Quarterly Report III 22/23

September 2022 – May 2023, Diamyd Medical AB (publ), Fiscal year 2022/2023

Precision Medicine for Autoimmune Diabetes in Pivotal Phase 3
Diamyd Medical’s B-share is traded on Nasdaq First North Growth Market under the ticker DMYD B.
Further information is available on https://www.diamyd.com.

September 1, 2022 – May 31, 2023

• Net result: MSEK -78.6 (-63.4), third quarter: MSEK -20.6 (-17.1).
• Result per share: SEK -1.0 (-0.8), third quarter: SEK -0.3 (-0.2)
• Cash flow from operating activities: MSEK -76.4 (-50.7), third quarter: MSEK -24.0 (-35.7)
• Cash and short-term investments at May 31, 2023: MSEK 77.3 (192.8).

Significant events during the third quarter March 1 – May 31, 2023

• Diamyd Medical resolved on a rights issue of shares
• Topline results from Remygen^® trial in individuals with long-term Type 1 Diabetes were presented
• Diamyd Medical partnered with JDRF to advance the DIAGNODE-3 Phase 3 trial in Type 1 Diabetes

Other events during the third quarter

• Karin Rosén, M.D, PhD, was invited to join Diamyd Medical’s Board of Directors as an adjunct member

Significant events after the third quarter

• On June 27, Diamyd Medical announced that preliminary SEK 75 million was received from the Company’s rights issue
• On June 13, Diamyd Medical announced that the Company refrains from enforcing the underwriting agreements in the rights issue and extended the subscription period
• On June 5, the trading in subscription rights in Diamyd Medical's rights issue was halted

Other events after the third quarter

• An Extraordinary General Meeting on June 26 resolved to amend the articles of association
• On June 19, Diamyd Medical announced that the largest owner fully subscribed for his share in the rights issue

Comments by CEO Ulf Hannelius
We continue to progress our precision medicine Phase 3 trial DIAGNODE-3 with the antigen-specific immunotherapy Diamyd^® and I am very happy to announce that all eight European countries where DIAGNODE-3 is ongoing have randomized patients to the trial and we hope to start the trial in the US shortly.

In light of the recent approval of Teplizumab in the US, and the subsequent acquisition of ProventionBIO by Sanofi, we find ourselves in a momentous era for the diabetes treatment industry. These advancements affirm the growing recognition of the need for innovative treatment approaches in Type 1 diabetes and underline the significant potential of our own work in this field. This development in the field is clearly visible at the international conferences where we have been represented including the annual Immunology of Diabetes (IDS) conference in Paris, the annual BIO conference in Boston and most recently, the annual diabetes conference ADA in San Diego. These are excellent platforms where we have showcased our ongoing trial and engaged in discussions with investigators, collaborators and potential partners. At the ADA conference, where Diamyd Medical also hosted a breakfast event and an exhibition booth, the momentum in the field was especially clear, with several sessions and discussions around screening programs and therapeutic solutions to slow down, halt and prevent the progression of type 1 diabetes.

We also make progress with our intellectual property portfolio where recently Israel, following Australia, has approved our patent describing the intralymphatic administration of beta cell antigens beyond GAD that we already have approved in several geographies including Europe, China and Japan. The patent now approved in Israel and previously in Australia includes the use of insulin, proinsulin, and preproinsulin to treat Type 1 Diabetes. This validation underscores the potential of our antigen-specific immunotherapy platform, and we continue pursuing patent applications in several geographies both regarding the intralymphatic injection of beta cell antigens and the precision medicine approach focusing on genetic subgroups, technologies that are the foundation of the ongoing Phase 3 trial DIAGNODE-3.

During the reporting period we also received the topline data from the ReGenerate-1 trial evaluating Remygen^®. Our team, in collaboration with our partners, is in the process of analyzing this data in tandem with insights from other trials.

Sufficient funding is crucial to support our mission and capitalize on the significant market opportunity in Type 1 Diabetes for Diamyd^®. The just closed rights issue has preliminary contributed with an additional SEK 75 million before issue costs and I am very thankful to our existing investors for their continued support and warmly welcome our new investors who believe in the potential of our life-changing therapy.

In April, we announced the partnership with JDRF, the largest patient advocacy group in Type 1 Diabetes in the US, and the first installment of the associated non-dilutive USD 5 million support has been received and we expect the second and third installments later this summer as we initiate the first clinic in the US and hit the next recruitment milestone.

I look forward to keeping you informed of our future progress as we have several important milestones upcoming this calendar year including results from the ongoing booster study DIAGNODE-B, operational updates from our biologics facility in Umeå, start of the DIAGNODE-3 in the US and our activities in ASSET, the preemptive health initiative focusing on screening, prediction and prevention of Type 1 Diabetes. Together, we are moving closer to achieving our vision of creating a world where Type 1 Diabetes can be prevented, halted, and ultimately cured.

Thank you for your continued support.

Stockholm, June 28, 2023    
Ulf Hannelius, President and CEO
 

Significant events during the third quarter
March 1, 2023 – May 31, 2023

On May 24, Diamyd Medical resolved on a rights issue of shares
The Board of Directors, pursuant to the authorization granted by the Company's annual general meeting held on December 1, 2022, resolved on a rights issue of a maximum of 19,231,734 B-shares, corresponding to approximately SEK 163 million (the “Rights Issue”). The subscription price in the Rights Issue was set to SEK 8.50 per share. Shareholders in Diamyd Medical on the record date have for each four (4) held shares, regardless of share class, preferential right to subscribe for one (1) new B-share in the Rights Issue. External guarantors had also provided guarantee commitments subject to customary conditions which, in aggregate, amount to approximately SEK 115.2 million. Certain members of the Company management including CEO Ulf Hannelius as well as the Chairman of the Board Erik Nerpin undertook to subscribe for in total approximately SEK 0.8 million, corresponding to 0.5 percent of the Rights Issue. The Board of Directors also resolved to convene an Extraordinary General Meeting to propose, inter alia, to amend the articles of association. Initially, the Board of Directors proposed that the Rights Issue of shares also should include a right to receive free warrants. This proposal was later revoked, since, inter alia, the registration procedure regarding the prospectus risked being delayed and thus also the intended timeline. For full information, refer to the press releases on May 24, June 5, June 9 and June 13.

Topline results from Remygen^® trial in individuals with long-term Type 1 Diabetes were presented
Uppsala University Hospital’s ReGenerate-1 trial evaluating Diamyd Medical’s Remygen^® in individuals with long-term Type 1 Diabetes met the primary endpoint of safety. No clear support for a durable treatment effect on increasing endogenous insulin production measured as C-peptide or preventing hypoglycemia (sharply lowered blood glucose levels) by improving the protective counterregulatory hormonal response was observed. A potential trend for an immediate effect, e.g directly following ingestion of Remygen^®, on improving counterregulatory hormonal responses was observed in the higher dose groups.

Diamyd Medical partnered with JDRF to advance the DIAGNODE-3 Phase 3 trial in Type 1 Diabetes
Diamyd Medical and JDRF, the leading global type 1 diabetes research and advocacy organization, entered into a four-year research and development collaboration including a non-dilutive $5 million award to Diamyd Medical to support its ongoing Phase 3 trial with the precision medicine antigen-specific immunotherapy Diamyd^®. The grant will be funded under JDRF’s Industry Discovery & Development Partnerships program that focuses on commercialization of therapeutics and devices for the treatment, cure, and prevention of type 1 diabetes and its complications.

Other events during the third quarter
March 1, 2023 – May 31, 2023

Karin Rosén joined Diamyd Medical’s Board of Directors
Karin Rosén, M.D, Ph.D, San Francisco, joined the Board of Directors as an adjunct member, and will be proposed for election to the Board at the next General Meeting of Shareholders. Dr. Rosén has deep experience from the biotechnology industry with more than two decades of working in senior leadership positions in global clinical development and U.S. and global medical affairs across her time with Horizon Therapeutics, GSK (GlaxoSmithKline), Aimmune Therapeutics and Genentech, a member of the Roche group.

Significant events after the third quarter

Diamyd Medical announced preliminary outcome in the Company’s rights issue
Diamyd Medical announced that the preliminary outcome for the rights issue of B-shares for which the subscription period ended on June 27, 2023, indicated that approximately 8.4 million B-shares, corresponding to approximately 43 percent of the Rights Issue, have been subscribed for with subscription rights. Additionally, applications for subscription of approximately 0.5 million B-shares without subscription rights, corresponding to approximately 3 percent of the offered shares, have been received. In aggregate, the subscriptions by exercise of subscription rights and the applications for subscription without subscription rights correspond to approximately 46 percent of the offered shares. Thus, the preliminary outcome indicates that the Rights Issue will provide the Company with issue proceeds of approximately SEK 75 million before deduction of costs attributable to the Rights Issue.

On June 13, Diamyd Medical announced that the Company refrains from enforcing the underwriting agreements in the rights issue and extended the subscription period
Diamyd Medical decided to refrain from enforcing the underwriting agreements entered into with a number of external investors in connection with the rights issue due to substantial uncertainty as to whether the underwriting agreements were fully legally binding and could be enforced by the Company. In light of this, Diamyd Medical decided to extend the subscription period in the rights issue and to prepare a supplementary prospectus.

On June 5, the trading in subscription rights in Diamyd Medical's rights issue was halted
Nasdaq Stockholm decided to stop the trading in subscription rights in Diamyd Medical's rights issue. The trading halt was linked to the issue structure (including new issue of B-shares and issue of warrants) that Diamyd Medical announced in a press release on May 24.

Other events after the third quarter

An Extraordinary General Meeting on June 26 resolved to amend the articles of association
The amendments include an increase of the limits of the number of issued and outstanding shares and the limits of the share capital. Pursuant to the amended articles of association, the share capital should amount to not less than SEK 7.8 million and not more than SEK 31.2 million. The number of issued and outstanding shares should amount to not less than 76 million and not more than 304 million.

On June 19, Diamyd Medical announced that the largest owner fully subscribed for his share in the rights issue
Bertil Lindkvist informed the Company that he had subscribed for his pro rata share, corresponding to approximately SEK 13 million, or 8.0 % of the ongoing rights issue of a total of SEK approximately 163 million. Diamyd Medical's founder and major owner Anders Essen-Möller informed the Company that he intended to subscribe for shares corresponding to SEK 1 million, approximately 0.6 % of the rights issue.

Two drugs in clinical development

Diamyd^® is an antigen-specific immunomodulating precision medicine therapy for the treatment and prevention of autoimmune diabetes (type 1 diabetes and LADA, Latent Autoimmune Diabetes in Adults).

Clinical data indicate the potential of Diamyd^® to halt or stop the autoimmune destruction of insulin-producing beta cells in individuals that carry the HLA DR3-DQ2 haplotype. The effect is achieved by antigen-specific reprogramming of immune cells by administration of low doses of Diamyd^® in superficial lymph nodes. By maintaining the endogenous insulin production, Diamyd^® has the potential to make a significant difference in the daily life of patients as well as significantly reduce the complications of type 1 diabetes. Topline results from the Phase IIb trial DIAGNODE-2 demonstrated a significant treatment effect of Diamyd^® in the predefined genetic patient group. A confirming Phase III trial, DIAGNODE-3, is on-going.

Remygen^® is an oral GABA-based regenerative and immunomodulatory drug candidate for the treatment of autoimmune- and type 2 diabetes. The safety of Remygen has been demonstrated in a Phase 1/2 clinical trial with Remygen in patients who have had type 1 diabetes for several years.  In addition to safety, the study also collected data on restoring or stimulating the body's insulin production and preventing hypoglycaemia.

Clinical trials

Type 1 Diabetes is a devastating disease which requires daily treatment with insulin to sustain life. The importance of finding a drug that improves the prospects for patients with diabetes is of utmost importance. The effect of intralymphatic administration of Diamyd^®, an antigen-specific precision medicine immunotherapy aimed at stopping the immune system's attack on insulin-producing beta cells in autoimmune diabetes, is evaluated in the Phase III trial DIAGNODE-3 and in the Phase I/II trial DIAGNODE-B.

 

Ongoing clinical trials

Trials with Diamyd® in lymph nodes

• DIAGNODE-3 – DIAMYD^® IN LYMPH NODES WITH ORAL SUPPLEMENTATION OF VITAMIN D

The placebo-controlled Phase III trial DIAGNODE-3 will include approximately 330 individuals aged 12 to 28 who have been recently diagnosed with Type 1 Diabetes and who carry the genetically defined haplotype HLA DR3-DQ2. The trial will be conducted at approximately 50 clinics, where almost half of all individuals with Type 1 Diabetes are estimated to carry the current haplotype. After an initial month in which all trial participants receive vitamin D, the individuals will be randomized 2:1, ie two out of three trial participants will receive three intralymphatic injections of Diamyd^® and one in three will receive the corresponding placebo at one month intervals, with one primary reading 24 months after trial start. The design provides, based on efficacy data from previous studies on the HLA-restricted patient population, a high probability of reaching the primary endpoints; preservation of stimulated C-peptide and lower HbA1c. The Coordinating Investigator for the trial is Professor Johnny Ludvigsson at Linköping University. The Sponsor of the trial is Diamyd Medical.

• DIAGNODE-B – ADDITIONAL INJECTION OF DIAMYD^® IN LYMPH NODES

The aim of the trial is to evaluate the safety of a booster (fourth/fifth) injection with Diamyd^® and the effect on the immune system and the endogenous insulin production. DIAGNODE-B is an open-label investigator-initiated clinical trial enrolling Type 1 Diabetes patients who carry the genetically defined haplotype HLA DR3-DQ2 and are previously treated with intralymphatic injections of Diamyd^®. The trial is planned to include approximately 6 patients who have either been treated with four injections in DIAGNODE-1, who will then receive a 5th intralymphatic injection of Diamyd^®, or patients who participated in DIAGNODE-2, who will receive a 4th intralymphatic injection of Diamyd^®, approximately 4 years after the last injection. The patients will be followed for 12 months after injection. The trial is conducted at the Clinical Research Unit at the University Hospital in Linköping. Sponsor of the trial is Linköping University with Professor Johnny Ludvigsson as Sponsor’s representative.

Manufacturing of GAD65 in Umeå
A new facility for manufacturing of biological products is being set up in Umeå, the Capital of Västerbotten County in Sweden, for the manufacture of recombinant GAD65, the active pharmaceutical ingredient in the antigen-specific immunotherapy Diamyd^®, currently in late-stage clinical development. The 20 000 square feet site, comprising of clean rooms, laboratory facilities, warehousing and office space, will facilitate full control, predictability and scalability of the manufacturing technology of the active ingredient. Diamyd Medical has chosen Cytiva’s configurable single-use bioprocess manufacturing platform FlexFactory for the process that is based on baculovirus-insect cell expression system. Small-scale experimental production of GAD65 is established at the manufacturing facility. Large-scale production is being set up with the aim of having the biomanufacturing facility operational during 2023. The property where the manufacturing is being established is owned by Diamyd Medical.

*** The above is an excerpt from the report. To read the complete report, please visit https://www.diamyd.com, or see attached PDF ***

For more information, please contact:
Ulf Hannelius, President and CEO, phone: +46 736 35 42 41
Diamyd Medical AB (publ), Box 7349, SE-103 90 Stockholm, Sweden
Phone: +46 8 661 00 26 E-mail: info@diamyd.com Reg. no: 556242-3797

The information was submitted for publication, through the agency of the contact person set out above,
at 08.15 CET on June 28, 2023.

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