A different kind of family business

Diamyd's Anders Essen-Möller

Every cloud has its silver lining. So if it wasn't for his daughter's diabetes, Anders Essen-Möller might not have sold his company and started Diamyd Medical AB.

In 1993 Essen-Möller, a bio-entrepreneur trained at Sweden’s Karolinska Institutet, was running a large medical technology firm, when one of his five children was diagnosed with diabetes. He began some research on the illness, and one day came across an article in Nature implicating antibodies to a pancreatic enzyme, glutamic acid decarboxylase or GAD, in diabetes.

"Ever since I have been focusing on that," says Essen-Möller. A few years later, he took the cash from selling his company and started another firm, Diamyd, to develop GAD-related products for diabetics. Since then, he has found resilience and speed essential to success. "I have been working in this sector for twelve years, and in development you have to be flexible without losing your goal and missing opportunities to make money for your shareholders."

The most recent opportunity Essen-Möller grabbed was to buy Nurel Therapeutics, a US biotech company that designs treatment for chronic pain and also has a GAD-related product. Diamyd paid $1.5 million in shares for the US biotech company last month.

Industry analysts praise the deal. "I think it’s a good idea because it wasn’t too expensive and [Nurel] have an interesting technology patent," said Benjamin Nordin, an analyst at Kaupthing Bank in Iceland.

Founded in 2003 by Michael Christini and University of Pittsburgh professor Joseph Glorioso, Nurel develops products based on a technology derived from an inert herpes simplex virus, designed to deliver therapeutic proteins through local injections into the peripheral nervous system. A single injection is intended to deliver medicine over a period of months.

The drug-delivery technology platform, according to Essen-Möller, could deliver any protein to the central nervous system.

"As Diamyd would like to launch into the CNS area, [Nurel] could bring the technology to them to develop product for the CNS area," said Nordin.

In addition, Nurel's lead product, NG2 (HSV-GAD) is in late-stage preclinical development for the treatment of chronic pain due to diabetes. The product could work well with Diamyd's platform, which is developing compounds targeting GAD65 to treat diabetes. That product has completed a Phase II study and is being evaluated in an ongoing Phase II/III trial in Type II diabetic patients. Moreover, Nurel has a second product aimed at protecting nerve cells from degradation caused by diabetes.

The acquisition also marks Diamyd's entry into the cancer drug field as development of another Nurel compound, NC3, a cancer drug targeting glioblastoma multiforme, a type of brain cancer, is preparing for a Phase I trial in 2007. The program is supported with US federal grant funding of $1.4 million.

"If we succeed with all these things our market potential will increase five times (to $5 billion,)" said Essen-Möller. "Whereas the cost side is very limited. With the federal funding for the cancer trial we will be using some of that technology. We think we [need] to spend about $1.5 million per year for the first two years."

Beside its portfolio, Nurel's geographical origin also attracted Essen-Möller's attention. He saw the acquisition as an opportunity to spearhead the company’s plan to access the US capital market.

To do so, Diamyd, which is already listed on the Stockholm Stock Exchange, will sell shares via American Depositary Receipts in the US early next year, according to Essen-Möller. An investor relations company has already been hired for its acquisition in Nurel and Diamyd will "continue to meet with various people in the States to increase our presence".

Besides the US market, the company is also keeping its eyes open elsewhere.

"Asia is a very interesting market if we can have something in Japan or Korea we will be more than happy," said Essen-Möller. "We have talked to many potential partners but nothing concrete at this point. But when you are a small company like we are you can just change your mind and move in a way that is the best for the company."

Despite expansion of its reach and its product pipeline, Essen-Möller still doesn’t have a set idea of what Diamyd would evolve into; his motto is to "take opportunities as they come". But one thing is certain for Essen-Möller. His daughter, the muse for Diamyd, is now 24 and in "perfect health".