Xintela : A successful year

Xintela had a very eventful year with success regarding both projects and financing. The following presentation summarises the status of Xintela's various activities and overall plans for the coming year. Through a directed issue of approximately MSEK 50 to the German orthopaedic company Bauerfeind AG, we achieved financial stability and a long-term owner with a major commitment to Xintela's future R&D activities. This will enable us to apply a strategy whereby some projects can be further developed in order to increase the value of projects and thereby advance our positions prior to commercialisation.

Clinical trial in Australia

In the stem cell project, we are fully focused on preparing clinical trials in humans where the main objective is to demonstrate that our stem cells are safe, but also to study efficacy on damaged articular cartilage of osteoarthritis patients. We have advanced plans to conduct our first clinical trial in Australia in order to save time and to keep costs down. Several companies in Australia have conducted clinical trials with stem cells, which means that regulatory authorities in Australia now have extensive experience in development of stem cell-based products. This has resulted in a more simple regulatory framework for approval of clinical trials with stem cells, which can also be used as a basis for further clinical development in the EU and the US. In addition, the Australian authorities have introduced considerable tax rebates for companies engaged in R&D in the country, which is also in Xintela's interest because this will significantly reduce the company's costs for the trial. Xintela's goal is to be ready to commence clinical trials by the end of 2019.

Partnership discussions with CO.DON

The discussions with CO.DON will continue in the coming year. From Xintela's point of view, it is important that Xintela continues to develop value-enhancing steps in the stem cell project and we are investigating the suitable time point for starting up a joint venture with CO.DON. Xintela's plans to commence clinical trials in Australia are not dependent on the continuing discussions with CO.DON.

GMP facility for stem cell manufacturing

The GMP facility is a key component in Xintela's path to clinical trials, which is why so much has focused on getting the facility ready and approved for stem cell manufacturing. The GMP facility and related equipment will be qualified and ready for use before the end of the year as planned. An application for a manufacturing licence is planned for submission during the spring, with the aim of commencing clinical trials by the end of 2019 as planned.

Neural stem cells - a new cell therapy area with major business potential

As previously announced, Xintela has developed new methods for identifying and isolating neural stem cells from the brain. The new methods have opened up a completely new field for the company - the treatment of traumatic injuries and diseases affecting the central nervous system (CNS).

Last year, Xintela filed a patent application to protect these interesting findings. We can now announce that an International Preliminary Report on Patentability (IPRP) has been issued for our international patent application WO 2018/033596, in which the European Patent Office (EPO) concludes that all patent claims are novel and innovative, which is a highly significant milestone in our efforts to obtain approved national patents in key strategic markets.

Xintela is now working on a strategy for our continued R&D activities. The company has already entered into discussions with possible partners who can contribute complementary research competencies within the CNS area as well as financial resources.

New horse study

Xintela had previously planned to start a new horse study in collaboration with Cornell University in the US during the autumn with the aim of studying the mechanisms of action of our stem cells in more detail. Since these results are not needed in the preclinical documentation that Xintela is compiling for its clinical trial application in Australia, we have chosen to postpone the start-up of this study until early 2019.

The results from the first horse study received considerable attention and we are expecting further dissemination of the positive results when the manuscript, which has now been submitted, is published. We have also submitted another manuscript for publication describing how our marker technology can be used in a unique way to purify and quality assure stem cells from horses for the treatment of osteoarthritis.

Partnership discussions with veterinary companies

Xintela's veterinary medicine strategy is to conduct clinical trials in horses together with a partner that can co-finance the development costs. Our participation in international partnering conferences during the year has given us contact with several leading veterinary companies and a number of interesting discussions are ongoing.

XACT partnerships

During the year, Xintela partnered with the Japanese company CellSeed regarding Xintela's analytical test XACT (Xintela Assay for Cell Therapy), which is used to quality assure cartilage cells. Although the studies generated positive results, we have different expectations with regard to our continued collaboration and have therefore reached a mutual decision to discontinue our partnership. Xintela will continue to evaluate other potential partnerships and by filing a new patent application we have broadened and extended the protection for the use of this marker technology for cartilage cells.

Positive development for the oncology business

The highly positive trend for the oncology project has continued. The collaboration with the US company Catalent is already ongoing, and the first analyses of new antibodies produced by Catalent will begin in January. The glioblastoma project has expanded with new results and we expect the results to be published in a prestigious scientific journal in the first half of 2019. Efforts to broaden the oncology project to other therapeutic indications in oncology have also been highly successful during the year and we are expecting to file a new patent application in the beginning of the year. When this has been done, we will provide information about Targinta's expanded focus.

Spin-out to Targinta AB

Efforts to spin-out the oncology business to Targinta are in progress. We have now completed the necessary preparations for transferring projects and relevant patents to Targinta and the company is now ready to be registered as a public company. Targinta will initially have the same management and Board as Xintela.

The process of transferring a business operation from one company to another requires careful planning and for various reasons, including fiscal issues, the spin-out will not be completed until early 2019. Xintela's auditors and legal advisors have been actively involved in the process of evaluating the various transactions to ensure compliance with both the Swedish Companies Act and various tax rules. In January, our efforts to achieve financing for Targinta will intensify. We are already evaluating various financing options, including an IPO.