Quarterly Report I 08/09

Quarterly report Stockholm January 30, 2009 First quarter report for Diamyd Medical AB (publ), fiscal year 2008/2009 (www.omxgroup.com ticker: DIAM B; www.otcqx.com ticker: DMYDY) September 1, 2008 – November 30, 2008

• The results from a Phase II study of Diamyd® were published in the prestigious medical journal, the New England Journal of Medicine • Diamyd’s Phase III studies have been approved in six European countries as well as the US, as of November 6, 2008 • 10 percent of the patients in Diamyd’s European Phase III trial have been screened, as of October 1, 2008 • Preclinical studies with the NP2 gene therapy product demonstrate efficacy for diabetes pain • A European patent was granted for the treatment of erectile dysfunction (impotence), a complication of diabetes, using the company’s gene therapy technology • Diamyd receives great exposure at the EASD conference in Rome • Applications were filed to initiate two prevention studies with the Diamyd® diabetes vaccine (after reporting period) • The Annual General Meeting was held on December 11, 2008 (after reporting period) • Net sales for the first quarter were kSEK 88 (149) • The net loss for the first quarter was MSEK 10.4 (17.1) • Group liquid assets were MSEK 70.4 (49.8) as of November 30, 2008 • Earnings per share after dilution were SEK -1.0 compared to SEK -1.7 for the same period last year CEO OVERVIEW Late autumn at Diamyd has seen many activities, with a focus on the company’s visibility on the world stage. I myself have visit Beijing, London, Helsinki and New York among other places, and spoken before audiences from the worlds of science and finance. We’ve been positively received, and it is reassuring to see that Diamyd is gaining a hearing worldwide. Awareness of Diamyd has reached a new level in the scientific world, thanks to the publication in the New England Journal of Medicine at the beginning of October. In the future this will be considered to be one of the company’s milestones. Having our successful results of the Phase II study, where type 1 diabetes patients were treated with Diamyd®, published in the most prestigious medical journal in the world means a tremendously valuable validation of our research. An example of an immediate reaction is that two research groups that cooperate with Diamyd have applied for permission to initiate prevention studies, independent of one another. It seems important to initiate treatment as early as possible in the disease process while there are still enough insulin producing cells remaining and it is still possible to prevent the serious illness of type 1 diabetes. The first study is being led by a team of Scandinavian researchers, and concerns Scandinavian patients. The second study is being led by Dr. Helena Elding Larsson in Malmö-Lund, and involves Swedish children. More information about these two studies will be published when the studies are ready to commence. Thus these two studies place no financial burden on Diamyd, but are of tremendous value to the company. Diamyd is cooperating in the same way with the American organization TrialNet for some time. This is a very cost-effective model for a small company. By cooperating with leading research institutions on studies of research character, we can explore several paths in parallel with our ongoing projects, in a way that is cost effective. Moreover the researchers’ good reputations lend extra weight to the studies among opinion makers in the field, and Diamyd has the rights to the study results. In my conversations and meetings with representatives from the financial industry throughout the world, I’m being shown respect that Diamyd has come so far into Phase III of its development of a potentially pioneering diabetes vaccine, at such low costs. I feel confident about the future, and the success that the Diamyd® vaccine may achieve, based on the results that have already been demonstrated at this point. For Diamyd as a company, the next priority is to ensure continued financing in order to complete our Phase III studies. Along with financing strategies, we are also currently working on positioning Diamyd as a market-oriented diabetes company. This includes numerous different scenarios, where in addition to actively pursue outlicensing of our products, we are also evaluating other partnership opportunities with companies that work in the area of autoimmune diabetes. We live in exciting times, where new possibilities are opening up all the time. I look forward to the coming year. Elisabeth Lindner, President and CEO, Diamyd Medical AB SIGNIFICANT EVENTS DURING THE PERIOD The New England Journal of Medicine publishes the 30-month results of the company’s Phase II study. The results demonstrate that the therapeutic diabetes vaccine Diamyd® for type 1 diabetes preserves the body’s capacity to produce its own insulin. The results indicate that Diamyd does not cause any side effects associated with the product. 5-year results from the Diamyd Phase II study with LADA patients are presented at the EASD conference (European Association For The Study Of Diabetes, 44th Annual Meeting) in Rome, Italy. The results demonstrate that vaccination with Diamyd® significantly reduces the risk that LADA (Latent Autoimmune Diabetes in Adults) patients will need insulin treatment, even after five years. No serious treatment-related side effects were observed in the study, which strengthens Diamyd®’s safety profile further. Phase III studies in Europe and the US. At the beginning of this reporting period, it was reported that 10 percent of the diabetes patients in the European study had been screened. The first patients in the US study had been injected. In October the Company also reported that six European countries - the Netherlands, the UK, Finland, Slovenia, Spain and Sweden - had approved the Phase III study of the Diamyd® diabetes vaccine for type 1 diabetes. The NTDDS product NP2 is effective against diabetes pain. Diamyd’s preclinical research on the topic is published in an article in the scientific journal Journal of Neuroscience. Erectile dysfunction, or impotence, is a common complication of diabetes, which may be treated in the future using the company’s NTDDS technology. The method of delivering nerve growth factors directly to damaged nerves has been shown to be effective in animal models. A new European patent was granted for the method. OTHER SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD The annual meeting of shareholders authorized the board to decide on a new share issue on one or more occasions until the next annual meeting. The total number of shares issued may not exceed 10 percent of the total number of shares. The meeting approved the Board’s proposal that it be authorized to repurchase up to 10 percent of the Company’s shares on one or more occasions until the next annual meeting. The annual meeting approved the Board’s proposed guidelines for compensation and terms of employment for the CEO and other key executives. In addition, the meeting approved the Board’s proposal to institute an employee option program. Anders Essen-Möller was reelected as Chairman of the Board, and Lars Jonsson and Sam Lindgren were reelected to the Board while Henrik Bonde was elected as a new Board member. Prevention studies with the Diamyd® vaccine. A team of Scandinavian researchers has applied for permission to begin a study using Diamyd® to vaccinate people at high risk of developing type 1 diabetes. In Sweden Dr. Helena Elding Larsson, a pediatrician and researcher at Lund University, has also applied to the Swedish Medical Products Agency for approval of a study intended to prevent type 1 diabetes in Swedish children. -- To read the complete report, please see attached pdf, or visit www.diamyd.com --

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