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LIDDS AB (publ) Interim Report January – June 2023

April – June 2023

  • Net sales amounted to 0 (0.3) MSEK
  • The operating result for the period was -7.4 (-9.9) MSEK
  • The net result was -7.4 (-9.9) MSEK corresponding to earnings per share of SEK -0.11 (-0.29)
  • Cash flow from operating activities amounted to -7.1 (-12.0) MSEK
  • Cash and cash equivalents amounted to 22.7 (19.7) MSEK

January – June 2023

  • Net sales amounted to 0 (0.8) MSEK
  • The operating result for the period was -17.0 (-19.7) MSEK
  • The net result was -17.0 (-19.7) MSEK corresponding to earnings per share of SEK -0.28 (-0.58)
  • Cash flow from operating activities amounted to -17.2 (-18.2) MSEK

Significant events January – June

  • The rights issue was approved at an EGM on January 9, 2023 and completed on Feb 6, 2023. The summary showed that 25,253,268 shares, corresponding to approximately 72.7 percent of the rights issue, were subscribed with or without the support of subscription rights. The bottom guarantors were allocated approx 8.6 percent of the rights issue, and the top guarantors approx 14.4 percent of the rights issue. The company received approximately SEK 46.5 million before issue costs. Three of the guarantors chose compensation in the form of shares.
  • The company implements significant cost containment measures to maximize the possibility of reaching a license agreement without the need for further financing. The decision means that further investments in clinical development will be held back until licensing agreements can be secured. Staff reductions have been implemented and Anders Månsson will leave the CEO role at the end of August 2023. The board has appointed Matthew Lindon as acting CEO.

Events after the reporting period

  • Max Mitteregger resigns from the Board of Directors
  • The collaboration agreement with Johnson & Johnson Enterprise Innovation Inc is closed.

CEO Statement

During Q2, LIDDS initiated significant cost saving measures that brought a laser-sharp focus on project prioritization and out-licensing before further investments in clinical development can be considered. The reasons for this are simple and have been clearly expressed by my predecessor in earlier CEO words: LIDDS is almost 20 years old, and it is time to demonstrate that the company can achieve recognition of the value it has created and produce revenue from the projects it has spent a long time developing, before it should seek further investment from shareholders. Liproca Depot, which has completed Phase IIb clinical studies with good results, is the main project that has the potential to raise the company significant amounts of money in the short term, and thus finance the company without the need for additional capital injections in the very near future. Maximizing the financial sustainability of LIDDS and strengthening our negotiating position for the ongoing partnering process was therefore a necessary decision.

The focus and savings measures announced in June, aimed at strengthening the company’s financial sustainability unfortunately has meant cuts in staff and consulting support. In that situation, Anders Månsson chose to leave the company. As such, I find myself writing my first quarterly report as LIDDS’ new CEO. Whilst new to this role I am, of course, not new to LIDDS having been CSO since joining in March 2021. The board’s opinion is that it was logical and cost-effective to appoint a CEO internally who can operationally lead these early development projects scientifically, as well as having the detailed knowledge of the portfolio to support the major focus on partnering.

In Q1, LIDDS finalized the collaborative project with Johnson & Johnson Enterprise Innovation Inc (J&J). This was followed by a long wait for a decision in Q2, but in early July we received the news that J&J did not prioritize our project for continued development. This was, of course, very disappointing news for us, but we are at least confident that we have done everything in our power in terms of delivery, including the earlier extension of phase 2 of the project that extended it by half a year and further supplemented the results achieved last autumn. In the end, however, we have minimal influence on which projects J&J chooses to prioritize. It is worth mentioning, however, that even if J&J had agreed to further development, this would not have automatically triggered a larger payment that would have radically changed the financial situation that is the reason for the savings measures described above. However, their decision not to continue the project only further underlines the importance and need for the measures taken in recent months.

The last 15 months have seen LIDDS bring an acute focus on business development. In that time, we have connected with several hundred companies regarding both Liproca and other projects. We have also partnered with Alira Health this year to strengthen our efforts. Alira continues to do great work for us and increase our BD outreach. The business development efforts continued unabated through the summer months. There is no lack of interest in the Liproca concept, but in the end a partnership must take place with one or a few parties with the willingness and capacity to take on both phase III trials and launch. If LIDDS does not find a global partner for this at the end of the process, the alternative would be to bring together a multi-party solution with different partners for different territories and a co-financing of Phase III studies. This has much greater complexity and therefore emphasizes even more the importance of strengthening the company’s cash position, cutting costs, and increasing sustainability in terms of liquidity. My aim in the coming months is to finalize our on-going efforts and find all opportunities for realising value in LIDDS.

If the company succeeds in its ambition to realize Liproca Depot, the development project that has been the cornerstone of the company since its inception, or any of the company’s other projects LIDDS will succeed in both generating a positive cash flow and achieving a “proof-of-concept” for its entire business, thereby demonstrating that development projects based on NanoZolid® have a realizable market value. This is an appropriate goal after such a long period of development.

Matthew Lindon, CSO & Acting-CEO

The interim report is available on the company’s website