Quarterly Report I 23/24

September 2023 – November 2023, Diamyd Medical AB (publ), Fiscal year 2023/2024

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, 2023 – November 30, 2023

• Operating income: MSEK 1.0 (1.0)
• Net result: MSEK -32.8 (-33.0)
• Result per share: SEK -0.4 (-0.4)
• Cash flow from operating activities: MSEK -27.8 (-27.1)
• Cash and short-term investments at November 30, 2023: MSEK 176.7 (130.9)

Significant events during the first quarter September 1 – November 30, 2023

• The Board resolved, subject to approval from an EGM, on a rights issue
• Diamyd Medical announced that approximately MSEK 78 were received through the rights issue

Other events during the first quarter

• Diamyd Medical partnered with DiaUnion to recruit participants for Type 1 Diabetes prevention trial
• Follow-up study suggested Diamyd^® may offer advantages in delaying Type 1 Diabetes onset
• An Extraordinary General Meeting resolved on a rights issue
• Preliminary results from booster trial with Diamyd^® provided additional support for intralymphatic injections
• Anders Essen-Möller was appointed Chairman of the Board
• DIAGNODE-3 Phase III trial in Type 1 Diabetes with Diamyd^® expanded to the US

Other events after the first quarter

• Diamyd Medical gained market research findings to guide U.S. commercial strategy
• Diamyd^® precision medicine Phase 3 trial key interim analysis to be presented in July
• Precision Medicine patent for the prevention and treatment of autoimmune diabetes was granted in South Korea

Comments by CEO Ulf Hannelius

Dear Shareholders,
As we progress into 2024, I am pleased to report significant advancements in Diamyd Medical's journey towards making the first-ever precision medicine treatment available for patients with type 1 diabetes.

The recent U.S. market research has yielded promising insights. It demonstrates a strong willingness among healthcare practitioners and payers to consider prescribing Diamyd^® for type 1 diabetes to the approximately 40% of patients identified as responders with a readily available genetic test. The indicative price range is around USD 200,000 per patient for a three-injection regimen. The positive reception is a testament to the value of Diamyd^® as a disease-modifying, precision medicine treatment with a strong safety profile and simple mode of administration. These new insights together with our strong clinical database strengthen our confidence that Diamyd^® has the potential of a first- and best-in-class therapy.

Our ongoing, registrational Phase 3 trial DIAGNODE-3 enrolls an easily identified genetic subgroup – 40% of type 1 diabetes patients. Our focus on likely responders should dramatically increase the probability of success of DIAGNODE-3 and is the key differentiator compared to the previous Phase 3 program with Diamyd^® that enrolled all patients regardless of their genetics. It is also the key difference compared to how clinical trials have been conducted hitherto in type 1 diabetes. This precision medicine approach – which treats only likely responders and spares non-responders’ exposure to the treatment – resonates strongly among patients, healthcare providers, payers and regulators, which in turn supports the willingness to prescribe and reimburse treatment with Diamyd^®. Our approach is further fortified by the Orphan Drug Designation granted by the FDA, emphasizing Diamyd^®’s potential in treating type 1 diabetes patients with residual beta cell function.

DIAGNODE-3 is ongoing in both Europe and the United States, aiming for full enrollment by the end of 2024. With more clinical sites being activated in the US and additional sites being planned, we are doing our utmost to reach this goal. During a busy annual JP Morgan Healthcare week with a focus on partnering meetings, we also visited the DIAGNODE-3 clinical site at Stanford University Hospital, where the team is eagerly preparing for activation and first patient enrolment. Site visits are enlightening for us as they provide first-hand information on how clinics perceive the trial with insights into the local provider perspective on how Diamyd^® may be prescribed in the future.

We recently gave an update on the Phase 3 interim analysis planned for July 2024 that will include 70-80 currently enrolled patients and will provide insights into the progression of the trial regarding preservation of endogenous insulin production measured as C-peptide. The analysis is blinded, which maintains the registrational nature of the trial; and will be evaluated by the independent Data Safety and Monitoring Board. The interim analysis will provide an estimate of whether the trial, given the data from patients followed for 6 months and certain assumptions regarding the rest of the patients, is proceeding according to plan.

The importance of C-peptide in managing glycemic control cannot be overstated. Diamyd^® has demonstrated significant preservation of C-peptide in previous trials. Recent research including our own data as well as a comprehensive meta-analysis published recently in the renowned journal The Lancet Diabetes & Endocrinology underscores its critical role in controlling blood glucose levels. This is compounded by significant research supporting its central role in reducing the complications of type 1 diabetes. These findings reinforce the strong potential of Diamyd^® for improving patient outcomes.

The new market research insights, the ongoing JDRF-partnered Phase 3 trial with important upcoming milestones, and progress at our biologics facility that we aim to have GMP-certified this year, all promise to make 2024 an important and exciting year for Diamyd Medical and our shareholders.

I am grateful for your continued support.

Stockholm, January 24, 2024
Ulf Hannelius, President and CEO

Significant events during the first quarter

September 1, 2023 – November 30, 2023

Diamyd Medical resolved, subject to approval from an EGM on a rights issue of SEK 243 million
The Board of Directors resolved on September 20, subject to approval from an extraordinary general meeting on October 10, 2023, on a rights issue of a maximum of 28,594,104 units, corresponding to approximately SEK 243 million. The subscription price in the rights issue was set to SEK 8.50 per unit. Each unit consisted of one share of either class A or B, one (1) free of charge warrant of series TO3 for the corresponding share class and one free of charge warrant of series TO4 for the corresponding share class. Shareholders in Diamyd Medical on the record date had for each three held shares, regardless of share class, preferential right to subscribe for one new unit of the same share class in the rights issue. Founder and Chairman of the Board, Anders Essen-Möller committed to subscribing for units equivalent to SEK 7 million, corresponding to approximately 2.9 percent of the rights issue.

Diamyd Medical announced the preliminary outcome of MSEK 78 in the Company’s rights issue
The Company announced on October 31 that the preliminary outcome for the rights issue of units that approximately 8.2 million units, corresponding to approximately 29 percent of the rights issue, had been subscribed for with unit rights. Additionally, applications for subscription of approximately 1 million units without unit rights, corresponding to approximately 3 percent of the rights issue, had been received. In aggregate, the subscriptions by exercise of unit rights and the applications for subscription without unit rights correspond to approximately 32 percent of the offered units. Thus, the preliminary outcome indicated that the rights issue would provide the Company with issue proceeds of approximately SEK 78 million before the deduction of costs attributable to the rights issue.

Other events during the first quarter

September 1, 2023 – November 30, 2023

Diamyd Medical partnered with DiaUnion to recruit participants for Type 1 diabetes prevention trial
Diamyd Medical entered into a collaboration agreement with DiaUnion, a center of excellence in type 1 diabetes, to identify participants for the DiaPrecise trial, an open-label trial evaluating the safety, feasibility and immune response of intralymphatic injections of Diamyd^® in children at risk of developing type 1 diabetes who also carry the HLA DR3-DQ2 genotype. The DiaPrecise trial has been initiated and is ongoing at the Department of Clinical Sciences at Lund University, Malmö, with Markus Lundgren M.D., PhD, as the Principal Investigator.

Follow-up study suggested Diamyd^® may offer advantages in delaying Type 1 diabetes onset
A retrospective follow-up study of two prior randomized placebo-controlled trials (DiAPREV-IT and      DiAPREV-IT2) indicates numerical benefits, although not statistically significant, favoring treatment with only two subcutaneous injections of Diamyd^® on reducing the incidence of type 1 diabetes diagnosis (Stage 3) in healthy children at risk of type 1 diabetes (Stage 1 or Stage 2) carrying the HLA DR3-DQ2 haplotype. The study, encompassing a total of 76 children, out of which 40 carried the HLA DR3-DQ2 haplotype, had a maximum follow-up time of 13 years and was performed by Professor Helena Elding Larsson (Lund University and Skåne University Hospital).

Preliminary results from booster trial with Diamyd^® provided additional support for intralymphatic injections
Preliminary results from the open-label clinical trial DIAGNODE-B provided additional support for the safety and feasibility of intralymphatic booster injections of Diamyd^®, showing only a small decline in stimulated endogenous insulin production one year following the additional injection and up to 8 years from type 1 diabetes diagnosis.

An Extraordinary General Meeting resolved on a rights issue
The EGM approved on October 10 the Board of Directors' resolution of September 20, 2023, on a new issue of shares and warrants in the form of units. If fully subscribed, the rights issue would raise issue proceeds of approximately SEK 243 million before issue costs.

Anders Essen-Möller was appointed Chairman of the Board of Diamyd Medical
The Board of Directors of Diamyd Medical appointed Anders Essen-Möller as new Chairman of the Board. Former Chairman Erik Nerpin was appointed Vice Chairman. The purpose of the rockade within the Board of Directors was to clarify Anders Essen-Möller's significant role in the company. Anders Essen-Möller continues his consulting assignment for Diamyd Medical and is thus Executive Chairman of the Board. Anders Essen-Möller founded Diamyd Medical and was previously CEO and later Chairman of the Board until 2015. Erik Nerpin then took over the role as Chairman of the Board when Anders Essen-Möller for a period re-entered as CEO of the Company before current CEO Ulf Hannelius took office in April 2016.

Registrational Phase III trial in Type 1 Diabetes with Diamyd^® expanded to the US
Diamyd Medical announced that the first clinical site in the United States was pending imminent initiation in the precision medicine Phase III trial DIAGNODE-3, ongoing in eight European countries. DIAGNODE-3 is designed to confirm the efficacy and safety of the antigen-specific immunotherapy Diamyd^® in patients aged 12 to 29 years recently diagnosed with type 1 diabetes and carrying the genetic HLA DR3-DQ2 marker. The goal is to have the trial fully enrolled in the second half of 2024.

Other events after the first quarter

Diamyd Medical gained market research findings to guide US commercial strategy
Market research including initial interviews with US health care practitioners as well as US payers demonstrated a strong willingness to consider prescribing the investigational precision medicine Diamyd^® for Type 1 Diabetes and pricing in the range of USD 200,000. Diamyd^® is currently being evaluated in the registrational Phase 3 trial DIAGNODE-3 in patients recently diagnosed with Type 1 Diabetes that carry the HLA DR3-DQ2 haplotype.

Diamyd^® precision medicine Phase 3 trial key interim analysis in July
Diamyd Medical announced that the upcoming interim analysis of the transformational gene-based precision medicine Phase 3 trial, DIAGNODE-3, for type 1 diabetes is planned for July 2024. This precision medicine trial employs the antigen-specific immunotherapy Diamyd^® and the interim assessment, focusing on the preservation of endogenous insulin production as measured by C-peptide levels at 6 months follow-up, will include data from 70-80 patients presently enrolled in DIAGNODE-3. The analysis is an important milestone, providing insights into the trial's progress towards achieving its primary goals.

Diamyd Medical's Precision Medicine patent for the prevention and treatment of autoimmune diabetes was granted in South Korea
The patent, granted by the South Korean Patent Office and valid until 2035, safeguards the application of GAD autoantigen in treating or preventing autoimmune diabetes, specifically in individuals with the HLA DR3-DQ2 gene. GAD, the key component in Diamyd^®, an antigen-specific immunotherapy is currently under evaluation in the registrational Phase III trial DIAGNODE-3.

Drugs in clinical development

Diamyd® and Remygen® are drugs in clinical development that focus on the underlying disease mechanisms of diabetes; the dysfunction and loss of insulin-producing beta cells in the pancreas.

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 II trial DiaPrecise.

 

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 29 who have been recently diagnosed with Type 1 Diabetes and who carry the genetically defined haplotype HLA DR3-DQ2. The trial is currently ongoing at 50 clinics in eight European countries and the United States, where about 40% 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.

DiaPrecise – DIAMYD^® IN LYMPH NODES

DiaPrecise is an open-label clinical trial where Diamyd^® (GAD-alum) is given directly into a lymph node in 10 to 16 children aged 8 to 18 years who are at high risk of being diagnosed with clinical Type 1 Diabetes (so called Stage 1 or Stage 2 Type 1 Diabetes), and who also carry the genetically defined haplotype HLA DR3-DQ2, associated with clinical response to Diamyd^®. The aim of the trial is to evaluate the safety and feasibility of two or three intralymphatic injections with Diamyd^® as well as the effect on the immune system and clinical parameters including endogenous insulin production and blood glucose control. The Principal Investigator of DiaPrecise is Dr. Markus Lundgren, Researcher at the Department of Clinical Sciences at Lund University and consultant pediatrician at Kristianstad hospital, Sweden. Sponsor of the trial is Diamyd Medical.

Biomanufacturing in Umeå
A new facility for manufacturing of biological products is being set up in Umeå, the Capital of Västerbotten County in Sweden. The primary purpose is the manufacture of recombinant GAD65, the active pharmaceutical ingredient in the investigational medicine Diamyd^®, an antigen-specific immunotherapy currently in late-stage clinical development. The long-term goal for the facility is to produce enough GAD65 to meet the market demand for Diamyd^®, as well as to be a key player in the production of biological substances for other drug projects. The 24 000 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 pharmaceutical ingredient manufacturing technology. Diamyd Medical has chosen Cytiva’s configurable single-use bioprocess manufacturing platform FlexFactory for the process that is based on a baculovirus-insect cell expression system. Small-scale experimental production of GAD65 is established at the manufacturing facility and large-scale production is being set up with the aim of having the biomanufacturing facility operational during 2024. Additional biomanufacturing projects will be evaluated to make full use of the site, platform, analytical laboratory and competencies.

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

INVITATION TO PRESENTATION OF THE QUARTERLY REPORT 1 2023/2024
Diamyd Medical’s CEO Ulf Hannelius will be interviewed in connection to the Company’s first quarterly report for the financial year 2023-24, published on January 24.

The presentation will be held in Swedish
When: Wednesday January 24 at 12:00 pm CEST

Live webcast: https://www.youtube.com/live/R4cunhO1TNk?si=NvRAnGw_Kufld4Hd.

The YouTube chat is open for questions.
The broadcast is produced by Direkt Studios, an independent part of the editorial staff of the news agency Direkt.
The presentation will also be made available on www.diamyd.com

About Diamyd Medical
Diamyd Medical develops precision medicine therapies for the prevention and treatment of Type 1 Diabetes and LADA (Latent Autoimmune Diabetes in Adults). Diamyd^® is an antigen-specific immunotherapy for the preservation of endogenous insulin production. DIAGNODE-3, a confirmatory Phase III trial is actively recruiting patients with recent-onset Type 1 Diabetes in eight European countries and in the US. Significant results have previously been shown in a large genetically predefined patient group - in a large-scale meta-analysis as well as in the Company’s European Phase IIb trial, where Diamyd^® was administered directly into a lymph node in children and young adults with recently diagnosed Type 1 Diabetes. A biomanufacturing facility is being set up in Umeå for the manufacture of recombinant GAD65 protein, the active ingredient in the antigen-specific immunotherapy Diamyd^®. Diamyd Medical also develops the GABA-based investigational drug Remygen^® as a component in treatments of metabolic diseases. Diamyd Medical is a major shareholder in the stem cell company NextCell Pharma AB as well as in the artificial intelligence company MainlyAI AB.

Diamyd Medical’s B-share is traded on Nasdaq First North Growth Market under the ticker DMYD B. FNCA Sweden AB is the Company’s Certified Adviser.

Further information is available on https://www.diamyd.com