On November 28, 2022 LIDDS AB (publ) reported that Interim Report January – September 2022(Press release, Lidds, NOV 28, 2022, View Source [SID1234624509])
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Net sales amounted to 1.2 (0.4) MSEK
The operating result for the period was -8.1 (-7.8) MSEK
The net result was -8.1 (-7.8) MSEK corresponding to earnings per share of SEK -0.23 (-0.26)
Cash flow from operating activities amounted to -7.3 (-9.2) MSEK
Cash and cash equivalents amounted to 14.9 (44.2) MSEK
January – September
Net sales amounted to 2.0 (1.2) MSEK
The operating result for the period was -27.7 (-28.4) MSEK
The net result was -27.7 (-28.4) MSEK corresponding to earnings per share of SEK -0.81 (-0.90)
Cash flow from operating activities amounted to -25.4 (-32.7) MSEK
Significant events January – September
The R&D project with J&J moved into the next phase.
A financing agreement of up to 40.8 MSEK signed with Nice & Green
Max Mitteregger and Johan Lund were elected as new members of LIDDS’ Board of Directors. Max Mitteregger acquired in connection with the appointment to LIDDS’ Board of Directors shares at a total value of 4.5 MSEK through a directed share issue of 750,000 shares at a subscription price of 6 SEK, which corresponded to LIDDS’ share price at Nasdaq First North Growth Market at the time for a binding commitment to subscribe for the shares.
Anders Månsson succeeded Nina Herne as CEO of LIDDS on 1 September 2022
CEO comment
As new CEO of LIDDS since September 1, I have done a thorough review of LIDDS to get a good picture of where the company stands and what needs to be changed. I consider LIDDS a company resting on a versatile technology platform, a platform that has managed to attract a collaboration with Johnson & Johnson that is progressing. In addition, the company has gone ahead and shown the way with its own development of drug candidates based on the platform and on already established substances. The combination of own product development and technology collaborations with large companies based on the platform, I consider to be a well-functioning, synergistic and well-balanced business model.
Therefore, I believe that the journey forward can offer good value development with relatively low risk, among other things because LIDDS in its own portfolio works with established pharmaceutical substances and a depot technology that has already been used successfully in clinical development. There are therefore very few uncertainty factors in the upcoming clinical projects. On the other hand, there can be considerable value in advancing the projects clinically, even without having to advance that far. LIDDS’ TLR9 project, Nanoimod (NanoZolid-formulated agatolimod), has a significant value benchmark in the big pharma company Regeneron’s acquisition of Checkmate Pharmaceuticals for 250 MUSD in May this year. The goal of the deal was primarily to take over Checkmate’s TLR9 project, which was in early clinical Phase II at the time of the acquisition. LIDDS can start a Phase II clinical study with its drug candidate in the TLR9 area, Nanoimod, in 2024, which means that we can relatively soon advance to a phase where the project is most interesting for acquisition or license. Nanoimod also has a NanoZolid-based depot formulation that can mean obvious advantages in terms of getting the right level release of drugs in tumors over time for optimal effect, minimal side effects, and with an increased user-friendliness for the patient in question with less frequent injections. The project thus has the potential for great value development with low risk, already in the relatively near future.
The upcoming Phase Ib study with Nanodotax (NanoZolid-formulated docetaxel) in the indication prostate cancer has no corresponding value reference points in terms of acquisitions. However, the active ingredient has been tried before as a pre-treatment before surgical removal of the prostate. The investigators we are collaborating with on the study are also enthusiastic about the possibility of testing the substance with NanoZolid formulation for intratumoral injection, a formulation that offers the possibility of increasing the locally available dose while avoiding the systemic side effects that the substance is otherwise characterized by. Nanodotax entails an opportunity for the treatment of prostate cancer but also for the treatment of many other types of cancer where the substance docetaxel is used systemically today.
The company also has a more advanced prostate cancer project in Liproca Depot, a project which, since the Phase IIb study was completed in 2019, is ready for Phase III. The development results are very good, but my assessment is that the company did not have the capacity for the business development that was required, something that was of course also hampered by the COVID pandemic, and which is possibly the main reason why we do not yet have a license agreement for the product in the EU/USA. Now, however, I believe that the company has upgraded its business skills and capacity, and the pandemic is no longer a significant factor, so the "redo and do it right" approach applies here. A number of new initiatives have already been launched, something I will have reasons to return to in detail later on. Of course, it is an impediment that the project has already been available for so long, but if we were to succeed with an out-licensing, such a deal could mean a very large upside in relation to the company’s total market valuation. My ambition is to reach such an agreement in 2023.
Further, I believe that great potential lies in the company’s depot technology, NanoZolid. We currently have a joint development project with Johnson & Johnson, one of the world’s largest and most reputable pharmaceutical companies. That type of collaboration, which can lead to value-generating licenses, or even the acquisition of the entire company, has the highest priority for me. LIDDS should therefore prioritize achieving one or more collaboration projects of this type, and initiatives in that direction are also on the way with increased presence at congresses such as BIO Europe and Partnerships in Drug Delivery. I believe that we should invest more in partnerships with larger companies in the coming year. It can generate some revenues upfront, it certainly provides cost coverage, and it provides the opportunity for license agreements around NanoZolid which can generate great values in the long term. And collaborating with large companies around the platform also means inviting potential candidates for an acquisition to get to know LIDDS and the technology.
As previously announced, there is no doubt that LIDDS will need to refinance to realize the plans we have for next year. Since last winter, the company has had access to a convertible solution with Nice & Green which can provide some flexibility, but it comes at a price, so basically I think that the company and the shareholders are better served by LIDDS having access to traditional risk capital, and we have therefore taken a bridge loan from Erik Penser Bank in order to carry out a refinancing during the first quarter of next year.
With the risk capital we need in place, I assess that LIDDS has assets in both the technology platform and in drug candidates that can be developed with a low risk compared to the biotech industry, and potentially very large value creation. In relation to the current company valuation, either a deal with Liproca, a deal with a focus on Nanoimod, or a deal regarding the company’s NanoZolid technology itself, could offer a considerable upside and actually be completely transformative for the company. In my opinion, the product and technology development in LIDDS works well. As I see it, the business development has previously been insufficient in the company – now we are changing that and doing the right thing in that area.