Diamyd Medical AB (publ)

Welcome to this live interview with Diabyd Medical and their CEO Ulf Hanelius. This is due to the fact that they have released a report for the second quarter in the broken year 2023-2024. The period from December 1 to February 29. You who are watching can ask questions in the live chat and I have noticed that there were already a lot of questions before the broadcast. I turn to today's main person, Ulf Hanelius. Welcome. Thank you very much. How would you summarize the quarter in its entirety?

In summary, it is an extremely positive quarter for Diabyd and it is with Fastrack that we got from FDA in February. We will go into this a little later, but it is and we have market analysis and everything else that has happened, so it is a truly positive quarter for Diabyd.

You will now be able to present a little, partly what you presented in Boston here this week. and tell us a little bit about the company's emissions, as you have announced. And then I'm back with some questions and then we can go into more detail. Yes, exactly. Then I say, please go ahead and start.

Thank you very much. As I said, I was in Boston last week and presented at a conference called Antigen Specific Immune Tolerance Summit, so it's a lot focused, specific conference, which is organized once a year, where it really is about antigen-specific technologies in order to be able to induce tolerance within autoimmune diseases and antigen as a technology platform. And there we had the opportunity to present. And I thought I'd give a little insight into not all the pictures I showed at that conference and the whole background and everything, but just because it's interesting to see how some new analyses in the company and how we can with even greater certainty explain our history and why what we are doing now, we believe that we are really on the right track now and that it will succeed this time. So if we go to the first picture that is now visible in English categories. This is really about the last fast review that was done in Europe, which was published in the New England Journal of Medicine 2012. And those of you who are employees of the company know that at that time we had a partnership with Johnson & Johnson, but in this case the three studies did not reach the whole way forward. You could not see statistical significance on the primary effect measure, which was to preserve your own insulin production. To the right of the picture you can see, after 15 months, how it went for the placebo group and for the two active groups, where you got two or four injections of Diamyd. Here you saw no statistical difference between placebo and active, even if you see that the two active curves lie in front of the placebo curve. But the question is, why didn't you reach it then, given that previous studies had looked positive? And today we know that HLA is an area on chromosome 6 called HLA and a specific haplotype or genotype on it. chromosomes that are crucial for our drug to have an effect. The rationale can be explained in this picture. When we treat with GAD65, which is the protein itself, which is important for type 1 diabetes, it is taken up by either presenting a cell that is cut into smaller pieces, and the small pieces are presented on the surface of the cell, attached to these MHC complexes and receptors. to antigen-reactive T-cells, and then you get the immune response, and we want to get an immune response that leads to a positive clinical response. But HLA is actually the recipe for these MHC receptors, Depending on which recipe you have, they will bind different parts of the protein in different ways. In the future, it is crucial that you have the right type of recipe to get the right type of clinical response. We are publishing a large analysis in 2020. We had gone back and looked at individual data from previous studies with the hypothesis that HLA affects the effects, and we could see that there was a significant effect of HLA on the clinical effect, and that all effects lie in a specific HLA subgroup. But if we go back to the study in 2012, where a lot of subgroup analyses were done. You can see a lot of details on the left, but what you can see is that almost all subgroup analyses Everything points you in the right direction, more to the right, which means that the more to the right you are in these plots, the more likely it is that the garden-like game works. But I want to highlight a few things here. For example, what we can zoom in on now is that it looked like it worked significantly better in boys than in girls. And this was when the study was in the age group 10 up to 18 years old. And here you could see in a subgroup analysis that there was a statistically significant positive effect in boys, about 40% more preserved insulin production compared to placebo in boys, while there was no effect in girls. And then there was a hypothesis at that time, among other things, that there can be a rational help, especially in puberty. The immune system is developed in different ways and there are different hormones that can have an effect on the effects of different drugs on boys and girls. But it was of course not the There is a rationale behind it, but it was practically a slightly more difficult way forward in terms of how to say that you are going to develop a drug that only works on boys, for example. But it was still a hypothesis you had. But the data that we have now analyzed a little more in depth to the company when it comes to this specific hypothesis, for example, is that if we then look at how our specific HLA genotype, the 3DQ2 that we now know, is linked to to the effect of our medication, how the frequency of the HLA type varies with both gender and age in recently diagnosed type 1 diabetics. This data is based on data from four previous clinical studies, a total of 656 individuals, of which about half have the right HLA type from our perspective. And here you can see that on the x-axis we have divided it into gender, boys and girls, and then in different age groups. Pediatric means 12 years and down, adolescents from 12 to 18 years old, and adults over 18 years old. And on the y-axis we have the absolute number of individuals who have our HLA type, DR3-DQ2. So we start in these pediatric groups, we see here that there are fewer boys who have had the type of HLA than girls. And this is, as I said, all data from previous studies that we have, without having any kind of gender division screened, simply for newly diagnosed type 1 diabetic patients. Here you can see that there are more girls than boys in this age group who have the right type of HLA. If we then go into 12- to 18-year-olds, we see that it turns. Here we have significantly more boys who have the right type of HLA than girls. And in older people, where we have a little less data, we see that the same thing continues. It's boys or men, and more men who have the right type of relationship compared to girls or women. And what this means, if we go back to the fact that it seems to work better in boys than girls, is actually as simple as when the study is in 10- to 18-year-olds, per definition, you will have several boys who happen to have the right type of HLA than girls. And in the analysis, If you divide it by gender, it will look like it works better in boys than girls. But the underlying factor is the genetics here. It was simply several boys with a correct HLA in that analysis, and that's why it looked like it worked better in boys than girls. And something similar also existed at that time, if you look at this, that it seems to work better in non-Nordic countries compared to Nordic countries. Here you can see that there was a statistically significant effect, the p-value 0.05, at least a nominal effect of about 28% better retention of own insulin production compared to placebo in non-Nordic countries, while in Nordic countries there was no effect. And then there was the idea, which also has a clear rationale behind it, that at that time it was this swine flu. The swine flu that spread in the world and in the north, both in Finland and Sweden, everyone was vaccinated against swine flu. In the FAST-3 protocol, it was clearly written that during the time you get active diabetes treatment, you should not get any other type of immunotherapy or vaccine. But it was in practice impossible to prevent, because there was such a pressure that everyone wanted to be vaccinated. While the same thing did not happen in non-Nordic countries. And then the hypothesis was that given that you went in with another immunotherapy at the same time as Diamyd, it can affect the individual's immunological response to our treatment. And there is absolutely a rationale behind it. And it has also been written, independent researchers have written about it, that this is something that you have to take into account when you give vaccines or other types of things. But if we then do similar analyses that we just did at the gender level and look at how it looked with the frequency at the geographical level, and again based on four previous studies, this is only about Sweden, Europe and the United States, then we can see quite clearly that in southern Europe, and here we notice Italy, Spain and France, Now I see that the figures have been wrong here by some strange reason. It should not be 0.00, it should be percent. But I can explain what lies behind these Italy, Spain, France. Over 60% of them have the right HLA type, while Finland, which has the least frequency, they are at about 30-32% and Sweden is a little under 50%. So again, here you see that only how the study was studied, which took place in all of Europe, and when you then divide it up into the Nordic and the non-Nordic, you will have more of the right HLA type in the south, in the non-Nordic, and that was why it came up as significant for non-Nordic countries, while Nordic countries, Finland and Sweden, in total, had significantly fewer of the right HLA type, we did not achieve statistical significance on that subgroup analysis. But again, everything comes down to the HLA type itself, that it is genetics that plays a role here, and these other variables are what we usually call confounders. It is not the explanatory factor, but under those factors there is the explanation, which in this case is genetics. So this is something that was presented in Boston, also a little more data from the ongoing FAST-3 study that shows exactly the same pattern, that is to say that we see overall that our HLA type is very common, about 50% of type 1 diabetics in Europe and the United States have it here, but there is absolutely a genetic variation on the geographical level and between the sexes in certain age groups, which is exactly the same thing that we have shown here. And that's something that In Boston, this is something that really has to be taken into account when you start developing a new drug within a complex disease such as type 1. You have to know that there are major variations in these complex diseases. If you don't take this into account when you start developing something or designing your Finnish study or analyzing your study, you may end up on the wrong track. As a company, we have now, thank God, been able to learn all this, to be able to go back and know why, what happens then and why we are now, Only patients with the right genetics should be highly likely to succeed. Before we move on to the last picture, which is about the pre-treatment mission we have recently announced, I would also like to show this. I also showed this in Boston. This was important for that audience because everyone works with either and everyone working in autoimmune diseases, to really show the positive momentum that now exists for us, of course. This was a bit of an excuse, but also for the whole field, that this technology is now really on the rise. About a year ago, we made a partnership with GRF, the largest patient organization in the United States. We had an industrial partnership with them, where they both supported us financially with their investment-based payments, but also, above all, with their knowledge of networks in type 1 diabetes, which is extremely important to us, with a great validation of our study and what we are doing, which is something that the patient organization sees as very important. Then we started up our fast-trade study in the USA in September last year. It has been in Europe, the same study before that was in eight European countries and now it is in the USA, which is very important. It is the most important market in the world for drugs. And in January this year, we went out with a market analysis on the first day of this JP Morgan conference in San Francisco, where we see that the taxpayers in the USA are willing to give a premium price for our drugs, around $200,000 for a treatment, and that there is a great interest and willingness for doctors to write out this type of drug. And that is very important. It is an important component now when we start to prepare ourselves for the market as well. And now, at the very end, in February, the FDA announced that we will get a fast-track designation for diabetes to treat newly diagnosed type 1 diabetics who have the correct HLA genetics. And this is really a a validation of the American Medical Society, both around the great medical need for type 1 diabetes and that our medicine is something that should reach patients as soon as possible. Then they become even more cooperative to ensure that it goes in the best possible way. But this is for the entire field, also for antigen and for type 1 diabetes, it really shows that there is a momentum now within the field and it is very positive for everyone who is involved in this. And then I want to get into the pre-release emissions, there will probably be a lot of questions about this as well, but here I want to, hopefully in a pedagogical way, draw up in a simple way how we see this emission and how it relates to the structure that exists today in terms of financial planning. And today we came with our quarterly report and in the last February we have 137 million kronor in the treasury. And with our monthly burn rate, this is enough for the whole of 2024. We have been more clear about that earlier as well, that we have money for the whole of 2024. And now we have, and we did two performance emissions last year as well. And in the last one we did in the fall, there were two coverage options also included as part of the offer. We have one coverage option, TO3, which is in September for a strike price of 11 kronor, which at full coverage of that coverage option could give us 52 million kronor before previous costs. The costs in this case are very small. And then we have another heating solution, TO4, which is in March next year, which again, given that it is full heating and costs about SEK 73 million. Now we have announced a third emission here, as we are going to have a driving heating period that takes place in two weeks in April. And it is a total of 114 million, just like the two previous emissions, no guarantees. which is completely aware that in this market climate, there are extremely high costs associated with guarantors and unfortunately, but also understandable in many guarantors, not long-term owners in the company, which means that they often sell quite quickly. The companies push down the price. Here we have no guarantors. And with full coverage, this emission would then give us about 114 million kronor before costs. And as part of the offer, we also fill in these TO4 options, which would then be able to fill them with an additional 76 million kronor via full coverage. With all this, of course, We have 137 million kronor in the treasury today, and we would have enough money in 2026, which gives us a long-term opportunity to plan the company. And this is what we are doing now, actively and proactively, with the fast track in the back, why we choose to do it now and not wait for other events, which of course is also linked to risk, but we do this from a strength position. And there is really a thought behind this pre-race mission. And a lot is happening here during this period as well. We have an interim analysis this summer, which we have also talked about and which we will probably go into here in the questions as well. But this is one way of looking at it that I wanted to hopefully show in a pedagogical way, how the thought behind the pre-intervention emissions is that it is done from a strength position and absolutely in the best interests of the shareholders with low costs and the possibility to strengthen us financially, potentially and very long-term. Thank you, Ulf.

As you guessed, we have received a lot of questions about the company's emissions. Let's start with the most important one. On 15 February, you submitted a fast track of FTA regarding DMID.

What does this mean to you? It means a lot, as Jerem was saying. It's a real quality boost from FDA, both for our drugs and for the area we work in. And it also means that we will have a faster route to the market. Everything else is the same, we get four months faster review of FDA when I send in a market analysis, market application, but also that we will have even more interaction with FDA, that they are even more cooperative, to make sure that this can come as quickly and as well as possible to the patients.

Thank you. When you are around and meet industry colleagues, what comments do you get about this decision?

Everyone is very positive. There has been a lot of attention in the type 1 diabetes field, among other things. We saw it when we went out with it, how it spreads within the type 1 diabetes networks. In Boston, for example, where we present, we can also say that almost everyone knows us. the company in antigen-specific immunotherapy in autoimmune diseases, which is in Fast 3. No one has come that far. We are the only one with Fast Track, so it's very positive. Everyone knows us. Then we also have to see if we are linked to Boston. And there are many who are interested in type 1 diabetes. Most are in preclinics with nice technology platforms. Most dream of just being able to come to Fast 3 and be able to treat healthy children who are at high risk, wherever they have done all this. So it is very positive for us, it is very positive for the field, both for type 1 and for the anti-GN field as well, that it is actually in progress now.

Exciting. If we move on to your study, DiagNode 3, it is a precision medicine study. Could you give us a description of the study?

Precisely. Precision medicine study, and that means, as Jörgen was saying, that the first thing we do in the study when a patient comes in with a right the right age interval, in this case 12-29 years, to a clinic and have an interest in being a part of the study. The first thing you do is take a blood test and check if you have the right genetics. And that is the big thing that differs from the previous phase 3, that now we choose only those who have the right genetic profile, which we also think is totally decisive for the study, that the study will succeed. And then you get, and the treatment starts with three injections of Diamyd or Placebo. One month in between. And then the patient is born in a total of two years. And the most important parameter you measure in the study, the effect measure, is then the own insulin production. And that's what we want to preserve as much as possible, to slow down the disease so that the immune system does not destroy its own insulin production. And that's what we measure, and after two years, we want to see that the disease has slowed down significantly more compared to non-active placebo treatment. And in the study, you have a 2 to 1 chance of getting active treatment. That is, it is a randomization where two out of three patients will get active treatment and one out of three patients will get placebo treatment.

According to your experience, can you see this difference clearly after six months?

You can see it after six months. Only in our data can you see a clear difference. And there was also a big publication last fall in Lancet Endocrinology, which we have also presented briefly in another broadcast. We collected data from a few thousand patients who have participated in different types of diabetes studies in the world, including ours, where we also see that within six months you can see a difference between active and non-active treatment of C-peptide.

How do you deal with patient recruitment in Diagnod3?

Patients, not patients. And that came in the report as well. In April, we expect to have 100 patients randomized in the study, and that means that you have You have screened, you have the right genetics, you fill in all the other criteria, and then you start, first before you get active treatment, you put on D-vitamin for a month, and then you get randomized. So it's a long period before you get randomized. In April, we expect to have 100 patients randomized in the study, and we have a screen of over 300 patients who have been screened as part of the study. So that's where we're at. It's a good moment in the study. It's a big challenge to be able to fill the whole study with 300 patients as quickly as possible. But it's going on now, and now that we have more and more US clinics that are starting, it's really positive for the study.

As you say, you will have 100 randomized patients in April, and thus also Milstolp's payment from JDRF. How confident are you that this will succeed?

That it will happen exactly in April, we are quite confident, but you know it can always happen in May or something like that. But that it will happen, we are very confident, we are very close now. But you can never say the exact date for that.

You are going in with 300 patients in the study. How does it look to fill in under 2024?

We have said this before, it is a big challenge because these patients do not grow on trees and the big challenge is compared to In the previous study, we have taken in roughly the same age interval, but then we have not made any selection in genetics. Now we do it and then we know that about 50-60% will have the wrong genetics that will not be included in the study. And as I already said, we have today screened more than 300 patients for study. Should we see if it should be a In the non-precision medical phase III, we would almost only be in the hand, because most of those 300 would meet the criteria. I think in our phase II diagnosis, we took in 109 patients and we screened 140 in total. Of those, 109 came into the study. But this is the first really big prospective study where we choose genetics beforehand. So that's the big challenge. So we need to screen a lot and we need to get even more. And it's important that there is a lot of interest and that people know about our study. And we have enough clinics that can take in. So that's what we're working on. Everything within the limits of feasibility to be able to achieve it. It's a big operational challenge, but at the same time an extremely important study that must be done. What does collaboration with JGRF mean in this work? It means a lot. We have regular meetings with them, and this patient recruitment is something that we always bring up, of course. The JDRF, the Beljuster study, they can't, as a non-profit, do anything and change, lift up our study. There are several studies in the world ongoing, so they must have a certain, shall we say, a certain distance to the fact that it is not just our study, even if we say that it is the most important that takes place in the whole world, then they must have a certain balance there. But they help a lot with that, they know how we publish the study in which media and if they can push for more studies. They have their own website where they inform them about the study. There are local meetings, especially in the USA, as JRF organizes, where also the studies and be told about it to families with newly diagnosed type 1 diabetes. So that means a lot. And then on the regulatory side, We have a lot of knowledge to interact with the FDA, for example. So there we can play with them, our strategies, regulatory. And then when we get close to the market that day, hopefully we can send in market applications. It is extremely important to have GRF on our side to be able to lobby for this type of treatment.

You write in your report that you are ready for an interim analysis in the summer, maybe in July. What answers will we be able to get there?

If we start with that, the answer will still be green light or red light when it comes from the Security Committee. So in practice, it is about 70-80 patients who have been born in six months and we look only at C-peptide, which is the marker for self-insulin production. As we see, that is the most important marker. That is what shows if you modify the disease, if you stop the disease or not. And we know from earlier data that in six months you see a difference. Then the analysis itself is set up so that it is what is called a conditional power. The rib is laid relatively low, but according to industry standards. The whole point here is to know that if you don't achieve it, then the likelihood is that the study as it is designed today have a relatively small possibility of going all the way to the harbor. Then there may be factors behind it that explain whether it will be so. But the most important thing for us is that we believe that it will be positive and should be positive. But it reduces the risk further in achieving a summer period, an important summer period. Then you take further risks away from the study. And it is important both for potential partners, larger investors to know that you have also achieved a summer period. So it's an important thing, especially in large, long studies, to be able to have such a holding place. It is also important that you are not totally blind and would be doing a study every year and then after a few years find out that hopefully it doesn't work. But now we believe that it will work, but at the same time you can never take anything for granted in this industry. It's biology, it's about that.

I've actually got a question from a viewer who says, how big is the risk that history repeats itself?

It's impossible to put an exact percentage on that. We are and we should be positive as a company. It's also my job as the CEO of a company that I should be positive and I believe in this and I believe that it will be positive. But at the same time, we know that Twelve years ago, it was also extremely positive that it should work and everything was pointing in the right direction, but then it didn't go all the way forward. Now we believe, as I have already presented, we know why it didn't work last time and that all of our data points in this direction, and with the right genetics, then it works. So I see a great chance that it will work, but at the same time I know that you can never take something for granted.

But you are as sure as you can be in this time period? We'll go on and leave it at that. You have made some market preparations, including the market analysis, which showed very good results. What other activities do you need to do?

That's a good question. Before the launch of the market, you have to prepare for the launch of the market. That is, it is not enough to just get approved and then patients can go to the stores and buy it on the shelves, it doesn't work that way. You have to prepare the whole landscape so that the day you hopefully get approved, the launch will go as quickly and as well as possible. What we did in early January is that we did interviews with payers in the United States. insurance companies and such. And just that analysis was paid by about 80 million insured lives in the US. So it's pretty big. You get a pretty good indication of On that front, we can say that before a market launch, we will have even more data and insights from payers and even more detailed insights, for example. Now we have a lot of good insight into how some of the biggest payers in the USA see this. We also interviewed a number of endocrinologists, i.e. diabetics, dentists and radiologists. Many of the radiologists today do this type of treatment. know how they view type 1 diabetes as a disease, how they are treated today and how they would view this type of treatment. What is the willingness to write out and treat patients? And there is a high willingness. There is a great need for this type of treatment. What you really like is our safety profile. It is a simple and safe treatment. What the payer likes, by the way, is the precision medicine, that you know that you only treat those who you know have a high chance of having an effect, which is important for a payer, that you do not pay unnecessarily for half of the patients who do not get any effect. But here we can also say on that front, we will do even more follow-up interviews with an even larger selection of doctors to get even more detailed knowledge. And if we think about the US, there are different departments with different ways, maybe a number of clinics and such, to know at the department level what the situation looks like and how to advance. Then it is also important that, if we come to radiologists, we also had market analysis. There are so-called hospital networks in the USA, both with hospitals and so-called outpatient clinics that belong together in networks. that it can be a very strong launch engine, that you go through those networks. And there, the radiologists have said that this is a very simple treatment. It is something we can save the patients on Tuesdays and Thursdays, for example, and give the treatments. But there it is necessary to get even more details in practice. How is this going to happen? In the USA, for example, it is all about this reimbursement. How, when the patient comes to a doctor, gets the diagnosis, should be able to get the treatment. What do patients need for paper, which insurance covers this, which papers are needed so that it will not be paid for it. So all those details must be prepared. So there are a lot of such preparations that will be made in the coming years before the market in the USA. Europe is different. Each country has its own system in a simpler way, but different above all than the USA. But the USA is the most important commercially. So it's a lot of this type of preparation, interviews with how the system works so that you don't sit there and understand that hopefully we had forgotten to find out how exactly that patient, where they are going to be taken to be able to get treatment and get paid for the treatment.

Yes, great. And over to a hot question that you have already presented a little bit. After the period, the Ministry of Health announced that a The emission was preceded again, in this case by 114 million kronor. Can you again express the background and the purpose of this?

Exactly. The purpose is, as I said, mainly with Fast Track in the back. It's something that we felt with that momentum and with that quality mark. That we have a strong cash today, so it's enough for the whole of 2024. At the same time, you can't wait until the end of 2024 and then fill it up when it's almost empty in the cash. Then you act from a a weak position. You have to act when you have a strong position, strong momentum and this is actually a new emission that we don't know. When we don't have a guarantee in it, we don't know how much we will get. Last time we got about 30% in the previous ones, but But this gives us an opportunity to work with the existing structure with cover options without affecting, it was also very conscious that we should set our cover course not to destroy the September option, for example, but to also give an opportunity to fill in the existing cover options next year in March. which can also give us a lot of money. That we really get a long-term and that today's shareholders have the opportunity to be a part of it. So that's what we've really thought. And there are low costs associated with it, there are no guarantees. So it will not affect in that way either. I understand that it moves in the pan when you do something like this and it can feel like it comes as a flash from the blue sky. But this is actually something that we do proactively and with a fanstruck in the back to be able to give the opportunity to long-term and stable financing of the company.

The timing feels good, partly with the FastTrack decision, but also with the fact that the market is in a slightly different situation now compared to last year. Which for you is the most important reason, as you see, for investors to be involved in this?

Many investors want to help us and help the type 1 diabetes field, so there is an altruistic perspective in the whole, which is very important and we are very grateful for. And that is the whole purpose of the company, to hopefully be able to cure the disease sometime. For us as a company, financing is always important. In this industry, you can't get anywhere without money. The more money you have, the better. If you have too much money, you become a little more comfortable. But it is extremely important for the company to be able to finance the business in the best possible way. And of course, we always want to pay attention to our current shareholders. Many in the company are large shareholders, so everything we do also affects us. So it's important to be careful. But in the end, everyone wants to make money from it. Me personally, too. I have a great exposure to diabetes. I absolutely want to be able to make a lot of money from this. And what we can say is that if this succeeds, all the way to the market, it will be very big. Then there is a lot that will happen along the way. If we take partnerships and things like that, which we are absolutely focused on, which is huge and will have a big impact on the share price as well. And then we can say, as a company, we have delivered in recent years. Those who were involved in the previous emissions, there was a lot of talk about them as well. We knew there were some things we could do better, but since then everyone who was involved in them has made money from it. Whether they have sold it or not is another matter, but so far we have been delivering as a company and everything is going There are big operational challenges, such as patient recruitment, manufacturing facilities, and financing is always a big challenge. But we have been able to deliver, and we are absolutely interested in all of our shareholders being able to become rich on what we are doing. But it is important to be able to have money and to be able to run the business in the best possible way. We are a Swedish company on a relatively small list in Sweden, but our product is a global product and we compete in a global market. Then it is important that we are not in too much of a financial underlay against our American colleagues, who usually take in 10 times more than this.

Thank you for that. A question that I just have to raise, how is it going with partner interviews?

They are ongoing and we can say absolutely after Fast Track and our market analysis. First of all, the market analysis in January, extremely positive, very important information. You can see all of our partners that we discuss with each other, it's a very important thing. One thing is science, that you understand science and see what are the possibilities that Fast Track will work. The next thing is, given that it works and you get approved, will you get paid for it? Is there a need? and you get paid a lot for it, and we have been able to respond to that. And now with fast track in the back, it takes away the regulatory risk. The likelihood of getting approved with positive results is even greater now that the FDA has put down its quality standard. So we can say that the momentum in the partnership conversation is absolutely even more positive. They have been positive for a longer period and they are of course ongoing. But when it happens, we can never say. But it's a positive conversation, absolutely.

Thank you. We move on and go to your production facility in Umeå that you own. How does the work progress there?

Exactly. We have also given it an update in the quarter-finals report, where what is now going on, as it is called in English, engineering runs. What that means in practice is that before you go into it, you can start producing for, let's say, clinical batches, really large scale, then you do a technical batch where you really control the various critical steps in the production, make sure that everything works and you have your standard operating procedures, how to do everything. So you test a lot, you control a lot, you test that everything works, you do a few of those, to then be sure that now we can go over and start doing the large-scale part. So these technical batches are now underway during the spring, and then we are in the next step to be able to go over to start produce what we can call clinical batches. And in parallel with all this work, the work is underway to ensure that the facility becomes so-called GMP ready, that is, that you are ready to be certified to produce according to GMP, which is then regulatory criteria to be able to manufacture, to give drugs to patients. So all this is happening, a whole lot is happening and a lot is happening in parallel as well. And it is also a big operational challenge, but at the same time a really big value for the company to be able to build up and own its own QMP facility for the future. Both to have control over its own production, which in recent times has also highlighted a lot when, for example, Novo Nordisk, or those who own a large Novo Nordisk foundation, bought up Catalent, which is one of the largest contract manufacturers in the world, and they bought them because get control over their production of these new obesitas drugs, where there is a greater need. They cannot supply enough drugs to the market, because it has exploded, there has been an explosive growth. And then they have bought up all of Catalent to secure their production. And that has been taken up by other big pharma companies that are currently producing under Catalent's umbrella and have employed Hobson. This is something that we have to start investing in with even more self-production in order to be able to have control, because it becomes quite disruptive if something is bought up and then your contract manufacturer disappears. It happened to us a few years ago too. But now we have control, which is of great value. possibly a trend that occurs within the area of critical drugs, you have to be able to sit on the controls. And then it will give us the opportunity to be able to manufacture other products, even for an internal purpose. We also have an analysis lab to be able to take in analyses that today lie with external contract manufacturers, possibly take them in and make them ourselves so that it becomes more cost-effective and potentially be a contract manufacturer or a collaboration partner with external companies in the future as well.

Thank you. On the patent side, you received a patent in South Korea during the quarter. Can you tell us briefly about what it looks like on the patent side for you?

Exactly, and it was a patent, if I remember correctly, with this HLA type. If you have the right HLA type, then you should treat with GAD as an active component, which is the active component in our diabetes treatment. Then it is included in the entire patent application. It is in progress in a lot of different countries and approved in several countries. It only contains, if you have that HLA type, then you should treat with GAD. If you have the other regular HLA type, you should treat with insulin as an antigen. If you have both HLA types, you should possibly treat with both antigens. What is now approved in South Korea, but also in several other countries, is the treatment of our HLA type with GAD, or if you also have both HLA types with GAD and insulin. So it is approved. Then you follow up with these patent applications, you do so-called Divisional, so that you go on with several requirements in the patent application, and then it occurs, for example, to use insulin as an antigen, what we have as a company, also publicly said that we have an interest in broadening ourselves, even taking care of the other parts of type 1 diabetes. But it is an important patent, we have patent applications in progress, then we have this with the administration method, to go into an external lymph node, which is also approved in several countries and is in progress. In the USA, we still have what is called Substance of Matter, that is to say different substances, GAD as a protein, or parts of GAD, to treat type 1 diabetes. This applies to 2032 in the USA. These other patents I am talking about apply to at least 2035 or longer. It is important to know that patents are part of the protection. But what is almost more important from a market perspective is that we get a so-called exclusivity the day we get approved. In the USA, since we have a biological drug, you get 12 years of market exclusivity. Even if you don't have any patents at all, you have 12 years of exclusivity. In Europe, the equivalent is 10 years. Then we have special drug status, which is 20 years in the USA. So these are also extremely important to keep an eye on.

We have received a number of questions after Diagnose 3, if you get a positive outcome here. What does the process look like, for example, to seek accelerated approval in the US and Europe?

Accelerated approval is a bit different in the US and Europe. They have similar programs, but it may look a bit different in detail. In the US, accelerated approval means that you get, in our case, for example, we have what is called a co-primary endpoint. We have C-peptide, which is insulin production, and HbA1c, which is the measure for blood sugar control. And then you should achieve both of the effect parameters. A potential accelerated approval could be that you achieve, for example, significance on C-peptide, and then you get approval for only that parameter with some kind of conditions that FDA sees, but then you should be able to come in within X years with additional data that shows that you also see an effect on the other parameter. In the best case, it would be that you can see that it is now faster than two years and that there are still patients. If you could go to a lower number of patients, a earlier solution, then C-peptide and get accelerated on that. But the whole study shows that you also get an effect on all these other important parameters and then you get a complete approval. This has become relatively common in the USA. It is not common to get it, but the FDA has become a little more free of charge, but at the same time they put even greater demands on this. After you have been approved and accelerated, they put even greater demands, because it has been earlier that the FDA has not really followed up on these conditions. They have accelerated and then just without anyone really having fully adopted it. Now they have become much stricter with the follow-up, but a little more free-spirited, depending on the technology area. So that's how it looks. When you have fast track, there is potential accelerated approval as part of fast track, so you can absolutely have those discussions with the authority. Europe has similar types of conditional marketing approvals, which gives you the right to market approval. approved on this, but it is the condition that you should be able to complete the entire application with complete data to show that it finally works. And that is usually given both in the USA and in Europe. If you see that there is a great need and it works at the highest level and the patients need this drug, then an authority can say that we can approve the approval, but If you don't eventually prove that it works, then maybe you can go back and approve something else or do it even more specifically. You don't get it approved in such a wide patient population, you have to cut it off. Because the authorities never want to risk anything. It is their job to make sure that everything that is released on the market is safe. That's why they exist.

Thank you very much, Ulf. That was all my questions. Good luck with your clinical work, patient recruitment, interim analysis and emissions. Thank you very much.