Diamyd Medical AB (publ)

Hello and welcome to BioStock. In today's live broadcast we will be talking about Bookstore Communiqué and we will do that together with DMU Medical and VD Ulf Hanedius. There is an opportunity to ask questions to Ulf in the open chat, but before we get to the question section, we will listen to a short presentation from Ulf. And before we do that, of course, we will say welcome to Ulf. Hi Ulf.

Thank you very much. Nice to have you here.

Very nice to have you here. Before I let you start your presentation, I would like to ask two short questions. The first one is, could you just summarize the three most important events from this reporting period?

Three most important. If we think regulatory and on the clinic side, it is most important that we are now at the end of the track with patient recruitment. In the FAST-3 study, we have been 275 patients So we plan to end the screening for new patients this year. We are also preparing for the early reading that is expected in March next year. So in six months we will have an early reading from the FAST-3 study that can lay the groundwork for an accelerated approval in the USA. In terms of manufacturing and science, we also have our facility in Umeå on track to get GMP certification. We have been in contact with Läkemedelsverket now and we expect their feedback in the coming months on this work. And scientifically, we were also presented at EASD, one of the largest diabetes fairs recently, with new analyses that strengthen our case around our drug testing and the effect it has on diabetes. And last but not least, it has been one of the most difficult financial markets so far. For a long time, we have managed to bring in money in a very cost-effective way, at about 315 million kronor during the year. So it really shows strength there, and it also shows the progress we have made in the company. And we are very grateful to our shareholders for the support we have received.

And what message do you want the shareholders to take with them into the next period?

We are now close to the FAS 3 reading, so most companies will not have come this far in their development. And now it is close, it lifts the curtain in the ongoing FAS 3 study that FDA has given us the opportunity. Det kanske man ska vilja en enda grej. Vi befinner oss i ett sent utvecklingskedje med resultat nära inpå.

Med det så lämnar jag över till dig, Ulf, och låter dig göra din presentation helt enkelt.

Tusen tack. Jag kommer dra några slides. De här slidesen är på engelska men jag kommer snacka på svenska. Let's jump to one thing before we move on. Something happened yesterday. The Nobel Prize in Medicine and Physiology. This time it was about immune tolerance. The reason why we are raising this is for us and many others. This is central to what we do at Diabynd. Immune tolerance is It is central to how the immune system tries to find a balance between not attacking the body itself, but at the same time making sure that viruses, bacteria and other things that do not belong to the body, including cancer, should attack the immune system. For autoimmune diseases such as type 1 diabetes, the immune system has mistakenly started attacking the body itself, in this case. the insulin-producing cells in the body. And what we do, and what many others are trying to do, is to try to create a balance where the body stops attacking. But this really shows that this is now being highlighted globally as an important area in neurology and medicine, where many, including us, are trying to translate this into new treatment for autoimmune diseases. Hopefully, this will create an even greater momentum in immunology and information and immune tolerance itself. And the next picture is actually a little short, simplified and how it relates to immune tolerance to our medication. And there are many, certainly from the viewers who have followed us for a long time, know this. But we treat here in the picture, as you can see, simplified a lymph node with an antigen-presenting cell in yellow and an antigen-reactive T-cell, T-lymphocyte in light blue. And then we have GAD in red, which is actually the active component in our test drug, Diamyd. GAD is a large protein that exists in the body, which we also inject into this individual with type 1 diabetes. And when you do that, it is taken up by the antigen-presenting cells, it is cut into smaller pieces, and it will then be presented on the cell surface. to the anti-reactive T-cell. This creates an immune reaction, and what we want to do is to create a specific tolerance, that is, that the body gets used to this protein and ends the attack. and we program the immune system. And here we see that we induce a regulatory immune response, and we also see that these T-cells that recognize the protein, they stop functioning, they become exhausted and stop functioning. In this way, we create tolerance against the protein. And then, as many know, we have seen that HLA, which is actually the recipe for these receptors that bind to these small pieces of protein, is completely central to what type of clinical effect, immunological and clinical effect, you get from our medication. And that is why today, compared to 15 years ago, when we were in phase 3, patients based on their HLA genetics. As we know, then we have a big chance that it will work on these patients. And what it then leads to clinically, we can say that we slow down progression and disease development in type 1 diabetes. Following is an illustrative picture that is based on data from our two previous FAST-3 studies. Here on the y-axis we have beta cell functions, which is how much insulin production the individual has, the C-peptide, which is the biomarker, and on the x-axis we have the time of year. And for a placebo patient, that is, a patient who goes on inactive medication, actually their natural course, you usually see that it goes out quite quickly here with how much insulin production they have when the immune system destroys this. When we go in and treat with three injections in between, we change the slope on the curve, that is, we slow down the development of the disease and we can see that about 15 months from the start, we have about 50% more of our own insulin production compared to placebo-treated patients. And what this also means, and what the latest analysis that was also presented at the EASD conference in Vienna recently, is that this also leads to a significant reduction in the blood pressure progression. And this depends on when you measured it. If you measured it early after treatment, then we have shown that when we have set up certain criteria for which CPF time these curves should meet, then it takes about six months of delay. If you look at the other one, then it will be more than when the active curve, the diameter, is combined as usual. So there will be a longer and longer delay the longer you follow up these patients. So it is also important to know that when we really change the pollution of the disease progression, the longer you follow up the patients, the longer the placebo-active patients will be when it comes to C-peptide emissions. And here we have also seen in our clinical data that we improve blood sugar control, On top of standard of care, all these patients go on insulin treatment, many of them have insulin pumps, some even have artificial buccal cartilage, and almost everyone today has these continuous glucose meters. So on top of that, given that we preserve our own insulin production, we see that you can get improved blood sugar control, and it is also important to show the value of preserving your own insulin production. Before we move on to questions about the highlights from the end of the year, what has happened during the financial year? The most important thing is that we are now approaching the first pre-release of our FAST-3 study, Diagram 3. We have over 275 patients randomized. We aim at about 300, a little more than 300. So here is the plan. We will end the screening for new patients this year. And then the first data reading from phase 3 will be planned for March next year, so that's in six months. The FDA has given us the opportunity to go through a so-called accelerated approval process based on a previous study. This is the first time we have had the opportunity to go out into the world. We have a smaller study going on in these earlier stages of type 1 diabetes, that is, before clinical diagnosis. We have a study in Sweden going on, where we also had to show a first safety analysis. It is important that we start in the so-called stage 3, i.e. newly diagnosed type 1 diabetics, but we also expand towards these earlier stages to be able to treat preventively, which is potentially a very large market. We have also received greater IP protection both on our The genetic subgroup that we treat today with diamyde, i.e. DR3DQ2, but we have also expanded our supply in various territories for the other large genetic subgroups, where we have as a plan to continue with an insulin-based antigen drug, in order to in the best case be able to treat up to 90% of type 1 diabetes in the future. Today we have about 40-50% of the diameter, but if we can expand the platform to another antenna and insulin, we could achieve nearly 90% of type 1 in the world. In terms of GMP, we have built up our own facility in Umeå, with the main purpose of manufacturing this active component. in our trial drug, GAD, the recombinant protein. Then it is formulated at APL, which actually exists in Kranne, with our facility in Umeå, what is formulated in the drug. And here we are now, we have carried out so-called mock inspections, that is, our own internal inspections, together with an external consultant to inspect The next step is to get in touch with the Swedish Medical Association, where we expect their feedback on the GMP certification in the coming months. The purpose is to get the GMP certified facility to be able to produce for clinical use, and then on the day you send in a market application, the authorities will come in to inspect it from a commercial perspective. But it is important that you have had authorities before that to check that everything is in place, so that you do not wait until the last second. And above all, FDI is perhaps the most conservative authority in the world, so it is important that other authorities have been there first to check the facility as well. Men det är på gång och det är ju viktigt för oss och det här är ju en stor investering och kommer att också ge oss möjligheter, framtida möjligheter framåt utöver diamydbehandlingen då också. Och sist men inte minst som jag också påminner i början är ju att det här var ju ett Extremely successful year from a financial point of view. We have succeeded in an extremely difficult market to bring in 315 million kronor. It has been mixed in both development options, and more of a supplementary emission with very low costs, less than 5% of the costs, but it usually lies at 15-20% of the costs. So here we are extremely grateful to our shareholders for that support. And it is important that we are fully funded past our FAS 3 reading that will come in about six months. And with that, I wanted to show one last picture. This is a picture from EAS in Vienna, where we had a delegation on site. Both presenters had been allowed to present oral sessions, our latest analyses. We also had our own booth, where we had a lot of traffic, where we told about the study and everything that was going on. We met our testers in the FASTE-RE study, and we had a breakfast event. We went through the study, came to the table and everything. We had the opportunity to meet potential partners and other key opinion leaders at this place. It is extremely important now that we are so close to the FASTE-RE presentation that we are out there and we can see. All the doctors are our potential customers in the future, so it is important if you update them and have them on your side on the day you can go to market approval. With that, we can move on to questions. Here is our last slide with our latest slogan, which shows that there is nothing better than your own insulin production.

Thank you very much for that, Ulf. I will remind you again that you can send in questions in the open chat. We have already received a lot of questions, so let's go through them. The first question concerns the deadline for full recruitment, and it's actually two parts. First, if you can confirm that you are still in line with this deadline for full recruitment, and you have been a little bit aware of that, but also what challenges you may see with following that deadline?

Yes, we are on track. We have more than 275 patients in today, that is, randomized patients who are in the study and have received treatment. And then we are in line with being able to complete the screening. And when I talk about screening, it is that we stop looking for new patients. From the day you find a potential patient who could be part of the study until it is randomized, for a few months to do different screening visits, check that you have the right genetics, enough of your own insulin production. You take the D-vitamin first before you get your first treatment and then you are randomized. We are on track to be able to finish looking for new patients for the study this year. So there we are on track. But it's not like we're going back and forth now. It's about being out there all the time, being enthusiastic. The clinics say that now is the last chance to find patients. We have influencers in the US who are also out there telling about the study. So we do everything we can to make sure that we can keep our time line. Because you can never be comfortable when it comes to patient recruitment.

And on the same topic, how do you work to ensure the patient's follow-up in the future, i.e. to make sure that they really submit the final tests before the reading?

Yes, but there is a lot of the same thing there. It is important that everyone, of course, a large part of that work is carried out via our clinics and our testers, that it is they who meet our patients and then tell the study about the importance of being part of the study and remembering to take tests and come to other visits and things like that. So much is, and then it is our job as a sponsor that we are out and meet the clinics and update them and keep them more enthusiastic. Then I can say that we are Many clinics tell us that they feel that this is a special study. They feel the commitment of the company. It is not like any other clinic study. It feels a little special for them to be part of it. It is very grateful for us to be able to get that feedback. Maybe as a smaller company, and that we have been doing this for a long time, we are actually out and about meeting clinics. And it is very important that they are our supporters towards the patients. We cannot have direct contact with patients as a company. And then there is a lot of other things as well. We are simply out there updating the law and showing the importance of what we are doing. So everything plays a role, but it is our contact with the clinics and their belief in us and that they like us as residents and also believe in what we do.

Then we have someone who is a little curious about exactly when you sent in your application to Läkemedelsverket, because it is said that it will take 90 days from sending in the application to making a decision.

We have not done that, and we are not going out either, because it is easy to start promising exact times if we say so exactly. We are in contact with Läkemedelsverket and our goal is to be able to do this at the end of the year. We have said that it is our goal. Then we exactly want Läkemedelsverket to come to an inspection. During such a period, we will know, during the inspection, a fairly clear picture of different funds. There will always be different funds. Then a report will be written together of the entire visit. Then we hope that all this will be able to be resolved this year. There is always the possibility that it can go into the next year as well, the final things. But we are in contact, and as I wrote in the report, we are also expecting your feedback in the coming months. We will keep the market updated for this as well. We understand the importance of being able to communicate about this as well. And as I said, this is an important point. GMP certification means that we then, we do an in-drift, we can say in Umeå, we manufacture our protein on a large scale, but with a GMP certification, then we can produce under GMP. And that is important for the next step, both to be able to produce for upcoming clinical studies, but also it is that you produce under GMP, you can then start the preparation for commercial production, what you should show that you can produce according to the GDP and show that you produce exactly the same way every time according to all your standard operating procedures and so on. So it's an important point of view. And then, as I also said, it's about We want to be prepared for inspections, so that on the day the FDA appears, it is not the first time an authority comes. This is a way for the facility to get used to authority interactions and what that means.

You were a bit involved in the meeting with potential partners. We have received a question about that as well. How would you say that the interest looks from potential partners before this lecture next year? Are you already in dialogue with larger pharmaceutical companies? I know that it is a question that everyone always has, but which is difficult to answer.

Yes, and one of the standard answers is that we always have to have a dialogue with large companies. We have been doing this for a long time, and all companies should, regardless of how far you have come in your development, before those dialogues. Those dialogues change, of course, over time, depending on how far you have come. And of course, there is a great interest in our analysis next year. That's what everyone sees when you sit so close to the results. So there are many who see that now it is on the rise. So much interest is there and we are the only company today within Type 1 diabetes with a 20 ton modified drug that is in phase 3. And the only company that has had the opportunity to even make an earlier review from the American FDA. And the only company in the whole world that has the opportunity to go for an accelerated If these results are positive, which commercial model would you prefer?

Own launch, partnership or licensing?

Yes, partnerships and licensing are basically the same thing. Licensing is a partnership. Then there is the possibility of purchase, which in a way becomes a partnership if the entire company is purchased by a partner, then you become part of the new company. Or it is a separate launch. And some markets are on all markets. So sometimes it can be a hybrid, that you license out a certain part of some markets and keep other markets, or that there are different partners on different markets, for example. For us, we have done, now it was several years ago, we were in partnership with Johnson & Johnson when J&J took The license for the entire world, except for the Nordic countries, was held by the company. But that didn't work out, although it did all the way forward. But it's something that we're comfortable with. We've done it before and it works really well. So it's clearly a big priority for us. At the same time, you should always be prepared, and we're also prepared to be able to go all the way ourselves. Everything else is the same, you will earn more money if you can take it all the way to the market, because you're leaving a large part of the world. If you do a partnership, a licensing. But at the same time, to go all the way yourself, you need more investments to do it. But it is possible today to do it in a completely different way as a small company than it was maybe 10 years ago. Given that there are these commercialization companies that you can cooperate with, that have all the commercial infrastructure, for example in the USA. So you don't have to build up the infrastructure yourself. So we actually have both ways. Then we can also say that it is important, and it is for all companies as well, especially if you are working with an indication like we are, such as type 1 diabetes, which is a fairly large indication, but it is absolutely not type 2 diabetes. So you don't need a huge sales organization, for example in the US, to cover the entire US market. So it is possible to do the commercialization yourself. And if you can do it yourself and can show that you can do it yourself, you are in a completely different negotiation than if partners know that you are totally dependent on them, because then they can sit in a rather comfortable position as well, if they know that the company is forced to license in some way. So it is important to be able to show that, and that is also why we have done market analysis in the USA, and we know that a lot was done at the time when we were with J&J as well, a whole lot of such analyses and preparations as well, so we have a pretty good knowledge of what is required. But again, to sum up, we have a great focus on partners, but at the same time we also have a clear focus on being able to take it all the way ourselves, if necessary, in order to be able to sit in a completely different negotiation position than when we are dependent on partners.

You mentioned market analysis and price models on the American market. I have a question about that. According to a market analysis that you did a few years ago for the American market, is it still there?

So far, it is still there. We have not done any more right now. The closer we get to the market, the more market analysis we will do. We will look at how exactly it will be launched and so on. But as I said, in the end, there are three results that will also lay the groundwork for the payers in the final negotiations. And then we know that Sanofi is one of the companies that has approved drugs in the US that are priced at about 20,000 dollars. And everyone knows to pay for it, that's where you put the reference. Then I know, yes, there is a lot of talk from the new American leadership about the price of actual drugs and gambling and everything, so no one is an expert today, but on exactly where it will all end up, even if today there are indications that it does not seem to be as serious as It may have been understood earlier that these big pharmaceutical companies have actually come into agreement with the US about pricing and such. And then the whole biotech index has increased because of that. But for us it is still there. Then we also have, which is our strength, we have special medicine status in the US, which is important for the payer. We go to a genetic subgroup, that is, we do precision medicine, which is important for the payer. So we will get coverage as a special drug and a special drug in the USA. Then we have the opportunity, let's see here, price flexibility, what it is usually called, to be able to price ourselves very competitively, for example, against monoclonal antibodies, cell therapies that are much, much, much more expensive to manufacture and give as treatment than our drug. So we have that flexibility. But we want to be able to price ourselves high. from a commercial perspective. So that's still there.

We have a question about the pricing as well, and it's quite a long question, so please excuse me if I look down a bit here. I wonder if you can develop the analysis that is presented at EASD, where three indications were given, with a statistically significant decrease at certain levels. And if the questioner has interpreted the PME correctly, then the difference between placebo and DMUD is barely six months. And Hen wonders if six months is enough for a insurance company in the US to be willing to pay $200,000 per treatment.

Yes, and now we can see just, I was a little into this, I might be able to jump to it, but just, if we look at this picture, and then I think it's this, I jump a little back to this, so it becomes so, The first arrow on the left shows the difference between the red and the blue line. In this analysis, we had set up a CPEP value of 0.5. How long does it take for the active arm to reach 0.5? That is, the median, half of the patient, we can say, has reached it compared to how long it takes for half of the placebo patients to reach it. And then the diameter of the arm reached six months later. So it was six months later. It took half a year longer before half of the patients had reached that level. But this is... What we wanted to show with this is that we are compressing the time horizon. Then we set up another level at 0.2 and then it took about 15 months for the passive heat to come down to that level, while the active heat had never come down to that level. If you were to continue, it would only take much longer than six months, because as you can see in this picture, it will only take longer and longer to compress the time between the active and The longer you follow up the patient, the more the lines separate from each other. Then it is also important to know that we take our patients into studies within six months of diagnosis. There are other studies that try to get them within one month of diagnosis. And then they have a lot more C-peptide at the baseline. Of course, before you have achieved, for example, 0.5, it will take longer than if you have taken in these patients later when several of them were already below 0.5 at the start of the study. So I think that it may be much faster around these six months. The focus should be that we significantly reduce the time between active and placebo, and the longer you follow up the patients, the longer it will take for the active arm to reach the same levels as this. Then exactly what the payers in the USA, for example, will look at. It is mainly our three results. The first thing we look at is how much more of our own insulin production we have at 15-24 months compared to placebo. So that's the first primary, and of course the blood sugar control. There are a number of secondary measures that we also look at, like a timing range, for example, how much of the time the patient is in the target area, how often above and so on. So this was a way to turn our analysis around and show this depression, instead of looking at how much more self-insulin production. So that's the important thing, as I said. And then when you're out in the real world, you will be able to treat, preferably treat as early as possible, perhaps earlier than six months. And then this analysis, as I said, is completely in relation to how much the patients had at the beginning when they started. Men det blev mycket snack kring den analysen. Sen var det lite olyckligt med lite skrivfel också från Nyhetsbyrå som skrev fel först och rätt att säga i efterhand. Men det viktiga är igen att titta på de här sträckade linjerna och fördröjningen. Sen har vi ju data från stage 1 and stage 2 type 1, i.e. healthy children who have type 1, but not yet the clinical diagnosis. There we have been able to show, descriptively, because it is now so little data, that we could even have a delay of seven years to diagnosis with only two injections. So it also shows a little bit of this delay when you follow them up in years, that it can be quite long, long delays when you treat with a diameter.

With that clarified, I think it sounds like a good way to end this live broadcast. Thank you very much, Ulf.

Thank you very much.