Welcome to the SynAct Pharma Audiocast with Teleconference 2022. Throughout the call, all participants will be in listen-only mode, and afterwards there will be a question and answer session. Today, I am pleased to present CEO Jeppe Øvlesen. Please begin your meeting, sir. Thank you very much, and thank you all for joining in on this audiocast with SynAct Pharma today. Today is a very important day for SynAct, where we announced this morning two major events in our strategy going forward. First, a proposal for the acquisition of TXP Pharma, and secondly, the completion of a directly issue totaling SEK 80 million. On the call today, we have Uli Hacksell. Uli is on the board member and being the Chairman of the independent committee that has performed the due diligence to handle the suggested transaction and acquisition of TXP Pharma. On the call, we also have our founder and CSO, Thomas Jonassen, and CFO, Patrik Renblad. Please move to slide number two. Just a short disclaimer in relation to forward-looking statements. The take-home message that I want to send you is that all of us in the bid committee are very excited about the acquisition of TXP Pharma because we believe that it creates a true powerhouse for development of melanocortin acting drug candidates for a variety of inflammatory conditions with large unmet medical use. Let me start by introducing you to TXP Pharma. This is a privately held Swiss company that was founded in 2013. The company has been focusing on developing a platform, a technology platform consisting of a large number of peptide-based melanocortin agonists with enhanced subtype receptor selectivities and also with various degrees of stability. These molecules provide opportunities to address very serious indications that lack adequate therapeutic options and consequently have high unmet medical needs. TXP Pharma's most advanced development candidate is TXP-11. This is a molecule that is directed towards prevention of acute organ failure in high-risk surgical patients. Among other interesting opportunities from TXP Pharma are TXP-35 and 39, molecules that have been modified to allow for subcutaneous administration, something which is important when you don't want to give IV to patients for various indications. Let us move on to slide five. The bid committee, which was by the way completely independent from TXP, conducted or had oversight over extensive due diligence on TXP Pharma and its assets. The due diligence included legal, financial, patents, and scientific diligence of TXP. It was very satisfying to see that throughout this process, no red flags surfaced. Following the due diligence, the bid committee negotiated a deal with TXP and a decision to acquire TXP was made following a supportive fairness opinion that was obtained from Ernst & Young. The agreed on terms for the acquisition are as follows. First, an upfront payment of SEK 136 million, which will be financed by around 2.2 million SynAct Pharma shares. Second, an earn-out of SEK 55 million, Swedish crowns to be payable to TXP shareholders upon achievement of positive phase II results in a study with an asset coming from TXP. The transaction is conditional upon the approval with the 90% majority votes at the EGM, which is scheduled to occur on January 12, 2023. Provided that the approval is, that the acquisition is approved, the closing date of the transaction will be January 16th, 2023. Let us move to slide six. Let me go through with you the key assets of SynAct Pharma and TXP Pharma so that you can understand how complementary the companies are. I will start with AP1189, SynAct Pharma's clinical drug candidate for autoimmune and inflammatory diseases. AP1189 has shown impressive efficacy and safety data in two clinical phase II studies. It has long and strong patent protection, and it's currently studied in three ongoing phase II programs. It is an oral drug taken by mouth with a enormous potential for patients in areas with large unmet medical needs, including rheumatoid arthritis. In my opinion, AP1189 is a development candidate with blockbuster potential. Let us now move to slide nine. Sorry, slide seven. So slide seven describes the assets of TXP in a rather brief manner. It shows that TXP has developed a platform consisting of more than 70 melanocortin agonists, different receptor profiles, different selectivity for various melanocortin receptors. This allows for really identifying the perfect type of selectivity for treatment of various inflammatory diseases. These peptides also have different stabilities that provide us with opportunities to decide if we want to move ahead with an IV drug or a subcutaneous drug administration. Importantly, most of these peptides also have very strong patent protection. Let us move to slide eight. The combination of the SynAct Pharma and TXP assets create a new company that really looks like a powerhouse in melanocortin-related drug development. The more advanced assets, led by AP1189 and TXP-11, address multiple indications with major unmet medical needs. The combination sets us up for a broader pipeline, with one molecule, AP1189, having the potential to be a pipeline in a drug itself. We also see many other opportunities within autoimmune and inflammatory diseases that may be generated by the technology platform. Let's move to slide nine. Let me end by summarizing why we are so excited about this acquisition. First, it creates a leading inflammation resolution company based on a strong and broad melanocortin platform. Second, we will get a robust pipeline with three unique assets under development, all having strong patent protection. Third, the new pipeline has the potential to provide a steady flow of key inflection points. Fourth, the acquisition of TXP Pharma is supported by a directed financing of SEK 80 million that adds two new and highly reputable shareholders to our company, Thomas von Koch and Christian Kinch. With this, I will ask Jeppe to take over again. Thank you, Uli. If we move to slide number 11. This slide basically gives you an overview of where we are today in SynAct Pharma and why we are in a good position to take on the task of TXP. As many of you will know, our lead compound, AP1189, is currently in phase II development for RA, nephrotic syndrome, and virus-induced respiratory insufficiency. We have spent, many of us, near more than 20 years working with the target and technology, and we think that we are well-positioned for taking on the task of driving TXP forward. As you will see, we have communicated and achieved a number of important milestones during 2022. First of all, in the first half, we managed to uplist the company from Spotlight to Nasdaq Stockholm Main Market. We have adjusted and redesigned a bit on the nephrotic syndrome study so that we are now using a tablet, and we can, thanks to additional tox studies, now be in a situation where we have three months of dosing. We have also managed to file an IND, a big achievement for a relatively small company, allowing us to do studies in the US. The rest of our studies are progressing well and on time. Just a short summary on the share. The company was founded back in 2012 and listed in 2016. Uplisted in the month of July this year to Nasdaq main market. The management hold around 20% ownership and therefore very committed. All of this thanks to that we have had loyal support from 14,500 shareholders during the journey. I will now give over the word to Thomas Jonassen, our CSO, to give a deeper understanding of the technology and the potentials in TXP Pharma. If you move on to slide 13, Thomas. Yes, slide 13. Inflammation is the immune system's way of responding to injection, infections of injury. Normal inflammatory response is self-limiting, that is a process that's going on in the body on a regular basis to control the homeostasis of tissues and organs. During this self-limiting response, the immune system will deactivate itself, the inflammation will resolve, and whatever is, and thereby bringing the tissue back to normal homeostasis. However, in many cases the inflammation can be excessive or it can even go into a chronic phase where the proinflammatory and inflammatory process overwhelm the immune system's ability to resolve the inflammation. This can lead to pain, tissue destruction, loss of function and in the end, to chronic disease. To the right, it's a very simplified cartoon showing the influx of inflammatory cells into a tissue in an acute inflammatory response, as you see in an active phase of rheumatoid arthritis, or as you see in an active proinflammatory conditions associated with, for example, major cardiovascular surgery. Please go to slide number 14. Where for many years, the primary way of addressing inflammatory diseases has been to reduce the inflammatory response, either by blocking specific pathway or more broad-based by immune suppression, broad-based anti-inflammatory compounds with the risk or often the result is that you suppress the inflammatory system to a degree where you have an increased risk of infections. The approach of addressing inflammatory diseases with melanocortin-derived therapy is somewhat different. Melanocortin-derived therapy do have anti-inflammatory effect, as shown here to the left, exemplified here with an excessive response where the up going curve, you have proinflammatory activity, you have influx of inflammatory cells, and melanocortin receptors here exemplified by AP1189 do have the ability to reduce the inflammation but not to block it, which is very different from most other compounds. That we do never take out a pathway, but we can reduce the proinflammatory pathway approximately 50%-60%. In addition, and very important, the stimulation of specific receptors on these white cells do promote what is called promote resolution, meaning that we stimulate pathways in the inflammatory tissue to clear up the inflammation and bring the inflammation back to normal homeostasis. Instead of having a standard anti-inflammatory treatment with melanocortin-derived therapy, you have a combination of anti-inflammation and then very important, promoting resolution, making it a novel way to address inflammatory diseases. Please move on to slide number 15. Here we, as Uli highlighted, we have small molecule AP1189, which is currently in phase II development, both in rheumatoid arthritis and within nephrology. It's a selective MC1 receptor agonist stimulating two major main receptors who are present on immune active cells, the MC1 and the MC3 receptor. It works as a biased agonist, meaning that it does stimulate an alternative pathway rather than the classical pathway when you stimulate a receptor and shows very nice anti-inflammatory and pro-resolving effects. Importantly, by being a biased agonist, the compound do not stimulate melanogenesis, meaning that we do not have an unwanted side effect from systemic administration of increasing skin pigmentation. The compound can be given once daily and as we said, it's currently in development in phase II, including in combination with first-line treatment in rheumatoid arthritis with drugs. The peptides, the TXP peptides are more broad-based receptor agonists, primarily focused on MC3R and MC1R and MC3R, but also on MC5R receptors. It's a full agonist, meaning that it stimulates both cyclic AMP and ERK phosphorylation pathways, which in some indications, not at least in organ preservation, might be an advantage. It can be developed for IV and sustained release, subcutaneous administration. It's a very nice supplement to what is possible with AP1189 and in some instances, especially in the in-hospital setting where intravenous administration is needed, the compound is very attractive. For acute severe inflammation according associated with organ dysfunction and for example in major surgery, the peptides have a very beneficial profile compared to AP1189 as very early onset of action and the broad-based dual mode of action, but also for sustained release, where it in some instances, and not at least as highlighted by Uli, in a broad range of anti-inflammatory diseases, it could be beneficial and we are going to develop that way. Slide number 16, please. In other words, we can address critical care primarily by our new peptide technology, the TXP peptides. With short-term dosing, IV administration ability for multiple daily doses provide quick, straightforward path to clinic. Ability to target multiple organ and system, including pulmonary, cardiac, and renal function. That would be the focus area of AP1189 of TXP-11. Rheumatology, where we are ongoing programs with AP1189. There's also enormous, large organ and as well as organ diseases that respond to melanocortin receptor therapy and can be addressed with the new peptides as well with AP1189. As a new, you would say, indication area for SynAct Pharma, there's opportunities in ophthalmology, not only in large diseases as dry eye disease, but also in smaller and more serious diseases, where systemic or local administration of peptides could be very beneficial for treatment. These two... In other words, by taking in TXP-11, we now have the opportunity to go into a number of indications where we know that melanocortin receptor therapy would be attractive, but where and where the peptide would be beneficial for treatment purposes. Slide number 17, please. In total, the new combined pipeline, we will have AP1189 as our lead compound in rheumatoid arthritis both as first-line treatment, where we have an ongoing phase IIb study called the EXPAND study, where we test the compound in combination with methotrexate in previous treatment-naive patients. We are now under the IND, we have the results study. It's a two-part study where part A is dose range and will be initiated here in December following the clearance of the IND we got here a little more than a month ago where we test three doses of AP1189 versus placebo in patients who are irresponsible to first-line treatment. What is called DMARD-IR patients. Very large market and a very large potential. We have the ongoing program in nephrotic syndrome in idiopathic membranous nephropathy to evaluate the compound's ability to reduce proteinuria. We have previously shown effects of the compound in COVID-19 patients where we had faster recovery from pulmonary affection in patients treated with AP1189 compared to placebo when given as on top of standard therapy. We are working here in the space of virus-induced respiratory insufficiency, are currently working in different pharmacology programs to develop or work further in that indication, which is still very attractive for us. We have TXP-11, where we have the intention to bring that into development or rather clinical development for IV treatments. The compound is ready for clinical development. What we are going to do in the first part of next year is to run a number of dose response studies in additional animal studies to support the starting dose and the dose range to be applied in the clinic. Besides that, the toxicology and CMC development, we are ready for phase I. Then we have discovery programs with TXP-11, TXP-35 for slow-release formulation, and we have next-generation small molecules in the discovery pipeline as well. Slide number 18. All in all here for the time, here is an overview of our milestones for the next two years. In 2022, here in December, we will have first patient, first visit in the RESOLVE study. We will in the first half of next year, we will have last patient, last visit in the EXPAND study, which was the phase II study, phase IIb study in previous treatment-naive rheumatoid arthritis patients. We will in the second half of next year, we will have last patient, last visit in the RESOLVE study, part one of the RESOLVE study. We will have in the second half of next year, we will also have top-line data from both the EXPAND and RESOLVE part A study, and we will also expect to have top-line data on the study in nephrology. The first half of 2024, we will be able to initiate part B of the RESOLVE study. We will be able to start or rather dose in TXP-11 in phase I with the aim then to in the second half of next year, prepare and hopefully also be in a position where we can initiate phase IIa on TXP-11. That's major milestones and then of course we have the other programs running on site. Go to slide 19, please. Very briefly about the potential about the TXP peptides. Slide 20, please. Here at slide 20, post-operative organ dysfunction and failure is a major significant source of in-hospital mortality and healthcare system costs. Organ dysfunction and failure are common following surgical complications. The three major organ system that is involved in peri and post-operative complications are the pulmonary, the cardiac and the renal systems. In hospital mortality from surgical admission to the ICU, to intensive care units, has been shown to increase substantially with the number of impaired organs. Meaning that if you can protect the development of organ dysfunction, you would most likely, or the aim is then, of course, to prevent that, the more complicated cases. Post-surgical patients and the risk of in-hospital mortality was higher for liver, renal and pulmonary with quite significant odds ratio responsive in patients in an ICU who last for more than five days. In other words, if you have a treatment that can reduce the risk for developing organ dysfunction in patients who are admitted to hospital, with critical care situation or following major surgery, you would have a very advantage of giving a compound. Slide number 21. Cardiac surgery is particularly associated with major postoperative complication or high rates of organ failure. The cardiac surgery is associated with five major surgical complications, including the kidneys, the atrial fibrillation from the heart, ARDS, renal or pulmonary insufficiency as well as stroke. In a recent review published in 2020, the rate of major complications was seen in up to 17% of all major U.S. surgical sites. In-hospital mortality is highly associated with multiple complications that range from 8% in single complication up to more than 50% if you have affection in three organs. Any in-incidence of renal failure in combination with any other complication was associated with the highest rate of associated mortality. We know that melanocortin-derived therapy do have profound effects on organs in various relevant disease model, as well as in previously conducted experiments in patients, indicating that to be able to treat patients and in the right fashion, the right patients undergoing cardiac surgery would prevent or the aim is then of course to prevent the development of the organ dysfunction. Slide number 22. On-pump cardiac surgery presents a significant opportunity. Also transplant and other major abdominal surgery. The case is that if you have an adult patient, a patient more complicated, long time in anesthesia with an open thorax, open surgery, and especially if you are on what is called on-pump surgery, meaning that you are artificial circulation, then your risk for having organ dysfunction are very, very high. Alone from more CABG, standard CABG, including more complicated, has more than 350 cases alone in the U.S. For valve surgery, which most likely are more associated with a higher risk for organ dysfunction than CABG alone, there's more than 400,000 units alone. There is a large market for these patients. There is a high complication rate, and very importantly, there is a very, very good chance and a very good indication in the literature that melanocortin-derived therapy given in the right way to the right patients could make a difference. We would focus very much for bringing TXP-11 into phase IIa development in cardiac surgery, and then, based on these data, develop further into cardiac surgery and or then also into transplant or other major surgery. That's the ambition for developing TXP-11. Slide number 23, please. We also have the opportunity to make slow-release formulations here with TXP-35, where we have collaborated or rather TXP have collaborated with the formulation partner to develop a sustained release formulation of TXP-035, which has a very attractive release profile that indicates that the compound could be given once monthly. This would of course give an additional layer to IP, but could also importantly bring us in a situation where we could address a number of inflammatory diseases and autoimmune diseases with a highly unmet medical need. We think not at least on systemic lupus, myositis, but also on ocular diseases as AMD, diabetic retinopathy or dry eye disease. With this, I think I will stop and with the conclusion that we have the TXP-11 ready for be taken into clinical development in cardiac surgery and other major surgeries, including transplantation with a high unmet need. Then we also have here the opportunity to develop TXP-35 and potentially also other peptides for slow-release formulation also in diseases with high unmet medical needs. With this, I will give the word to Patrik. Thank you for that, Thomas. May I ask that we move to slide 25, please. This morning we announced a directed issue of new shares issued by the company to Thomas von Koch and Christian Kinch, who through their companies will invest SEK 80 million in return of approximately 1.3 million new shares in SynAct. Thomas von Koch is one of the founders and longtime CEO of the private equity company EQT, and also a large shareholder in Bactiguard, where Christian Kinch is the founder and chairman of the board. The new investors have assessed SynAct as well as the proposed business combination, as you can see in the quotes displayed here on the slide from Thomas von Koch. They are impressed by the potential of AP1189 and also fully supports the acquisition of TXP Pharma. It's also worth repeating that this share issue is not conditional on approval of the TXP Pharma transaction by the extraordinary general meeting. May I ask that we move to slide number 26, please. In this financing transaction, the company issues approximately 1.3 million shares at a price per share of SEK 62.60. The price corresponds to the volume weighted average price of the SynAct share for the 30 trading days up to and including Friday, December ninth. This is the same price that was and is being used for the settlement of the upfront payments to the sellers of TXP Pharma. Through this share issue, we received SEK 80 million in proceeds and the number of shares will increase to 29,648,457. Which represents a dilution of approximately 4%. Synact intends to use the proceeds from the share issue to finance the development of the assets acquired from TXP. To further strengthen development activities around AP1189, and for general purposes, extending the runway to mid-2024. May I ask for the next slide, number 27, please. We are describing on this slide the high-level timelines for the two transactions, the TXP transaction and the directed issue that we announced this morning. We expect to close and complete the financing transaction within the next business days, up to maximum 5 business days from now. We will announce the new number of shares as soon as they have been duly registered. Following that, the important date that's coming up is for all existing and new shareholders to pay attention to is January third, which is the cut off date for participation at the extraordinary general meeting on January 12th. Following that, the deadline for registration of participation at the EGM is set at January fifth. We will welcome all shareholders that wish to attend, and by that time have registered to the EGM to come and meet us at our headquarters at Medicon Village in Lund on January 12th at 3:00 P.M. CET. Finally, subject to approval by the EGM, we expect to close the TXP transaction with the exchange of shares on January 16th. Slide 28, please. In this presentation today, we have gone through the two major transactions that we announced today. Just to summarize that, through the TXP transaction, we give ourselves the opportunity to build and become the leading inflammation resolution company. Through the combined scientific platforms, we will be able to address a broad range of autoimmune and inflammatory diseases. The combination strengthens the clinical pipeline and will enable a steady new slope. Very importantly, the development of the TXP assets and the activities that we believe are important for strengthening our existing development program for AP1189 are now financed by the directed issue to two new shareholders, Thomas von Koch and Christian Kinch. With that, we conclude our presentation and are now handing back to the facilitator for questions. Thank you. Ladies and gentlemen, if you have a question for the speakers, please press zero one on your telephone keypad. Once again, if you have a question, please press zero one on your telephone keypad. Thank you. The first question comes from Sebastiaan van der Schoot from Van Lanschot Kempen. Please go ahead. Hi. Thank you. Good morning, everyone. Congratulations on this smart deal, and thank you for taking my questions. Just first on the pipeline regarding AP1189. Can you maybe expand a little bit on how recruitment of the past year has been going, and whether you see any differences between recruitment between EXPAND and RESOLVE study? Also on the TXP assets, when could we expect the first ones to actually enter the clinic? Let's assume that the directed share issue and the TXP transaction goes through, what will be your cash position? My final question is regarding any guidance how you will anticipate that R&D expenses and SG&A expenses will change with the TXP Pharma transaction for next year. Thank you. Thomas, will you take the first two questions and then Patrik, the next two? Yes, it would be a pleasure. I mean, we have had recruitment to the EXPAND study that was initiated in late in September, it is going according to plan. I think that is what I can say at the moment without sharing too much information. It goes according to plan with recruitment on sites in Eastern Europe as we have previously described. With regards to the RESOLVE study, we, which is in the DMARD-IR patients, we got the clearance of the IND, I think it was by the end of October. We have then spent November to have the sites initiated, we are then with the aim then for the next to initiate recruitment and dosing in December. From what we understand is that the sites are all very dedicated and look very much forward to get this study up running. We will of course update the market as soon as we can tell more about that. The TXP-11, you asked about that. That would be the first compound of the peptides that would be brought into clinical development. As I've said, the toxicology is in principle, it's completed, the IND-enabling toxicology. The same is the formulation work with a very stable IV formulation for reconstitution that can be applied in the clinic. I think that the work that has been conducted not only would cover phase I, but also phase II-A. to run a number of additional dose range studies in disease models here in the first half of next year. That is simply because the new European guidelines for first-in-human studies require that we are very specific in our identification of pharmacological active doses as well as minimum affected doses. And there we need to run some more to see some more studies. That is what is aimed for the first half next year, and then with the end then to reach a clinical trial application in the second half of next year, most likely in Q4. Patrik, the next two questions. Yes. The cash position, as I, hi Sebastiaan, as I alluded to, it's by the directed issue, we secure a runway up until mid-2024, and that's been very important for us. Again, that's assuming that the money is received in our bank account within days from now. I believe that the last question was how would this impact the R&D expenses in 2023? As Thomas alluded to, we're not going to do a lot of clinical work in the beginning of the project here with TXP. You can expect 10%-15% increase from our current rate of R&D expenses to fund the activities that Thomas alluded to. Okay. Great. Thank you. Then, maybe one last question. I remember from last year that there was some interesting drug-drug interactions between AP1189 and MTX that maybe would explain the clean safety profile that you see. Have you done any more research on that specific phenomenon? I think that question is for me, Thomas here. Yeah. I think what you allude to is that what we saw on the highest dose in the BEGIN study was that it was very clean with regard to effects or rather to side effects on potentially methotrexate induced liver or methotrexate induced effects on the liver. We haven't been, we expect that, or rather the hypothesis is that this is that we one way or the other modulate methotrexate induced liver inflammations. We do not have data that support that yet, but that is within what we are looking for and also are building into our current development programs. Okay. Very clear. Thank you very much. Thank you. Let me remind you again, if you have a question for the speakers, please press zero one on your telephone keypad. Thank you. There are no further questions at this time. Please go ahead, speakers. Okay. Thank you very much for joining this call, much appreciated, and thank you for your support. The presentation itself will be uploaded on the homepage and available. Thank you. Ladies and gentlemen, this now concludes our presentation. Thank you all for attending. You may now disconnect. Thank you.