Diamyd Medical AB (publ)

Hi, and welcome to this live broadcast from BioStock Studio. In Tänselvik, Diarmuid Medical have announced a financing agreement with US specialist investors and this morning published their Q2 report. We are joined by CEO Ulf Harnedius and CFO Niklas Axelsson, who are here to tell us more. And don't forget that the live chat is open, so just send in your questions and the gentleman will answer them after a brief presentation. And with that, I hand it over to you, Ulf.

Welcome, everyone, and I'll start off here by giving you a brief sort of run through the main achievements milestones during this period and also some of the upcoming milestones. And then Niklas will follow with a bit more of a deep dive into the financials. So let's start off here by Just a second here. So it's been, as always, a very intense, intense period and maybe especially intense now as we are getting close to the first interim readout in the phase three trial. So with the milestones that we have achieved, first of all, full enrollment in the phase three trial that is running in Europe and US. So we now have 321 patients enrolled and it's now fully randomized. And this, I must say, is quite a monumental achievement by the team because we have screened patients worth of actually two phase three trials here. We have screened more than 800 patients and now we have 321. the trial and again as a reminder this is the first ever precision medicine trial ever done in in type 1 diabetes meaning that we go for a specific genetic subgroup of the disease and this is also why it's especially challenging to actually recruit for these kinds of trials and again these our clinical sites have never done a a trial like this so This is truly an achievement by the team to have achieved more than 300 patients in the trials. I am truly proud of what the team has done here and all our clinical sites and obviously patients as well that are participating in this trial. And secondly, also on the phase three trial. So it has been selected for one hour session at the upcoming ADA conference that will be in the beginning of June in New Orleans. And this is one of the biggest diabetes conferences in the world. And to be selected for one hour dedicated symposium is quite an achievement as well. I mean, this is a big competition, high competition to get these spots. So that's also something we are very proud of and looking forward to. And then, as Cecilia already mentioned, we have done an equity financing with US sector specialists, where we now have 25 million US dollars ahead of the interim readout in equity financing. And then there is a big upside after the phase three readout in the form of warrants that can generate quite substantial amounts of additional financing. Niklas will go into this in a bit more detail, but this is obviously also something we are very happy about, and the US is our main and first market that we are focusing on, so this is very important. And then also, as the last achievement during the month, and this is also in the quarterly report, we are advancing our readiness in Umeå, in our manufacturing facility, The Swedish Medical Products Authority has been at the site and done an inspection as part of the ongoing GMP certification process. So we want to facilitate GMP certified to produce material for clinical studies. and this inspection went very well and we have only received minor findings that we are currently working on so there's a process in how you answer these findings send them back and then there's back and forth and then the process will after a certain amount of period will be closed and then you get the decision around the GMP certification but it was a very positive experience and again only minor findings so we look forward to the to the next steps in this matter as well. And then upcoming milestones again, the interim readout is coming up now on Friday. So again, this is when 174 patients have been followed for 15 months. We are doing a blinded interim readout, meaning that we are looking at C-peptide, which is the marker for endogenous insulin production. And that's what we want to change with our treatment. So we want to slow down the disease progression by preserving the endogenous insulin production, and you measure this by C-peptide. And on Friday, we will get the information from the DSMB, which is the committee that usually looks at safety in the trial, and this time they will also report to us if at the interim we see a statistically significant treatment effect or not when we look at C-peptide. And it's a blinded analysis and the reason being that we don't want to compromise the integrity of the ongoing pivotal phase three trial. And with a thumbs up on Friday meaning statistical significance, the next step would be then to schedule a meeting with the FDA to start discussing the BLA strategy and we will also then also follow up the trial to the full readout which will come summer of 2027 with where we got all the data that can support a full traditional BLA in the US and also in Europe. And in April, following the interim readout, there will be a warrant exercise period. So we have this, and Niklas will go into this in a bit more detail. So we'll have these warrants that were part of our previous preferential rights issue about one year ago. These TO5 warrants that can be exercised the second half of April with a strike price of 20 kroner in our share. And then also now as part of this very recent financing with a US sector specialist, there are warrants that can also be exercised 30 days after the interim readout at the same strike price, 20 crowns, that can also generate a significant amount of additional financing to the company. But I want to let Niklas go into more of the details around the financials, current cash, the financing we've just done, and also around the warrants and use of proceeds. So please, Niklas, your turn.

Thank you. And hi, everyone. Right. So in terms of the financial overview of Diomid Medical, we've tried to clarify what the situation looks like by reviewing the existing cash. So as of February 28th, we had about 20 million U.S. or the 191 million. Jone Peter Reistadler, One million that we saw in in today's report and corresponding to cash and short term investments and that's obviously not conditional and in terms of use of proceeds and its ongoing business and manufacturing related etc. Looking ahead, so in terms of the new cash pre-transactional cost, we first have the directed issue of shares to new investors corresponding to 25 million. The timing thereof is imminent and it's not conditional. And in terms of how this money will be used, it's essentially very much focused on remaining Dino 3 trial cost. In addition to that, we have the directed issue of warrants to new investors corresponding to up to 100 million. And timing though will be late April or early May. It is, however, conditional. upon warrants being exercised in full, obviously, and also on EGM or extra general meeting approval early April. In terms of user proceeds, that's going to be very much focused on pre-commercial, so market access, medical affairs, LCM opportunities for lifecycle management opportunities, and also pipeline development. And then last but not least, we have the existing TO5 warrants that Ulf was alluding to that may generate another or add another 35 million of cash. Same timing and being conditional upon being exercised and use of proceeds will be the same as for the other warrants. So all in all, in terms of new cash, including conditional elements, we're looking at another 160 million in total US.

Yeah, and with that, maybe we should go to, well, questions, ending with our slogan here, there is no insulin like Rome.

Thank you so much both of you. I will just start with a question of my own actually before I dive into the live chat. This financial agreement is significant and not entirely usual in the Swedish context maybe. Can you just tell us a little bit about how this came about?

Yeah, I can start. So obviously it's a long-term work. This is nothing that happens overnight. So it's a mix of obviously that we have reached quite significant milestones as a company, especially on the phase three. And again, we are one of three companies in the world in phase three. development currently in type 1 diabetes with a disease modifying therapy so that puts us in a quite unique spot and we have a very unique approach as well or like an antigen specific immunotherapy where we are really like spearheading the field when it comes to this technology so I think it's both like being persistent and obviously having these contacts, being out on conferences, spreading the word and also working with the right kind of collaborators. In this case, you have like many, like the bank in this case, it was Learing Bank that has done a tremendous job obviously in introducing us to many US-based investors. And also we have been contacted by US investors. And so it's a long-term, it's something that It takes a long time. You have the introductions, do the presentations, and then at some point it gets more intense. In this case, you have what's called a wall crossing, where you really then start discussing the transaction to get it as fast as possible in place. But I must say it's always teamwork. We wouldn't be here if we wouldn't have achieved all the milestones, partly of what I already presented earlier and previously as well. But it is something we are obviously very proud of. Niklas, do you want to add anything?

No, I think you summarized it well. It's just that it's very, very intense and very energizing at the same time. So it's an interesting period to go through.

Yeah, we've obviously had quite a few questions about this, about this financing agreement, but I will start with one here that's a little bit broader. It's just wondering if you are seeing increased interest from Big Pharma, I guess, in light of this agreement, but also the results nearing.

Yeah, I mean, regarding the interest in general, obviously, again, given that we are in phase three, very close to now the first interim readout, And again, with a very unique mechanism of action and previous results as well that look very promising. The interest is obviously on a different level now than it was a year ago or two years ago, three years ago. We've been in constant contact, obviously, with potential partners. That's, again, part of the long term work here that you keep all these parties up to date on what's happening. And the more data you can show and more milestones you achieve, obviously, the interest level keeps increasing. Regarding the equity financing, I mean, this has only happened a few days ago, so it's not like we can... I mean, it's important for us as a company, and we've said this before, the stronger we sit regarding cash, the more we are in a much stronger position in our negotiations as well. So it's very important that we can actually execute on our operations, including then also pre-commercial preparations, so that we don't become dependent on other actors, because then we can really have a standalone strategy that we can execute on, and that puts us in a very strong negotiation position.

because there was actually a question here obviously some of these questions you have touched upon in your answers and in the presentation but as they've come in i think we will give them to you anyway and there's a question here about whether or not you consider this financing agreement with the american investors as the partnership that you have previously talked about or are you still having a continuous discussion with other partners i guess you would say then

Yeah, we still have those discussions. It's an important part of our business development. Like we said before, it's important that we have a standalone strategy that we can execute on, meaning that we can never fully control these negotiations with potential partners. I mean, there are two parties involved and both need to agree on terms and all these things, and the terms need to be the right from both parties. both perspectives. And that makes it very important that we can execute on a standalone strategy so that we don't say that, well, we can only take it this far and then our journey ends unless we can sort of find a partner. And with this financing, obviously it's still conditional on warrants in this case to really strengthen the cash with more than a billion Swedish or a hundred million US. But with that kind of financing, we really sit in a very strong position that we can execute on a standalone strategy. And then we can really compare what our own strategy would be from a, let's say, valuation perspective compared to what a potential partner could offer us so that we can really compare what is actually better for us and for our shareholders. But we are in constant contact with potential partners and that's an important part of our business development as well. I would say that right now we just have more options on the table given this kind of financing.

Yes, it's just opened up more alternatives for you potentially. And with the aim of a market approval in the U.S., what's the status like for your commercial organization? Have you today appointed all those sort of key positions that the FDA needs you to appoint and etc.? ?

Yeah, so we haven't said anything specifically around those. What we've talked about again is that, I mean, we need to do this in steps. First, we do the interim readout, obviously with a thumbs up, meaning statistical significance. We know early on that it looks very positive, meaning that then we can accelerate across functions, including pre-commercial and other functions. But we need to take it in steps and the organization will also level up in steps when we get closer to potential filing and therefore after for potential approval. We have done some market research in the US as well and that's continuing but obviously then starting to to level up the organization, that's something you need to do in a very pragmatic fashion so that you don't build it up too much too early at risk before you really know this, that you achieve the other key, upcoming key milestones. And then also it's not the FDA that sort of decides what our organizations should look like. In the end, it's us plus knowing that you need to have all the functions like around market access, medical affairs, commercial sales, pharmacovigilance, there's a lot that needs to be in place. A lot of that or almost all of that can be actually outsourced also to these commercial infrastructure companies. We still need to have the key functions on our side so that we are the project managers on the commercial side, on the medical side, for example. But a lot can be outsourced so that you don't have to build at risk your own organization, for example, in the US. But that's something that is going to come and it will come in steps as we move forward and hit our upcoming milestones.

So the message there is one step at a time you're building. Yes. And someone here is a little bit curious about if the investors who've come in now, if they wanted to invest more in Diameid, but you said no.

We can't go into the details around the discussions we've had, but I must say that the interest has been very high. Obviously, and maybe it's been above our expectations as well. But obviously, it's important if you can raise capital at good terms, you should do it. Any biotech company should do that. And again, it's important for us that we can hopefully sit on a cash position that gives us the true capabilities to execute on pre-commercial everything that is required ahead of potential filing approval and then commercialization.

And we have a question here about the timing about the issue. Would it not have been better to wait with the share issue until after the interim results?

Well, that's a good question. Obviously, that's maybe more of the traditional way of doing it. Obviously, we don't know the outcome on Friday. And the most important thing for us as a company is that we can go to full readout. I mean, it will come summer of 27 now, nine months earlier than previously planned, given that we had this FDA interaction in December last year where they allow us to do the full readout in 24 months. So that will come summer 27. So the most important thing for us is that we don't end up in a situation where if, for example, on Friday, it's not statistical significance at the interim. Obviously, it's an interim readout, so it's a possibility for us to take an early look at the data, but they are not mature yet. And then we don't want to end up in a situation where we need to raise capital in this macro environment that we are in today, plus with a potential disappointment from the market. In this case, we have now sort of reduced that risk to basically zero. We have the capital required to go to full readout. And that's why we are very happy that we were able to come to this kind of structure. And then the biggest bulk obviously is coming after the readout in the form of warrants. So there's an upside, a significant upside.

I understand. There's also some questions about kind of the role of the new investors here and whether or not you're even maybe considering listing in the U.S. and not going to say abandon Sweden, but to relist it in the U.S. And is there a potential maybe seats on the board for these new owners?

Well, that's a discussion obviously that will be taken as they come. And it's up to the board, obviously, regarding these board seats. And I mean, this is only a few days old now, the financing. So they will obviously be interesting now with the new shareholder base also to do. monitor this and move ahead and regarding the potential listing in the us it's always a possibility for us i mean we are a swedish company today and it would be great to remain a swedish company i think for swedish life sciences as well and that's a possibility even if you list in the us i think it's it's definitely a possibility for us and there can be a big interest as well from us investors that that's on the roadmap but again that's a discussion that we will It's up to management and the board in the end and also with investors to see what's the best journey for the company now ahead.

So there as well, one step at a time.

Always.

I've got some more specific questions here about the study, actually, whether or not If the interim analysis is only on the C-peptide preservation co-primary endpoint or the HbA1c co-primary endpoint, is that also considered in this interim analysis? And if utility testing is included? Some more specific questions, but just to mix up the financing a bit.

Yeah, exactly. So on Friday, the interim readout, it's on C-peptide only. So the marker for endogenous insulin production. And the reason being, since we have aligned previously with the FDA, that C-peptide is what's called a reasonably likely surrogate endpoint. and that it can support a potential accelerated approval pathway in the US. So that's why it's done on C-peptide, but again, in a blinded fashion so that we don't unblind anything and compromise the trial. Next step then with significance would be to schedule a meeting with the FDA to discuss the BLA strategy. And if then the FDA recommends, and also we agree as the sponsor, that the accelerated approval pathway would be the best way to go, again, reminding that we have full data coming in the summer of 27, so much earlier now. But then in that case, there would be then a unblinding of the interim database because that's something that you will then take to the FDA to start discussing around the what the BLA could look like so in that case obviously there would be the full data from the interim and as a company would be obviously announced it enough so that we cleanse any potential insider information for example but the details still need to be blinded because the trial is still ongoing but that in that case there would be more data coming out but right now it's only seed peptide and then again we will take it in steps thereafter

Regarding futility?

Oh, yeah, futility. And there is a futility analysis as well. So there's three things happening on Friday. One is the C-peptide, so the blinded efficacy readout on C-peptide. And then there's safety, as always, like the DSMB is looking at the safety. I think this is the fifth or sixth time during the phase three, they are looking at safety. Very important as well. And that's one of our unique selling points with our investigational therapies, really the safety profile, which looks very favorable. And that's really important. And then the third one is that there is also a futility analysis very similar to the one that we did in the summer of 2024, when 70 patients had been followed for six months. similar kind of utility. So where you set this kind of a conditional power threshold, you should see the industry standard quite low and you want to be above that threshold, meaning that there's still some signs of efficacy there, that there's still a good likelihood that the trial will meet its primary endpoint at the full readout. If you're below the threshold, that means that there's very low likelihood and that the trial is futile and should be discontinued. We already passed that in the summer of 24, but we have it now also. There is basically a hygiene factor as well on Friday.

Perfect. I've also got a question here in Finnish, Ulf, but I think we'll save that for afterwards, because I'm not going to attempt the Finnish.

I can just say, terve kaikille suomalaisille, että kiva, että te myös seuraatte Diabydian.

You've touched on the strategy a bit, but there is a question here about now that the U.S. funding is with U.S. funding and de-risked CMC. Is the primary strategy to pursue a global big pharma buyout, or are you still prioritizing regional licensing deals?

I would say that everything is on the table. In the end, when it comes to licensing and these things, it's up to the management and board to look at what is best. I mean, there can be hybrid models where we commercialize in certain regions and the pharma partner commercializes other regions through license. Or there could be a global license where the pharma company takes the global license. And when it comes to merger acquisition, that's more of a, in the end, a shareholder decision. I mean, we can be contacted by a company that wants to acquire us. The board will look at that and see if it makes sense, if they can recommend. uh that sort of that proposal but then in the end that will be up to the shareholders to decide on and well nicholas you are an expert in these things you've worked at astra with these things so maybe you want to add anything yeah no i i think you summarized it well so uh got a question here about whether or not you can share if the us investors had access to any additional uh historical data during the due diligence process So it's been mostly through many, many repeat meetings and obviously deep dives into the science based on obviously non-confidential information, press releases, but it's more like deep dive sort of discussions around that to put a bit more color around around our data, but again, very much. I mean, we're so transparent as a company in our press releases and in our presentations. So it's mostly around really intense and many repeat meetings.

Can you tell us roughly how long have this process been ongoing?

I mean, again, it's a long term thing. So just to generate usually starts at, I mean, you get some introductions, you have some updates, meetings, and then you get repeat meetings, updates. And then obviously in the end, when you start, there's more and more meetings coming. And then we, and like the bank in this case, Lirink that worked with us, see that now the interest is at such a high level that there's a relatively high likelihood that we could actually uh finalize a transaction and then you do this what's called a wall crossing so that you will have like a log books and insider list to make sure that these uh investors that have showed an interest that they get that call to say are you interested in getting more information about potential transaction and if they say yes then you go into this this period where you have very intense meetings and many repeat meetings and talking about the science, the transaction structures and all these things. So it takes a long time, but the last bit of it is very intense. And you want to also do that in a quite short time since you have these kind of insider lists in place.

And we're nearing the end of our time. So as a final question, if the interim analysis is positive, what is sort of the strategy or the playbook for April to keep the stock, as this person says, well above the 20 sec? Can you share the... Your thoughts on that strategy?

I mean, obviously, let's first with a thumbs up. I mean, that would be a great thing to early on see that we reduce the scientific risk in the ongoing phase three is considerably that early on. And then it's all about for us as a company is really to move forward, start accelerating and because then then we sort of already know that there's a higher likelihood that this works and it will go all the way. And for us, it's always important to be visible and really show that what are the next, how are we executing as a company to show that it wasn't just results and that's it, and then business as usual. Then we go into the next level as a company and really start executing on like the pre-commercial, like cycle management, pipeline opportunities. And it's important that we are visible and show these sort of activities as well so that everyone understands that we are now really moving ahead as a company and hopefully increasing value for our shareholders.

Well, thank you to you both for taking the time to give this presentation and answer some questions during what is a very intensive week for you. Thank you.

Thank you.

And thank you so much for watching and hopefully we will see you in another live broadcast soon.