Lipum AB (publ)

Hello and welcome to today's webcast with Lipum, where the CEO Ola Sandborg will present the report for the second quarter of 2024. After the presentation we will hold a Q&A, and if you have any questions for Ola, you are welcome to send them in in the form to the right. With that said, I leave the floor to you.

Thank you so much Ludvig and welcome to all viewers, listeners, who you should call when it's a webcast, but it's the same thing really. I'm Ola Sandborg, CEO of Lipum since December 1st of this year, so it's been eight amazing months. It's also my second quarter report that I will present, the first one after Q1 and now it's a part-year report in connection with Q2. So, warm welcome and I will take you through a number of slides, which I see as useful and good information for you. But the report that we released, which came out this morning, I have put the rubric on, and a little bit of an overarching message actually, that the clinical phase 1 study that we are working on is nearing the end of the planning of phase 2. I must say that after this half year, everything we have achieved, I am very proud of my organization with team and what has been contributed. It's not just that own organization, but many partners that are involved in this. So it was a very successful and good first half year, which I hope to be able to show you in the coming pictures. As always, in connection with the report, there is a lot of hard data and for our part when it comes to that, considering that we are not a commercial organization at the moment, then it may be limited interest in that. But if you look at the financial composition for the first half year, we have movement revenues, which goes to 315 000 SEK, is primarily about the contribution received to the business. Otherwise, the result after financial posts, it is about that we have minus on 28 million, 109 000 SEK compared to minus 21 million for the last year. Fully natural and given the type of business we are doing, which then needs to be cost-saving. In our cash, we have liquid assets on June 13th at about 20 million compared to 12 million from last year. So we have a good base for our continued work. But something else that can be interesting from this first half year, some highlights, I have already pointed out together with the Q1 report, things that have happened, but some of the things I want to highlight right now is that, to start with in April, we can now go out with information to strengthen the protection for our medical general, Sol 116, further through a patent application that has become public, and it is about inflammation and cancer. We have also during the late period received a permit from Sway Life for a 2.8 million SEK project, I will mention it later in the presentation. For those of you who have been with us, we have then carried out the pre-trial emulsion during the spring, which then gave us a contribution of nearly 80 million SEK in interest, and beyond that we also have a loan loan of 20 million SEK, which gives us good security for the time to come forward, to be able to work without having to use the small brakes along the way. We have also entered a strategic manufacturing cooperation with Nofx by Logics for the production of our medical equipment for phase 2. Another thing that has happened during the period is that we have had a vote, which should be once a year, and in the same way, Ulf Björklund, our former chairman, has ended, but he has been replaced by Ingmar Kihlström, who has been the head of the board for a while. So a very natural and good change, and a big thank you to Ulf for the unquestionably valuable work that he has done over the years and has been involved in creating this company. When Ingmar then took the lead in the board's position, we have also got in Åsa Magnusson, who is the new head of the board, who is very inspiring and positive. And finally, before Sillen came forward this summer, we have actually been able to report in the interim results for several parts of the phase 1 study, which is now completed, and I will also show you the results. But just briefly before we get into the details, maybe I can mention something about the company and the new listeners. But for those of you who do not know it, we are more involved in what is called a clinical, biopharmaceutical company in the clinical phase, with a focus on chronic inflammatory diseases. Our main project is based on the fact that we have an antibody called sol116, which is the one that is then directed towards the target, which is often called the sol-stimulated lipase, or BSSL abbreviation. If you translate it into Swedish, it would be gallsad-stimulated lipase. But this is based on research that has been carried out by the Umeå, which started 50 years ago by Ol Hennell and colleagues. The company was founded in 2010, and since April 2021, we have been listed on the Nasdaq First North Growth Market. As I said, it's all about BSSL, Biosol-stimulated Lipase, which is the target protein that we are aiming for. And this was something that had to do with breast milk and breast milk. Because BSSL is extremely important to be able to stimulate breast milk to the breast milk child and to be able to get the nutrition. But as always, when you do research, things come up along the way. One area that we have seen is that it has actually also been linked to inflammatory diseases, and that's where we have come in and work as a liposupport. And it is also for that that our anti-corrosive sol-116 has been developed. It has been developed in Sweden together with Lifesize Lab in Uppsala and Stockholm. It is really designed to be an optimal anti-corrosive to work on the BSSL protein. Our activity today is primarily linked to three strategic areas. The first one, and that is what we are doing with the Nasdaq, we are a biopharmaceutical company in the clinical phase, is that we have a phase one program that is ongoing. And that is primarily to be able to study the safety profile of our product. You will get a little more detail in the upcoming slides, but that is the main focus. But what we are also focusing on is to be able to show that the product is effective in treating symptoms and diseases. And from there, we have in the planning now a proof of concept, what we are focusing on is RA, rheumatoid arthritis or lead-wound dermatitis, as you might say in Swedish in ordinary words. We have done a lot of pre-clinical work with this type of medicine, -116-HR, which can often be used on many other diseases as well. So for our part, it is very important to understand which indications we could have a possibility to achieve. And in contrast, we are also working with clarifying the mechanism of operation, the mode of action that Sol-116 works through. And last but not least, the third leg is something that is very important for the greater and longer perspective, and that is to have good partners. And for our part, as a Swedish company, in the size we are, it is not reasonable to see that we, the community product, are all the way now a commercial series on the global market. So that's why we need good partners to be able to continue the development together. And it can also be about a new licensing in the end. So at the same time, these three are the main areas that I work with more or less daily. And it has been very fun and exciting to get into the lipoma part of this. But if we then take ourselves to the results we have seen, and which I am extremely happy for and which at the same time really support where we are and where we are going. So during the spring we have released two press releases, one in the end of January, when we could then verify the interim results from the first part of the phase 1 study, when we looked at how sol 116 could be taken up and received at the health and welfare persons. The second part, which we came up with here in June in the press release, handles the multiple doses part of the clinical phase 1 study that is being carried out. And to give a little more detail on what it is about, we have three parts in this phase 1 study, the first in June, which is the first time we are injecting the medicine into humans. So the first part, the one that came in January, actually studied 40 healthy volunteers who received one dose. And here is the main track so far, look at the safety. That report, as I said, was released in January. The second part, which then concerned a multiple dose or multiple doses of healthy volunteers, started in October 2023 and we got the interim report in the second quarter of 2024. The third and last part still goes on, it started in February this year. In this case, we are looking at a single dose study in eight patients with R. So this is the first time we have treated patients. And the recruitment still goes on, we are actually waiting for the last, the eighth patient in this, so soon I will be able to close that study as well. But if we also look at the situation, the first part, the blue boxes to the left, are the 40 healthy volunteers who have received one dose of Sol 116. And as you can see, there are five charts that have received a rising dose. The absolute first chart got a hardly noticeable dose of 0.075 mg per kilogram. And the last chart actually got as much as 6 mg per kilogram. That part has been especially helpful for how we could look at the dosage when we were looking at multiple doses or multiple doses of healthy volunteers. And those individuals got four doses on each other, given one dose per month. So during four dosage times with one month in between, so they got Sol 116, that's a dose of 3 mg per kilogram. And as I said, the last part is the part that goes on. There are eight patients who get, in that case, 2 mg per kilogram, which is in line with the same dose you got in chart 4. And the primary effect month you look at, as it always is in a phase 1 study, yes, it is safety and how well this product is tolerated. But we also take the opportunity to look at other effect variables. And for example, as a secondary end point, we looked at pharmacogenetics and anti-drug antibodies, or ADA, which are often abbreviated. It is actually a rather important part to be able to see if this product that you give to an individual, if it develops antibodies in the body itself. And this is something that can limit the effect of a product over time. Finally, we also looked at some explorative effect meals, especially BSSL concentrations in individuals, but also a number of inflammatory biomarkers, which are very important. I can also finally mention that in each cohort there are eight individuals who are involved. Each of six gets the active drug, that is, Sol 116, and two get placebo, and this is blind randomization as always. If you look at the results, here we see the seroconcentration, how it looks from the magnesium dose to peak concentration, and how it is then diluted from the body over time. In this case, it has already been set to hours on the X-axis, the concentration on the Y-axis. What I can say is that this is exactly what you want to see, with the increased dose, increased top concentration, that we have a linear dilution over time, and that these are relative to each other in exactly the same way you see. And the fact is that in this case we have a halving time of our product, which is about 20 days, which is very impressive and important for the future development of the product and how it will be designed. I also mentioned that we are looking at the levels of BSS, that is, the protein we are going for, and that the antibody will block the effects. In this case, it is actually healthy volunteers, because this is the result from the five cohorts in the first single dose part. And these healthy volunteers actually expected that they would not have any BSS levels, but they have, a number of them, 23 of them, 40, that is, 58 percent, have been able to show BSS levels at some point during this study period. And what is interesting to see, and it is actually the gray staples, that are the ones who have gotten BSS 116 and the blue-purple ones are the ones who have gotten placebo, it is very obvious that when they have gotten BSS 116, they have been able to take down at non-measurable levels very, very soon. A few individuals may have been shown on day two or three, but from day four and forward, it is non-measurable levels for those who have gotten BSS 116, against those who have gotten placebo, where you see that the staples remain over the entire study period. There are four individuals where the result is shown at BSS levels at the end of the study period, from day 49 and forward, but this is for a very small number. And above all, it is important to see that we have a good selection of BSS over time. So it is quite obvious that BSS 116 does what it should do, that is, eliminate free-circulating BSS cells in the blood, and for most individuals, up to 90 days after they have given the dose. Very, very strong and important results for us, and very encouraging, because it shows that the anti-corrosion does exactly what it should do. So in summary, in the phase 1 study, where we are in the state of emergency, we have received very positive interim results. We know that BSS 116 is tolerated well, with few and above all, and that there are no serious side effects at the various dose levels. At the same time, we have also seen that no individual has been able to show anti-drug, anti-virus, as I mentioned earlier, and that is a measure of immunogenicity. This applies to both those who have received the first dose, but also single doses and multiple doses. We could not have gotten a better result earlier. This really strengthens the product to be able to continue to have effect over time in a good way, even if it has to be studied further in the study. We have also, as we can say, received a expected and desired pharmacogenic profile. So you saw the rupture, the top concentrations, and that this is also associated with a halving time of about 20 days, and very clearly that we have a potent BSS-binding antibody that we are handling. So with this, we have the interim reports from SAD and MD cards, which have been available during the spring, and which have already mentioned the single dose study on the amount of patients who are on the way and will be able to close relatively reasonably. That is to say, the last patient we are waiting for. So very, very positive and good results. This is very important for us when we look forward and see what the next step is to take. And looking forward, there was a bit of a message, together with the fact that we launched our pre-treatment emulsion earlier during the spring. So what we hoped to get support for and have received support for is to get a financial base to be able to start advancing sol 116 into phase 2. Pre-treatment emulsion was extremely important for that, and I must really once again thank everyone who has supported it, because this is a very strong platform for us to be able to take the steps further. One of the important parts and a basic starting point for alkyne in phase 2 is that we should have a study medicine application in connection with the fact that we are starting the phase 2 study. And for that we have actually looked at how we can do this in the best possible way. And here we mentioned that we entered a strategic collaboration with Notex Pyrologics. And we have been able to start from April with a start. Notex Pyrologics has a business in both Food Science and Health Sciences and in Sona. And they will have two companies that will help us with the production of sol 116, which is what we will use in the clinical phase 2 studies. And I think it is worth mentioning that this is, as I said, a very important starting point, but it is also a relatively expensive part of the development program we have. In total, it cost about 52 million SEK to bring out the study medicine in sufficient volume to be able to carry out the phase 2 studies, and it takes, in large part, one and a half years. This may seem expensive for the uninvited and take a long time, but the fact is that here we handle biological medicines, and they have a completely different manufacturing process compared to the perhaps more common medicines that we buy or get based on the recipe that is called small molecules or synthetic drugs, because they can be produced much faster and much easier. But in our case, it is built on the fact that it is a cell growth that is going to happen over time, and there are many analysis and quality controls that are to be done along the way. Plus that from a small initial volume from the cell bank where you start, this should then scale up to volumes of over 200 liters in bioreactors. So it takes time, it costs money to do it, but it is very, very important that it happens in a qualitative and good way. We are extremely pleased to have just Notex Biologics as our partner in this. I can only say that the work is starting with a start, and everything is running exactly as it should, which means that we look forward to next autumn, autumn 2025, to be able to get the medicine that is to be used for the trial to go into the stability study and then be ready for an initiation of phase two study from the year change 25-26 approximately. I also mentioned in the summary at the beginning that we have received support from SWILIFE for 2.8 million SEK, and this is for a collaboration project we have together with the Karolinska Institut and the University of Linköping, designed to look at precision-medicine biomarkers to be able to optimize the person in treatment in the RA, for the time period. This is a real project that looks into the future, but everyone wants to be in the right place, to be able to find some kind of signal that shows what is the best treatment for this individual. This is very important for us to have in the package the day we can commercialize the product. How can you really tell which individuals are the ones who should have the greatest benefit of the product, and then you can really get a good reception on the right individual and a very good assessment of the product's suitability for that individual. So very, very fun. I have now arrived at Gbong and will generate results in the coming future, but not this year, but we will have to wait until next year. Finally, before I open up for questions, I would like to mention that we went out with the press release yesterday. This was actually a bit unexpected for us to do, but as always, the information we have in hand, I think it is important to share, regardless of whether it is positive or negative. It is important with openness and transparency. And the fact is that we have received a negative preliminary report. It is important to say that a preliminary report is the late revision of Horizon 2020 projects. And a little of that information I shared in the press release, I think it is important to take into account, because what it is all about is that we received a contribution from the European Commission, or the Horizon 2020 project, in 2018, and that was about 23 million SEK. And that is through the innovation program that is named Horizon 2020. A very successful project that was reported in February 2021. For us, it was very much about getting the production process and the anti-corrosion of O116 into place, so that we could get into the phase we are in today with clinical studies. After the project was reported, the late revision of Horizon 2020 was published. It is something that can rise. And this time we were chosen to be part of a revision, where they looked at the project, how it was carried out and its cost. And about two years after this, now recently, we received a preliminary report of the late revision. And then the reviewers raised the risk of paying back 400,000 euros, and even a 25% increase in indirect costs, which is a general increase. This surprises us a lot. Nothing that we see as being right. But the reviewers have done their job, and they do it based on the prescriptions they have. But I also think it is worth raising the risk that this project, which the European Commission has also lifted during the year, which is a very successful one. They talk about it being a game changer for chronic inflammatory disorders. And this is communicated, for example, via its information channel, Kordis, which is a very successful example of how their contribution to welfare and help companies move forward with the development. But what I would like to summarize, and a little bit of a review later, is that this is complicated with the EU-support. You get in a lot of formal agreements and administrative procedures, but at the same time it is also extremely valuable to be able to take part in these contribution money. Because we can not only be safe with support from shareholders, but it is good to get from the other side, and we have really received a significant contribution in 2018. At the same time, we have also been chosen as a unique European technologist who really stands out. In summary, I can also say that we feel safe with the fact that at the same time some projects that have been approved for this project have been used to pay the final price. And for us it is up to them to go in with a response to this. And what it is basically about is what they have mentioned. It is the classification of these costs that have been reported to the Commission, that we have classified them wrong. And it is about consulting costs. Some of our organization, the staff we have, have been employed with consultants, which is so very common in Sweden at the moment. And we have reported that as a personnel cost, not as a subcontracting cost that they then wanted it to be. So it is all about a technical mistake when it comes to how we have classified and reported the costs back, nothing else. So we actually feel safe with that this will not happen. But regardless, it is a risk, and that is what we have been flagged for in relation to the press release that went out. But again, this with Holocon 2020 is not the only contact we have had with the European Commission. We have also been part of the application process from what is now called EIC Accelerator. So we have a 2020 name change along the way. And in October last year we were on an interview, and a very small part of them who are applicants come to the interview. Very good presentation and performance on both sides. But unfortunately the competition was too hard and we were a bit short and did not get the contribution we had asked for at that time. But at the same time we got such a report from EIC, which is called the SILA Exchange, which further supports its very positive perception of our work and project. So a few personal words around this. We will handle this in the future. So I do not see the risk being so obvious, but we still have to flag it because it is there. And as you can see a bit over the years, we have a number of occasions when we have received a contribution to the company. And if you look back towards 2018, you see the EU flag with the 23 million SEK that we have received in this case. Over the years, the contribution has come. We had a big one in connection with IPO, which entered the Nasdaq stock exchange with 85 million SEK in 2021. And now you also see the contribution this year from the previous year's investment of 79 million SEK. But above this timeline, you see all the projects and initiatives that have been carried out. And above all, that we are currently working on a clinical phase 1 study, where all three parts are in progress and have been reported with interim results. So really, as I see it, as new to the company, but still a few months now, a very impressive progress over the years and a good development, which I look forward to being a part of now when we also want to get into phase 2. But of course, we will finish the phase 1 program first in its entirety, but I will be able to do that before the end of the year. And a little bit as a last picture and last message, it might also be good for you to see where we are and what is ahead of us. But as I said, in 2024 we have been able to report data on single doses and multiple doses at Friska Frivelä in the first two quarters. The R of the patients are expected in the third quarter, or as it looks right now, that we can have interim results in October. But even with this, we will have a final and comprehensive picture from the phase 1 study available during the year. At the same time, we are working with Biobank data to be able to study BSSL and its connection to infelicital diseases. We have a number of preclinical data on NocInnemos studies that we have started up now. And for 2025 and 2026 and 2027, there is a lot to be able to take part of these Biobank data. The implementation mechanism, projects you have done together with Karolinska, we expect to be able to share results during the second quarter next year. Plus that we are ready to be able to start the phase 2 program, which is the phase 2 program Proof of Concept, which is the CV-parse, mainly under 2026 and 2027. So that, my friends, my listeners, is the summary that I was going to give from this first, this report from the first half of the year, 2024. And as I said, I hope you will keep up with me, but I am extremely happy, extremely proud of what has happened during this, and look forward to continued action from and with the end of the semester, as most of us are leading at the moment. So I say thank you and leave it to you Ludvig to see if there will be any questions.

Yes, but thank you so much for the presentation here. And I thought we would start right away. And you mentioned at the end this with Horizon 2020 and so on. I thought you might give us a short summary. What happens next, if you put it that way, in that aspect?

Well, this is a preliminary report we have received, and it shares the law that is the company, Revisionsbyrån, who have done this work, they share it with us for our view. And we also have the opportunity here to contribute with information that the European Commission should take into account when they look at the final report. So part of this final report that goes to the European Commission, we have the opportunity to lift our view on the revision. And we will do that, and as I said earlier, we feel safe in that they are with the one we have received, and that they have been used, but unfortunately we have made a mistake when it comes to the classification of the costs that we have reported back to the Commission. It's just to be honest, but we have not used any of them. And we have the opportunity to come to the last of August to come in with our contribution to the report. And that is primarily what we will do now, under August, to formulate and present our view on the whole in a convincing and credible way.

Thank you very much. If we look a little again, you mentioned here that the planning work of phase 2 is in progress. When do you expect phase 2

to start? As the time plans look right now, we are in that position, so that in the months or the year shift, 25-26 or in the beginning of the first quarter of 26, we will be able to see what we are aiming to do. Things can happen along the way, like the shooting or something, but there are no indications of that today. The only important thing is that we must have a study drug to use in the study, it says almost by itself. And as I previously talked a little about when it comes to the affective-biological, I think they do a fantastic job and they really have good speed in it, so that's no problem. But it takes time to produce biological drugs and that is what is primarily the reason why we should not be able to start a phase 2 study before this time period either. So, the shift between 25-26, I think is a good time to look at today.

Thank you. If we look further forward, but do you have any dialogue with potential co-workers for potential commercialization? If we look forward in the mirror, so to

speak. The easiest answer is yes. And as I showed in one of the first pictures, we have three cornerstones in what we are focusing our activity on today. The fact is that Einar Pontén, who is my predecessor and the team, has worked with this before I came in, so I have really got a mania since I was a kid, you could say. And I have tried to take over all these contact areas in the best possible way. We have a number of possible partner companies that we are discussing with and they are updated on where we are. They are very excited to see the results and to see the program. So I will have a good autumn with these companies to meet them, inform and also see how their interest and vision for the future looks. I can say that the interest is great and above all when you come with a unique drug that seems to be a completely new mechanism of action, a completely new protein, the interest is great. But at the same time, they have to feel safe in that there is data that supports that it should be able to succeed all the way. We are on the way, but the companies that exist, they are working with them. It is more the big and big global drug companies we are talking about in this case.

Is it that you go out and meet companies or that you go out to some fairs and conferences?

Both, actually. The fairs and conferences. For example, By Your Europe is a classic meeting. It was in Stockholm last year, the first week in November. It is a given event that you are at. There you meet and there is professional... ...connection work, you can almost call it that. But you announce your interest in meeting companies. If you accept, there is a meeting room on the square where you meet and share information. So there it is. But the companies we have a little more clear interest in, we meet them separately outside as well. It happens all the time. I have had a few meetings like this during the summer, actually.

Final question here, Ola. We have to look a little forward here. Are there any hard estimates on how big a potential it could be for Sol 116?

Yes, you do this type of assessment after the best of your ability. I have a number of years behind me on Swedish Orphan B. White, when I work with this type of estimations. So you do it as best you can. If you look at our RRA indicators, the time-based data we have as the main track right now, and estimate what it could bring from a measured uptake on the market, and if you look at the seven major markets, which are the US, Europe and Japan, it is about peak sales, which may come after about four or five years after launch, and we have a profit of about 3.5 billion USD, up to 35-40 billion Swedish. So if the product delivers where it should, and if you can get it to be used on the right patients, then there is a good chance for real profits. As I said, this has been a measured estimate we have done, so it is not an exaggeration in any way, but it still means that the product must deliver a result. So in that way, it is an incredibly interesting product.

Thank you very much Ola for presenting today and answering questions, and thank you very much to everyone who watched. We wish you a nice weekend when it comes here.

Yes, the same to everyone. There are a number of hours left, if I do not want to skip work earlier, but I do not have the opportunity to do so. There are a number of things to do, but a big thank you to everyone who was part of this today.