Diamyd Medical AB (publ) (DMYDB) Earnings Call Transcript

Welcome, everyone, to the BioStock Studio where we today are doing this live webcast. Thank you for tuning in. So we are meeting today in the context of the World Diabetes Day. It's a day to raise awareness about diabetes, type 1 diabetes and also the impact that this disease has on people's lives. Around 9 million people globally are living with type 1 diabetes. And each year, roughly 300,000 to 500,000 people are newly diagnosed with it globally. So it is a big, big medical need, and it needs to be addressed. And we are here with a panel of experts that will definitely bring us new light in what's going on with the development within type 1 diabetes. So without much further ado, I would like to introduce our panelists. From Diamyd Medical, who we are co-hosting this webcast with, we have Ulf Hannelius, CEO. Diamyd Medical is a listed company on NASDAQ First North in Sweden and developing a GAD65-based precision therapy to preserve the body's own insulin production called Diamyd. We also have with us Professor Johnny Ludvigsson, pediatrician and type 1 diabetes researcher, also the founder of Barndiabetesfonden, the Children's Diabetes Fund and principal investigator in the GAD Diamyd trials. Welcome, Johnny. With us from the U.S., we also have Joshua Vieth, who is representing Breakthrough T1D. It's a nonprofit organization that leads research strategy at global funding -- and funding disease-modifying trials within diabetes. So thank you for joining us from the U.S., Josh. We also have with us Professor Åke Lernmark, also type 1 diabetes researcher focused on genetics, HLA and autoantibodies, central to understanding risks and prevention with disease. So very much appreciate you taking the time to be with us today.

I would like to start by laying down some grounding basics in terms of terminology. And I'm going to address you first, Johnny. Can you just in sort of layman terms, tell us what does type 1 diabetes actually mean?

Yes, it is actually so that all of us need glucose, sugar as fuel for the machinery. And the problem is that this glucose cannot pass into the cells. It's too large. It needs an opening, and that is done by insulin. And the problem is then that if you lose insulin, then the body will actually die. And in type 1 diabetes, there is -- there's a process starting, we get a civil war. The immune system for some reason attacks these cells producing insulin. And when that starts, the autoantibodies, antibodies against these cells are seen. And this is nowadays what people call Stage 1 of the disease, but it's not clinically evident yet. And then gradually, the glucose capacity to take up glucose decreases and you get an intolerance with something increasing blood glucose. And finally, the Stage 3, which we call clinical diabetes, the type 1 diabetes people think of. And that is a very serious disease, which cannot be cured, it cannot be prevented. You need to take insulin every day and that should be adapted to what you eat, physical activity, infections, everything. And if you are happy and it works very well, then you can continue with this for many, many years, a long life. But if you have -- for some reason, some people develop serious complications, kidneys, eyes, heart, heart infarctions. And unfortunately, some people die too early -- much too early by this. So it's a very serious disease. And in Sweden, for instance, it's by far the most common of all type of diseases in especially children and adolescents, but it's 3x more common than all cancers and tumors together in Sweden.

So actually looking at who are at risk and why do people develop the disease, I was going to ask you, Åke, you're working with HLA genotyping for people who have never heard the term before, what is HLA genotyping and how does HLA genes actually then affect who is at higher risk of developing disease and how fast the disease progresses?

So the HLA system is present in all people. Everybody has it. And we have, during evolution, developed a way by which we can protect ourselves from virus infections, bacterial infections, parasite infections and also we have learned how to transplant organs and these different mechanisms, which is human survival, is all regulated by genes coding for proteins that these proteins are able to identify fragments of virus, and the proteins are able to help the immune system to develop specific antibodies to virus. And the interesting part is that these HLA genes and they are very, very variable, as you can imagine, in people all over the world. We can use them to identify where people come from. So for example, people in Scandinavia, they have HLA genes that are very good to code for proteins that are able to protect ourselves from tuberculosis, while we are unable to protect ourselves from yellow fever. So the important part is that the HLA proteins are then making some mistakes to think that GAD, for example, or insulin or like virus proteins or virus antigens. And the immune system make a mistake to develop antibodies against ourselves. And this is called autoimmunity. It's related to autoimmune diseases. And -- so in order to develop type 1 diabetes, you inherit these HLA genes. It doesn't mean that you're going to get the disease. It means that the risk is increased to develop type 1 diabetes, if you have these particular HLA genes. And they are very easy and inexpensive to find out what people have.

Thank you very much for that explanation. So the insulin production decreases. C-peptide, Josh, I know this is something that you are looking into closely. What is C-peptide? And how does that show how much insulin the body can actually make?

Yes. Thank you. Building on what Johnny said with the role of insulin in the body, this insulin is produced in your beta cells, which are a type of cell in the pancreas. And during that process, a larger protein is broken down to -- until you have insulin. And that sort of that breaking down involves different pieces of that larger molecule, one of which is C-peptide. What this means is that for every molecule of insulin your body produces, you produce one molecule of C-peptide. So by measuring C-peptide, you can directly measure how much insulin your body is making.

That sounds very useful, I would say. So, Josh, from your perspective, at Breakthrough T1D, you support a lot of research going on and so on. So why has preserving the C-peptide or endogenous insulin become such an important goal in clinical trials?

Yes. We are working very hard to make C-peptide a validated endpoint for clinical trials. And the reason being is that a lot of people that enter trials at the time of diagnosis are also receiving insulin through an insulin pump. This makes it very hard, if not impossible, for us to determine how much insulin they're producing because of the insulin they're receiving from their pump. So by measuring C-peptide, we are just measuring the insulin that their own body is producing, and that allows us to determine whether or not a drug or therapy is preserving that and allowing them to continue -- their beta cells to continue to function.

Right. So how then -- how would you say that -- describe that how is the field moving from better management towards sort of more disease-modifying and preventive therapies?

Yes. It's an exciting time in the field. We've shown a number of immune-based approaches can stop the autoimmune attack that Ake spoke about and preserve beta cell function. Now we're at a point where we're looking to see why do some people respond to certain therapies and others do not. And that gets us into more of a precision medicine approach. So where the field is going is learning more about the pathology of disease, as it progresses and then fine-tuning our therapeutic options so they address the specific needs of a patient versus broad use of immunosuppression and other approaches.

Yes. So precision medicine is the key here. But Ulf, when you look at the current landscape of type 1 diabetes treatments and trials, where is Diamyd Medical positioning this GAD65-based therapy amongst other emerging disease-modifying therapies?

Yes. Thank you for that question. And I can like allude to what Josh was mentioning around precision medicine. We -- our Phase III trial, which is ongoing, is the first ever -- precision medicine-based Phase III trial ever being done in this field. So that's really been part of the learning over all the year that GAD-based therapy has been developed that it doesn't work in all individuals, like I would say, any therapeutic, in any complex disease, never worked 100%, but that's been very clear for us how we've been able to adapt our development in finding the potential responders based on the HLA genetics that Ake mentioned. And we are now in Phase III, which is the last step before hopefully, market approval and commercialization. So we are -- today, we are 1 of 3 assets in Phase III in the field as far as we know. And like also Josh mentioned, there is a great momentum now ongoing in the field. If you go back 10 years back, it looked completely different landscape of type 1 diabetes assets being developed. But now there's a lot of investments going on, a lot of awareness, and we are 1 of 3 in Phase III, and we are the only company with a so-called antigen-based immunotherapeutic in Phase III development. So again, where you specifically want to reprogram the immune system against a single component, no broad immunosuppression, but very specific treatment in a patient population that we identify based on HLA genetics. So I would say, obviously, as a company, we are very well positioned in a very interesting field currently where there's a lot of momentum and Phase III results coming in March next year...

We'll get right back to that in a short while. But first, I would like to ask, Johnny, in everyday language, if you will, what is GAD65 really? And how does Diamyd try to reeducate the immune system rather than suppress it?

Yes. GAD is one of these products from the islets of cells in pancreas. And therefore, the immune system attacks this GAD that means glutamic acid decarboxylase. It's actually an enzyme from the brain, but it's also in the blood together [indiscernible]. We discovered that 45 years ago in Linköping children. And by using that, we decided 35 years ago or something like that, that we should use it as people do in allergy, where if somebody is allergic against cats, dogs, birds, they give that allergen and get tolerance. So we thought maybe we can do the same with an autoantigen. So we started to give this in very, very small amounts under the skin, and it worked. And actually, I can tell you that we could be able to show them at our lab that we got to change of the immune system. Recently -- or this year, actually, the Nobel prize was given for T lymphocytes where -- the regulatory T lymphocytes who regulate the offices. And it was something called FOXP3. And we showed that we could increase FOXP3 -- CD25 FOXP3 positive cells, which are those regulating and decreasing the war, calming down the immune system. So we create some kind of tolerance. We have a deviation of the immune system. And that leads to that the war -- the civil war, as I call it, the immune attack decreases and the beta cells survive. May I add to what Joshua said regarding C-peptide? You know that if you have some own insulin secretion, even with the most modern techniques, it's difficult to keep a good blood glucose balance. You tend to get high -- both too low blood glucose or too high blood glucose. But if you have some own insulin secretion, that helps a lot. Very much easier to balance blood glucose. You avoid serious complications, both acute and late, extremely important.

Josh, is there anything you want to add to that?

No, no. I think Johnny summed it up beautifully. And I think the key here, particularly for our approach for disease-modifying therapies is that it's about balance, right? And type 1 diabetes is a difficult disease because not only are you trying to balance the metabolic aspect of the level between glucose and insulin, but then we're also trying to rebalance the immune system between our protective Tregs and the attacking T cells.

We go up more Tregs when we gave GAD subcu. Now we give it directly into lymph nodes, which has shown to be even more effective. There the offices sit and we present a directly close GAD and we seem to get a tolerance development in some way. We don't know exact mechanism, but it looks nice.

Looks nice. Ulf, you were alluding to your Phase III study with a readout in March. What will that early readout actually tell us?

Yes, exactly. So it's kind of an interim efficacy readout that we have in discussions with the FDA. We have gotten the green light to actually do this kind of a readout in the middle of an ongoing registrational Phase III trial. That's also something where we and the field are breaking new ground to really like the regulatory discussions where the FDA has been very positive in their meetings with us and others now. And specifically here, we are going to do a readout that after 15 months from the start of the trial, in around 170 patients, and that's a bit less than -- more than half of the total trial that will be 24 months follow-up. And the readout, it's been done in -- like in a pre-agreed plan together with the FDA, how we do it in a way that we are not sort of compromising the integrity of the trial. That's very important when you -- in a registrational big trial, you can't sort of look at all the data in the middle of the trial because you might be biased and that can destroy the whole trial then. So it will be done in a way where we look at C-peptide only that was mentioned here, the marker for your own endogenous insulin production. And it will be kind of a thumbs up, thumbs down analysis where we get -- as a company, we will get the information from a security committee that looks at the data where they say, we hope and believe it will be a thumbs up, but that's obviously we'll see in March. where a thumbs up means that it's a statistically significant treatment effect on C-peptide, which means that at that interim, it looks like the treatment really is working. It's preserving your own insulin production. And there, the FDA has then given us the thumbs up that with good results at the interim, we can then start having the interactions with the FDA and talk about a potential accelerated approval pathway in the U.S. so that we can start going towards market already using this interim data, and then we finish the full trial that then will be the complete approval of the treatment. But that's -- it's a very important upcoming milestone, obviously, where we have the opportunity to look much earlier at the data in a very controlled fashion. And if it looks positive, that can then lay the groundwork for an accelerated approval pathway in the U.S. So it's a big thing and most companies never come this far in the development of any therapeutic and even less so in type 1 diabetes, which has been obviously a lot of failures over the years. But now we are close, hopefully so.

Exciting times, that is. So we have actually invited the viewers to ask questions through the live chat in the webcast. And I will look at them in a little while and see if we have time to go through some of the questions that might have arisen. But Josh, I was going to ask you, if the current immune targeted and precision approaches succeed, how might the story you tell families at diagnosis and change going forward over the next, say, 5 to 10 years?

I think the biggest advancement we can see in the field is the advancement of tolerizing therapies. Right now, if somebody has -- is screened and has 2 autoantibodies indicating that they're progressing through type 1 diabetes, we talk about delaying or -- delaying the onset or delaying diagnosis, giving them a little bit more time with producing their own insulin. The goal with moving toward immune approaches such as tolerization is to make that a lasting effect. So how can we more permanently rebalance the immune system so we're not talking about a delay, we're talking about halting. And then eventually, as we develop therapies that can regenerate and support beta cells, how can we reverse and restore those individuals back to normal levels of insulin production.