Financial Statement 11/12

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Quarterly Report Diamyd Medical AB (publ), fiscal year 2011/2012
(www.omxgroup.com ticker: DIAM B; www.otcqx.com ticker: DMYDY)

Reporting period June 1, 2012 – August 31, 2012

  • Group net sales amounted to MSEK 0.1 (2.2)
  • Loss before tax amounted to MSEK -28.3 (-26.5)
  • Earnings per share after dilution were SEK -1.0 (-0.9)
  • The Group’s liquid assets and short term investments amounted to MSEK 380 (436) as of August 31, 2012

Full year, September 1, 2011 – August 31, 2012

  • Group net sales amounted to MSEK 1.0 (280.8)
  • Loss before tax amounted to MSEK -51.5 (profit 101.8)
  • Earnings per share after dilution were SEK -1.7 (3.5)

Significant events during the reporting period June 1, 2012 – August 31, 2012

  • Results were reported from Phase II study in cancer pain

Significant events after the reporting period

  • Agreement was entered into for the sale of U.S. gene therapy company
  • Diamyd Medical limited further investment in the diabetes vaccine
  • Extraordinary General Meeting of Diamyd Medical AB approved the sale of U.S. gene therapy company

CEO COMMENTS
The last quarter we have been occupied to change the course of Diamyd Medical in order to safeguard the Company’s success in the long term. At the end of the reporting period we had SEK 380 million in liquid assets and short term investments. The financial position and the stock listing represent significant strengths in the current business climate.

Yesterday, an Extraordinary General Meeting of Diamyd Medical with overwhelming majority approved the sale of the U.S. subsidiary, Diamyd, Inc., including the development projects based on the Nerve Targeting Drug Delivery System (NTDDS) with applications in pain and neuropathy among others. The buyer, Periphagen Holdings, Inc. assumes all costs and revenues related to the NTDDS business from September 1, 2012, whilst Diamyd Medical retains the right to share in future successes of the NTDDS platform.

The day before the Extra General Meeting, we announced the Board of Directors’ decision to limit the investment in further development of the diabetes vaccine Diamyd® for the treatment and prevention of autoimmune diabetes to SEK 30 million over the coming three years. A Swedish researcher initiated Phase II study is ongoing to evaluate whether Diamyd® can prevent or delay type 1 diabetes in children who are at high risk of developing the disease. Results from that study are scheduled for 2015. There are also plans from researchers to test Diamyd® in combination with other agents in small, less costly clinical pilot studies. The ambition is to have new scientific results within three years providing opportunities for partnering with major pharmaceutical companies or other funding.

Through these two decisions we limit Diamyd Medical’s financial commitments towards the development projects where we have had set backs in clinical studies during the past 18 months. These measures should be seen as steps in Diamyd Medical's process to build a company generating a lasting robust return. Further information will be presented in connection with the Annual General Meeting to be held in December.

Stockholm, October 31, 2012
Peter Zerhouni
President and CEO Diamyd Medical AB

SIGNIFICANT EVENTS DURING THE REPORTING PERIOD
June 1, 2012 – August 31, 2012

Results were reported from Phase II study in cancer pain. Diamyd Medical AB has reported that the Phase II study evaluating the Company’s drug candidate NP2 Enkephalin did not meet the primary objective of reducing pain in subjects with severe intractable cancer pain. The treatment was however well tolerated.

SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD

Agreement was entered into for the sale of U.S. gene therapy company. Diamyd Medical AB entered into an agreement for the sale of the U.S. subsidiary, Diamyd, Inc., involved in drug development primarily relating to the NTDDS platform with applications in pain and neuropathy among others. The buyer, Periphagen Holdings, Inc., is owned by members of the management of Diamyd, Inc. The agreement was subject to approval of an Extraordinary General Meeting of Diamyd Medical. By reason of the divestment, Diamyd Medical postponed its Year End Report to October 31, 2012.

Diamyd Medical limited further investment in the diabetes vaccine. Diamyd Medical AB decided to allocate a maximum of SEK 30 million over three years for the development of the diabetes vaccine Diamyd®. The development activities are gathered in the subsidiary Diamyd Therapeutics.

Extraordinary General Meeting of Diamyd Medical AB approved the sale of U.S. gene therapy company. An Extraordinary General Meeting of Diamyd Medical AB (publ) held on October 30, 2012, decided in accordance with the Board's resolution, to approve the agreement to sell all shares in the subsidiary, Diamyd, Inc. to Periphagen Holdings, Inc.

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

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

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