Investor presentation, London, UK

June 22, 2016

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CONQUERING ACUTE RESPIRATORY DISTRESS SYNDROME (ARDS) AND CANCER IMMUNITY

DISCLAIMER

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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.

FARON (FARN)

• Successful IPO November 2015, raising €14.2 million (£10 million)

• Current Market Cap: £62 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 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)

• Experienced Management Team and Board with successful track record in Drug Development

Late Stage Clinical Development Pipeline Targeting Significant Unmet Medical Needs

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FARON PIPELINE BASED ON FARON R&D DAY ON JUNE 14, 2016 22.6.2016

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EXECUTIVE DIRECTORS & SENIOR MANAGEMENT TEAM Experienced Team with Successful Track Record in Drug Development

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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 a 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

INTERFERON-BETA TREATMENT OF ARDS AND OTHER ISCHAEMIC REPERFUSION INJURIES

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Traumakine®

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

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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

COMPELLING PHASE I/II TRIAL RESULTS Data Published in World Leading Medical Journal

*Of the 37 patients treated with Traumakine®, 32 were diagnosed with ARDS (PaO2/FiO2 ≤200 mmHg) and 5 patients were diagnosed with ALI (PaO2/FiO2 ≤300 mmHg) 30% of the treated patients were diagnosed with sepsis and 41% with pneumonia. The study was carried out in 8 ICU centers in the UK 8

Primary endpoint: significant drop in mortality*

Phase I/II trial showed a significant reduction in mortality with

positive secondary endpoints

Traumakine® treated (n=37, APACHE II of 22)

Control group, standard treatment (n=59, APACHE II of 23)

P = 0.01 (28 day)

• Mortality at six months was lower than expected • Improvement in lung function and functional assessments aligned with improvement in lung function and

general dysfunction • Efficacy improvements are consistent with a reduction in vascular leakage

World leading peer reviewed article (Bellingan et al. (2014) The Lancet Respiratory Medicine 2: 98-

107) has already reached the intensive care community

Positive secondary endpoints

Mortality 8%

Mortality 32%

• Phase I/II trial showed a drop in mortality rate to 8% from an expected range of 30 to 40%*, comparable results now obtained in Japan as well

• Clinical trial showed a reduction in ICU stay from 28 to 16 days

CLINICAL DATA SHOWING CLEAR REDUCTION IN MORTALITY

REDUCED ICU STAY SAVES MONEY AND INCREASES ICU CAPACITY

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TRAUMAKINE® First Life Saving Drug Treatment for ARDS

NO SAFETY ISSUES

• Optimal tolerated dose established

• Interferon is considered safe. IFN-beta has good safety profile; in chronic use by millions of MS patients

• Short treatment period

*Expected mortality rate based on the severity of ARDS (APACHE II score) in the patients participating in the trial

INTEREST PAN-EUROPEAN PHASE III TRIAL ONGOING Targeting Conditional MA in Europe 2017–18 and Progressing as Planned

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INTEREST

• Randomised, double-blinded, 300 moderate/severe ARDS patients in seven countries across 55 hospital sites

• Seeking a reduction of all-cause mortality and days in ventilator

• Powered at 90% with 50% reduction in all-cause mortality at D28

• Recruitment anticipated over the next 12–18 months with 6 month follow-up and extended follow-up at 12 months

• Compelling results from first Phase III trial, should allow filing of conditional application for marketing approval in Europe

• Guiding other territorial development, e.g. through meta-analysis combination

CANCER IMMUNOTHERAPY Clevegen®

CONTROL OF IMMUNE REACTION SAVES US

1. Immune activation is our first line defense against any foreign element (e.g. infections, foreign molecules, transformed cells)

2. Immune suppression is an elementary part of our immune balance as it controls the magnitude of immune reaction tolerated by the host (defective immunosuppression in autoimmune diseases)

3. Long term immunity always require immunosuppression following immune activation (e.g. vaccinations)

4. Significant unmet medical need and business opportunity caused by diseases which result from disturbed immune balance (e.g. cancers, chronic infections, etc.)

5. Few cell types have immunosuppressive properties (regulatory T-cells (Treg), myeloid-derived suppressor cells (MDSC), type 2 macrophages)

Ability to Balance Immune Activation and Suppression - Huge Business Opportunity

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CANCER FIGHT BY ELIMINATION OF IMMUNOSUPPRESSIVE TAMS

All treatments targeting cancer immunity should enhance conversion of M2 dominance to M1 (see figure on the right)

High M2 presence in tumour leads to: • Induction of T cell apoptosis • Inhibition of T cell receptor expression (arginine depletion) • Inhibition of NK cell migration to lymph nodes • Recruitment of T-reg cells to tumour environment and induction of

their function • Stimulation of angiogenesis • Enhancement of tumour cell invasion, motility and intravasation • More malignant phenotype of tumours

Clevegen® is targeting at TAM-2 elimination by blocking Clever-1 function

• Binds to specific proprietary and dis-continuous epitope on Clever‐1

• Epitope binding results in phenotype M2 M1 conversion of TAM

• M2 M1 conversion of TAM leads to transformation of immune suppressive environment around the tumour to immune activation

From: Noy and Pollard (2014) Immunity 41; 49-62 13

M2 > M1

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

Thymus T 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 14

CURRENT LANDSCAPE

Activation of T-cells

(eACT), $2.0+ billion

market cap Activation of T-cells

(T-CAR), $3.0+

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

CURRENT CLEVEGEN® DEVELOPMENT PHASE SUPPORTED WITH €1.5 MILLION NON-DILUTIVE LOAN FROM TEKES

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Research Antibody humani-sation

GMP production

Toxicology in primates

Phase I/II Full size Phase II

Completed Completed Not initiated Not initiated Not initiated In progress

Faron has carried out anti-Clever-1 antibody humanisation in collaboration with antibody technology company

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3

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Faron has excellent IP-coverage on Clever-1 target and function blocking antibodies

Fully humanised anti-Clever-1 antibody (FP-1304) production clones are under preparation High yield cell clones will be used in early GMP production to obtain material for toxicology studies, supported by €1.5 million loan

3 Clevegen based platforms for outlicensing and collaboration opportunities

Tumour Immunity

Enabling

Technology (TIET-

programme)

Vaccination Response

Enhancement

Technology (VRET-

programme)

Chronic Infection

Removal Therapy

(CIRT-programme)

NEWS FLOW

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 in 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

• Clinical development plans (H2-2016)

Focus on Project Progress (Traumakine® and Clevegen®)

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SUMMARY

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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%

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 products across oncology, infectious disease, and vaccination

Faron Represents a De-Risked Near Market Opportunity Offering Patients Hope

Footnotes 18