Diamyd Medical, a Swedish biotech company focused on precision medicine therapies for Type 1 diabetes, has announced a significant rights issue aimed at raising approximately SEK 114 million before deduction of related costs. The Board of Directors approved the rights issue on March 18, 2024, following authorization from the company's annual general meeting held on November 30, 2023.
Strategic Financing to Advance Clinical Development
"With the very positive development led by the granting of Fast Track status by the US FDA, this preferential rights issue further strengthens our strategic position," said Ulf Hannelius, CEO of Diamyd Medical. "By harmonizing with the existing warrant structure and upcoming key milestones, it provides opportunities for advantageous long-term financial planning."
The rights issue comprises a maximum of 9,494,799 units, including 274,163 A-units and 9,220,636 B-units. Shareholders will receive one unit right for each share held on the record date of March 27, 2024, with ten unit rights entitling the holder to subscribe for one new unit at a price of SEK 12.00 per unit.
Each unit contains one share of the corresponding series and one warrant of series TO 4. The subscription period runs from April 2 to April 16, 2024, with trading in unit rights of series B taking place on Nasdaq First North Growth Market from April 2 to April 11, 2024.
Commitment from Leadership
The company has secured subscription commitments from key leadership figures, including Chairman of the Board and founder Anders Essen-Möller, who has committed to subscribing for units equivalent to approximately SEK 1 million. CEO Ulf Hannelius has committed to subscribe for his pro rata share, corresponding to approximately SEK 0.4 million, while other senior executives have committed to units worth approximately SEK 0.2 million.
Strengthening Financial Position with Additional Capital
In a subsequent development announced on May 5, 2025, Diamyd Medical has expanded its capital raise through a directed new issue of SEK 41.6 million. This additional funding was subscribed by several qualified private investors, including the Edlund family (SEK 18.5 million), Venture S.A.R.L. (SEK 10 million), and several other investors.
The directed issue comprises 5,200,000 B shares and 5,200,000 warrants of series TO 5 B, carried out on the same terms as the rights issue at SEK 8.00 for a B share and a warrant. This additional capital strengthens Diamyd's ownership base and provides resources for business development initiatives that were previously postponed.
Advancing Precision Medicine for Type 1 Diabetes
The proceeds from these financing activities will primarily support the clinical development of Diamyd®, an antigen-specific immunomodulatory therapeutic for the preservation of endogenous insulin production. The therapy specifically targets individuals carrying the HLA DR3-DQ2 gene type, which is present in approximately 40% of people at risk for or diagnosed with autoimmune diabetes.
Diamyd® has received significant regulatory recognition, including Orphan Drug Designation and Fast Track Designation from the U.S. FDA for the treatment of new-onset Type 1 diabetes. In February 2025, the FDA also granted Fast Track Designation for the treatment of Stage 1 and 2 (pre-symptomatic) Type 1 Diabetes.
DIAGNODE-3: Pivotal Phase III Trial
A substantial portion of the funds will support DIAGNODE-3, the company's confirmatory Phase III trial currently recruiting patients with recent-onset Type 1 Diabetes across eight European countries and the United States. The trial specifically targets patients carrying the HLA DR3-DQ2 genotype, following significant results in preserving endogenous insulin production in this genetically predefined patient group in previous studies.
An early read-out of the Phase 3 trial is expected in March 2026, representing a critical milestone for the company.
Manufacturing Capabilities and Platform Expansion
Approximately 15% of the proceeds will support the continued development of the company's production facility in Umeå, Sweden, for the manufacture of GAD65, the active ingredient in Diamyd®. The remaining funds will be allocated to general administration and expansion of the company's antigen-specific immunotherapy platform.
Market Significance and Medical Need
The medical need for new disease-modifying treatments for autoimmune diabetes is underscored by Diamyd Medical's partnership with the American patient organization JDRF, established in April 2023. Market analysis from January 2024 supports premium pricing potential for Diamyd® and indicates strong willingness among physicians to prescribe the drug in the US market.
By intervening early in the disease course and preserving patients' endogenous insulin production, Diamyd® aims to significantly reduce complications of autoimmune diabetes, including cardiovascular disease, retinopathy, neuropathy, and nephropathy.
Looking Forward
The additional capital from the directed new issue provides Diamyd Medical with increased financial flexibility for upcoming partner discussions and intensified preparations for the Phase 3 readout. The company's CEO noted that this strengthened position is particularly valuable given the challenging financial climate for smaller biotech companies.
With these financing activities completed, Diamyd Medical is well-positioned to advance its precision medicine approach to Type 1 diabetes, potentially transforming treatment options for a significant subset of patients with this autoimmune condition.
