The financing situation entails binary risk: non-dilutive solutions (a partnership or grants) can support the share price, while a potential large share issue could put downward pressure on it.