Hi, and welcome to this live broadcast from BioStock Studio. In an intensive week, Diamyd Medical have announced a financing agreement with U.S.

specialist investors and this morning published their Q2 report. We are joined by CEO Ulf Hannelius and CFO Niklas Axelsson who are here to tell us more.

Don't forget that the live chat is open, just send in your questions and the gentlemen will answer them after a brief presentation. 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 through the main achievements, milestones during during this period, and also some of the upcoming milestones. Then Niklas will follow with a bit more of a deep dive into the financials.

Let's start off here by Just a second here. 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 3 trial.

With the milestones that we have achieved, first of all, full enrollment in the our Phase 3 trial that is running in Europe and U.S. This is so we now have 321 patients enrolled, and it's now fully randomized.

This I must say is quite of a monumental achievement by the team because we have screened patients worth of actually two Phase 3 trials here. We have screened more than 800 patients, and now we have 321 in the trial.

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. Again, these are clinical sites have never done a a trial like this.

This is truly an achievement by the team to have achieved more than 300 patients in the trial, I I am truly proud of of what the team has done here and all our clinical sites and obviously patients, as well, that are participating in this trial. Secondly, also on the Phase 3 trial, it has been selected for 1-hour session at the upcoming ADA conference that will be in the beginning of June in New Orleans.

This is one of the biggest diabetes conferences in the world, and to be selected for 1-hour dedicated symposium is quite quite an achievement, as well. This is big competition, high competition to get get these spots, so that's that's also a something we are very proud of and looking forward to.

Then as Cecilia already mentioned, we have done an equity financing with U.S. sector specialists where we now have $25 million ahead of the interim readout in in equity financing, and then there is a big upside after the Phase 3 readout in the form of warrants that can generate quite substantial amounts of additional financing, and Niklas will go into this in a bit more detail.

This is obviously also something we are very happy about, and the U.S. is our main main and first market that we are focusing on, this is very important.

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, where we want the facility to become GMP certified to produce material for clinical studies.

This inspection went very well, and we have only received minor findings that we are currently working on. 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.

It was a very positive experience, and again, only minor findings, we we look forward to the to the next steps in this matter, as well. Then upcoming milestones, again, the interim readout is coming up now on Friday.

Again, this is the 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. That's what we want to change with our treatment.

We want to slow down the disease progression by preserving the endogenous insulin production, and you measure this by C-peptide. On Friday, it will be we will get the information from the DSMB, which is the 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 at when we look at C-peptide.

It's a blinded analysis, and the reason being that we won't don't want to compromise the integrity of the ongoing pivotal Phase 3 trial. With a thumbs-up on Friday, meaning statistical significance, the next next step would be then to schedule a meeting with the FDA to start discussing the BLA strategy.

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 U.S. and also in Europe.

In April, following following the interim readout, there will be a warrant exercise period. We have these and Niklas will go into this in a bit more detail, we'll have these warrants that were part of our previous preferential rights issue about 1 year ago, these TO5 warrants, that can be exercised the second half of April with a strike price of 20 kronor per share.

Then also now as part of this very recent financing with the U.S. sector specialists, there are warrants that can also be exercised 30 days after latest 30 days after the interim readout at the same strike price, 20 kronor, that can also generate significant amount of additional financing to the company.

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. Please, Niklas, your turn.

Thank you, Ulf, and hi, everyone. Right.

In terms of the financial overview of Diamyd Medical, we've tried to clarify what the situation looks like by reviewing the existing cash. As of February 28th, we had about $20 million or the 191 91 million that we saw in today's report corresponding to cash and short-term investments.

That's obviously not conditional, and in terms of use of proceeds, it's ongoing business and manufacturing related, etc. Looking ahead, 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. In terms of how this money will be used, it's essentially very much focused on remaining DIAGNODE-3 trial cost.

In addition to that, we have the directed issue of warrants to new investors corresponding to up to $100 million. Timing thereof 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 use of proceeds, that's going to be very much focused on precommercial, market access, medical affairs, LCM opportunities or lifecycle management opportunities, and also pipeline development.

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. All in all, in terms of new cash, including conditional elements, we're looking at another $160 million in total U.S.

With that, maybe we should go to, well, questions, ending with our slogan here: There's no insulin like your own.

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?

I can start. Obviously, it's a long-term work.

This is nothing that happens overnight. It's a mix of obviously that we have reached quite significant milestones as a company, especially on the Phase 3.

Again, we are one of three companies in the world in Phase 3 development currently in Type 1 diabetes with a disease-modifying therapy. That's puts us in a quite unique spot, and we have a very unique approach, as well, an antigen-specific immunotherapy where we are really spearheading the field when it comes to this technology.

I think it's both being persistent and obviously having these contacts, being out on conferences, spreading the word, and obviously working with the right kind of collaborators. In this case, you have mainly the bank, in this case, it was Leerink Partners that has done a tremendous job obviously in introducing us to many U.S.-based investors, and also we have been contacted by U.S.

investors. It's a long term.

It's something that takes long time. You have the introductions, do the presentations, and then at some point, it gets more intense.

Obviously, in this case, then you have the what's called a wall-crossing where you really then start discussing the transaction to get it as fast as possible then in place. I must say it's always teamwork.

We wouldn't be here if we wouldn't have achieved all the milestones part of what I already presented previously, as well. 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, it's an interesting period to go through.

We've obviously had quite a few questions 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?

Regarding the interest in general, obviously, again, given that we are in Phase 3, 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 2 years ago, 3 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. The more data you can show and more milestones you achieve, obviously, the interest level keeps increasing.

Regarding the equity financing, this has only happened a few days ago, 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. It's very important that we can actually execute on our operations and including then also precommercial preparations so that we don't become dependent on other actors, because then we can really have a stand-alone 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. 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 continuous discussion with other partners, I guess you would say then?

We still have those discussions. It's an important part of our business development.

Like we've said before, it's important that we have a stand-alone strategy that we can execute on, meaning that we can never fully control these negotiations with potential partners. 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 perspectives.

That makes it very important that we can execute on a stand-alone 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. With this financing, obviously, it's still conditional on warrants, in this case, to really strengthen the cash with more than a 1 billion Swedish or $100 million U.S.

With that kind of financing, we really sit in a very strong position that we can execute on a stand-alone 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. 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.

It's just opened up more alternatives for you, potentially.

Exactly.

Yeah. 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.?

We haven't said anything specifically around those. What we talk about again is that 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 precommercial and other functions.

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 U.S., as well, and that's continuing.

Obviously then starting 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 that you achieved the upcoming key milestones. Then also, it's not the FDA that sort of decides what our organization should look like.

In the end, it's us, plus knowing that you need to have all the functions 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, let's say the key functions on our side so that we are kind of we are the project managers on the commercial side, on the medical side, for example.

A lot can be outsourced so that you don't have to build at risk your own organization, for example, in the U.S. That's something that is going to come, and it will come in steps as we move forward and hit our upcoming milestones.

The message there is one step at a time you're building. Yep.

Yes.

Someone here is a little bit curious about if the investors who've come in now, if they wanted to invest more in Diamyd, but you said no?

We can't go into the discussion 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. Obviously, it's important if you can raise capital at good terms, you should do it.

Any biotech company should do that. Again, it's important for us that we can hopefully sit on a cash position that gives us the true capabilities to execute on precommercial and everything that is required ahead of potential filing, approval, and then commercialization.

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?

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. Most important thing for us as a company is that we can go to full readout.

It will come summer 2027 now, 9 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 at 15 months rather than 24 months, so that will come summer 2027. 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, and so it's a possibility for us to take an early look at the data, but they are not mature yet, and that we don't want to end up in a situation where we need to raise capital in this macroenvironment 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 a structure.

Then the biggest bulk obviously is coming after the readout in the form of warrants, there's an upside, a significant upside.

Yeah. 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 yeah, to relist it in the U.S., and is there a potential maybe seats on the board for these new owners?

That's a discussion obviously that will be taken as they come, and it's up to the board obviously regarding this board seats. This is only a few days old now, the financing, there will obviously be the interesting now with the new shareholder base also to monitor this and move ahead.

Regarding the potential listing in the U.S., it's always a possibility for us. We are a Swedish company today, and it would be great to remain a Swedish company, I think, for Swedish life sciences, as well.

That's a possibility, even if you list in the U.S. I think it's definitely a possibility for us, and there can be a big interest as well from U.S.

investors on the road. Again, 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.

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 futility testing is included? More specific questions,

but

just to mix up the financing a bit.

Exactly. On Friday, the interim readout, it's on C-peptide only, the marker for endogenous insulin production.

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 U.S. 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. 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 the summer of 2027, 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 what the BLA could look like.

In that case, obviously, there would be the full data from the interim, and as a company, we would be obviously announce 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. In that case, there would be more data coming out, but right now, it's only C-peptide.

Then again, we will take it in steps thereafter.

Regarding futility, perhaps?

Oh, yeah. Futility, yeah.

There is a futility analysis, as well. There's three things happening on Friday.

One is the C-peptide, the blinded efficacy readout on C-peptide, and then there's safety, as always, the DSMB is looking at the safety. I think is it the fifth or sixth time during the Phase 3 they are looking at safety.

Very important, as well, and that's one of our unique selling points with our investigational therapy is really the safety profile, which looks very favorable, and that's really important. Then the third one is that there is also a futility analysis very similar to the one that we did in the summer of 20 2024 when 70 patients had been followed for 6 months.

Similar kind of futility, where you set this kind of a conditional power threshold, usually see 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 as basically 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, but

No, I can just say terve kaikille suomalaisille, että kiva että te myös seuraatte Diamydia.

Exactly. You you've touched on the 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 obviously management and board to look at what is best.

There can be hybrid models where we commercialize in certain regions and a 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. 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 that sort of proposal, but then in the end, that will be up to the shareholders to decide on.

Niklas, you are an expert in these things. You've worked at Astra with these things, maybe you want to add anything?

No. I think you summarized it well, so.

Got a question here about whether or not you can share if the U.S. investors had access to any additional historical data during the due diligence process?

It's been mostly through many, many repeat meetings and obviously deep dives into the science based on obviously nonconfidential information, press releases, but it's more like deep dive sort of discussions around that to put a bit more color around our data, but again very much we've so transparent as a company in our press releases and in our presentations, it's mostly around really intense and many repeat meetings.

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

Again, it's a long-term thing, you get some introductions, you have some updates, meetings, and then you get repeat meetings, updates, and then obviously in the end, there's more and more meetings coming, and then the bank, in this case, Leerink, 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 finalize a transaction, and then you do this what's called a wall-crossing so that you will have logbooks and insider lists to make sure that these investors that have showed an interest that they get that call to say, 'Are you interested in getting more information about potential transaction?' If they say yes, then you go into this period where you have very intense meetings and many repeat meetings and talking about the science, the transaction structures, and all these things.

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 this kind of insider lists in place.

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 SEK? Can you share your thoughts on that?

The strategy, obviously, let's

first with a thumbs-up, that would be a great thing to early on see that we've reduced the scientific risk in the ongoing Phase 3 considerably than early on. Then it's all about for us as a company is really to move forward, start accelerating, and because then we sort of already know that there's a high likelihood that this works and it will go all the way.

For us, it's always important to be visible and really show 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 the precommercial, lifecycle 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.

Thank you to you both for taking the time to give this presentation and answers on questions during what is a very intensive week for you. Thank you.

Thank you.

Thank you.

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