Quarterly Report III 11/12

September 2011 – May 2012

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

Reporting period March 1, 2012 – May 31, 2012

• Group net sales amounted to MSEK 0.3 (19.5)
• Loss before tax amounted to MSEK -1.9 (-43.6)
• Earnings per share after dilution were SEK -0.1 (-1.5)
• The Group’s liquid assets and short term investments amounted to MSEK 389 (442) as of May 31, 2012
  
  

Period September 1, 2011 – May 31, 2012

• Group net sales amounted to MSEK 1.0 (278.5)
• Loss before tax amounted to MSEK -23.2 (profit 128.4)
• Earnings per share after dilution were SEK -0.8 (4.4)
  
  

Significant events during the reporting period March 1, 2012 – May 31, 2012

• Phase II study in cancer pain was fully recruited
  
  

Significant events after the reporting period

• Results were reported from Phase II study in cancer pain
  
  

CEO COMMENTS
We report today that the Phase II study with NP2 Enkephalin did not meet its primary objective of relieving pain in subjects suffering from intractable severe cancer pain. The novel treatment has however been well tolerated and appears safe, which is an important and positive finding for the Nerve Targeting Drug Delivery System (NTDDS), our gene based technology for delivery of therapeutics directly to the nervous system.

The lack of efficacy in the double-blind part of this study is unexpected given the robust preclinical data and the encouraging results from the previous Phase I study with NP2 Enkephalin. However, we have to accept that we are still in the early days of exploring the NTDDS technology in man and the concept of nerve targeted gene delivery can remain valid despite failing to demonstrate efficacy in this relatively small trial. Clinical development in intractable pain in subjects with advanced cancer is a challenging indication on many levels. Having established the safety profile our development options will expand and other indications may prove better targets for this versatile therapeutic approach, be it with NP2 Enkephalin or other drug candidates from our NTDDS platform.

The study and the analysis of the data is still ongoing and it is yet too early to determine what the best way forward is for the development of NP2 Enkephalin and the NTDDS platform respectively. We will of course reduce costs in the short term, while we update the development plan and accompanying budget. We also have to revisit our plan to outlicense NP2 Enkephalin based on the Phase II results.

Meanwhile, the research community’s interest in the concept of a vaccine like approach to prevent, treat, and cure type 1 diabetes remains high. This was a leading theme of the recent meeting of the Immunology of Diabetes Society (IDS) in Canada, and in connection with the meeting the insulin giant Novo Nordisk announced that they are starting a type 1 diabetes research center with 20 scientists in Seattle, USA, with the goal to move early-stage discovery projects in immunotherapy into small clinical exploratory trials in type 1 diabetes. That is interesting considering the further devlopment of our own Diamyd® diabetes vaccine.

Still no single therapy has succeeded to convincingly demonstrate a clinically meaningful change to the disease process in type 1 diabetes and the messages I took home from IDS is that we need to explore combining several therapeutic approaches as well as to work in prevention. There is already a Swedish type 1 diabetes prevention study with our diabetes vaccine ongoing, where healthy children, who are at high risk of developing type 1 diabetes, are treated as a preventative measure. The results of that study are scheduled for 2015. There are also plans from researchers to test combining our diabetes vaccine with other agents in small, less costly clinical pilot trials in newly diagnosed type 1 diabetes.

The ongoing evaluation of the Company’s strategic direction will be facilitated by now having access to the results of the Phase II study with NP2 Enkephalin. Diamyd Medical’s financial situation remains strong and as of May 31, 2012, we had SEK 389 million in cash, corresponding to SEK 13 per share.

Stockholm, July 3, 2012

Peter Zerhouni
President and CEO Diamyd Medical AB

SIGNIFICANT EVENTS DURING THE REPORTING PERIOD
March 1, 2012 – May 31, 2012

Phase II study in cancer pain was fully recruited. The last study participant has been recruited to Diamyd Medical´s Phase II study in which cancer pain is treated with the drug candidate NP2 Enkephalin. The purpose of the Phase II study is to evaluate NP2 Enkephalin for the treatment of severe and chronic cancer pain. It is the first sizeable and placebo-controlled clinical trial of a drug candidate based on Diamyd Medical’s patented Nerve Targeting Drug Delivery System, a unique technology for delivery of therapeutics directly to the nervous system.

SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD

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

*** 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

About Diamyd Medical
Diamyd Medical is a Swedish biotech company focusing on the development of pharmaceuticals for the treatment of pain, neuropathy and diabetes. The development projects for the treatment of chronic pain and neuropathy uses the Company’s patented NTDDS (Nerve Targeting Drug Delivery System) platform to administer therapeutic agents directly to the nervous system. The development project within the area of diabetes consists of the protein GAD65 for the treatment and prevention of autoimmune diabetes. Diamyd Medical also has holdings in the companies Protein Sciences Corporation (USA) and Mercodia AB (Sweden).

Diamyd Medical has offices in Sweden and in the US. Shares are listed on Nasdaq OMX (segment Small Cap) in Stockholm (ticker: DIAM B) and on OTCQX in the US (ticker: DMYDY) administered by the Pink OTC Markets and the Bank of New York Mellon (PAL). Further information is available on the Company’s website: www.diamyd.com.  

This information is disclosed in accordance with the Swedish Securities Markets Act, the Swedish Financial Instruments Trading Act, or the requirements stated in the listing agreements.

Diamyd Medical AB (publ), Karlavägen 108, SE-115 26 Stockholm, Sweden. Phone: +46 8 661 00 26
Fax: +46 8 661 63 68. E-mail: info@diamyd.com. Reg. no: 556530-1420

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