REPORT FOR FIRST QUARTER 2009

A quarter dedicated to progress on CE studies

The first quarter report for 2009 was approved by the Board of Directors on May 11th. Please find the report and an investor presentation attached.

Highlights from the report:
• Finalized the necessary analytical work for CE marking of both BCtect® and ADtect®
• Awarded 6.5 mill NOK research grant for development of Parkinson’s Disease test
• Signed term sheet with a pharmaceutical company on development of a new biomarker
• Strong interest for ADtect® and the company at the ADPD congress in Prague

A substantial effort in further developing our statistical methods on genetic analysis has been implemented in the development of ADtect® and BCtect®, and into the bespoke software which generates test results. The software has been developed under international quality standards and in close cooperation with Applied Biosystems. The software is now universally applicable on our tests.

The first pharmaceutical company has signed a term sheet with DiaGenic on development of a new biomarker for use in drug development.

A substantial effort has been made in dialogue and negotiations with distributors in Europe. Discussions have been held with several distributors across selected areas in Europe, covering the Nordics, Western and the Southern Europe. The negotiations with the larger distributors responsible for several countries demands dialogues on both local and corporate levels. Final agreements depend on both finalised CE documentation and thorough local market research.

In India our distributor continues their work on establishing BCtect® among key opinion leaders in New Delhi using seeding kits. Several visits to customers by DiaGenic and consultants were performed to support our distributor, SRL Diagnostics, in their scientific marketing to opinion leaders in New Delhi. Increased media profiling is needed to increase the market uptake.

DiaGenic has been granted NOK 6.5 million by the Norwegian Research Council to develop a diagnostic test for Parkinson's disease. This project will run over 4 years and build upon the Michael J. Fox Foundation financed biomarker project.

Net Income totalled NOK -11.4 million for the first quarter in 2009 compared with NOK -7.7 million in the corresponding period in 2008. Total operating costs for the first quarter 2009 amounted to NOK 11.6 million compared with NOK 7.9 million in the first quarter 2008. The company’s liquid assets totalled NOK 18.3 million at 31 March 2009.

Highlights post quarter end:
• Compliance to the CE marking of ADtect® achieved, pending final registration by the authorities.
• The calibration model and all technical studies for BCtect® have been finalized. Pending test development and documentation BCtect® will be CE marked.
• Distribution agreements signed for several countries:
- Algol Pharma as distributor for Norway, Sweden, Denmark and Finland
- Access Health Care as distributor for Switzerland and Austria
- Genekor as distributor for Greece
- Data Diş Ticaret (a division of the Reysas Group) as distributor for Turkey


Attachments: The First Quarter report and presentation

Contact:
MD PhD Erik Christensen, Managing Director
Telephone: +47 95939918
e-mail: erik.christensen@diagenic.com