Third quarter 2022

Third quarter, 1 July – 30 September
·         Net sales amounted to -- KSEK (--)
·         Profit after financial items amounted to SEK -2,121 thousand (-1,524)
·         Cash flow from operating activities amounted to SEK -2 595 000 (-916)
·         Investments in intangible assets amounted to SEK 2 350 thousand (7 113)
·         Earnings per share amounted to SEK -0.02 (-0.02)
Nine months, 1 January – 30 September
·         Net sales amounted to -- KSEK (--)
·         Profit after financial items amounted to KSEK -6 410 (-4 523)
·         Cash flow from operating activities amounted to KSEK -6 689 (-2 770)
·         Investments in intangible assets amounted to SEK 22 006 thousand (20 562)
·         Earnings per share amounted to SEK -0.06 (-0.08)
 
”Company” or ”Toleranzia” relates to Toleranzia AB with Swedish registration number 556877-2866.
 
Significant events during the third quarter 2022

• Toleranzia initiated a collaboration with Dr Amy Rosenberg, former head of the FDA’s Division of Therapeutic Proteins, to obtain regulatory advice.

• Torbjörn Sannerstedt was appointed as the new Chief Financial Officer (CFO).

Significant events after the reporting period

• Toleranzia and 3P Pharmaceuticals, the company's contract manufacturing partner, started production of the first pilot batch of TOL2 where all process steps are implemented on a large scale.

 
Key financial data

  
Comments from the CEO

Focusing on the production of TOL2
The next major value-adding step for Toleranzia is when we complete the large-scale production of TOL2. In this work we are now, together with our partner 3P, carrying out a pilot batch where all process steps are implemented and evaluated on a large scale. Once the pilot batch and subsequent analytical work is completed, we will have a solid basis for establishing the large-scale manufacturing process for TOL2. As TOL2, like many biologics, has a complex manufacturing process, we have a patent application pending for the manufacturing method, which together with the orphan drug status already obtained, will allow us to create a very strong commercial protection for the treatment in the future.
In parallel with the important steps in large-scale manufacturing, detailed planning continues for the upcoming clinical trial of TOL2, including the selection of biomarkers to evaluate the clinical efficacy of the treatment, dialogue with study sites to be included in the trial and development of the final study design to deliver high quality data. We look forward to meeting the high international interest in TOL2 by validating our drug candidate step by step and creating the best conditions to enter into a successful partnership with an established international pharmaceutical company.

New drug successes boost interest in TOL2
Over the past quarter, we have focused on raising awareness of our drug candidate TOL2 for myasthenia gravis. In September we were present in Malmö during the Nordic Life Science Days, after the end of the quarter we participated in the BioPharm America virtual networking meeting and in early November we will participate virtually during the European life science conference Bio-Europe. Shortly thereafter we will also meet with investors and potential partners during the ChinaBio Partnering Forum.

Increased international interest in TOL2
During the many partnering meetings this autumn, it has become clear that international interest in TOL2 is growing. Although new drugs for the treatment of myasthenia gravis have reached the market in the past year and several projects have advanced into clinical phase, we are seeing an increased interest and demand for information about our drug candidate TOL2, which is the only potential disease-modifying treatment in development. The sales success of the newly introduced treatments for myasthenia gravis further contributes to this curiosity. These therapies are rapidly gaining acceptance despite the fact that they only relieve symptoms and do not address the cause of the disease. Given the very promising preclinical results we have seen for TOL2, it is understandable that our pioneering project - which has the potential to actually cure the disease - is attracting a lot of interest.
  
 
Charlotte Fribert
CEO
Gothenburg, 28 October 2022

About Toleranzia
 
General information about the business
Toleranzia AB (556877-2866) is a Swedish biotechnology company listed on Nasdaq First North. The Company develops drugs that harness the power of the immune system for the treatment of autoimmune orphan diseases (rare diseases). The drugs, which target the cause of the disease, can alleviate or cure the disease and not, like current treatments, merely reduce the symptoms. They have the potential to be the first long-acting or curative therapies that act specifically on the underlying cause of the autoimmune orphan disease for which they are being developed. Toleranzia's main focus is the autoimmune nerve and muscle disease myasthenia gravis, for which the Company is developing the drug candidate TOL2. In addition, Toleranzia is working on the autoimmune blood vessel disease ANCA-vasculitis, for which the Company is developing the drug candidate TOL3. Both diseases are so-called orphan diseases and there is a great medical need and market potential for both. For further information, please visit: www.toleranzia.se.
 
Company structure
Toleranzia was founded by researchers at the University of Gothenburg. The Company operates at the Biotech Center in Gothenburg. Toleranzia has no subsidiaries and is not part of any group. The Company has no shareholdings.
 
Financial development and position
 
The period July – September 2022
Net sales amounted to -- KSEK (--) during the period.
 
Other income amounted to 59 KSEK (--) during the period and consists of currency exchange rate gains.
 
Operating expenses for the Company amounted to 4 546 KSEK (8 843) during the period, of which 1 211 KSEK (820) are costs for personnel.
 
The increased costs are in line with the Company's plan and expectations linked to the long-term strategy. The cost of personnel has increased compared to last year, as a result of the increase in the number of human resources compared to previous quarters.
 
Of the total cost 2 350 KSEK (7 319) relates to development of the Company product portfolio within myasthenia gravis and ANCA vasculitis and the costs incurred are capitalized on an ongoing basis as own-account work.
 
Operating income during for the period amounted to -2 137 KSEK (-1 524).
 
The period January – September 2022
Net sales amounted to -- KSEK (--) during the period.
 
Other income amounted to 72 KSEK (459) during the period and consists of currency exchange rate gains, together with contributions from Vinnova.
 
Operating expenses for the Company amounted to 28 536 KSEK (26 348) during the period, of which 3 646 KSEK (3 054) are costs for personnel.
 
In 2022, the company has added human resources equivalent to three positions to the organization - one protein chemist and two cell biologists.
 
Of the total cost 22 006 KSEK (21 364) relates to development of the Company product portfolio within myasthenia gravis and ANCA vasculitis and the costs incurred are capitalized on an ongoing basis as own-account work. Development work costs correspond to 77% (81%) of the Company's total operating expenses.
Operating income for the period amounted to -6 458 KSEK (-4 525).
 
Cash flow and liquidity
Cash flow from operating activities for the third quarter 2022 amounted to -2 595 KSEK (-916). For the period January - September 2022 cash flow from operating activities amounted to -6 689 KSEK (-2 770).
 
As of September 30, 2022, the cash balance amounted to 47 583 KSEK (86 110).
 
Investment
Total investments in intangible assets amounted to SEK 2,350 thousand (7,113) in the third quarter of 2022. Total investments in intangible assets amounted to SEK 22,006 thousand (20,562) for the period January - September 2022.
 
The investments relate to the development of the Company's project portfolio in myasthenia gravis and ANCA vasculitis and the costs are capitalized on an ongoing basis as own-account work.
 
Personnel resources
Toleranzia is a development company where dedicated employees with solid experience and excellence are a prerequisite for commercial success and for achieving the company's vision. In 2022, the company recruited three new people and the company had nine full-time equivalent employees or contracted consultants as of 30 September 2022.
 
Financing
During the autumn of 2021, the company carried out a new share issue, raising capital and cash of SEK 69 532 thousand in total, before issue costs.
 
The company has a continuous focus on cash flow and has ongoing discussions with its major shareholders to ensure sustainable financing of ongoing and future development projects. The existing working capital is, in the opinion of the Board of Directors, sufficient for the current needs according to the business plan for the next nine months.
 
In light of the above, the report has been prepared on a going concern basis as it is the assessment of management and the Board that there are a number of options available to obtain long-term financing.
 
Related party transactions
The company has related transactions concerning the purchase of administrative services from the company GU Ventures AB in Gothenburg. The services purchased have been made on market terms.
 
Ongoing unrest in Europe
There is a general uncertainty in the market caused by the ongoing conflict in Ukraine. The uncertainty has so far not affected the company's operations and is not expected to affect operations in the coming months. Toleranzia has no operations in either the Russian or Ukrainian markets. Incoming raw materials and expertise are sourced from neither Russia nor Ukraine.
 
Share
Toleranzia's shares have been traded on Nasdaq First North since 15 October 2020. The number of shares in Toleranzia as of 30 September 2022 was 110,315,231. The share capital amounted to SEK 13,789,404 as of 30 September 2022. The Company has one class of shares, each share having a quotient value of SEK 0.125 (0.125 SEK) and carrying equal rights to participate in the Company's assets and profits.
 
There are no outstanding option plans at the time of issuance of this interim report.
 
Mangold Fondkommission AB is the Company's Certified Adviser and can be reached at: ca@mangold.se.
 
Ownership per September 30, 2022

 
Review
This interim report has not been reviewed by the Company’s auditors.
 
Financial calendar
Year-end report 2022                              2023-02-24
 
The Board of Directors and the CEO hereby certify that this interim report gives a true and balanced view of the Company's operations and financial situation.
 
Gothenburg, 28 October 2022
Toleranzia AB
The Board of Directors and CEO