Quarterly Report III 09/10

Third quarter report for Diamyd Medical AB (publ.), fiscal year 2009/2010

(www.omxgroup.com ticker: DIAM B; www.otcqx.com ticker: DMYDY

Third quarter March 1, 2010 – May 31, 2010

• Group net sales for the third quarter was MSEK 1.3 (0.2)
• Loss before tax for the third quarter was MSEK -30.9 (-26.2)
• Earnings per share after dilution for the third quarter were SEK -1.1 (-1.2)

Period September 1, 2009 – May 31, 2010

• Group net sales for the period was MSEK 2.8 (1.1)
• Loss before tax for the period was MSEK -75.3 (-52.1)
• The Group’s liquid assets amounted to MSEK 205.0 (54.4) as of May 31, 2010
• Earnings per share after dilution for the period were SEK -2.8 (-2.4)
  
  

Significant events during the reporting period March 1, 2010 – May 31, 2010

• Fund invested 35 MSEK in Diamyd.
• Diamyd granted Orphan Drug Designation in the US.
• Diamyd announced that the Company’s US Phase III study has included 100 study participants at 33 diabetes centers.
• Liquidity provider agreement for the Diamyd share was terminated.

Significant events after the reporting period

• Diamyd signed an agreement with Ortho-McNeil-Janssen Pharmaceuticals, Inc., a Johnson & Johnson company, to develop and commercialize the Diamyd® diabetes therapy.

CEO COMMENTS

A new chapter has begun
On June 22 we announced that Diamyd Medical has signed an agreement with Ortho-McNeil-Janssen Pharmaceuticals, Inc., a Johnson & Johnson company, to develop and commercialize the Diamyd® diabetes therapy. The agreement is probably one of the largest ever signed by a Swedish biotechnology company!

The agreement concludes the first stage of the journey that started in 1994. Our founder and Chairman Anders Essen-Möller’s daughter developed type 1 diabetes that year. Anders read in an article in Washington Post that scientists had succeeded to prevent diabetes in mice by administering the protein GAD65. As a true entrepreneur, Anders went to the USA, licensed the rights and started the development of the Diamyd® diabetes therapy. There are of course many more people that have contributed to bringing it this far, but at this historical occasion I must commend Anders, with his great personal and financial commitment, who never gave up despite many challenges along the way.

Johnson & Johnson, with access to leading expertise in diabetes, pharmaceutical development and product commercialization, has chosen to invest heavily in Diamyd® after having spent more than a year scrutinizing the project. The due diligence has covered everything from preclinical and clinical data to audits of clinical sites and production facilities. Our collaboration opens many doors and raises Diamyd’s profile. Returning from the world’s largest diabetes conference, American Diabetes Association (ADA), I can testify to the great enthusiasm this agreement has created in the field of diabetes.

The Diamyd spirit that permeates our company keeps us working hard, efficiently, and goal oriented and it makes us dare to find our own ways forward. It is an incredible positive force and I am myself amazed at what we have accomplished with scarce resources in just the last two years. The Diamyd spirit in combination with the larger resources the agreement with Johnson & Johnson brings can only mean success.

We will realize the plan to bring Diamyd® to the market in the Nordic countries ourselves and have negotiated exclusivity for this region. The Nordic market is a prestige market for type 1 diabetes in that the Nordic countries have the highest incidence of the disease in the world.

We are on the threshold of a completely new era for Diamyd Medical. A new chapter has begun

Stockholm, July 1, 2010

Elisabeth Lindner

SIGNIFICANT EVENTS DURING THE PERIOD
MARCH 1, 2010 – MAY 31, 2010

Fund invested MSEK 35 in Diamyd.
Diamyd Medical accepted an offer from an investment fund managed from New York by a Swedish-American team to issue 291,667 new B shares in a direct placement at SEK 120 per share. The issue price corresponded to the average market price of the past 30 trading days. Total proceeds for Diamyd amounted to MSEK 35. The new shares represent 1.0 % of the capital and 0.7 % of the votes. The Board of Diamyd decided on the new issue based on the authorization given by the Annual General Meeting on December 11, 2009.

Diamyd granted Orphan Drug Designation in the US. The FDA has granted Orphan Drug Designation of Diamyd Medical’s lead drug candidate Diamyd® in the USA. The Orphan Drug Designation is granted for rhGAD65, the active ingredient of Diamyd®, for the treatment of type 1 diabetes with residual beta cell function. Orphan drugs qualify for seven years of market exclusivity from the date of US marketing approval, tax credits for clinical research and a waiver for FDA user fees.

Diamyd announced that the Company’s US Phase III study is well under way. Diamyd Medical’s ongoing US Phase III study was announced to have included one hundred study participants at 33 diabetes centers in the USA and more sites will be added. The global Phase III program with the Company's lead drug candidate Diamyd® has thereby enrolled more than 430 children newly diagnosed with type 1 diabetes in Europe and the USA.

Liquidity provider agreement for the Diamyd share was terminated. Due to increased turnover in Diamyd Medical’s B share, the Company’s liquidity provider agreement with Mangold Fondkommission AB expired on March 5, 2010. A new liquidity provider has not been appointed.

SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD  

Diamyd signed an agreement with Ortho-McNeil-Janssen Pharmaceuticals, Inc. (OMJPI), a Johnson & Johnson company, to develop and commercialize the Diamyd® diabetes therapy. The agreement was announced on June 22, 2010, and relates to the development and world-wide commercialization of the GAD65 antigen-based therapy (Diamyd®) for the treatment and prevention of type 1 diabetes and associated conditions. OMJPI will make an upfront payment of USD 45 million, and under the terms of the agreement, Diamyd has the potential to receive additional development and sales milestone payments of up to USD 580 million, as well as tiered royalties on future sales. The parties will equally share costs for the development program until results from the ongoing EU Phase III study, expected in the first half of 2011. OMJPI has the right to fully assume responsibility for the development program upon reviewing the results. Following its strategy, Diamyd has secured exclusive rights for commercialization in the Nordic countries. Diamyd also retains the rights to the therapeutic use of the GAD65 gene and derivatives, fragments and variants of the GAD65 protein. The transaction is expected to close in the third quarter of 2010, contingent upon clearance under the Hart-Scott-Rodino Anti-Trust Improvements Act.

--- To read the complete report, please see attached PDF, or visit www.diamyd.com ---

Tags: