LIDDS AB (publ) Interim report January – March 2023

Significant events January – March 2023

• The decided rights issue was approved at an extraordinary general meeting on January 9, 2023 and completed on February 6, 2023.
• The subscription 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 approximately 8.6 percent of the rights issue, and the top guarantors approximately 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.

CEO comment

During the first quarter, LIDDS carried out a necessary financing with a significant impact on our share price. We were certainly not alone in this experience this year. The conditions for the biotech sector, with its risk profile and the long periods of waiting for a possible positive cash flow, have at the moment fundamentally changed. But the company had to refinance itself in order to survive and have a chance to succeed with an out-licensing of above all Liproca Depot, the project in LIDDS that could bring relatively large amounts of money in the short term. This licensing work is currently in an intensive phase.
I have no doubt that LIDDS is active in a very interesting development area – intratumoral depot injections in oncology, perhaps the hottest development area in the pharmaceutical industry. Almost all cancer treatment takes place with more or less toxic and thus side-effect-heavy substances, which if given directly into the blood stream will expose healthy tissue to the drug and thus create unwanted effects of varying severity. This means that the dosing is not always optimized with regard to effect, because one must constantly balance the drug’s effect against the risk of side effects. The technology that LIDDS bases its business on – NanoZolid® – is a technology that enables cancer drugs to be given as an injectable depot directly into a tumor, instead of indirectly via the blood. This allows for exposing the tumor to a higher and more effective dose while avoiding the side effects that otherwise would result from the drug circulating freely in the blood and affecting healthy tissue.

LIDDS works with NanoZolid® to help other companies with formulation development based on the platform, but also in the development of our own product portfolio. In this portfolio, only Liproca® Depot has progressed beyond the pre-clinical or early clinical phase. Liproca® Depot has undergone phase IIb, reached a so-called “Proof-of-Concept”, received a nice publication last year, and had an advisory meeting with the EMA to overall agree on the study design for phase III. In short, the product candidate is ready for out-licensing and one of my most prioritized tasks during my nearly nine months in LIDDS has been to design and implement a professional licensing process, as well as support this with, among other things, the creation of a health economic analysis around the product and with the contracting of Alira Health, which was completed at the turn of the year. My focus on Liproca® Depot in particular is great precisely because it is a project that has reached far in clinical development and therefore it is undoubtedly the project that has the greatest value in LIDDS. The other projects can also achieve a rapid increase in value with their planned clinical development and the Nanodotax phase Ib study could start after the summer. Liproca® Depot has already reached as far as LIDDS is able to take on the project on its own, and with good clinical results, and therefore out-licensing now has the company’s full focus.

LIDDS also reached an important milestone in the first quarter with the completion of the development project we have with J&J. During the second quarter, we have delivered a final report of all results and at the time of writing we are awaiting a formal decision from J&J as to whether they wish to take the project further. This decision will likely come in the near future. We are also actively working to acquire more collaborative projects with big pharma. This type of collaborative project does not bring big money in the short term but can bring greater returns in the long term if a project advances to market. After all, LIDDS also receives a revenue stream during the course of the project and, in addition, it gives the company credibility that larger companies choose LIDDS for their formulation development projects in the area, which can contribute positively to all types of business discussions.

Back to the Liproca Depot out-licensing project. This work has been carried out in a structured form since the turn of the year. My assessment is that the project is progressing as well as could be expected and I have confidence in our process. This is the summary we can provide – it is difficult to continuously comment on the work and comment on whether it is “going well” or not. I think it is “going well” so far and we have several stakeholders in the process. In the end, the outcome is essentially binary in nature – we either succeed in making a deal or we don’t. When I bought my shares in LIDDS in connection with the rights issue this winter, it was with the attitude that this should be resolved and I have had no reason to reconsider that attitude so far. I know it can be agonizing to wait for word on the matter, especially as the share price slowly ticked down during the spring. However, I ask for the confidence of the shareholders to work further in the process, calmly and unrelentingly, and according to plan. That provides the best conditions for achieving the result we all hope for.

Anders Månsson, CEO

The interim report is available on the company’s website https://liddspharma.com/en/investors/financial-report