Diamyd Medical - World's first diabetes vaccine

Stocks
, ,
21

Antia pukkaa:

kuva

The Board of Directors in Diamyd Medical has resolved on a rights issue of approximately SEK 208 million

Fri, Feb 28, 2025 14:45 CET

THIS PRESS RELEASE MAY NOT BE RELEASED, PUBLICATED OR DISTRIBUTED, DIRECTLY OR INDIRECTLY, IN OR INTO AUSTRALIA, BELARUS, CANADA, HONGKONG, JAPAN, NEW ZEALAND, RUSSIA, SINGAPORE, SOUTH AFRICA, SWITZERLAND, THE UNITED STATES OR ANY OTHER JURISDICTION IN WHICH SUCH ACTION IN WHOLE OR IN PART, IS SUBJECT TO LEGAL RESTRICTIONS. THIS PRESS RELEASE DOES NOT CONSTITUTE AN OFFER, OR A SOLICITATION OF ANY OFFER, TO BUY OR SUBSCRIBE FOR ANY SECURITIES IN DIAMYD MEDICAL AB (PUBL) IN ANY JURISDICTION. PLEASE REFER TO THE “IMPORTANT INFORMATION” SECTION BELOW.

The Board of Directors in Diamyd Medical AB (publ) (" Diamyd Medical " or the " Company ") has today, pursuant to the authorization granted by the Company’s annual general meeting held on December 5, 2024, resolved on a rights issue of a maximum of 26,022,044 units, consisting of shares and warrants, corresponding to approximately SEK 208 million (the “Rights Issue”). The subscription price in the Rights Issue has been set to SEK 8.00 per unit, corresponding to SEK 8.00 per share (the warrants are issued free of charge). Each A-unit contains one (1) share of series A and one (1) warrant of series TO 5 A. Each B-unit contains one (1) share of series B and one (1) warrant of series TO 5 B. 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 unit of the same share class in the Rights Issue. Chairman of the Board of Directors and founder, Anders Essen-Möller, has committed to subscribe for units equivalent to approximately SEK 5 million. In addition, CEO Ulf Hannelius and CFO Anna Styrud have committed to subscribe for their respective pro rata share of the Rights Issue, corresponding to approximately SEK 0.7 million and SEK 0.3 million. Vice Chairman of the Board of Directors, Erik Nerpin, has committed to subscribe for units equivalent to approximately SEK 0.1 million. In total, the Rights Issue is thus covered by subscription commitments equivalent to approximately SEK 6.2 million, corresponding to approximately 3.0 percent of the Rights Issue.

Chairman of the Board comments
“The new issue should be seen against the background of the dilemma we have found ourselves in through our outstanding warrant TO4. We have understood that many intended to exercise their warrants, but as the redemption price for TO4 is above the current market price, we have made the assessment that TO4 will not provide the capital we need. We do not think it would be justifiable to let holders of TO4 - who in most cases are also shareholders in Diamyd - subscribe for shares at the price of SEK 16 and that we immediately afterwards carry out a new share issue at a lower price. Those who have intended to use their TO4 can now instead subscribe for more shares for the same amount. Everyone who subscribes to the issue now also receives a new warrant - TO5 - whose redemption period in April next year falls shortly after our FDA-approved early readout of the registrational phase-3 study DIAGNODE-3.

I hope for some understanding of the above and that the decision will prove to be wise in a year’s time. I intend to personally subscribe for SEK 5 million in the rights issue.”

Anders Essen-Möller, Founder and Chairman of the Board of Directors, Diamyd Medical

CEO comments
“We are now entering a crucial phase with the early readout of our registrational Phase 3 study and ongoing partnership discussions. This financing strengthens our cash position and provides us with the flexibility to focus on ongoing strategic dialogues and preparations for the study results.”

Ulf Hannelius, CEO, Diamyd Medical

Summary of the Rights Issue
The Board of Directors in Diamyd Medical has today, pursuant to the authorization granted by the Company’s annual general meeting held on December 5, 2024, resolved on the Rights Issue. The Rights Issue is carried out on the following main terms:

  • The Rights Issue comprises a maximum of 26,022,044 units, of which 747,124 are A-units and 25,274,920 are B-units, corresponding to issue proceeds of approximately SEK 208 million before deduction of related issue costs.
  • Shareholders in Diamyd Medical on the record date, April 11, 2025, will for each one (1) held share, regardless of share class, receive one (1) unit right of the same class. Four (4) unit rights will entitle the holder to subscribe for one (1) new unit of the corresponding share class, implying a subscription ratio of 1:4.
  • Each A-unit contains one (1) share of series A and one (1) warrant of series TO 5 A and each B-unit contains one (1) share of series B and one (1) warrant of series TO 5 B.
  • The subscription price in the Rights Issue has been set to SEK 8.00 per unit, corresponding to a discount of approximately 43.2 percent compared to the theoretical price after separation of unit rights (TERP), based on the volume-weighted average price (VWAP) of the B-share on Nasdaq First North Growth Market on February 27, 2025. The warrants are issued free of charge.
  • The last day of trading in Diamyd Medical’s B-shares including the right to receive unit rights of series B in the Rights Issue is April 9, 2025. The B-shares are traded excluding the right to receive unit rights of series B in the Rights issue from April 10, 2025.
  • The record date for participation in the Rights Issue is April 11, 2025.
  • The subscription period in the Rights Issue runs from and including April 15, 2025, to and including April 29, 2025.
  • Trading in unit rights of series B (UR B) will take place on Nasdaq First North Growth Market during the period from and including April 15, 2025, to and including April 24, 2025, and trading in paid subscribed B-units (BTU B) will take place on Nasdaq First North Growth Market during the period from and including April 15, 2025 to and including May 20, 2025. No trading will take place in neither unit rights of series A nor paid subscribed A-units (BTU A).
  • Two (2) warrants of series TO 5 entitle the holder to subscribe for one (1) new share of the corresponding share class in the Company during the period from and including April 16, 2026, to and including April 30, 2026. The exercise price for subscription of shares by exercise of warrants of series TO 5 is SEK 20.00 per share.
  • Provided that the Rights Issue is fully subscribed, the Board of Directors may resolve on an additional unit issue of a maximum of 2,500,000 B-units.
  • Chairman of the Board of Directors and founder, Anders Essen-Möller, has committed to subscribe for units equivalent to approximately SEK 5 million. In addition, CEO Ulf Hannelius and CFO Anna Styrud have committed to subscribe for their respective pro rata share of the Rights Issue, corresponding to approximately SEK 0.7 million and SEK 0.3 million. Vice Chairman of the Board of Directors, Erik Nerpin, has committed to subscribe for units equivalent to approximately SEK 0.1 million. In total, the Rights Issue is thus covered by subscription commitments equivalent to approximately SEK 6.2 million, corresponding to approximately 3.0 percent of the Rights Issue.
  • The complete terms and conditions for the Rights Issue, including additional information about the Company, will be made available in the EU growth prospectus that is expected to be published on the Company’s website on April 14, 2025 (the “Prospectus”).

Warrants of series TO 4
The terms of Diamyd Medical’s outstanding warrants of series TO 4 remain unchanged, meaning that during the period from March 3 to March 31, 2025, two (2) warrants can be exercised to subscribe for one (1) new share at an exercise price of SEK 16.00. In the event that new shares are subscribed for through the exercise of TO 4, these newly subscribed shares will be given the opportunity to participate in the Rights Issue under the same conditions as currently existing shares. This would also mean that the Board of Directors’ decision regarding the Rights Issue will be adjusted to include these newly subscribed shares. Shareholders should therefore note that the number of units, shares, warrants, and share capital stated in the press release are subject to change due to such adjustments. Anyone considering exercising TO 4 to subscribe for new shares should carefully review the terms of the Rights Issue and the additional information provided in this press release.

Background and reason
The past year has been eventful for Diamyd Medical. The US FDA has confirmed that the ongoing Phase 3 study, DIAGNODE-3, meets the requirements for accelerated approval. An early readout in early 2026 will serve as the basis for potential market approval in the US. Market analyses in the US indicate that Diamyd® has sales potential exceeding USD 2 billion per year for its launch indication. Diamyd® has already received Fast Track Designation as well as Orphan Drug Designation from the FDA.

The Company’s lead drug candidate, Diamyd®, is an antigen-specific immunotherapy for individuals carrying a common risk gene called HLA DR3-DQ2. The gene is carried by up to 40 percent of the millions of individuals worldwide who are at risk for, or have been diagnosed with, autoimmune diabetes. By intervening early in the disease process and preserving as much of the body’s own insulin production as possible, the progression of the disease can be delayed, blood sugar control improved, and complications of autoimmune diabetes, which include cardiovascular disease, retinopathy (an eye disease that can lead to blindness), neuropathy (a nerve disease that can lead to amputations and pain) and nephropathy (a kidney disease that can lead to kidney failure) be significantly reduced. Here, Diamyd Medical has a broad focus on preventive medicine through the registration-based precision medicine Phase 3 study DIAGNODE-3 and the prevention study DiaPrecise.

The Board of Directors in Diamyd Medical is now offering shareholders the opportunity to participate in the Rights Issue, which will provide working capital to prepare the Company for an early readout of DIAGNODE-3 in March 2026. To capitalize the Company with working capital and create the conditions necessary to ensure the execution of the Company’s business plan and strategy, the Board of Directors resolved on the Rights Issue on February 28, 2025.

Use of issue proceeds
Upon full subscription in the Rights Issue, the Company will receive initial proceeds of approximately SEK 208 million before deduction of issue costs, which are estimated to amount to approximately SEK 9 million. Upon full exercise of all warrants, provided that the Rights Issue is fully subscribed and that the additional unit issue is exercised to the maximum possible amount, the Company will receive additional issue proceeds of approximately SEK 285 million before deduction for issue costs, i.e. approximately SEK 277 million after deduction for issue costs. All proceeds are intended to be used for the following purposes, listed in order of priority:

  • approximately 65 percent will be used for the clinical development of Diamyd®, primarily for the Phase 3 study DIAGNODE-3 and preparations for the early readout of the study;
  • approximately 20 percent will be used for the continued development of the Company’s production facility in Umeå for production of GAD65;
  • approximately 10 percent will be used for the general administration and other; and
  • approximately 5 percent will be used may be used for an expansion of the Company’s antigen-specific immunotherapy platform.

Preliminary timeline for the Rights Issue

April 9, 2025 Last day of trading in B-shares including right to receive unit rights of series B
April 10, 2025 First day of trading in B-shares excluding right to receive unit rights of series B
April 11, 2025 Record date for the Rights Issue
April 14, 2025 Planned publishing date of the Prospectus
April 15, 2025 – April 29, 2025 Subscription period
April 15, 2025 – April 24, 2025 Trading in unit rights of series B (UR B)
April 15, 2025 – May 20, 2025 Trading in paid subscribed B-units (BTU B)
April 29, 2025 Expected announcement of the preliminary outcome
April 30, 2025 Expected announcement of the final outcome

The above preliminary timeline is conditional on the Prospectus being approved and published at the estimated date of April 14, 2025.

Subscription commitments
Chairman of the Board of Directors and founder, Anders Essen-Möller, has committed to subscribe for units equivalent to approximately SEK 5 million. In addition, CEO Ulf Hannelius and CFO Anna Styrud have committed to subscribe for their respective pro rata share of the Rights Issue, corresponding to approximately SEK 0.7 million and SEK 0.3 million. Vice Chairman of the Board of Directors, Erik Nerpin, has committed to subscribe for units equivalent to approximately SEK 0.1 million. In total, the Rights Issue is thus covered by subscription commitments equivalent to approximately SEK 6.2 million, corresponding to approximately 3.0 percent of the Rights Issue. No fee is to be paid for the subscription commitments. The subscription commitments are not secured through pledged assets, restricted funds or similar arrangements.

Exercise price and subscription period for warrants of series TO 5

Two (2) warrants of series TO 5 entitle the holder to subscribe for one (1) new share of the corresponding share class in the Company during the period from and including April 16, 2026, to and including April 30, 2026, at an exercise price of SEK 20.00.

Additional unit issue
Contingent on that the Rights Issue is fully subscribed, the Board of Directors of Diamyd Medical may resolve on an additional unit issue of a maximum of 2,500,000 B-units, equivalent to additional issue proceeds of up to SEK 20 million. The allocation in the additional unit issue is conducted at the discretion of the Board of Directors and is primarily aimed towards current shareholders and strategic investors who have subscribed for units in the Rights Issue but not received full allocation. Thus, the additional unit issue may increase the total issue proceeds in the Rights Issue to approximately SEK 228 million before related issue costs.

Shares and share capital
Upon full subscription in the Rights Issue, Diamyd Medical’s share capital will initially increase by SEK 2,639,188.4834, from SEK 10,556,754.1362 to SEK 13,195,942.6196, and the number of shares by 26,022,044, from 104,088,178 shares to 130,110,222 shares. After a fully subscribed Rights Issue, the number of A-shares will increase by 747,124 shares, from 2,988,496 shares to 3,735,620 shares, and the number of B-shares will increase by 25,274,920 shares, from 101,099,682 shares to 126,374,602 shares.

Shareholders who choose not to subscribe in the Rights Issue will therefore be faced with a maximum dilution effect of approximately 20 percent of the number of shares and votes, calculated as new shares and votes divided by the total number of outstanding shares and votes after the Rights Issue, but are given the opportunity to be financially compensated for this dilution effect by selling their received unit rights of series B.

If the Board of Directors of Diamyd Medical resolve on the additional unit issue and it is exercised and subscribed to the maximum amount possible, the number of B-shares will increase by 2,500,000 shares. Given that the Rights Issue is fully subscribed, the total number of shares will thus increase by 28,522,044 shares, from 104,088,178 shares to 132,610,222 shares, of which 3,735,620 are A-shares and 128,874,602 are B-shares. Upon full exercise and subscription of the additional unit issue, the share capital will increase by SEK 253,553.1493, from SEK 13,195,942.6196 to SEK 13,449,495.7689, provided a fully subscribed Rights Issue. Shareholders would thereby experience a dilution effect of an additional maximum of approximately 1.9 percent of the number of shares and approximately 1.5 percent of the number of votes. Shareholders who choose not to subscribe in the Rights Issue may therefore experience a dilution effect of up to approximately 21.5 percent of the number of shares and approximately 21.2 percent of the total number of votes.

Should the warrants be fully exercised (assuming full subscription in the Rights Issue), this would imply an additional dilution effect of approximately 9.1 percent of the number of shares and approximately 9.1 percent of the number of votes. Should the Board of Directors resolve on the additional unit issue, and it is exercised to the maximum extent possible, provided the Rights Issue is fully subscribed, the dilution effect resulting from the warrant series being fully exercised would instead amount to approximately 9.7 percent of the number of shares and approximately 9.6 percent of the number of votes. Shareholders may therefore be faced with a maximum dilution effect of approximately 29.1 percent of the number of shares and approximately 28.8 percent of the number of votes.

Prospectus
An EU growth prospectus with complete terms and conditions for the Rights Issue will be published and made available before the subscription period commences on Diamyd Medical’s website, www.diamyd.com, and on Aqurat Fondkommission AB’s website, www.aqurat.se.

Advisors
G&W Fondkommission acts as Financial Advisor to Diamyd Medical in connection with the Rights Issue. Aqurat Fondkommission AB has been appointed as Issuer Agent.

About Diamyd Medical
Diamyd Medical develops precision medicine therapies to prevent and treat Type 1 Diabetes and LADA (Latent Autoimmune Diabetes in Adults). Diamyd® is an investigational antigen-specific immunomodulatory therapeutic

for the preservation of endogenous insulin production specifically for individuals carrying a HLA DR3-DQ2 gene. Diamyd® has been granted Orphan Drug Designation in the U.S. as well as Fast Track Designation by the U.S. FDA for the treatment of Stage 3 (clinically diagnosed symptomatic) Type 1 Diabetes. Diamyd® has also been granted Fast Track Designation for the treatment of Stage 1 and 2 (pre-symptomatic) Type 1 Diabetes. DIAGNODE-3, a confirmatory Phase III trial is actively recruiting patients with recent-onset (Stage 3) Type 1 Diabetes at 60 clinics 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 prospective European Phase IIb trial, where Diamyd® was administered directly into a superficial lymph node in children and young adults with recently diagnosed Type 1 Diabetes. The DIAGNODE-3 trial is recruiting only this patient group that carries the common genotype known as HLA DR3-DQ2, which constitutes approximately 40 % of patients with Type 1 Diabetes in Europe and the US. Injections into a superficial lymph node can be performed in minutes and are intended to optimize the treatment response. A biomanufacturing facility is under development in Umeå, Sweden, for the manufacture of recombinant GAD65 protein, the active ingredient in the antigen-specific immunotherapy Diamyd®. Diamyd Medical is a major shareholder in the stem cell company NextCell Pharma AB and 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.

4 Likes
22

Now, the TO4B risk materialized badly for the undersigned.

The stock dipped almost 40%, and of course, the 16 SEK warrants became practically worthless.

The company therefore decided to issue new warrants, but this time at half price to avoid similar problems. This raises two questions:

  1. Don’t the warrant terms or Swedish legislation allow changing the terms of warrants issued by the company?
  2. Wouldn’t it technically be possible to issue new replacement warrants to warrant holders?

In conclusion, it seems to be a foolish move to choose a fixed strike price a year in advance, especially if the company’s cash position is dependent on the exercise. NextCell Pharma, also affiliated with the company, structured its issue such that the warrant’s strike price is determined only based on the previous month’s weighted average with a 30% discount.

2 Likes
23

Despite this, the company continues with the same strategy: in April 2026, the cash position will again be as low as it is now; if funds are not received from the TO5 warrants, a similar emergency solution would have to be made again if the situation allows. However, the expiration of the TO5 warrants is now set so that the Phase 3 interim readout scheduled for March should support the share price if successful, such that the risk of the warrants expiring worthless is smaller. There should also be no significant risk of the interim readout being delayed.

Before the news of the offering, the share price was 15.40 SEK, meaning a market capitalization of 1556 MSEK and with -102 MSEK in net debt, the EV was 1455 MSEK. If the offering is fully subscribed, 199 MSEK will be added to the cash, in which case, at the current share price of 10 SEK, the market capitalization is 1264 MSEK and the EV is only 963 MSEK.

Thus, the share is now valued at over a 30% discount compared to the pre-offering situation, even though financing risks have now practically disappeared, provided that the offering is successful. However, it is only a 208 MSEK offering, which is raised at over a 40% discount to the closing price, meaning current shareholders will pay dearly if they choose not to participate in the offering.

What about the TO5 warrants? Upon their expiration in April 2026 at a price of 20 SEK, approximately 142M shares will be outstanding, in which case the market capitalization should have been over 2830 MSEK for the warrants to be exercised. In that case, the company would have the interim readout behind it by the end of Q2 2026, and 274 MSEK in cash, of which 250 MSEK would come from warrants, assuming that 50 MSEK is burned per quarter and no grants are received, for example. So, if positive data is obtained from the March 2026 interim readout, the share price is quite likely to be above the warrants’ exercise price.

The interim readout will be a binary event, because if it fails, one can well assume that the company would close its doors, in which case the cash position at the end of Q2 2026 would only be a few tens of millions, or approximately 0.2 SEK per share.

So, if one frames the situation such that if the interim readout is successful, the market capitalization is 3500 MSEK and EV is about 3250 MSEK or $300M, and the share price is 25 SEK, and if it fails, 0.2 SEK, then the probability p of the interim readout succeeding must be 39.5% to break even at the current share price of 10 SEK.

If, on the other hand, one thinks that the probability p is only 25%, then the market capitalization upon success must be 5518 MSEK or $513M to break even. If, on the other hand, one bullishly assumes that the interim readout succeeds with a 75% probability and leads to a greater value realization, in which case the market capitalization would be $700M or about 7500 MSEK or about 53 SEK per share, then the expected value of return from now until Q2 2026 would be 298%. And this does not even consider that if one buys the share from the stock exchange now, part of that price consists of the receivable TO5 warrant, whose return profile grows asymmetrically with high values of p and market capitalization.

Overall, this seems like an unusually clear lottery ticket, where the announced offering has led the markets into some state of inefficiency, or there is indeed a much greater risk associated with the offering’s success that I simply do not perceive. Perhaps shareholders need money to participate in the offering; however, the trading volume is negligible, so the share price reacts quickly. It will also be interesting to see at what price TO5 warrants will soon be available on the stock exchange; this will also provide a new way to examine market expectations.

6 Likes
25

The share has been steadily declining since Carnegie refrained from giving a recommendation. Apparently, there is a significant risk associated with the success of the offering, and having researched the matter, the subscription rates in the previous three offerings have been 34%, 46%, and 50%.

At the end of November, the cash balance was approximately 152MSEK, with an additional 17MSEK expected from the T1D grant. Conservatively assuming a monthly burn rate of approximately 15MSEK, to reach the end of May, the offering would need to generate at least 101MSEK net, or 110MSEK gross. If the cash burn were only 13MSEK per month, 74MSEK gross would suffice. This means that a subscription rate over 50% would be positive news, while anything less would be negative news, further increasing pressure to reduce costs or find a new financing solution even before the interim report.

How much money is expected from the offering then? Commitments currently stand at approximately 17MSEK, which is about 8% of the total offering. This sum mainly consists of commitments from Mr. Möller and his children, totaling 6.5MSEK. It is noteworthy, however, that the company has not yet announced the commitments of the largest individual owner, Bertil Lindkvist. In the first offering of 2023, he subscribed for shares worth 13MSEK, in the second for 6.8MSEK, and in the 2024 offering for 1MSEK. A declining trend is observable here – does this indicate that Bertil’s money and credit are running out? In this current offering, however, the subscription price is the lowest, and cash flows are closer than ever, but the valuation is naturally higher due to the increase in the number of shares, though not by much. In the first offering of 2023, the announcement of Mr. Lindkvist’s subscriptions came about a month after the offering was published, so the phone is probably ringing hot now too.

B. Lindkvist’s subscription rights, if fully subscribed, would bring the company over 17MSEK, which is as much as all other commitments to date combined. But who is this mysterious B. Lindkvist – on whose hands the company’s future may rest – really?
image
Judging by the picture, he seems like a perfectly ordinary boomer, but he has assets worth over a billion Swedish kronor – or at least he did, according to the only article found about him in 2006. If the assets have dwindled, they must have been lost in the stock market, because Bertil is not said to have women, children, or even a car, and he is unlikely to have drifted into drugs, typically for his generation. Nor can one drink millions worth of alcohol.

If Mr. Möller can persuade Mr. B to participate, commitments will total 35MSEK. After that, it remains to be seen whether pension insurers will participate in the offering. They would have subscription rights for approximately 39MSEK if fully subscribed. Is it common for pension insurers to participate in offerings or even sell their subscription rights? From the perspective of the value of their holdings, it might be sensible, as they cannot get rid of those shares anyway.

If pension insurers were involved, 74MSEK would be raised, and the rest would have to come from small investors. The subscription rights themselves are practically worthless after the price drop, but on the other hand, by subscribing to them, one also gets a warrant, which in turn has at least some value. The share has been actively traded since the offering was announced, and there are certainly many people on the selling side who are raising funds to participate in the offering. Many would surely prefer to subscribe for shares rather than buy them on the exchange. There has been a lack of soldiers on the buying side, but the price has attracted new entrants there too. The valuation is, however, at its lowest level practically ever, even though the pot of gold and its sweet cash flows may be just over a year away. I cannot estimate at all how much interest the offering will generate among small shareholders.

This is the kind of case for which the stock market was created. Money is sought a couple of times a year by any means necessary, and a pot of gold looms in the future, by reaching which the drug could sell many tens of times the current market value annually.

4 Likes
27

It’s baffling why on earth they don’t use the average price method for the warrant issue. The stock is clearly very volatile, and the subscription price was set a year in advance at a level clearly above the share price.

From my own experience, it seems that with companies whose market value is based on vague future expectations, the stock tends to drift down towards the fixed price of the warrants. By distributing 8 SEK warrants this way, it was guaranteed that the stock would dive to that vicinity. At the same time, those who had bought previous warrants lost their faith.

By the way, it occurred to me, now that 16 SEK warrants are practically free, but their users have also been promised warrants for the 8 SEK and 20 SEK issues:

In the event that new shares are subscribed for through the exercise of TO 4, these newly subscribed shares will be given the opportunity to participate in the Rights Issue under the same conditions as currently existing shares. This would also mean that the Board of Directors’ decision regarding the Rights Issue will be adjusted to include these newly subscribed shares.

How will the decision be changed? So that the subscription amount of TO4 warrants increases the number of shares? The exercise of TO4 warrants cannot actually change later warrant issues in other ways.

How large a stake in the company could someone acquire if they decided to buy and subscribe for all TO 4 warrants available on the market and then subscribe for the accompanying 8 and 20 SEK warrants?

It also occurred to me: Had the owner entities committed to subscribing for 16 SEK warrants? It’s unlikely one can back out of such a commitment, right?

2 Likes
28

Indeed, especially when the entire financial position is dependent on the funds obtained from warrants. Perhaps it was thought that the company would create enough value on its balance sheet that the strike price could be raised annually. TO3 was more successful. But it’s wild to think about the situation from the shareholders’ perspective: if the share price had stayed at the 18SEK level for a couple of months longer, the whole mess would have been avoided.

However, the warrants should be exercised at a price 100% higher than the current market price. Even then, you would only get subscription rights to the ongoing rights issue. A similar subscription right is still included in the shares you can buy directly from the stock exchange at 50% cheaper. You only get the TO5 warrant by exercising the subscription right, not by exercising the TO4 warrant.

The maximum number of new shares from the rights issue and the maximum number of warrants are only increased to match the new share count after the TO4 warrants expire.

Not a very big piece. The current number of shares is 104M, and if all were fully subscribed, there would be 44M new shares, plus a few million more shares from the additional issue and new subscription rights from TO4 subscriptions, and the TO5 warrants resulting from those. And this is assuming that warrants and subscription rights could be absorbed from the market.

No, commitments are only made for rights issues; it would be foolish to commit to subscribing to warrants.

29

Subscription rights arrived in the account today and were sold.

Watching the trading for the first time, I got the impression that investor sentiment is completely crushed. AB UR B-warrants are currently trading hands at 0.05 SEK, which feels very cheap. It’s quite understandable that those not interested in subscribing would put the subscription rights up for sale on the first day, with the stock in an apparent downtrend and below the subscription price, but it still surprised me. However, the trading volume of the warrants is not yet very high. Today’s volume is about 2 million warrants, even though on the first day one would expect many to let go of the instruments they don’t want to subscribe to.

Despite massive market turbulence, the stock has remained relatively stable around 8 SEK ±5%, so I don’t quite believe the stock would fall much lower here. A small dip from the end of last week onwards was very much expected, as some sell the stock after the subscription right detaches.

Currently, the stock price is 7.75 SEK, and the subscription unit detaches at a price of 0.04 SEK. So, for 4*0.04 SEK = 0.16 SEK, one effectively gets a call option with an 8 SEK strike price for just over a week, plus a TO5 lottery ticket which, in all likelihood, will be very profitable IF the study succeeds in spring 2026. I could well pay a significant price just for the TO5 warrant and replace all stock ownership with TO5 warrants and let them mature towards spring. However, the spring study is almost a “make it or break it” moment for the company. Of course, there’s a possibility that the interim results of spring 2026 might not yet provide sufficiently strong statistical evidence, and we’ll have to wait until the end of the entire study period to get a longer effect duration and a larger sample. However, I would see that towards the spring publication, hype will start to build up, and warrants can be sold at a good price to reduce risk.

As a risk-seeking opportunist, I see great opportunities here and intend to subscribe to shares generously. The subscription rights themselves might also find better appreciation during the next week. Is anyone else participating in the subscription?

Screenshot 2025-04-15 130432

5 Likes
30

CEO Ulf Hannelius and board member Mark Atkinson are interviewed by Direkt Studios about the strategic positioning of Diamyd Medical, including the therapeutic platform, current and future indications, commercial opportunities, and upcoming milestones.

Diamyd Medical | Live 15:00 Strategic Positioning and Growth Outlook for Diamyd Medical

Livelähetys klo 16 Suomen aikaa.

1 Like
31

Bad luck with the timing, indeed. The general weakening of sentiment reduces risk-taking willingness, which will certainly also affect the outcome of the rights issue.

On the other hand, I consider the price of the subscription rights to be very high. However, there are approximately 100M of them in circulation, and only half of them will be used. If the subscription rights do not accumulate intrinsic value such that the share price rises above 8 SEK, then their value will approach zero as the time value diminishes.

A falling share price is detrimental to the subscription rate, because the lower the price drops, the more expensive it becomes to exercise the subscription rights. As the share price falls, both the value of the warrants decreases and the loss incurred from the shares increases.

If there were certainty that the offering would raise +119 MSEK in gross proceeds, one could easily pay many times its current implicit value for the warrant, but there is certainly no such certainty. Lindqvist will most likely not subscribe for his 17 MSEK worth of subscription rights, and thus there are no more commitments than the previously announced 38 MSEK.

Possible further dilution before the warrants expire in 2026 is practically the same as raising the strike price, which would have a devastating effect on the value of the warrants. Therefore, the risks here are enormous, and there’s a high probability of being left with the short end of the stick. If the offering succeeds, on the other hand, the share could easily rise above its pre-offering EV, which would simultaneously multiply the value of the TO5 warrant from its current level, as the risk of dilution would be removed. The problem here is a negative spiral where the share value falls, which makes participation more expensive, which reduces participation enthusiasm, which lowers the share value…

1 Like
32

The decrease in the share price is detrimental to the subscription rate, because the lower the price drops, the more expensive it becomes to exercise the subscription rights.

Yeah. In the 2024 offering, I decided to make a seemingly irrational decision and chose to subscribe to the share even though it was clearly trading below the subscription price and there were no sweeteners included. A smart aleck might say it would have been better to buy the share, which is probably true, but then of course the company wouldn’t have received my pennies. However, the company rocketed immediately after the offering and rose 100% in a short time, so it went quite well even though the subscription rate remained at 50 percent.

Lindqvist will most likely not subscribe to his SEK 17 million worth of subscription rights.

Possible, but we’ll see. By the way, an internal transfer of 1.5 million warrants was made at Avanza Bank first thing this morning. This is likely one of the top 10 owners.

33

Speaking about Big Pharma partners on air, Ulf Hannelus said

We have ongoing discussions with potential partners
However, he generally described that the contract terms are best when phase 3 is complete, but in principle they are ready to conclude agreements at any time if the terms match expectations.

1 Like
34

Screenshot_20250415_191131_TradingView

Patents are still pouring in. The market reaction will be tomorrow, as trading had already closed.

2 Likes
35

The stock is up 2.5% today at 7.9 SEK, even though the Stockholm stock exchange is clearly down. Partially owned Nextcell, on the other hand, has risen 30% since yesterday morning. Still under eight, but perhaps an indication that sentiment is not so pessimistic now.

If the stock closes above eight, one can assume that the value of the warrants will skyrocket from the cent class.

1 Like
36

Screenshot_20250417_104852_Chrome

News about research on diabetes prevention treatment.

1 Like
37

The stock already went above 8 sec and reversed, and short sale volumes are low. I think I’ll decide to place my orders, whether it’s below eight or not.

38

After previous offerings, the market reaction has been surprisingly positive even though the subscription might have remained low after the share dipped clearly below the subscription price. The image marks the end of the subscription period for the 12 SEK offering.

Screenshot_20250417_145856_TradingView

Screenshot_20250417_145122_Chrome

Also, the partly-owned Nextcell has been canceling invoices at a good pace.

39

An announcement that contained no actual new content (if one has watched recent interviews)

Diamyd Medical highlights opportunity in Type 1 Diabetes prevention, adult-onset market, and upcoming Phase 3 readout

In a recent investor interview, Diamyd Medical Board Member Professor Mark Atkinson and CEO Ulf Hannelius shared key insights into the Company’s positioning as a first-mover in precision medicine-based, disease-modifying and preventive treatment for Type 1 Diabetes. The discussion covered the strong safety profile and genetically targeted approach of the Diamyd Medical’s investigational therapy Diamyd®, the opportunity to expand into the adult-onset autoimmune diabetes (LADA) segment increasingly recognized as part of the Type 1 Diabetes spectrum, and the major milestones ahead – including a registrational Phase 3 readout expected within 12 months.

“We are not just treating Type 1 Diabetes — we’re actually aiming to prevent and cure it,” says Ulf Hannelius, CEO of Diamyd Medical. “And with LADA now increasingly recognized as Type 1 Diabetes, the potential market more than doubles.”

Positioning of Diamyd®
Diamyd® is a precision immunotherapy targeting individuals with a specific HLA genotype associated with Type 1 Diabetes. Over 1,000 patients have been treated with Diamyd®, a durable investigational antigen-specific GAD-based therapy, giving it a robust safety track record. The treatment aims to preserve endogenous insulin production by reprogramming the immune system—addressing the root cause of the disease rather than just managing blood glucose.

“Diamyd has one of the strongest safety profiles of any drug that I’m aware of seeking to prevent Type 1 Diabetes,” says Professor Mark Atkinson, Board Member and Chair of Diamyd Medical’s Scientific Advisory Board. “The combination of safety and therapeutic durability makes Diamyd a very attractive treatment.”

A precision platform with broad reach
Diamyd Medical’s approach is built around matching therapy to the patient’s genetic profile. The Company is currently enrolling only patients with the appropriate HLA genotype in its Phase 3 trial DIAGNODE-3. Diamyd Medical is also taking steps to broaden its precision medicine platform.

“With GAD we target about 40 % of Type 1 Diabetics in the Western world. By adding insulin as a second antigen, we can potentially reach 90 %,” says Ulf Hannelius. “This antigen-specific approach also makes Diamyd® an ideal candidate for future combination therapies—given its safety, durability and lack of systemic immune suppression.”

“Some of the other candidates don’t afford the ability for as a safe combination, because of toxicity or immune system compromise”, says Professor Atkinson. “Given its strong safety profile and precision mechanism, I believe Diamyd has real potential as part of combination treatments.”

Indications: From newly diagnosed to prevention and adult-onset Type 1 Diabetes
While Diamyd Medical’s Phase 3 trial focuses on newly diagnosed Type 1 Diabetes (Stage 3), the Company’s pipeline spans the full disease continuum — from at-risk individuals to slow-progressing adult-onset cases. Increasing scientific consensus now recognizes LADA (Latent Autoimmune Diabetes in Adults) as a form of Type 1 Diabetes.

“The American Diabetes Association now includes LADA under the Type 1 Diabetes umbrella,” Ulf Hannelius emphasizes.

Professor Atkinson adds: “We now believe that it’s just a population of slow-progressing individuals with Type 1 Diabetes that happen to occur in adults. Many of these patients are GAD antibody-positive, making Diamyd a unique and optimal drug.”

Diamyd Medical is one of the very few — and possibly the only — companies to have conducted interventional trials in LADA patients, with safety data extending up to age 70.

“If we secure regulatory approval in Type 1 Diabetes, we will explore extending our label to include adult-onset Type 1 Diabetes,” says Ulf Hannelius. “This could more than double the addressable market for Diamyd.”

Diamyd Medical has conducted market research in the United States that supports peak sales potential of USD 2 billion in the Stage 3 Type 1 Diabetes population targeted as the initial indication. The same research shows that extending the label to adult-onset Type 1 Diabetes could more than double the commercial opportunity.

Milestones ahead
Diamyd Medical expects several key milestones within the next 12 months including:

  • Top-line results from its single pivotal Phase 3 trial DIAGNODE-3 to support an accelerated approval pathway in the U.S.
  • GMP certification of its biologics manufacturing facility in Sweden

“DIAGNODE-3 is the first-ever precision medicine Phase 3 trial in Type 1 Diabetes,” says Ulf Hannelius. “We’ve screened over 600 patients to identify the right genetic match.”

“This trial is not a Hail Mary pass,” adds Professor Atkinson. “Countless months went into designing this trial based on past data, experience, and genetics. Everything pragmatically possible has been done to maximize the chances of success.”

A strong case for impact and market adoption
Beyond the scientific and regulatory readiness, the Company sees strong commercial potential.

“We’ve conducted market research in the U.S. with providers and payers,” Ulf Hannelius says. “The feedback has been very positive — they see a significant need and view this as a strong candidate for adoption.”

Professor Atkinson closes with a broader reflection:
“This is not just an investment opportunity. It’s a chance to improve lives, prevent disease, and be part of something that has real societal benefit.”

Watch the full 60-minute interview at: https://www.youtube.com/live/84cNuJVunHg?si=MYCjdbaEzoNyeuGK

The morning started off quite positively again, with the stock having reached eight. Soon after, it dipped down. It doesn’t make sense to buy above 8 SEK as long as warrants are available at a bargain price.

image

Nextcell continues its recovery. In the morning, it was up +8%. Technically, considering the dilution effect, the breakeven would be around 1.4 SEK, because the issue is based on a 70% weighted average during May 1-15 (but surely the dilutions are already priced in). Now might be the last chance to get cheap warrants if the trend continues.

1 Like
40

I reviewed the 2024 spring offering, which also distributed TO4-warrants for the autumn.

Based on the shareholder list, Avanza Pension subscribed for all units it received and increased its ownership stake to 12 percent. This despite the fact that the subscription price of 12 SEK was clearly below this throughout the subscription period, between 9-10 SEK. No advance information was given about Avanza’s share.

A pension company does not necessarily fixate on small price changes but invests long-term, supporting companies. I would consider it likely that if Avanza previously agreed to subscribe at a fair discount, it will also subscribe for the shares now, with the share being roughly at the subscription price and when a bonus warrant is also included.

Avanza’s share would amount to 25M SEK on top of the current 44M SEK commitments. That would bring the total to 69M, meaning only 31M SEK would need to be raised from other shareholders. If one assumes Avanza subscribes, and the current commitments have come from the top 10 shareholders or the company’s insiders, then for the remaining 65% of the share capital’s subscription units, only a 23% subscription rate would be needed. This doesn’t look bad at all in my opinion.

Judging by the commitment announcements, Avanza is not yet included in this either.
28.2: SEK 6.2 M
10.3: SEK 17.5 M
21.3: SEK 38.7 M
14.4: SEK 44.1 million

42

Chairman of the Board, Anders Essen-Möller, is increasing his commitment by SEK 1 million to a total of SEK 6 million. All members of the management team are subscribing for their pro rata share. In total, the rights issue is covered by subscription commitments and subscription intentions amounting to approximately SEK 47.4 million, corresponding to approximately 22.8 percent of the rights issue.

New update. The entire management team is subscribing for their full shares. However, commitments only increased by a few million.

2 Likes
43

There are other large pension fund owners. If even some of them subscribe for something, it would go a long way. There’s plenty to be excited about.

I thought it would have concerned Lindqvist’s participation.

It’s quite a contraption when money is paid to management, with which the management then subscribes for a significant portion of new shares a couple of times a year.