Financial Statement 14/15

September 2014 – August 2015, Diamyd Medical AB (publ), Fiscal year 2014/2015

Reporting period, June 1, 2015 – August 31, 2015

• Net result amounted to MSEK -4.2 (-3.3)
• Net result per share amounted to SEK -0.2 (-0.1)
• Cash flow from operating activities amounted to MSEK -4.1 (-3.2)
• Liquid assets and short term investments amounted at the end of the period to MSEK 29.7 (35.7)

Full year, September 1, 2014 – August 31, 2015

• Net result amounted to MSEK -21.4 (-16.0)
• Result per share amounted to SEK -1.0 (-0.8)
• Cash flow from operating activities amounted to MSEK -18.6 (-16.7)

Significant events during the reporting period

• New Diamyd Medical-licensed patent was issued
• Diamyd Medical’s associated company Cellaviva launched its service for private family saving of stem cells
• Diamyd Medical licensed candidate drug for diabetes and gluten intolerance

CEO comments
In recent years, Diamyd Medical has undergone a transition from being one company with one key development project into one company with several projects. Our in-licensed technologies for GAD, GABA and Gliadin are all, both individually and in combination, particularly relevant for driving us toward the vision – a cure for type 1 diabetes. In passing, our patent portfolio has also been developed to become relevant for other disorders than type 1 diabetes, such as gluten intolerance, type 2 diabetes, metabolic syndrome and, perhaps, autoimmune diseases in general.

It is becoming increasingly clear that GABA, best known as an inhibitory neurotransmitter, also plays a key role vis-à-vis metabolism and hormonal regulation. Our GABA patent portfolio, which comprises patents and patent applications in-licensed from the University of California, Los Angeles (UCLA), was supplemented during the year with our own preliminary GABA-related patent applications. We were extremely pleased when a patent protecting the use of the combination of GABA and preproinsulin or fragments thereof, in other words parts of the insulin molecule, was approved during the year. This combination has demonstrated substantially improved blood sugar regulation in animal models. Similarly good results have been reached in animal models with the combination of GABA and our in-licensed autoantigen GAD, which has also demonstrated a significant effect in certain sub-groups of patients in a European Phase III trial when used alone. Is the conclusion that autoimmune disorders in general can be improved through a combination treatment that includes GABA together with relevant autoantigens?

That GAD is one of the most important autoantigens with regard to autoimmune diabetes has been established for a long time. Nonetheless, a new patent was approved during the year that protects the use of GAD for, inter alia, autoimmune diabetes until the beginning of 2032. Six different trials are currently ongoing for the GAD-based diabetes vaccine Diamyd®. The trials should be viewed as pilot trials. More than 1,000 patients have now participated in various trials with the diabetes vaccine Diamyd®, which have contributed to our important database with good safety data. GAD is required to produce GABA through an enzymatic pathway. Our molecules are related to each other.

A third area – gluten intolerance – is also related to type 1 diabetes. The genetic disposition at greatest risk for type 1 diabetes is also that with the highest risk for gluten intolerance. A gluten-free diet and treatment with the gluten protein Gliadin and Gliadin derivatives have demonstrated positive results in animal models for diabetes and gluten intolerance. For this reason, we recently licensed a new patent that protects the use of Gliadin to prevent or treat type 1 diabetes, and submitted a preliminary patent application as protection for GABA in combination with Gliadin to cure gluten intolerance.

Diamyd Medical is involved in the stem cell field, primarily through our 39 percent holding in the cord blood banking company Cellaviva. We are open to new opportunities in the area, since we believe that stem cell technology could become extremely important to treat genetic disorders and autoimmune diseases as well as some congenital conditions such as spinal cord injuries, where stem cells can replace lost tissue from the donor or close relatives, such as siblings.

New fiscal year from September 1. Interest from Big Pharma. New investigator-financed studies are under discussion. The results from the first pilot trial with ibuprofen, vitamin D and GAD are expected to be available this calendar quarter.

Thank you for your interest and support in the fight against diabetes!

Stockholm, October 14, 2015

Anders Essen-Möller, President and CEO Diamyd Medical AB (publ)

Significant events during the reporting period
June 1, 2015 – August 31, 2015

New Diamyd Medical-licensed patent issued
Diamyd Medical announced that the University of California, Los Angeles, UCLA, had been granted a key patent for a combo treatment for type 1 diabetes with GABA and preproinsulin or an immunogenic fragment thereof. Immunogenic fragments include C-peptide, proinsulin and other insulin molecules. This adds to Diamyd Medical’s patent estate of exclusively licensed intellectual property using GABA for treatment and interception of type 1 diabetes and inflammatory diseases including type 2 diabetes, metabolic syndrome and rheumatoid arthritis. The Company also exclusively licenses UCLA patents for GAD65 (a major autoantigen in type 1 diabetes) for which the last patent expires 2032.

Diamyd Medical’s associated company Cellaviva launched service for private family saving of stem cells
Diamyd Medical’s associated company Cellaviva AB launched its service in which expecting parents in Sweden can save stem cells from their newborn child. Stem cells from the baby’s umbilical cord are saved and stored for at least 20 years in Cellaviva’s biobank.

Diamyd Medical licensed candidate drug for diabetes and gluten intolerance
Diamyd Medical entered into an exclusive license agreement for using the gluten protein Gliadin for the treatment and prevention of type 1 diabetes. Diamyd Medical aims at evaluating combination regimens of Gliadin with compounds and antigens, such as for example GABA and GAD, for shutting off the inflammatory component in type 1 diabetes, gluten intolerance and other inflammatory diseases, for which preliminary patent applications have been filed. The world market for a successful new drug for treatment and prevention of autoimmune diabetes and gluten intolerance (celiac disease) is considered to be several billion US dollars.

Antigen Based Therapy (ABT) and combination trials

Type 1 diabetes is a devastating disease which requires daily treatment with insulin to sustain life. The importance of finding a cure should not be underestimated. The GAD-based diabetes vaccine Diamyd® is considered to be the furthest developed Antigen Based Therapy (ABT) in the world for treating autoimmune diabetes. Diamyd® has been used in clinical studies with more than 1,000 patients and has shown a good safety profile. In a European Phase III trial Diamyd® showed good clinical effect in several subgroups, and a limited overall 16% efficacy (p=0.10) in preserving endogenous insulin secretion. Subsequent development is focused on combination trials to enhance efficacy. Diamyd® is easy to administer in any clinical setting. The potential annual market is estimated to several billion dollars per year.

Six researcher initiated clinical trials are ongoing combining Diamyd® with various other immunomodulatory compounds; etanercept, ibuprofen, vitamin D and GABA.

• DIABGAD- 1 – COMBINING DIAMYD® WITH IBUPROFEN AND VITAMIN D

INTERVENTION TRIAL
A placebo-controlled trial, where Diamyd® is being tested in combination with ibuprofen and vitamin D. The trial comprises a total of 64 patients between the ages of 10 and 18, recently diagnosed with type 1 diabetes, and will continue for a total of 30 months. The aim of the combination treatment is to preserve the body’s own capacity to produce insulin. The trial runs at nine clinics in Sweden and is led by Professor Johnny Ludvigsson at Linköping University, Sweden. 15 month results from the trial are due in the fourth quarter of 2015.

• DIAGNODE -1 –DIAMYD® IN LYMPH GLANDS IN COMBINATION WITH VITAMIN D

INTERVENTION TRIAL
An open label trial, where Diamyd® is administered directly into lymph nodes in combination with treatment with vitamin D. The trial comprises five patients between the ages of 18 and 30 newly diagnosed with type 1 diabetes, and will continue for a total of 30 months. The aim of the trial is to evaluate the safety of the combination treatment and the effect on the immune system and the patients’ insulin producing capacity. The trial is led by Professor Johnny Ludvigsson at Linköping University, Sweden. The first patient was included in the trial in February 2015.

• GABA/ DIAMYD® – COMBINING DIAMYD® WITH GABA

INTERVENTION TRIAL
A placebo-controlled trial, where Diamyd® is being tested in combination with GABA. The trial comprises 75 patients between the ages of 4 and 18 recently diagnosed with type 1 diabetes, and will continue for a total of 12 months. The aim of the combination treatment is to preserve the body’s residual capacity to produce insulin. The trial is led by Professor Kenneth McCormick at the University of Alabama at Birmingham, USA. The first patient was included in the trial in March 2015.

• EDCR IIa – COMBINING DIAMYD® WITH ETANERCEPT AND VITAMIN D

INTERVENTION TRIAL
An open label trial, where Diamyd® is combined with etanercept and vitamin D. The trial comprises 20 patients between the ages of 8 and 18 who have been newly diagnosed with type 1 diabetes, and will continue for a total of 30 months. The aim of the trial is to evaluate the safety of the combination treatment and the effect on the immune system and the patients’ insulin producing capacity. The trial is led by Professor Johnny Ludvigsson at Linköping University, Sweden. The first patient was included in May 2015.

• DiAPREV-IT 1– DIAMYD®

PREVENTION TRIAL
A placebo-controlled trial, where Diamyd® is being tested in children at high risk of developing type 1 diabetes, meaning that they have been found to have an ongoing autoimmune process but do not yet have any clinical symptoms of diabetes. A total of 50 participants from the age of four have been enrolled in the trial, which will last for five years. The aim of the trial is to evaluate whether Diamyd® can delay or prevent the participants from presenting with type 1 diabetes. The trial is led by Dr. Helena Elding Larsson at Lund University, Sweden. Five year results are expected at the end of 2016.

• DiAPREV-IT 2 – COMBINING DIAMYD® WITH VITAMIN D

PREVENTION TRIAL
A placebo-controlled trial, where Diamyd® is being tested in combination with vitamin D in children at high risk of developing type 1 diabetes, meaning that they have been found to have an ongoing autoimmune process but do not yet have any clinical symptoms of diabetes. A total of 80 participants between the ages of 4 and 18 will be enrolled in the trial, which will last for five years. The aim of the trial is to evaluate whether Diamyd® can delay or prevent the participants from presenting with type 1 diabetes. The trial is led by Dr. Helena Elding Larsson at Lund University, Sweden. The first patient was included in March 2015.

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

For more information please contact:
Anders Essen-Möller, President and CEO, phone: +46 70 55 10 679

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

Note: This document has been prepared in both Swedish and English. The Swedish version shall govern in case of differences between the two documents. The document contains certain statements about the Company’s operating environment and future performance. These statements should only be regarded as reflective of prevailing interpretations. No guarantees can be made that these statements are free from errors.

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