Year-End Report 18/19

September 2018 – August 2019, Diamyd Medical AB (publ), Fiscal year 2018/2019

To preserve and regain the body’s own insulin production
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, 2018 – August 31, 2019

•  Net income: MSEK 1.6 (0.8), whereof the fourth quarter MSEK 0.3 (0.1). The change refers to increased sales of GAD-protein for pre-clinical research.
•  Net result: MSEK -36.6 (-44.0), whereof the fourth quarter MSEK -9.8  (-11.7)
•  Result per share: SEK -0.5 (-0.8), fourth quarter SEK -0.1 (-0.2)
•  Cash flow from operating activities: MSEK -39.2 (-41.6), fourth quarter MSEK -10.6 (-9.0)
•  Liquid assets and short-term investments as of August 31, 2019: MSEK 56.7 (44.1)

Significant events June 1, 2019 – August 31, 2019

• Diamyd Medical fully subscribed to its pro rata share in NextCell Pharma's rights issue
• DIAGNODE-1: Increase in endogenous insulin production following extra intralymphatic injection with Diamyd®

Significant events after the reporting period

• Preliminary results were presented from a GABA/Diamyd®trial
• DIAGNODE-2: Patients will be offered longer participation in the European Phase IIb trial with the diabetes vaccine Diamyd®
• DIAGNODE-2: Feasibility study supported the use of intralymphatic injections of Diamyd®

Comments by CEO Ulf Hannelius
We systematically build our value proposition around intralymphatic administration of Diamyd®. The clinical results from DIAGNODE-1 provide proof of concept of a strong, clinically relevant effect for preserving the patient’s own insulin production. Moreover, immunological results indicate a response as in immunological tolerance. In addition, a recently published feasibility study based on interviews and questionnaires highlighted the ease of use for intralymphatic injections in a clinical routine setting. The administration takes seconds, is simple, safe and the patient is free to leave the clinic within an hour.

The innovative, strategic choice in 2017 to focus on intralymphatic (IL) administration seems to be very successful. With safety from Diamyd®trials in more than 1000 patients, where injections under the skin (subcutaneous, SC) resulted in positive efficacy trends and significant efficacy in certain prespecified subgroups, three IL administrations one month apart, have resulted in that 11 out of 12 type 1 diabetes patients in the DIAGNODE-1 trial are in partial remission mode 15 months after treatment. As expected, SC administration of Diamyd®in the recently reported GABA/GAD investigator-initiated trial at the University of Alabama in Birmingham, confirmed these prior results, whereas the GABA part of the trial indicated an important effect on glucagon secretion. This trial started in 2015 before the higher potency of intranodal administration was known and it now seems clear that additional doses including IL administration, as is being pursued in DIAGNODE-1 and DIAGNODE-2 is required to achieve the desired effect with Diamyd®. We are excited to advance this innovative and promising therapeutic approach for patients suffering from autoimmune diabetes and it may be of interest to point out that a similar development is ongoing within the allergy space. Here, minute amounts of allergen are administered three times into a lymph node, resulting in, compared to conventional long-term SC or oral regimens, significantly faster and safer desensitization to several allergens.

Highlighting our second therapeutic platform based on GABA, the investigator initiated trial in Alabama reported important results from treatment with a GABA food supplement in a population of recent-onset type 1 diabetes patients. While trial limitations were observed, especially regarding patient adherence to the oral GABA supplement as well as an unusually strong response in a few placebo patients, strong trends for effects on lowering glucagon levels were seen in both treatment arms compared to placebo. This is interesting as we now have the very first clinical results in humans showing that GABA influences the pancreatic islets in patients with diabetes. Glucagon is a most important regulatory response to low blood glucose levels and an integral component in both type 1 and type 2 diabetes pathology. The role of glucagon in diabetes was highlighted in several large sessions at a recent EASD conference in Barcelona, Spain. Diamyd Medical’s proprietary formulation of GABA, Remygen®, is being evaluated in the ReGenerate-1 trial at this time, and together with the data from the trial in Alabama we aim at much more precisely define the product profile around Remygen®- and advance it towards market.

We have the world’s furthest advanced antigen-specific diabetes therapeutic (Diamyd®) in late stage development; one additional compound (Remygen®) in early clinical phase, both of which are supported by strong safety and a significant unmet medical need. With our strong IP position and ongoing regulatory activities our goal is to further strengthen the foundation of the company ahead of results from DIAGNODE-2.

I would like to thank all patients, shareholders, collaborators and employees, for your engagement and confidence that makes all this possible.

Stockholm, October 2, 2019
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 three 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 fourth quarter

June 1, 2019 – August 31, 2019

Diamyd Medical fully subscribed to its pro rata share in NextCell Pharma's rights issue
Diamyd Medical pro rata share corresponded to approximately SEK 3.2 million in the associated company NextCell Pharma's rights issue, meaning that Diamyd Medical's book value of the holding in NextCell Pharma after the investment increased from approximately SEK 5.3 million to approximately SEK 8.5 million.

Increase in endogenous insulin production following extra intralymphatic injection with Diamyd®
The first seven patients that had been followed for the entire 30-month period in DIAGNODE-1 continued to show a positive clinical course and were in partial remission. Partial remission in type 1 diabetes is characterized by low external insulin requirement and near to normal long-term blood sugar levels. Three of the seven patients had also received an extra intralymphatic injection of Diamyd®after their 30-month visit. These three patients showed an increase in endogenous insulin production between the 30 and 37month visits. The treatment appeared safe and no serious side effects had been reported.

Significant events after the reporting period

Preliminary results were presented from a GABA/Diamyd® trial
Preliminary results from the US investigator initiated GABA/Diamyd®trial were presented by Professor Kenneth McCormick at University of Alabama at Birmingham, Principal Investigator and Sponsor of the trial, at the annual meeting of the EASD in Barcelona, Spain. Initial analyses indicated that GABA alone or in combination with two 20 µg Diamyd®injections under the skin (in contrast to three injections into a lymphnode as in the ongoing DIAGNODE trials) to recent onset type 1 diabetes patients does not significantly affected insulin production, blood glucose values or insulin dose compared to placebo. A potential positive effect of GABA on lowering glucagon levels was observed. No serious side effects were reported. In-depth metabolic analyses and immunological results are expected to follow.

Patients will be offered longer participation in the European Phase IIb trial with the diabetes vaccine Diamyd®
Following approval from the Competent Authorities and Ethics Committees in Spain, the Czech Republic, Sweden and the Netherlands, Diamyd Medical can offer the patients participating in the diabetes trial DIAGNODE-2 who have not yet performed their last visit at 15 months, to be included in a 9 month extension of the trial, which means that these patients will be followed for a total of 24 months. Top-line results of the trial will, as previously announced, be presented after 15 months, in the third quarter of 2020. The purpose of the longer follow-up is to further strengthen the regulatory package with safety and efficacy data prior to a potential earlier market application.

Feasibility study supported the use of intralymphatic injections of Diamyd®
A feasibility study performed as a Master Thesis at Uppsala University and supervised by Diamyd Medical, supported the use of ultrasound guided intralymphatic injections for clinical routine use. The pilot study was based on interviews with and answers to questionnaires from selected radiologists and answers to questionnaires from selected study nurses participating in the ongoing DIAGNODE-2 trial where the antigen-specific immunotherapy Diamyd®is administered directly into a lymph node.

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® intralymphatically

• DIAGNODE -2 – DIAMYD® IN LYMPH NODES IN COMBINATION WITH VITAMIN D

A follow-up double-blind randomized clinical trial where Diamyd®is administered directly into a lymph node in combination with treatment with vitamin D. The trial encompasses 109 patients from Sweden, the Czech Republic, Spain and the Netherlands, aged 12–24 years that have recently been diagnosed with type 1 diabetes and will continue for a total of 15 months. Those patients who have not yet performed their last visit at 15 months will be offered to participate in an extension for another 9 months. 15-month results are expected to be presented in the third quarter of 2020. The trial is a follow up of DIAGNODE-1. 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.

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

An open label investigator-initiated clinical trial, where Diamyd®is administered directly into a lymph node 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. 30 months results are expected to be presented in the first quarter of 2020. 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.

Trial with Remygen® (GABA)

• REGENERATE-1 – REMYGEN® /APRAZOLAM

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.

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 the beginning of 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.

About Diamyd Medical
Diamyd Medical develops the diabetes vaccine Diamyd®, for antigen-specific immunotherapy to preserve the endogenous insulin production. Diamyd®has demonstrated good safety in trials with more than 1,000 patients as well as effect in some pre-specified subgroups. Besides the Company’s own European Phase-II trial DIAGNODE-2 where the diabetes vaccine is administered directly into the lymph node, there are two other investigator initiated clinical trials ongoing with Diamyd®. Diamyd Medical also develops the GABA-based investigational drug Remygen®for regeneration of endogenous insulin production. An investigator initiated Remygen®trial in patients living with type 1 diabetes for more than five years is ongoing at Uppsala University Hospital. Diamyd Medical is one of the major shareholders in the stem cell company NextCell Pharma AB and has holdings in the medtech company Companion Medical, Inc., San Diego, USA.

Diamyd Medical’s B-share is traded on Nasdaq First North Growth Market under the ticker DMYD B. FNCA Sweden AB is the Company’s Certified Adviser; phone: +46 8-528 00 399, e-mail: info@fnca.se.

Further information is available on https://www.diamyd.com.

*** 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 08.15 CET on October 2, 2019.

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