Financial Statement 16/17

September 2016 – August 2017, Diamyd Medical AB (publ), Fiscal year 2016/2017

The period September 1, 2016 – August 31, 2017 in brief

• R&D-expenses amounted to MSEK -12.9 (-6.2) of which the fourth quarter constituted MSEK -3.1 (-1.9)
• Net result amounted to MSEK -25.6 (-32.0) of which the fourth quarter amounted to MSEK -6.5 (-4.8). Previous year’s result was charged with an impairment in associated company of MSEK -13.5
• Result per share, before and after dilution, amounted to SEK -0.7   (-1.3) of which the fourth quarter constituted SEK -0.1 (-0.2)
• Cash flow from operating activities amounted to MSEK -25.8 (-17.8) of which the fourth quarter constituted MSEK -9.8 (-4.1)
• Liquid assets and short-term investments amounted per August 31 to MSEK 85.7 (31.4)

Significant events during the reporting period

• Diamyd Medical ordered additional Diamyd® drug substance
• Diamyd Medical and Cardiff University to collaborate on study monitoring immune response in lymph node cells after administration of Diamyd®
• Additional preliminary interim results from intralymphatic trial with Diamyd® published as part of scientific correspondence in NEJM
• The Swedish Medical Products Agency approved conduction of the DIAGNODE-2 trial
• Two doses of Diamyd® showed safety in 5-year prevention trial in children at high risk for type 1 diabetes
• Continued positive interim reports from the DIAGNODE-1 trial. The trial was fully recruited.
•  Diamyd Medical subscribed for MSEK 1.9 in NextCell Pharma’s listing issue  

Significant events after the reporting period

•  Information was given about strategic development of the study drug Remygen®
•  Phase II trial DIAGNODE-2 with the diabetes vaccine Diamyd® approved to start in all participating countries

CEO comments

Dear Shareholders and Readers,
Given the strategic decisions taken over the past year and the company’s strong cash position following the successful new share issue this spring, we have significantly accelerated our operations during the quarter.

During the quarter national competent authorities from all of the participating countries (Spain, Sweden and Czech Republic) approved the conduction of the DIAGNODE-2 trial. The Investigator Meeting we arranged last week in Barcelona, at which the trial protocol was presented and discussed, was well attended and appreciated. The enthusiasm for the upcoming trial is high and stems from the promising preliminary results from the ongoing open DIAGNODE-1 trial, where Diamyd® is administered directly into the lymph node. After the decision was taken in the spring to conduct our own follow-up trial, our organization has in collaboration with our partners and contract manufacturers made an ambitious achievement moving the project forward on an aggressive timeline with a focus on starting as early as possible and efficient patient recruitment.

During the quarter we have also reached another milestone. We have established the formulation of our GABA study drug, filed a patent application on the formulation, and named it Remygen®. Manufacturing according to GMP (Good Manufacturing Process) has been validated and various pilot formulations were evaluated during the summer both at test-tube level and in a pharmacokinetic study. Remygen® is based on one of these formulations with specific desirable properties in terms of release and uptake. A consultative meeting regarding Remygen® and clinical trials was held with the Medical Products Agency in September and the first clinical trial will focus on beta cell growth in a selected population of type 1 diabetes patients. The ongoing GABA and Diamyd® trial at the University of Alabama at Birmingham focusing on recently diagnosed type 1 diabetes is progressing as planned with 74 of the 95 participants now enrolled and 41 having completed the trial.

On the business front, we are pursuing two courses of action. With the diabetes vaccine Diamyd® the Company is aiming to enter into licensing agreements for intralymphatic administration with the possibility of option agreements before the results from DIAGNODE-2 and for Remygen® to enter into licensing agreements or collaboration agreements. During the quarter, we participated at the American Diabetes Association (ADA) and the European Association for the Study of Diabetes (EASD) conferences, the two largest diabetes conferences in the US and Europe, as well as at the Nordic Life Science Days in Sweden. These conferences continue to devote greater attention to type 1 diabetes and the field is open to new treatment possibilities that apply lessons learned from the treatment of, inter alia, rheumatoid arthritis and other autoimmune diseases, for which a number of drugs are currently being marketed. With the preliminary results from DIAGNODE-1 and the impending start of DIAGNODE-2, we have an attractive package to offer our potential partners. In conjunction with the above, additional recombinant GAD was ordered toward the tail-end of summer from our US contract manufacturer.

Stockholm, October 11, 2017
Ulf Hannelius
Presient and CEO of Diamyd Medical AB (publ)

Significant events during the reporting period

Diamyd Medical ordered additional Diamyd® drug substance
Diamyd Medical ordered additional recombinant GAD-protein, the clinical grade drug substance which is the main component in the diabetes vaccine Diamyd®from its contract manufacture. The order was placed to ensure access to drug substance for future clinical trials and possible early market launch. The order totaled approximately USD 750 000 (approximately MSEK 6.1) for which a cash installment was paid. Final payment will be made at approved delivery, either through Diamyd Medical Series B shares or cash, as then decided by Diamyd Medical.

Diamyd Medical and Cardiff University to collaborate on study monitoring immune response in lymph node cells after administration of Diamyd®
Diamyd Medical entered into a collaboration with Cardiff University on a new study with the diabetes vaccine Diamyd®. The aim of the study is to optimize methods based on ultrasound guided lymph node biopsies for monitoring the cellular immune response to immunotherapy. The study is financed by Cardiff University while Diamyd Medical is supplying the study drug.

Additional preliminary interim results from intralymphatic trial with Diamyd® published as part of scientific correspondence in NEJM
New immunological data from the DIAGNODE-1 trial, an open clinical pilot trial where the diabetes vaccine Diamyd is administered directly into the lymph node in combination with treatment with vitamin D, published as part of a correspondence in the medical periodical New England Journal of Medicine, showed a predominant Th2 response when the diabetes vaccine Diamyd®is administered directly into the lymph node being stronger than observed when injecting it under the skin.

Continued positive interim reports from the DIAGNODE-1 trial, which was fully recruited
A third interim report from DIAGNODE-1, when nine patients have been followed for 6 months, preliminarily showed that the treatment appears to be safe and tolerable. The clinical progression in the patients is positive in terms of the body’s own capacity to produce insulin, as well as long-term blood sugar and insulin dose. Two of the three patients that have been followed for 6 months are children (12–18 years of age).

A fourth interim report from the trial showed a positive clinical progression in terms of the body’s own capacity to produce insulin, as well as long-term blood sugar and insulin dose when half of the patients have been followed for 15 months.

DIAGNODE-1 was fully recruited after 12 patients. Diamyd Medical, together with Professor Johnny Ludvigsson at Linköping University, Principal investigator and Sponsor, decided to close the recruitment of patients in the DIAGNODE-1 trial to begin the follow-up of patients and focus on the larger follow-up trial DIAGNODE-2.

Diamyd Medical received approval from the Swedish Medical Products Agency for DIAGNODE-2
The Swedish Medical Products Agency approved the conduction of DIAGNODE-2. Submission of applications to the respective Competent Authorities in Spain and the Czech Republic are ongoing, as well as to the relevant Ethics Committees.

Two doses of Diamyd® showed safety in 5-year prevention trial in children at high risk for type 1 diabetes
Final results from DiAPREV-IT 1, a placebo-controlled clinical pilot trial led by Associate Professor MD Helena Elding Larsson, Lund University, where the diabetes vaccine Diamyd®for the first time is given to a group of individuals at high risk of developing type 1 diabetes were presented. Overall, the results showed that the treatment was safe and tolerable, and that fewer subjects than expected, 16 out of 50 compared to expected 25 out of 50, had developed type 1 diabetes in the 5-year follow-up of the trial. However, no significant difference was seen between children receiving placebo and those who received the active substance. The trial results were presented by Associate Professor Elding Larsson at the Diabetes Conference of the American Diabetes Associations (ADA) 77th Scientific Sessions in San Diego, USA.

Diamyd Medical subscribed for MSEK 1.9 in NextCell Pharma’s listing issue
The Company subscribed for an additional SEK 1 million in the new issue in NextCell Pharma AB ahead of their IPO in July on Aktietorget. The Company invested in total approximately MSEK 1.9 in the listing issue.

Significant events after the reporting period

Information is given on the strategic development of the study drug Remygen®
A preliminary patent application was filed on the formulation and release characteristics of the GABA-based study drug Remygen®. Based on feedback from a scientific meeting with the Swedish Medical Products Agency, and in collaboration with Diamyd Medical’s scientific network, the Company will commence designing the first clinical trial based on Remygen®.

Phase II trial DIAGNODE-2 with the diabetes vaccine Diamyd® approved to start in all participating countries
Spanish and Czech Competent Authorities and the relevant Ethics Committees approved Diamyd Medical's application to conduct DIAGNODE-2, a pivotal follow-up placebo-controlled Phase II trial with the diabetes vaccine Diamyd®to be tested in children and young adults recently diagnosed type 1 diabetes. Previously, the trial has been approved by the Swedish Medical Products Agency and the Ethics Committee.

On-going clinical trials with Diamyd®
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 diabetes vaccine Diamyd® has been used in clinical trials with more than 1 000 patients and has shown a good safety profile. Diamyd® is easy to administer in any clinical setting. The potential annual market is estimated to several billion dollars per year. Four researcher-initiated clinical trials are ongoing combining Diamyd® with various other immunomodulatory compounds; etanercept, vitamin D and GABA.

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

An open label trial, where Diamyd® is administered directly into lymph nodes in combination with treatment with vitamin D. The trial comprises twelve patients between the ages of 12 and 30 newly diagnosed with type 1 diabetes, and will continue for a total of 30 months. The trial was fully recruited in June 2017. 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.

• GABA/ DIAMYD® – COMBINING DIAMYD® WITH GABA

A placebo-controlled trial, where Diamyd®is being tested in combination with GABA. In accordance with agreement with Jansen Research & Development and JDRF the trial has expanded to comprise 95 patients between the ages of 4 and 18 recently diagnosed with type 1 diabetes. The trial 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.

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

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. 15-month results are expected during the first quarter of 2018.

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

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. 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.

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

For more information, please contact:
Ulf Hannelius, President and CEO, phone: +46 736 35 42 41

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

This information is information that Diamyd Medical AB is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out above, at 08.17 CET on October 11, 2017.

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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