In this interview with Diagonal Bio, the CEO Jack Egelund Madsen get further into Diagonals strategic choices for 2023. They've recently opted for a directed share issue and loan to strengthen the impact and focusing on the commercialization of LAMPlify™, recently CE-marked. Diagonal Bio aims to generate revenue and continue its innovative journey.
Why did you choose to conduct a directed share issue and take out a loan instead of carrying out a rights issue?
To minimize the impact on current shareholders (thus ensuring low dilution) and maximize cost efficiency, the process was handled internally at Diagonal Bio. This demonstrates continued trust and support from both the main shareholders, board & management, and a few new investors – sending a strong signal. The capital raised will allow us to focus on initiating pilot tests with potential future clients, distributors, and key opinion leaders (“KOLs”). Our aim is to generate the first revenue from LAMPlify™, which was recently CE-market according to the Low Voltage Directive (LVD), enabling Diagonal Bio to move into a commercial phase.
The recently published interim report for the period January 1 - June 30, 2023 showed an increased focus on less regulated market segments. Can you provide more insight into the strategic reasons behind this choice and how you plan to leverage these segments to generate revenue?
We achieved the important milestone of CE marking LAMPlify™ at the beginning of the third quarter of 2023. The self-certification was carried out according to the Low Voltage Directive (LVD). This means that LAMPlify™ meets the relevant requirements and standards set by the European Union (EU) directives and regulations. The CE mark enables Diagonal Bio to commercialize LAMPlify™ in less regulated markets. For instance, LAMPlify™ can be used as a tool in research laboratories within the agriculture and veterinary sectors, offering a fast, reliable, and cost-effective method for identifying genetic markers. LAMPlify™ provides added value with faster results, accuracy in line with today’s PCR-based methods, and cost efficiency compared to the PCR-based methods used today. An intensive phase is now beginning for Diagonal Bio as we start marketing LAMPlify™ to potential future clients, distributors and KOLs for testing and evaluation.
What specific progress have you made since the last strategy update, and how has this progress affected your sales plan?
Diagonal Bio communicated three key milestones in connection with the strategy update in 2023:
1. External validation of the technology.
2. CE-marking of LAMPlify™ according to the Low Voltage Directive (LVD).
3. Generation of the first revenue from LAMPlify™.
Diagonal Bio achieved the first two milestones and is now fully focused on initiating pilot tests with potential future clients, distributors, and KOLs. The aim is to generate the first revenue from LAMPlify™, marking the completion of the last of the three milestones set for 2023. This signifies the transition from a company in the product development phase to a commercial entity.
Panviral. Picture: Impala Nordic
How has the interest been for LAMPlify™ since the CE marking?
At Diagonal Bio, we have seen increasing interest in our technology following the CE-marking of LAMPlify™. We are in discussions with several parties, both nationally and internationally, regarding potential pilot studies. LAMPlify™ could provide significant added value by delivering fast and accurate results for identification of multiple genetic markers in parallel, all while improving cost efficiency, i.e., not only direct costs savings but also in reduced indirect costs. Examples include reduced sample handling and the ability to analyze directly at the sampling site, eliminating the need for complicated and costly logistics (shipment).
How many tests can be run per hour on LAMPlify™?
The LAMPlify™ instrument is used together with Diagonal Bio´s cartridge, which contain 8 channels, allowing for the analysis of up to 8 samples in parallel. The Time-To-Positive (TTP) depends on the specific kit used (each tailored to a particular genetic marker) and the genetic marker's concentration in the sample.
Using the results from the external study conducted by Centre of Diagnostics at DTU HealthTech (Diagonal Bio AB reports positive results from the first study conducted at an externally accredited laboratory), the fastest recorded TTP was approximately 8½ minutes with a high concentration of the genetic marker. In contrast, it took approximately 12.5 minutes to detect the genetic marker at a low concentration, near the limit of detection (LOD). Theoretically, this would allow for the analysis of 32 samples within an hour with one LAMPlify™ instrument, divided into 4 separate analytical runs with 8 samples in each analysis, factoring in 10 minutes for pipetting/sample handling. Practically, it would be advisable to run the LAMPlify™ instrument for a few extra minutes per analytical run.
There is, however, nothing in the technology that would limit the number of samples analyzed in parallel if there were a future need for an instrument tailored for mass testing.
Is the burn rate expected to remain at the same level for the rest of the year as it was during Q2?
Diagonal Bio decided on a directed share issue of approximately 1.8 MSEK, which will involve the main shareholders, board members, management, as well as a few new shareholders. This directed share issue requires approval at the upcoming EGM on 22nd September. Furthermore, the Company decided to take out a loan of approximately 2.6 MSEK. The combined liquidity from both the directed issue and loan, accounts for approximately 4.4 MSEK in total, which will finance Diagonal Bio's activities until the early first quarter of 2024 and according to the current expectations, no later than the 28th February where the loan must be repaid. Diagonal Bio's primary focus will be on initiating pilot tests with potential future clients, distributors, KOLs, with the aim of generating the first revenue from LAMPlify™.
Panviral and LAMPlify. Picture: Impala Nordic
What is the current status of Panviral, and can you provide an updated timeline concerning the financial situation?
Diagonal Bio's ambition is to develop and commercialize LAMPlify™ and PANVIRAL™, both of which are based on Diagonal Bio's patented technology. LAMPlify™ is CE marked according to the Low Voltage Directive (LVD), enabling Diagonal Bio to transition into the commercial phase, with a focus on the less regulated market segments. The plan for PANVIRAL™ is to develop a universal in-vitro diagnostic system (CE mark according to EU-IVDR and/or US-FDA) at a later stage.
Diagonal Bio has adapted the company for the development and commercialization of LAMPlify™ as a first step, as evident from the Q2 report for 2023, where the burn rate was approximately 4.2 MSEK for the quarter, covering running costs of 2.8 MSEK and 1.4 MSEK in activated costs (patents and projects). The running costs were 1.4 MSEK less compared to the same quarter in 2022.
At Diagonal Bio, we strive to deliver innovative solutions that can truly make a difference and provide value to our future clients and the broader global community.