Quarterly Report II 08/09

Semi-Annual Report Stockholm April 29, 2009 Second 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 – February 28, 2009

• The FDA approved a combination study of the Diamyd® vaccine with the purpose of restoring the ability to produce insulin in patients with type 1 diabetes • A groundbreaking prevention study of the Diamyd® vaccine was approved by the Norwegian Medicines Agency • Diamyd Medical received a new approval to follow Swedish children and confirm the long-term efficacy of Diamyd® • Diamyd Medical’s European Phase III trial was approved in all nine countries • A pioneering study of the Diamyd® vaccine for the prevention of type 1 diabetes was approved by the Swedish Medical Products Agency (after reporting period) • Diamyd Medical licensed a new pain product (after reporting period) • Subscription of shares upon exercise of subscription warrant DIAM TO 2B from March 16 to April 17, which provided SEK 28 million in additional capital (after reporting period) • Employee Options were granted to Diamyd Medical employees, on April 1 2009, according to the approval of a new option program (after reporting period) • Diamyd Medical is discussing the possibility of combining its Phase III trials (after reporting period) • Group net sales for the second quarter were kSEK 778 (682) • The net loss for the second quarter was kSEK 15,399 (16,541) • Group liquid assets amounted to kSEK 50,375 (39,253) • Earnings per share after dilution for the second quarter are SEK -1.4 (-1.7) • Group Net sales for first half of the year were kSEK 866 (831) • The net loss for the first half of the year was kSEK 25,805 (33,664) • Earnings per share after dilution for the first half of the year were SEK -2.4 (-3.4) CEO OVERVIEW Treating, preventing and curing diabetes In the last quarter Diamyd Medical was able to report significant progress in no less than five different simultaneous trials to evaluate the efficacy of the Diamyd® vaccine. Our European Phase III trial has now been approved in all nine countries, an important milestone which has allowed us to sign up additional clinics in important countries such as Germany, France and Italy, which have all quickly begun treating children and adolescents with recent-onset type 1 diabetes. This means that the trial is fully under way and recruitment of new patients is proceeding even faster than before. It’s also of great importance to Diamyd Medical’s future development that we received approval from the Swedish Medical Products Agency in mid-January to continue following the children with type 1 diabetes who were vaccinated with Diamyd® four years ago. This is a strategically important trial with the purpose of confirming the long-term efficacy of the Diamyd® vaccine, a trial we’ve already begun, and where recruitment is simplified by the fact that the patients are already identified. In addition, there were three major news items during the period about new studies where the efficacy of the Diamyd® vaccine is evaluated by independent research groups, which removes the financial burden from us, while as a Company we are entitled to the study results. Two of these news items went worldwide, at nearly the same time. On February 13 we were able to report that the Norwegian Medicines Agency had approved a completely unique prevention study for adults. The purpose of the study is to study the disease process before type 1 diabetes manifests, while at the same time the researchers are investigating how the Diamyd® vaccine reduces the destruction of beta cells and whether treatment with Diamyd® can prevent the disease. Ten days later, on March 4, we were able to report that the Swedish Medical Products Agency had approved an additional prevention study to evaluate the potential of the Diamyd® vaccine to prevent type 1 diabetes from manifesting in young children at a high risk of developing the disease. Both of these studies may produce significant and entirely new knowledge, not only about the Diamyd® vaccine, but also about type 1 diabetes in general. They may also lead to significantly improved understanding of the mechanisms that affect the progress of the disease. We’ve been able to report positive news from the US, as the FDA approved a combination study of the Diamyd® vaccine with the purpose of restoring the ability to produce insulin in patients with type 1 diabetes. The Diamyd® vaccine is being tested in the study in combination with medication considered to stimulate the growth of new insulin-producing beta cells. The study is being financed and conducted by the respected National Institute of Diabetes and Digestive and Kidney Diseases (NIDDK). From a life cycle perspective, the study means that we are evaluating the vaccine’s potential to cure, while simultaneously pursuing a treatment and prevention strategy. In addition to the studies that we’ve reported, I also want to mention in closing that the TrialNet trial study of the Diamyd® vaccine financed by the National Institutes of Health has started in the US. As in the past, our goal is to bring the Diamyd® vaccine to approval globally in the shortest time and at the lowest cost possible. Our recent successes demonstrate that we are on the right path, which motivates us to work even harder to reach the market. Elisabeth Lindner, President and CEO, Diamyd Medical AB SIGNIFICANT EVENTS DURING THE PERIOD The FDA approved a combination study of the Diamyd® vaccine with the purpose of restoring the ability to produce insulin in patients with type 1 diabetes. The study means that the Diamyd® vaccine is being tested in combination with medication considered to stimulate the growth of new insulin-producing beta cells. A groundbreaking prevention study of the Diamyd® vaccine was approved by the Norwegian Medicines Agency. The purpose of the study in Norway is to investigate the disease process before type 1 diabetes manifests, and whether treatment with the Diamyd® diabetes vaccine will halt the progress of the disease. Diamyd Medical received a new approval to follow Swedish children and confirm the long-term efficacy of the Diamyd® vaccine. The study means that Diamyd Medical will continue to follow the 70 children with type 1 diabetes who were part of the Company’s Phase II trial of the Diamyd® vaccine initiated four years ago for three more years. Diamyd Medical’s European Phase III trial was approved in all nine countries. The trial includes a total of 320 children in nine countries. Its purpose is to evaluate the efficacy of the Diamyd® vaccine in preserving the capacity to produce insulin in children and adolescents with recent-onset type 1 diabetes. OTHER SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD A pioneering study of the Diamyd® vaccine for the prevention of childhood diabetes was aproved by the Swedish Medical Products Agency. The purpose of the study is to evaluate whether the Diamyd® vaccine successfully interrupts the course of the disease in Swedish children at high risk of developing type 1 diabetes, thus preventing the disease from manifesting. Diamyd Medical licensed a new pain product. The agreement covers an exclusive license for a new endomorphin technology which is an important strategic complement to Diamyd Medical’s pain portfolio, which now encompasses all three primary pain receptors. Subscription of shares upon exercise of subscription warrant DIAM TO 2B from March 16 to April 17, 2009. The warrants that accompanied each newly issued share from the directed placement of spring 2008 were listed for trading on the market place First North as of June 10, 2008, and were traded through April 8, 2009. The subscription period was from March 16 until April 17, 2009. A total of 280,902 new shares were subscribed for, providing SEK 28,090,200 million in additional capital. New employee option program. The new option program adopted by the annual meeting of shareholders means that employees of the Diamyd Group were granted new employee options as of April 1, 2009. A total of 158,400 options have been granted to the management team and other employees of Diamyd Medical AB. The program is running until 2011. Diamyd Medical is discussing the possibility of combining its Phase III trials. Diamyd Medical is conducting two clinical Phase III trials of the Diamyd® diabetes vaccine in children and adolescents with recent-onset type 1 diabetes: one in the US and one in nine European countries. At the same time, the company is currently holding discussions with the regulatory agencies about combining the two trials into one global trial. In addition to reducing costs, consolidating the trials would mean that countries with the fastest rate of patient recruitment could be utilized to the greatest extent. -- To read the complete report, please see attached pdf, or vist www.diamyd.com --

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