The subscription period for Diagonal Bio's rights issue starts today

Today, 23 January 2025, the subscription period in Diagonal Bio AB's ("Diagonal Bio" or the "Company") rights issue of units of initially approximately SEK 6 million, with preferential rights for the Company's existing shareholders, commences (the "Rights Issue"). The subscription period runs until 6 February 2025. The Rights Issue was resolved upon by the Board of Directors on 23 December 2024 and approved by the Extraordinary General Meeting on 17 January 2025, together with the resolution on a directed issue of units (the "Directed Issue", together, the Rights Issue and the Directed Issue are referred to as the "Transaction"). The purpose of the Transaction is to provide funds to focus on validation of LAMPlify®'s commercial interest. The Rights Issue is covered by subscription undertakings from the Board members, the CEO, and other shareholders, of in total approximately SEK 0.4 million, corresponding to approximately 6 percent of the Rights Issue. In addition, Diagonal Bio has received underwriting commitments from the Company's CEO Karin Wehlin, the Board members and a number of external investors of a total of SEK approximately 3 million, corresponding to approximately 50 percent of the Rights Issue, which means that the Rights Issue in total is covered by subscription and underwriting commitments of 56 percent. The Board members and CEO Karin Wehlin have entered into customary lock-up agreements corresponding to 100 percent of their respective shareholdings until 31 July 2025.

Press release
23 January 2025

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Summary

The Board has resolved on the Directed Issue, amounting to initially approximately SEK 1.7 million before deduction of issue related costs, and the Rights Issue, amounting to initially approximately SEK 6.0 million before deduction of issue related costs. Through exercise of warrants series TO 2, the Company may receive a maximum of an additional approximately SEK 3.4 million in June 2025. The proceeds from the Directed Issue, a fully subscribed Rights Issue as well as fully exercised warrants of series TO 2 are intended to fund the Company's operations until January 2026.
The Directed Issue is directed to the Company's marketing partner Daniel Redén, through Redén Trotting AB, and the strategic investor Svea Bank AB.
The Rights Issue is covered by subscription undertakings from the Board members, the CEO, and other shareholders, of in total approximately SEK 0.4 million, corresponding to approximately 6 percent of the Rights Issue. In addition, Diagonal Bio has received underwriting commitments of in total approximately SEK 3 million, corresponding to approximately 50 percent of the Rights Issue, divided into two separate top-down underwriting tranches. Out of the underwriting commitments, approximately SEK 0.3 million, corresponding to approximately 4.3 percent, are in the form of a top-down guarantee from 100 percent subscription in the Rights Issue, and down to approximately 95.7 percent, from the Company's CEO Karin Wehlin and the Board members, and approximately SEK 2.7 million, corresponding to approximately 45.6 percent, are in the form of a top-down guarantee from 95.7 percent subscription in the Rights Issue, and down to approximately 50.1 percent, from external investors.
The subscription price in the Directed Issue and the Rights Issue is set to SEK 0.18 per unit, corresponding to SEK 0.01 per share. Warrants of series TO 2 are issued free of charge.
The Company's shareholders have preferential rights to subscribe for units in the Rights Issue, whereby each share entitles the shareholder to one (1) unit right. Twelve (12) unit rights entitle to subscription of one (1) unit. One (1) unit contains eighteen (18) shares and eight (8) warrants of series TO 2. Shares subscribed for in the Directed Issue do not entitle the holder to subscribe for shares in the Rights Issue.
The record date in the Rights Issue was 21 January 2025 and the subscription period in the Rights Issue takes place from today, 23 January 2025, until and including 6 February 2025.
One (1) warrant of series TO 2 gives the holder the right to subscribe for one (1) new share in Diagonal Bio during the period that runs from and including 4 June 2025, to and including 18 June 2025. The exercise price for warrants series TO 2 has been set to SEK 0.01 per new share.
In connection with the Transaction, the Board members and CEO Karin Wehlin have entered into customary lock-up agreements corresponding to 100 percent of their respective shareholdings until 31 July 2025.
An information memorandum containing full terms and conditions for the Rights Issue (the "Memorandum") is available on the Company's website, www.diagonalbio.com.

Motive and use of proceeds
Diagonal Bio is carrying out the Transaction to focus on validation of LAMPlify®'s commercial interest within the equine healthcare sector. This is to be obtained by reaching the objectives set out below (see headline "Objectives").

The Transaction will, upon full subscription in the Rights Issue, provide the Company with a total of approximately SEK 7.7 million before deduction of issue related costs, which are estimated to amount to approximately SEK 1.7 million (of which approximately SEK 0.45 million refer to underwriting fees, provided that all underwriters desire to receive cash compensation). The issue proceeds are intended to be used for:

Production of instruments and consumables - approximately 18 percent.
Sales and marketing - approximately 18 percent.
Intellectual property - approximately 4 percent.
Working capital - approximately 60 percent.

In the event that all warrants series TO 2 issued in the Transaction are exercised for subscription of shares, the Company will receive additional net proceeds of approximately SEK 3.4 million before deduction of issue related costs, which are estimated to amount to approximately SEK 0.4 million. The issue proceeds from the warrants series TO 2 are intended to be used for working capital. It is the Board's assessment that the net proceeds from the Directed Issue, a fully subscribed Rights Issue as well as fully exercised warrants series TO 2 are intended to fund the Company's operations until January 2026.

Objectives
Diagonal's overall target for 2025 is to deliver an additional 30 LAMPLlify® platforms to end users in addition to the ten delivered in 2024, thereby achieving market acceptance. The Company expects a conversion from pilot testing to sales of 50 per cent of the 40 LAMPlify® platforms. Below is an overview of the Company's 2025 targets.

Q1
Initiate at least four more pilot projects.
Results from two pilot projects.

Q2
Initiate at least six more pilot projects.
Results from four pilot projects.

Q3
Initiate at least eight more pilot projects.
Results from four pilot projects.

Q4
Initiate at least twelve more pilot projects.
Results from six pilot projects.

Terms for the Rights Issue
On 23 December 2024, the Board resolved on the Rights Issue, which was approved by the Extraordinary General Meeting on 17 January 2025. The Rights Issue contains a maximum of 33,392,851 units, corresponding to 601,071,318 shares and 267,142,808 warrants series TO 2. Diagonal Bio's existing shareholders have preferential right to subscribe for units in proportion to their existing shareholdings. The public also has the right to subscribe for units in the Rights Issue.

One (1) existing share in the Company held on the record date 21 January 2025 entitles to one (1) unit right. Twelve (12) unit rights entitle to subscription of one (1) unit. One (1) unit contains eighteen (18) shares and eight (8) warrants series TO 2. The subscription price in the Rights Issue is set to SEK 0.18 per unit, corresponding to SEK 0.01 per. Warrants are issued free of charge. Through the Rights Issue the Company will initially receive approximately SEK 6.0 million before deduction of issue-related costs.

The subscription period in the Rights Issue runs from and including 23 January 2025, until and including 6 February 2025. Unit rights that are not exercised during the subscription period become invalid. Trading in unit rights takes place on Nasdaq First North Growth Market from and including 23 January 2025, until and including 3 February 2025. Trading in BTU (Paid Subscribed Unit) is expected to take place during the period from and including 23 January 2025, until 25 February 2025.

If not all units are subscribed with the support of unit rights, the allocation of the remaining units within the framework of the Rights Issue's maximum amount shall take place: primarily to those who have subscribed for units with the support of unit rights (regardless of whether they were shareholders on the record date or not) and who have registered an interest in subscription of units without the support of unit rights and in the event that allocation to these cannot take place in full, allocation must be made pro rata in relation to the number of unit rights that each of those who have declared an interest in subscribing to units without the support of unit rights used for subscription of units; secondarily to others who subscribed for units in the Rights Issue without the support of unit rights and in the event that allocation to these cannot take place in full, allocation must be made pro rata in relation to the total number of units for which the subscriber has registered for subscription; and thirdly to those who have submitted underwriting commitments regarding the subscription of units, in proportion to such underwriting commitments. To the extent that allocation in any stage according to above cannot be done pro rata, allocation shall occur by drawing lots.

Terms for warrants series TO 2
Warrants of series TO 2 are issued both through the Directed Issue and the Rights Issue. One (1) warrant of series TO 2 gives the holder the right to subscribe for one (1) new share in Diagonal Bio during the period that runs from and including 4 June 2025, to and including 18 June 2025. The exercise price for warrants series TO 2 has been set to SEK 0.01 per new share. Upon full subscription of the Directed Issue and the Rights Issue and full exercise of TO 2 issued thereby, the Company may receive a maximum of approximately SEK 3.4 million before deduction of issue costs, which are estimated to amount to approximately SEK 0.4 million.

The warrants are intended to be admitted to trading on Nasdaq First North Growth Market after final registration of the Transaction with the Swedish Companies Registration Office. The last day of trading in TO 2 is expected to be 16 June 2025.

Subscription undertakings and underwriting commitments
The Rights Issue is covered by subscription undertakings from the Board members, the CEO, and other shareholders, of in total approximately SEK 0.4 million, corresponding to approximately 6 percent of the Rights Issue. In addition, Diagonal Bio has received underwriting commitments of in total approximately SEK 3 million, corresponding to approximately 50 percent of the Rights Issue, divided into two separate top-down underwriting tranches.

Out of the underwriting commitments, approximately SEK 0.3 million, corresponding to approximately 4.3 percent, are in the form of a top-down guarantee from 100 percent subscription in the Rights Issue, and down to approximately 95.7 percent, from the Company's CEO Karin Wehlin and the Board members, and approximately SEK 2.7 million, corresponding to approximately 45.6 percent, are in the form of a top-down guarantee from 95.7 percent subscription in the Rights Issue, and down to approximately 50.1 percent, from external investors.

For the top-down underwriting commitment provided by external parties, an underwriting fee of 15 percent in cash or 17 percent in the form of units, which are issued on the same terms as the Rights Issue, is paid. For the top-down underwriting commitment from CEO Karin Wehlin and the Board members, no underwriting fee is paid. No compensation is paid for the subscription undertakings. Neither the subscription undertakings nor the underwriting commitments are secured by bank guarantee, blocking funds, pledging or similar arrangements.

Future capital need
Expecting a fully subscribed Directed Issue, a fully subscribed Rights Issue as well as fully utilized warrants of series TO 2, the Board assesses the additional capital need to reach break-even in the year-end 2026/2027 (focusing solely on the equine sector) to amount to approximately SEK 7 million. These estimations are based the on the objectives described above.

Lock up
The Board members and CEO Karin Wehlin have entered into lock-up agreements with Navia Corporate Finance AB as counterparty, and have undertaken, with customary exceptions, not to sell any of the existing shareholdings or such shareholding that is acquired through subscription in the Rights Issue, for a period lasting until 31 July 2025.

Timeline for the Rights Issue
Subscription period: 23 January - 6 February 2025.
Trading in unit rights: 23 January - 3 February 2025.
Trading in BTU: 23 January 2025 - 25 February 2025.
Press release on the outcome of the Rights Issue: around 7 February 2025.

Memorandum and teaser
The Memorandum is available on the Company's website (www.diagonalbio.com) together with a teaser summarizing the offer and Company information.

Advisors
Navia Corporate Finance AB is the financial advisor in connection with the Transaction. Setterwalls Advokatbyrå AB is the legal advisor to Diagonal Bio and Aqurat Fondkommission AB is the issuing agent.

For additional information about the Transaction, please contact:
Navia Corporate Finance AB
E-mail: info@naviacf.se

For additional information about, please contact:
Karin Wehlin, CEO
Phone: +46 703 052488
E-mail: kw@diagonalbio.com

Certified Adviser
Svensk Kapitalmarknadsgranskning AB
E-mail: ca@skmg.se

About Diagonal Bio
Diagonal Bio AB was founded in 2020 and is a Swedish biotechnology company with headquarters and offices in Lund. The Company develops the PANVIRAL® platform to detect and diagnose small sections of pathogen genomes, for example viruses, bacteria and fungi. The Company was founded with the goal of reducing human suffering by revolutionising global diagnostics of pathogen-borne diseases with proprietary technology. Diagonal Bio's patented technology can also be used for the less regulated market segments via LAMPlify®.

Important information
The information in this press release does not contain or constitute an offer to acquire, subscribe or otherwise trade in shares, warrants or other securities in Diagonal Bio. No action has been taken, and measures will not be taken to permit a public offering in any jurisdictions other than Sweden. Any invitation to the persons concerned to subscribe for units in Diagonal Bio will only be made through the Memorandum that the Company has published in January 2025 on Diagonal Bio's website www.diagonalbio.com. The Memorandum does not constitute a prospectus as defined in the provisions of Prospectus Regulation (EU) 2017/1129 of the European Parliament and of the Council ("Prospectus Regulation") and has not been reviewed, registered or approved by the Swedish Financial Supervisory Authority. The offering in the Memorandum is exempt from the prospectus obligation in accordance with Article 3 (2) of the Prospectus Regulation and Chapter 2, Section 1 of the EU Prospectus Regulation (Supplemental Provisions) Act (2019:414) due to the fact that the amount offered by the Company to the public is less than EUR 2.5 million. This release is not a prospectus in accordance with the definition in the Prospectus Regulation and, accordingly, does not identify or suggest, or purport to identify or suggest, the risks (direct or indirect) that may be associated with an investment in shares, warrants or other securities in Diagonal Bio. In order for investors to fully understand the potential risks and benefits associated with a decision to participate in the Rights Issue, any investment decision should only be made based on the information in the Memorandum. Thus, investors are encouraged to review the Memorandum in its entirety.

The information in this press release may not be released, distributed or published, directly or indirectly, in or into the United States, Australia, Belarus, Canada, Hong Kong, Japan, New Zealand, Russia, Singapore, South Africa, South Korea, Switzerland or any other jurisdiction in which such action would be unlawful or would require registration or any other measures than those required by Swedish law. Actions in violation of these restrictions may constitute a violation of applicable securities laws. No shares, warrants or other securities in Diagonal Bio have been registered, and no shares, warrants or other securities will be registered, under the United States Securities Act of 1933, as amended (the "Securities Act") or the securities legislation of any state or other jurisdiction in the United States of America and no shares, warrants or other securities may be offered, sold or otherwise transferred, directly or indirectly, in or into the United States, except under an available exemption from, or in a transaction not subject to, the registration requirements under the Securities Act and in compliance with the securities legislation in the relevant state or any other jurisdiction of the United States.

Within the European Economic Area ("EEA"), no public offering of shares, warrants or other securities ("Securities") is made in other countries than Sweden. In other member states of the European Union ("EU"), such an offering of Securities may only be made in accordance with the Prospectus Regulation. In other member states of the EEA which have implemented the Prospectus Regulation in its national legislation, any offer of Securities may only be made in accordance with an applicable exemption in the Prospectus Regulation and/or in accordance with an applicable exemption under a relevant national implementation measure. In other member states of the EEA which have not implemented the Prospectus Regulation in its national legislation, any offer of Securities may only be made in accordance with an applicable exemption under national law.

In the United Kingdom, this document and any other materials in relation to the securities described herein is only being distributed to, and is only directed at, and any investment or investment activity to which this document relates is available only to, and will be engaged in only with, "qualified investors" (within the meaning of the United Kingdom version of the EU Prospectus Regulation (2017/1129/ EU) which is part of United Kingdom law by virtue of the European Union (Withdrawal) Act 2018) who are (i) persons having professional experience in matters relating to investments who fall within the definition of "investment professionals" in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"); (ii) high net worth entities etc. falling within Article 49(2)(a) to (d) of the Order; or (iii) such other persons to whom such investment or investment activity may lawfully be made available under the Order (all such persons together being referred to as "relevant persons"). In the United Kingdom, any investment or investment activity to which this communication relates is available only to, and will be engaged in only with, relevant persons. Persons who are not relevant persons should not take any action on the basis of this press release and should not act or rely on it.

This press release may contain forward-looking statements which reflect the Company's current view on future events and financial and operational development. Words such as "intend", "expect", "anticipate", "may", "believe", "plan", "estimate" and other expressions which imply indications or predictions of future development or trends, and which are not based on historical facts, are intended to identify forward-looking statements. Forward-looking statements inherently involve both known and unknown risks and uncertainties as they depend on future events and circumstances. Forward-looking statements do not guarantee future results or development and the actual outcome could differ materially from the forward-looking statements.

Since Diagonal Bio conducts essential services according to the FDI-act certain investments in the Transaction may require review by the ISP. Diagonal Bio will, no later than in connection with the publication of the Memorandum, publish more information about this on Diagonal Bio's website, www.diagonalbio.com.