The listing of the new Diamyd Medical AB on First North marks the start of a new, exciting chapter for our diabetes operation. The spin-out of the diabetes business from the Parent Company – which has been listed for a long time and has now changed its name to Mertiva AB – is part of a major restructuring program, under which the greater portion of Mertiva’s cash funds of slightly more than SEK 300 million will be distributed to the shareholders.
The new Diamyd is a dedicated diabetes company with an initial focus on the development of the diabetes vaccine Diamyd® and the active substance GAD, which has the potential to become a key piece of the puzzle of a future solution to prevent, treat or cure type 1 diabetes and other forms of autoimmune diabetes.
We will test Diamyd® both in combination with other drugs to boost the beta cell preserving effect of the diabetes vaccine, but also as a preventative treatment to try to stop the onset of type 1 diabetes and other autoimmune diabetes altogether.
At the same time, we will capitalize on our expertise and our global network within diabetes and immunology to actively evaluate opportunities for expanding our business in terms of developing and marketing products in the diabetes area. We are looking at both new development projects and fully developed diabetes products and companies.
Diamyd has independently and cost-efficiently pursued the development of the diabetes vaccine as far as global Phase III studies, which led to one of Sweden’s largest-ever biotech deals. The results from the first Phase III trial did not meet the expectations, which is not unusual within drug development, but a small positive effect was seen – and that is what we are to improve!
Today’s focus of the field of research is on testing combinations of several therapies to attack the disease from several angles as well as to treat earlier in the disease process to prevent the onset of type 1 diabetes and other forms autoimmune diabetes. Many, maybe the majority, leading scientists argue that the future treatment of type 1 diabetes must involve a so called autoantigen, like GAD, to in the long term stop the immune system’s attack on the cells in the body that produce insulin, the so called beta cells.
Our diabetes vaccine has the advantage of being ready for clinical trials in children due to its favorable safety profile in earlier clinical studies and an established manufacturing process. Diamyd® is therefore attractive for university and industry researchers to test both in combination with other substances and as a preventive treatment.
The development of the diabetes vaccine is continuing with several parallel Phase II studies, with the new Diamyd as a hub for the diabetes area and GAD-based pharmaceutical development. Since 2009 a study is being conducted in the south of Sweden involving children from the age of four with a high risk of developing type 1 diabetes. The purpose of the study is to see whether the diabetes vaccine can prevent the onset of the disease. In addition, a new study began earlier this year involving recently diagnosed children from the age of ten, in which the diabetes vaccine is combined with relatively high doses of vitamin D and the anti-inflammatory drug ibuprofen aiming to potentiate the effect of the diabetes vaccine.
By working with externally funded research groups, we can test more treatment paradigms than if we were to conduct and finance all studies on the diabetes vaccine ourselves. We are involved in discussions with various research groups about launching further researcher initiated pilot studies.
The company recently secured a new exclusive license for a patent application for the specific combination therapy GAD plus the endogenous substance GABA, which has demonstrated favorable results in preclinical trials. The license also encompasses rights for the therapeutic use of GABA to treat diabetes and other inflammation-related disorders.
The company is capitalized at SEK 50 million from the beginning, which is expected to be sufficient to finance development of the diabetes vaccine and operation of the company for at least 12 months. To also enable a high pace for the development of newly in-licensed GABA rights, without encroaching on the existing development plan for the diabetes vaccine Diamyd®, the company intends to implement a rights issue for a maximum of MEUR 2.5 soon after the share has commenced trading on First North.
The aim is, within three years, to have a further three clinical studies with the diabetes vaccine in progress and to enter alliances with industrial partners to ensure the company’s financing and the continued development toward market approval of the diabetes vaccine. In these three years, we will also have results from the clinical studies that are already under way.
The market potential is huge for an approved pharmaceutical that can offer improved treatment of type 1 diabetes and other forms of diabetes, which has been confirmed not least by the gilt-edged license agreement we negotiated with Johnson & Johnson for the diabetes vaccine. At the same time, we must be aware that the risks in pharmaceutical development are considerable. It is a long way to market and only a small number of all development projects make it all the way. When one encounters obstacles on the way, it is however important to safeguard the values that have been accumulated in a project by trying new paths towards the ultimate goal.
Diamyd rests on a stable base, with a strong track record both in conducting development at a low expense and signing commercial agreements. With 17 years’ experience and a solid standing in the global diabetes sphere, Diamyd is well-positioned to gain access to deal flow and find markets for development projects and products in the area of diabetes.
Diamyd Medical is determined to find a cure for type 1 diabetes. We hope that you want to take part in the development of solutions for everyone affected by, or at risk of being affected by diabetes.
Stockholm, May 2013
Peter Zerhouni
President and CEO Diamyd Medical AB (publ)