As you have probably seen, right now our existence depends on the success of this rights issue. We hope that these tough times with a declining economic situation for our company and many others with us, and even for our country and its people, is coming to an end and that a brighter future is in sight. However, our future is right now in your hands, depending on if you want to participate and invest in our projects and what we see as an exciting and hopeful future. Read more about our work and what we plan in our memorandum and on our website (https://www.clinescientific.com/foretradesemission-2023) and watch interviews with Dr Hanne Evenbratt (https://www.youtube.com/watch?v=-f1qnN56FUw) and Professor Mats Brittberg (https://www.youtube.com/watch?v=3wZ4JXqqPEw).

In a step to streamline and optimize our resource utilization, our primarily focus the capital is currently StemCART. In recent times, a number of press releases with news and progress have been presented from the project. Let us tell you more about these areas and how they add value to the company.

The European patent for StemCART

Just a few days ago, we proudly shared our certificate for the European patent in the StemCART project. (https://cline-en.newsroom.cision.com/releasedetail.html?cline-scientific-s-european-method-patent-for-providing-a-cartilage-implant-with-chondrocytes&releaseIdentifier=C0F1EF87DFC7B7C7)

This is important value creation in the company and all news of this kind should leave a clear impression on the stock price and all types of future negotiations. A method patent provides intellectual property protection for the method used to grow and control the stem cells to become chondrocytes (cartilage cells). This includes the technology to grow the cells in a laboratory environment, modify their properties, differentiate them into cell type and use them for the medical application, to heal damaged cartilage.

In order for a method patent for cell development to be granted, the presented method must meet several criteria:

- Novelty: The method must be new and not have been known or published before. This means that no one else has previously described or documented exactly the same method of cell development.

- Inventiveness: The method must be non-obvious, meaning that it cannot simply be a trivial or obvious combination of existing cell culture techniques.

- Industrial applicability: The method must be applicable in an industrial or practical context, which means that it has the potential to be commercially or scientifically applicable.

A granted method patent gives us the exclusive right to use and exploit the specific method for 20 years from the patent application date. During this time, we can prevent others from using the method without permission and thereby have an exclusive position to develop and market products or services based on the patented cell development method.

Letter of Intent with NecstGen

On April 16th this year, we told you about the letter-of-intent we signed with the company NecstGen, a CDMO and competence center for cell and gene therapy. See here for the press release (https://cline-en.newsroom.cision.com/releasedetail.html?cline-scientific-announces-letter-of-intent-with-necstgen-for-the-manufacture-of-its-stem-cell-therapy-for-damaged-cartilage&releaseIdentifier=2906B50CAFED2629).

A CDMO (Contract Development and Manufacturing Organization) in ATMP (Advanced Therapy Medicinal Products) and stem cell therapy development plays a critical role in supporting and facilitating progress in advanced therapies.

Here are some of the key things a CDMO would support Cline in:

-          Development support: CDMOs offer expertise and technical resources to assist in the development of ATMP and stem cell-based therapies. This may include designing and optimizing production processes, conducting preclinical studies, and managing regulatory requirements to gain approval for clinical trials.

-          Manufacturing: CDMOs have specialized facilities and technologies to manufacture ATMPs and stem cell therapies in accordance with the stringent quality and safety standards required by regulatory authorities. They are responsible for the production of the therapies in accordance with Good Manufacturing Practice (GMP) and other relevant guidelines.

-          Technology and equipment: CDMOs invest in modern technology and advanced equipment necessary for the production of ATMP and stem cell therapies. This includes cell culture systems, bioreactors, advanced separation methods and other technologies needed to handle sensitive and complex cells.

-          Quality assurance: CDMOs have dedicated quality assurance departments that monitor the processes and products to ensure they meet the set quality standards and comply with regulatory requirements.

By outsourcing parts of the development and manufacturing process to a CDMO, Cline can take advantage of this specialized expertise and technical capabilities, enabling more efficient and resource-efficient manufacturing of StemCART. This can accelerate scientific development and improve accessibility for patients.

Through our partnership, NecstGen will support the further development and manufacturing of our ATMP, StemCART. NecstGen is located in a 4000m2 purpose-built GMP facility in the largest biocluster in the Netherlands, Leiden Bio Science Park. For more information visit https://necstgen.com.

Alongside our work to develop the manufacturing side of StemCART, Cline is focusing on developing regulatory competence and plan for the regulatory approval process. Regulatory expertise is crucial for several reasons:

-          Complex regulatory frameworks: ATMP products are inherently innovative treatment methods that use living cells. These types of therapies are not fully covered by the traditional regulations for common medicines. Therefore, there are specific regulatory frameworks, which can be complicated and vary between different countries and regions. A regulatory expert has in-depth knowledge of these regulations and can help navigate through the complex and often changing guidelines.

-          Safety and efficacy: ATMP and stem cell therapies are potentially very powerful treatment methods, but they can also involve some risks, especially when dealing with living biological materials. Regulatory experts help ensure that these therapies are developed and manufactured in accordance with stringent quality and safety standards to reduce the risk of unwanted side effects and maximize their therapeutic potential. This is a requirement from pharmaceutical companies worldwide.

-          Clinical trials: Before ATMPs and stem cell therapies can be approved for general use, they must undergo rigorous clinical trials to demonstrate their safety and effectiveness. Regulatory experts help design clinical trial protocols that meet regulatory requirements and ensure that trials are conducted according to ethical guidelines.

-          Approval and registration: In order for ATMP and stem cell therapies to enter the market and be available to patients, approval and registration by the regulatory authorities is required. Regulatory experts are responsible for preparing and submitting applications for approval and managing communication with the authorities to ensure that all requirements are met.

-          Updated guidelines: Regulatory authorities frequently update their guidelines and requirements regarding ATMPs and stem cell therapies as new research and technological advances occur. Regulatory experts stay informed of these changes and help their clients adapt their processes and documentation to comply with the latest guidelines.

In summary, regulatory expertise in the field of ATMP and stem cell therapy development is required to ensure that these innovative therapies are developed and manufactured to the highest standards of safety, efficacy and quality.

Possibility of grant funding

To be able to run these types of collaborations, more money will be needed. One way for us to obtain capital, in addition to right issues, is to seek grants from risk-focused programs that aligns to our project, for example the EIC Accelerator program. With this type of financing, Cline can have more time to focus fully on the projects and work according to plan.

The European Innovation Council (EIC) run the Accelerator program that is part of the European framework for research and innovation, Horizon Europe. It is part of the European Commission's initiative to promote innovation and support cutting-edge technologies and companies within the EU.

The EIC Accelerator program aims to support small and medium-sized enterprises (SMEs) that develop innovative products, services or technologies with high potential for growth and market expansion. The focus is on unique, ground-breaking projects with high risk where EIC, through its efforts, can de-risk projects to a point where traditional investors are willing to fund the project. Funding is mainly provided through non-repayable grants and can be combined with potential financial support in the form of investment. Selection takes place through a careful assessment process based on the strength of the innovation, the market potential and the feasibility of the projects.

This type of application involves in several steps. After very positive comments from the reviewers in the first step, we moved on in the process to step two. An extensive text of approx. 50 pages was required, as well as some tables and forms in addition, which describe the project, budget, market potential, etc. Now we await review of the application and then an interview before a decision is made whether we receive any money. This would mean approximately SEK 25 million in grants spread over approximately 2 years, with the possibility of additional funding through the EIC program's investment part after this time period. Parts of this need to be co-financed, but in that situation, we believe that a rights issue can cover the co-financing requirement.

We are hopeful based on positive conversations with a business coach working with the EIC, whose role is to help in the application process and who has insight into the accelerator program. He believes that the project is very promising, however, this is no guarantee. We can now just keep working as usual and await their response.

With this summer reading, we hope that you feel even more enlightened and if you haven't signed up for your shares, take the opportunity to do so! With hope of more newsletters in the future,

Hanne Evenbratt,

PhD, Interim CEO

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