Quarterly Report II 19/20

September 2019 – February 2020, Diamyd Medical AB (publ), Fiscal year 2019/2020

Developing therapies for type 1 diabetes
Diamyd Medical’s B-share is traded on Nasdaq First North Growth Market under the ticker DMYD B.
Further information is available on https://www.diamyd.com

Figures in parentheses relate to the corresponding period previous financial year.

September 1, 2019 – February 29, 2020

• Net result: MSEK 30.3 (-19.0), whereof second quarter MSEK 37.1 (-10.4). The increase is a one-off effect due to a payment of corresponding MSEK 48.0 from the previous GAD65 manufacturer as support for transition of the manufacturing process.
• Result per share: SEK 0.4 (-0.3), second quarter SEK 0.5 (-0.2)
• Cash flow from operating activities: MSEK 31.1 (-19.5), second quarter: MSEK 37.2 (-8.7)
• Cash and cash equivalents at February 29, 2020: MSEK 88.3 (79.6)

Significant events second quarter, December 2019 – February 2020

• DIAGNODE-1: Positive Top-line results from Phase I/II trial with intralymphatic Diamyd^®
• ReGenerate-1: The main part of the Phase I/II trial with Remygen^® in type 1 diabetes started
• Significant effect of Diamyd^® in Type 1 diabetes shown in comprehensive analysis of previous phase III and phase II trials

Significant events after the reporting period

• GADinLADA: New trial with Diamyd^® in autoimmune diabetes started recruiting patients in Norway

Comments by CEO Ulf Hannelius
The last weeks we have seen the Corona virus disease (COVID-19) outbreak creating turmoil in the financial markets and affecting the global economy. Given the prevailing times, we are fortunate at Diamyd Medical to have solid finances and a strong position with the diabetes vaccine Diamyd^®, our lead candidate.

First, SEK 88 million in cash and a current monthly burn rate of approximately SEK 3 million give us, with ongoing activities, a runway of at least two years. We will do our best to prioritize our resources wisely and to strengthen the foundation of the company, maximizing the value of our assets.

Second, our DIAGNODE-2 Phase IIb trial with Diamyd^®, was fully recruited already by May 2019, and all patients received their three injections long before the viral outbreak. We are now working closely with our partners to make sure to smooth operations as we are moving closer to finalizing the trial later this year.

Third, it is important to know that the antigen-specific immunotherapy Diamyd^® does not weaken the immune system, opposed to immunosuppressive treatments that may increase the risk of infections by viral or other pathogens and/or predispose the patient to complications due to these infections. The safety profiles of both Diamyd^® and our second clinical asset Remygen^® are clear strengths, and in these times and going forward this may prove to become one of the most crucial advantages for Diamyd Medical.

Fourth, with the comprehensive responder analysis announced in December last year, we have improved the probability of success for Diamyd^®. The results, which identified the genetics for the best Diamyd^® responders, were in agreement with the thoughts on precision medicine that were independently proposed in a recent scientific review (Introducing the Endotype Concept to Address the Challenge of Disease Heterogeneity in Type 1 Diabetes, Diabetes Care, January, 2020).

Last but not least, the DIAGNODE-2 results will be important in forming the final design of the pivotal Phase III program, and with the results from the responder analysis now at hand we have the confidence to move ahead in our preparations for building the commercial case for Diamyd^®.

Stockholm, March 25, 2020
Ulf Hannelius, President and CEO

Two drugs in clinical development

Diamyd^® is an antigen-specific immunotherapy for the treatment of autoimmune diabetes (type 1 diabetes).

Clinical data indicate the potential of the diabetes vaccine Diamyd^® to halt or stop the autoimmune destruction of insulin-producing beta cells. The effect is achieved by antigen-specific reprogramming of immune cells by administration of low doses of Diamyd^® in superficial lymph nodes.

By maintaining the endogenous insulin production, Diamyd^® has the potential to make a significant difference in the daily life of patients as well significantly reduce the complications of type 1 diabetes.

Intralymphatic treatment with Diamyd^® is now being investigated in a clinical Phase IIb trial (DIAGNODE-2), with the aim of confirming the previously demonstrated clinical effect from a pilot trial in type 1 diabetes patients (DIAGNODE-1).

Remygen^® is an oral regenerative and immunomodulatory therapy for the treatment of autoimmune- and type 2 diabetes.

By stimulating the growth of insulin-producing cells, Remygen^® has the potential to reverse the disease progression in autoimmune- and type 2 diabetes.

Remygen^® is now being investigated in a clinical Phase I/II trial (ReGenerate-1), where clinical efficacy is evaluated with the aim of optimizing treatment ahead of registration-based trials.

Significant events during the second quarter

December 1, 2019 – February 29, 2020

Diamyd Medical entered agreement to facilitate transition of manufacturing

Diamyd Medical and Protein Sciences Corporation (PSC) entered into an agreement modifying their relationship, by which PSC will continue to support Diamyd Medical in its development of a diabetes vaccine but will no longer serve as its contract manufacturer. The agreement facilitates the transition of the manufacturing process of recombinant GAD65, the active ingredient in the diabetes vaccine Diamyd^®, to a new manufacturer for future anticipated commercial manufacture. PSC will support Diamyd Medical with in cash, as well as certain raw materials and up to 150 man-hours of technical assistance for the transition process. The agreement has been made in light of the announcement by Diamyd Medical in October 2019 where PSC had informed Diamyd Medical that it was unable to meet Diamyd Medical’s manufacturing needs for commercial supply. The payment was made in February 2020.

Positive Top-line results from Phase I/II trial with intralymphatic Diamyd^®

When all 12 patients had been followed throughout the 30-month period in the open-label trial DIAGNODE-1, the patients showed on average a positive clinical course with a near normal long-term blood sugar and a low need for externally supplied insulin. The three patients who received an extra Diamyd^® injection into the lymph node after their 30-month visit showed a maintained own insulin production between the 30- and 43-month visits, as well as lower long-term blood sugar and insulin requirements compared to baseline. Safety looked good and no serious side effects had been reported.

The main part of the Phase I/II trial ReGenerate-1 with Remygen^®   started

Four patients had been included in the trial and additional patients were scheduled to be included in December and January. Compilation of metabolic results from the completed safety and dose escalation part of the trial awaits a final experimental analysis and is expected to be announced during the second quarter of 2020.

Significant effect of Diamyd^® in Type 1 diabetes shown in a comprehensive analysis of previous Phase III and Phase II trials

A new analysis based on data from more than 530 individual patients from previous Phase III and II trials in Europe and US with the diabetes vaccine Diamyd^® identified genetically defined subgroups of type 1 diabetes patients that showed a positive and statistically significant dose-dependent treatment response.

Significant events after the reporting period

New trial with Diamyd^® in autoimmune diabetes started recruiting patients in Norway

GADinLADA, the first clinical phase II trial with the diabetes vaccine Diamyd^® administered directly into the lymph node in patients with LADA started recruitment at the Norwegian University of Science and Technology in Trondheim (NTNU), in cooperation with St. Olav’s University Hospital, Trondheim. The trial will also be conducted in Sweden at the Center for Diabetes, the Academic Specialist Center, an academic specialist unit that is run in collaboration between the Health Care Services Stockholm County, Karolinska Institute and Karolinska University Hospital, and the recruitment is expected to start during the spring. In total, the trial encompasses 15 patients between the ages of 30 to 70 years diagnosed with LADA within the last 12 months who are not yet on insulin therapy.

Ongoing clinical trials

Type 1 diabetes is a devastating disease which requires daily treatment with insulin to sustain life. The importance of finding a drug that improves the prospects for patients with diabetes is of utmost importance. The effect of intralymphatic administration of Diamyd^®, an antigen-specific immunotherapy aimed at stopping the immune system's attack on insulin-producing beta cells in autoimmune diabetes, is evaluated in the Phase IIb trial DIAGNODE-2. Remygen^®, which aims to stimulate the growth of beta cells in patients with diabetes, is now evaluated in patients in a Phase I/II trial.

Trials with Diamyd® in lymph node

• DIAGNODE -2 – DIAMYD^® IN LYMPH NODES WITH ORAL SUPPLEMENTATION OF VITAMIN D

A follow-up double-blind randomized clinical trial where Diamyd^® is administered directly into a lymph node with oral supplements of vitamin D. The trial encompasses 109 patients from Sweden, the Czech Republic, Spain and the Netherlands, aged 12–24 years who have recently been diagnosed with type 1 diabetes and will continue for a total of 15 months. As of autumn 2019, those patients who have not performed their last visit at 15 months are invited to participate in a nine months extension of the trial. 15-month results are expected to be presented in the third quarter of 2020. The aim of the trial is to evaluate the patients’ remaining insulin producing capacity. Coordinating Investigator is Professor Johnny Ludvigsson at Linköping University, Sweden. Diamyd Medical is the Sponsor of the trial.

• GADinLADA – DIAMYD^® IN LYMPH NODES WITH ORAL SUPPLEMENTATION OF VITAMIN D

An open-label, investigator initiated clinical trial where Diamyd^® is administered directly into a lymph node with oral supplements of vitamin D. The trial encompasses 15 patients aged 30-70 years diagnosed with LADA (Latent Autoimmune Diabetes in Adults) and not yet on inulin treatment. The aim with the trial is to evaluate the safety of intralymphatic treatment with Diamyd^® in LADA patients and to continuously evaluate the immunological and clinical response during a one-year period. Sponsor of the trial is the Norwegian University of Science and Technology with Ingrid K Hals as sponsor representative.

Trial with Remygen® (GABA)

• REGENERATE-1 – REMYGEN^® /ALPRAZOLAM

An open-label, investigator initiated clinical trial with Remygen^®. The trial includes approximately 36 patients aged 18-50 who have had type 1 diabetes for more than five years with low to non-existing insulin production. The primary aim of the trial is to in a smaller dose escalation section evaluate the safety of Remygen^®. The main trial also evaluates whether the insulin-producing cells can be regenerated using Remygen^®, and in the combination of Remygen^® and Alprazolam. The trial is led by Professor Per-Ola Carlsson at Uppsala University, Sponsor of the trial.

Other ongoing trial with Diamyd®

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

A placebo-controlled investigator-initiated clinical trial, where Diamyd^® is given subcutaneously and 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 trial includes 26 children and results are expected in Q2 2020. 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, Sponsor of the trial.

*** The above is an excerpt from the report. To read the complete report, please visit https://www.diamyd.com, or see attached PDF ***

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

The information was submitted for publication, through the agency of the contact person set out above, at 08.15 CET on March 25, 2020.

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