Quarterly Report II 13/14

September 2013 – February 2014, Diamyd Medical AB (publ), Fiscal year 2013/2014

Reporting period December 1, 2013 – February 28, 2014

• Net sales amounted to MSEK 0.1 (0)
• Loss before tax amounted to MSEK -4.4 (-5,3)
• Liquid assets and short term investments amounted to MSEK 56 (15) as of February 28, 2014

First half year September 1, 2013 – February 28, 2014

• Net sales amounted to MSEK 0.3 (0)
• Loss before tax amounted to MSEK -9.2 (-4.4)

Significant events during the reporting period

• More than half of the patients treated in diabetes study with the diabetes vaccine Diamyd® in combination with vitamin D and ibuprofen
• Diamyd Medical clarified media reports on diabetes study
• Application to double unique prevention study with Diamyd’s diabetes vaccine submitted to the Swedish MPA

Significant events after the reporting period

• Diamyd Medical’s former sister company Periphagen, Inc. (former Diamyd, Inc.) secured new financing
• Diamyd Medical entered the stem cell field with investment in Swedish cord blood bank
  
  

CEO comments
Recent times have been eventful for Diamyd Medical and we were able to report two items of good news in quick succession the past week. Together with a group of founding partners and Karolinska Institutet Holding AB, we will establish Sweden’s first commercial stem cell bank for private family saving of umbilical cord blood and other sources of stem cells. The intention is also to collect stem cells from umbilical cord tissue and make these available for research purposes, not least for research into type 1 diabetes. With the new venture Diamyd Medical enters the expansive field of stem cells. The financial risk is considered limited given the many examples of established private cord blood banks in other countries. Through the initiative of a research bank, we hope to contribute to substantial progress in the future use of stem cells in various therapies.

At birth, there is a unique opportunity to collect young stem cells from the umbilical cord, which are otherwise discarded. Private family saving of umbilical cord blood has been possible in the US for more than 20 years and is offered in most European countries, although such a service is not yet available in Sweden. I myself investigated the possibilities when my children were born a few years ago but it was too complicated since the only way would be for me to personally bring the equipment necessary to the delivery room, collect the blood and subsequently send it overseas for processing, freezing and storage since this service didn’t exist in Sweden.

Hans-Peter Ekre, who has extensive experience and a broad network in the Swedish life science field, will lead the project. Together with the knowledgeable and experienced group of founding partners, as well as Karolinska Institutet Holding AB, we are looking forward to building a professional and robust activity.

Last week, we could also report that our former colleagues at Periphagen in Pittsburgh had secured funding for the continued development of their gene therapy platform. Periphagen was previously part of the Diamyd Group, where it was known as Diamyd, Inc., but was bought out by the US management in autumn 2012. I was delighted to hear that a life science fund has decided to initially invest USD 6.5 million and we congratulate the team at Periphagen! Diamyd Medical still has financial interests in Periphagen and these are dependent on the continued development of the platform. Diamyd Medical’s shareholding, which amounted to 10 percent, has been reduced as a result of the investment by the fund, but our other financial interests in Periphagen remain and the possibility of receiving a return on these has increased.

Diamyd Medical could receive up to USD 9 million in milestone payments to be disbursed on the achievement of certain development targets. Furthermore, Diamyd Medical will receive 10 percent of upfront payments and other payments that Periphagen may receive from future partners, as well as royalties on future sales of drugs based on the gene therapy technology. Diamyd Medical also has a claim of USD 1 million and retains certain rights to utilize Periphagen’s technology in the field of diabetes.

Two researcher-initiated clinical studies of our diabetes vaccine Diamyd® are currently in progress. We expect patient enrolment to DIABGAD-1, where Diamyd® is combined with vitamin D and ibuprofen, to be concluded before the summer, meaning that the first results can be presented in 2015. The results of the DiAPREV-IT prevention study are also expected in 2015. DiAPREV-IT is a relatively small study and the research team at Lund University conducting the study is planning to expand the number of participating children with a high risk of presenting with type 1 diabetes. This will increase the chance of being able to demonstrate a preventive effect of the diabetes vaccine and enhance the scientific value of the study.

Stockholm, April 9, 2014

Peter Zerhouni
President and CEO Diamyd Medical AB (publ)

*** To read the complete report, please visit www.diamyd.com, or see attached PDF ***

For more information please contact:
Peter Zerhouni, President and CEO Diamyd Medical AB (publ). Phone: +46 8 661 00 26

Diamyd Medical AB (publ), Kungsgatan 29, SE-111 56 Stockholm, Sweden
Phone: +46 8 661 00 26 Fax: +46 8 661 63 68 E-mail: info@diamyd.com Reg no: 556242-3797

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