STOCKHOLM, Sweden, Jan. 20, 2006 (PRIMEZONE) -- Diamyd Medical AB (Pink Sheets:DMYDF), a global biotechnology company focused on the treatment of diabetes and its complications, including chronic pain and neuropathy, today announced its financial results for the period ended November 30, 2005.
-- Sales were SEK 218,000 compared to SEK 167,000 for the same period of the prior year -- Net loss was SEK 7.8 million compared to a net loss of SEK 7.0 million for the same period of the prior year -- Liquid assets were SEK 110.4 million as of 30 November 2005 compared to SEK 145.5 million for the same period of the prior year. Management now expects these funds to support Company initiatives until July 2007 -- Loss per share was SEK 0.9 compared to SEK 0.8 for the same period of the prior year -- Reports from a Phase II clinical beta cell prevention study with Diamyd in 70 children and adolescents with Type 1 diabetes are expected in August 2006 -- Reports from a Phase II/III clinical trial in Type 2 diabetes is expected in June 2007 -- An agreement was signed with regard to the acquisition of Nurel Therapeutics, Inc., a Pittsburgh, PA-based biotechnology company. Nurel focuses on diabetes and targeted gene delivery systems. The acquisition closed on December 19. Nurel shareholders and financiers received a total of 317,173 Diamyd class B-shares as payment. -- Decision was taken to initiate a Level 1 ADR program to enable trading of Diamyd Medical shares in the United States. -- After the Reporting Period, an agreement was signed with Protein Sciences, with regard to manufacture of Phase III drug. At the same time Diamyd Medical invested three million dollars in Protein Sciences' convertible notes.
CEO Comments
"This first quarter included significant accomplishments for Diamyd Medical," said Anders Essen-Moller, President and CEO of Diamyd Medical.
- "Our clinical trials in both Type 1 and Type 2 diabetes with our diabetes drug, Diamyd, moved forward according to plan, and we will present results from the Phase II clinical study of 70 children and adolescents with Type 1 in August 2006. - "The signing of the manufacturing agreement with Protein Sciences and investment of US$3.0 million in the same company were important steps in the Diamyd Medical strategy to continue to strengthen the Company's presence in the U.S. The deal we made with Protein Sciences not only ensures the manufacture of Diamyd for Phase III trials, but also presents the opportunity for us to invest in an exciting vaccine technology company, - "Another important step was the decision to acquire all the outstanding shares of Nurel Therapeutics, Inc. Nurel and Diamyd Medical focus on different aspects of diabetes, but we are both focused on the development on GAD-based pharmaceuticals. We differ in that the GAD is used for totally different and non-overlapping aspects of diabetes: (1) the treatment of the actual disease itself; and (2) the treatment of pain resulting from diabetes. The acquisition of Nurel brings synergy to the table, which made the deal very attractive to us. - "Together with the Bank of New York we initiated the establishment of a Level 1 American Depository Receipt (ADR) program that will enable trading of Diamyd Medical shares in the United States."
Financial Highlights
Sales - Group sales were SEK 218,000 compared to SEK 167,000 for the same period of the prior year and consisted mostly of Diamyd-related products. Sales of Diamyd Medical products fluctuate from quarter-to-quarter as the Company's products are primarily sold for various scientific research purposes. Sales include SEK 35,000 from the Company's U.S. subsidiary.
Costs - The Group's current costs were SEK 8.7 million compared to SEK 7.7 million for the same period of the prior year. The cost of research and development was SEK 4.4 million compared to SEK 3.8 million for the same period of the prior year. Costs increased as the Company initiated two clinical trials involving a total of 25 clinics throughout Sweden.
Net Loss - Net loss after financial income and expenses was SEK 7.8 million compared to a net loss of SEK 7.0 million for the same period of the prior year.
Financial Status and Liquidity - The Group's liquid assets were SEK 110.4 million as of 30 November 2005 compared to SEK 145.5 million for the same period of the prior year. Management now expects these funds to support the Company's initiatives until July 2007 instead of December 2007, which was reported previously. That is, the funds are expected to last until after the results of the Type 1 study are presented in August 2006 and after the results of the Type 2 study are put forward in June 2007.
Changes in Shareholders' Equity - Group shareholders' equity as of 30 November 2005 was SEK 107.6 million compared to SEK 144.5 million for the same period of the prior year, which gives an equity ratio of 92.3% versus 92.0%.
Parent Company - The net sales for the parent company were SEK 0 for the period since all sales take place in the subsidiaries. The net profit after financial income and expense was SEK 207,000 compared to SEK 101,000 for the same period of the prior year. Changes in liquid assets were SEK -8.5 million compared to SEK 0.7 million for the same period of the prior year.
Staff - The Group had a staff of 7 people as of 30 November 2005, of which 4 were men and 3 were women.
The Share and Stockmarket Value - As of 30 November 2005, the number of outstanding shares was 8,418,043 of which 471,200 were A-shares and 7,946,843 were B-shares. The Diamyd Medical total stock market value at the end of the period was SEK 412.9 million compared to SEK 327.5 million in the same period of the prior year. The share price at the close of the period was SEK 51.25 compared to SEK 38.90 for the same period of the prior year.
Warrants - The 917,655 warrants resulting from the new issuance in 1999 expire in August 2006. To enable trading of these options, the Company plans to list them on the OMX Stock Exchange O-list within the first half year of 2006.
Significant Events During the Reporting Period
Acquisition of Nurel Therapeutics Inc. - Diamyd Medical signed an agreement regarding the acquisition of Nurel Therapeutics Inc., a Pittsburgh, PA-based biotechnology company. The acquisition was paid with 223,204 Diamyd class B-shares. A further 93,969 Diamyd class B-shares were issued to the Nurel early financiers. Nurel has developed a new innovative gene platform, "Nerve-Targeted Gene Delivery System", that focuses on the treatment of, among other things, neuropathy caused by diabetes, spinal cord injury or cancer. Nurel and Diamyd both use GAD as a molecule of choice for treatment. Beyond diabetes and pain treatment, examples of diseases that may be considered for GAD-treatment with Nurel's patented Nerve-Target Gene Delivery System include Schizophrenia, Bi-Polar Disorders, Anorexia, ALS and Huntington's disease.
The acquisition of Nurel offers a wider reach for Diamyd Medical's exclusive patent rights for the GAD65-molecule. Nurel's Targeted Gene Delivery System is also suitable for targeted deliveries of third party proteins and may, therefore, be out-licensed to such parties as required.
The additional costs for Diamyd Medical to operate Nurel are estimated to be SEK 12 million per year for the next two-year period.
Level 1 American Depository Receipt (ADR) program - Recently, Diamyd Medical presented itself to several US investors. To enable US investors to trade with Diamyd Medical shares in the U.S., the company decided to initiate the establishment of a Level 1 Depositary Receipt Program. The Program is expected to take effect in January/February 2006.
Therapeutic Developments
Diamyd Medical continues to advance its development on treatments for both Type 1 and Type 2 diabetes (LADA). The Company is currently engaged in three clinical trials: (1) a Phase II clinical study of 70 subjects with Type 1 diabetes; a (2) a Phase II/III trial of 160 subjects with Type 2 diabetes; and (3) a follow-up Phase II clinical study of 47 subjects with Type 2 diabetes. Development of Diamyd for treatment of patients with recent onset Type 1 diabetes
Type 1 diabetes develops when the body's immune system attacks the insulin-producing pancreatic beta cells. At the onset of the disease patients generally have about 10% remaining beta cells. These few cells are incapable of producing enough insulin to maintain normal blood sugar levels and external insulin must be injected. After presentation of the disease, the autoimmune attack continues against the remaining beta cells, which eventually will be destroyed completely.
Our diabetes drug, Diamyd, is intended to prevent the destruction of beta cells and may, in a best case scenario, allow regeneration of beta cells without subsequent attacks from auto-reactive immune cells.
The Company is currently conducting a randomized, double blind Phase II clinical trial with Diamyd in 70 children and adolescents with recent onset Type 1 diabetes. The patients are divided into two groups - (1) the treatment group (35 subjects) receives two injections of 20ug Diamyd (GAD65 formulated in aluminum hydroxide); and (2) the placebo group (35 subjects) receives the same formulation without GAD65. The goal of this trial is to investigate whether the positive results obtained in a previous, smaller-scale Phase II clinical trial involving Type 2 diabetes adult patients with GAD antibodies (LADA patients) can be reproduced in patients with Type 1 diabetes. Professor Johnny Ludvigsson of Linkoping University is the principal investigator for the trial, which is being conducted at 8 clinics in Sweden. All patients are enrolled in the trial. The Company expects to report results from the study in August 2006.
Development of Diamyd for treatment of patients with Type 2 diabetes
Diamyd Medical is developing Diamyd as a treatment for autoimmune diabetes. Approximately 10% of all Type 2 diabetes patients have antibodies to GAD and, therefore, have a form of autoimmune diabetes known as LADA. These patients are easily identified through a routine blood sample analysis.
The Company previously conducted a successful small-scale Phase II clinical trial of 47 LADA patients. In addition, a large-scale Phase II/III clinical trial intended to be used for registration of Diamyd is currently underway with 160 LADA subjects. This is a randomized, double blind and placebo-controlled study. The test subjects are divided into two groups - (1) the treatment group (80 subjects) receives two injections of 20ug dose of Diamyd (GAD65 formulated in alum) over a 30-day period; and (2) the placebo group (80 subjects) receives the same formulation without GAD65. The goal of the trial is to confirm the positive results obtained during the previously mentioned Phase II trial in LADA patients. Professor Carl-David Agardh at the University Hospital MAS in Malmo is the principal investigator for the trial, which is being conducted at 17 clinics throughout Sweden. The Company expects to report the results of the trial in June 2007.
Market & Business Overview
Diabetes
The International Diabetes Foundation estimates that the number of persons with diabetes worldwide is nearly 200 million and that this number will increase to 330 million by 2025. The majority of the new cases of diabetes are expected to be Type 2 subjects. In addition, the number of individuals with heightened blood sugar levels (Impaired Glucose Tolerance or pre-diabetes) is estimated to be of a similar order.
The costs associated with diabetes in the western world is about 7% of total healthcare budgets, or more than US$100 billion in the US alone.
Neuropathic pain
Approximately 1% of the population (2.5 million people) in the U.S. suffers from moderate to severe pain associated with diabetes neuropathy, post herpetic neuralgia, HIV/AIDS neuropathy, spinal cord injury, phantom limb pain and/or cancer pain. The products Nurel Therapeutics is developing may become useful in treating a variety of these neuropathic pain indications. Recently, the interest in the neuropathic pain market by the pharmaceutical industry has grown exponentially. The U.S. neuropathic pain market, which was approximately $450 million in 2003, is expected to grow to $665 million by 2008 (13% compounded annual growth) because of the development of new products.
GAD and neurological diseases
GAD, which is an enzyme, converts the excitatory amino acid glutamate to the inhibitory neurotransmittor GABA. Several neurological and movement related disorders may be due to disturbances in the Glutamate-GABA balance. Therefore, GAD may come to play a major role as a component in future medications for treatment of such diseases.
Diamyd Medical is licensing limited exclusive therapeutic rights to the GAD65-gene for specific diseases. The Company also is engaged in third party discussions with regard to development of a medication for Parkinson's disease.
Significant Events Following the Reporting Period
-- At the General Assembly Meeting for shareholders on December 12, it was decided to re-elect Board Directors Anders Essen-Moller (President and CEO), Tord Lendau and Peter Rothschild. New Directors are Bjorn O. Nilsson, (Ph.D.), and Joseph Janes (lawyer). Leif Ek stepped down as a Director due to retirement. -- Shareholders at the General Assembly Meeting approved granting the Directors the right to at one or several occasions before the next Annual Meeting, issue a total of maximum 900,000 shares of class B in order to enable acquisitions with Diamyd shares as payment. These shares can be issued with out regard to the preferential rights of the existing shareholders. If all 900,000 shares are issued, the dilution will be 9.7% after the issue. -- Shareholders at the General Assembly Meeting approved the acquisition of Nurel Therapeutics, Inc. The acquisition adds to the Company's product portfolio pipeline, which now includes candidate therapeutics for autoimmune diabetes as well as for diabetes neuropathy, pain and cancer. Nurel shareholders received 223,204 Diamyd class B-shares and a further 93,969 Diamyd class B-shares were issued to early Nurel financiers. Nurel's burn rate is estimated to be SEK 12.0 million per year for the next two-year period. -- After the end of the reporting period, the Company reached an agreement with Protein Sciences Corporation (PSC) for the manufacture of Diamyd for Phase III trials. In addition, it was agreed that PSC would assist the Company in filing an Investigational New Drug Application (IND) with the U.S. Food & Drug Administration (FDA) during 2006. Diamyd Medical also participated in PSC's current financing with a U.S.$3 million investment. If this investment is converted into shares, the Diamyd Medical investment in Protein Sciences would be less than 5%. Protein Sciences (PSC) is a privately held biotechnology company based in Meriden, Connecticut, USA. Its business is developing and manufacturing modern -- not egg based -- vaccines, using recombinant DNA technology. -- Diamyd Medical has announced the successful results of a pre-clinical study demonstrating the safety and tolerability of a novel formulation of the GAD protein, specifically intended for intravenous use. This novel formulation, which was developed and patented (pending) by Diamyd, is intended for patients with diseases that may benefit from GAD65 treatment such as certain movement disorders. Financial Results Group's Income Statement kSEK 3 months 3 months 12 months Sep-Nov Sep-Nov Sep-Aug 2005-2006 2004-2005 2004-2005 Operating Income Net sales (note 1) 218 167 883 Other income - - 48 Total Income 218 167 931 Operating Costs Raw materials and supplies -377 -235 -775 Research and development -4,393 -3,771 -24,676 Patents -279 -357 -1,719 Personnel -2,259 -2,269 -8,698 Other external costs -1,238 -849 -4,052 Depreciation patents -162 -190 -751 Depreciation equipment -28 -39 -150 Total Operating Costs (note 2) -8,736 -7,710 -40,821 Operating Loss -8,518 -7,543 -39,890 Financial Income and Expense Dividend in associated company - - 152 Interest income 676 564 3,195 Interest expense - -23 -26 Total Financial Income and Expense 676 541 3,321 Loss after Financial Income -7,842 -7,002 -36,569 Taxes - - -63 Net Loss for the Year (note 3) -7,842 -7,002 -36,632 Earnings per share SEK -0.9 -0.8 -4.4 Earnings per share after dilution SEK -0.9 -0.8 -4.4 Number of shares 8,418,043 8,418,043 8,418,043 Average number of shares 8,418,043 8,388,212 8,410,787 Number of shares after dilution 8,451,196 8,388,212 8,442,800 Group's Balance Sheet kSEK Nov 30 Nov 30 Aug 31 2005 2004 2005 Tillgangar Fixed Assets Intangible assets 1,147 1,870 1,309 Tangible assets 192 314 220 Financial assets 800 800 800 Total Fixed Assets 2,139 2,984 2,329 Current Assets Inventory 109 44 8 Current Receivables Customer receivables 134 292 450 Other receivables 1,306 1,496 1,536 Prepaid tax 198 136 168 Prepaid expenses and accrued income 2,385 1,183 5,447 Total Current Receivables 4,023 3,107 7,601 Short-term investments 76,687 92,672 91,374 Cash and bank balances 33,685 52,875 24,161 Total Current Assets 110,372 145,547 115,535 Total Assets 114,504 148,698 123,144 Liabilities and Shareholders' Equity 116,643 151,682 125,473 (note 4) Shareholders' Equity Capital stock 8,418 8,148 8,418 Not registered share capital 360 0 360 Share premium reserve 141,193 158,046 141,193 Loss carried forward -34,480 -14,734 2,129 Loss for the period -7,842 -7,002 -36,632 Total Shareholders' Equity (note 3) 107,649 144,458 115,468 Long-term Liabilities - 768 - Current Liabilities Accounts payable 3,155 2,696 2,508 Other liabilities 1,689 775 1,745 Accrued expenses and deferred income 4,150 2,715 5,752 Total Current Liabilities 8,994 6,186 10,005 Total Liabilities and Shareholders' Equity 116,643 151,412 125,473 Change in Shareholders' Equity kSEK Sep-Nov Sep-Nov Sep-Aug 2005-2006 2004-2005 2004-2005 Opening Balance 115,468 151,598 151,598 Translation difference(a) 23 132 2 New share issue - - 500 Net loss -7,842 -7,002 -36,632 Closing Balance 107,649 144,728 115,468 (a) The transition to IFRS reporting requirements has affected the result positively with kSEK 56 Cash Flow Analysis 3 months 3 months 12 months kSEK Sep-Nov Sep-Nov Sep-Aug 2005-2006 2004-2005 2004-2005 Operations Operating loss -8,518 -7,543 -39,890 Interest received 2,840 383 4,162 Interest paid -818 -23 -2,744 Paid financial expense -144 -- -4,216 Dividends received -- -- 152 Adjustments for items that are not part of the cash flow Depreciation 190 229 898 Changes in accrued interest -1,662 181 3,693 Amortization of premiums for short term investments 506 -- 2,274 Other items that are not part of the cash flow -- -- -- Taxes paid -27 -24 -119 Cash Flow from Operations before Changes in Working Capital -7,633 -6,797 -35,790 Increase(-) decrease(+) inventory -98 46 82 Increase(-) decrease(+) receivables 3,623 154 -4,455 Increase(+) decrease(-) liabilities -1,072 841 3,892 Cash flow from Operations -5,180 -5,756 -36,271 Investments Investments in tangible assets -- -16 -30 Cash Flow from Investments -- -16 -30 Financing Loans -- -- -- New share issues -- -- 500 Cash flow from financing -- -- 500 The Period's Cash flow -5,180 -5,772 -35,801 Liquid funds at the beginning of the period 115,535 151,338 151,338 Translation gains/losses on consolidation 17 -19 -2 Liquid Assets at the End of the Period 110,372 145,547 115,535 ACCOUNTING PRINCIPLES As of September 1, 2005 Diamyd Medical began using IFRS for its group reporting. This means that Diamyd Medical in its group reporting from the first quarter 2005/2006 applies all IAS, IFRS, IFRIC and SIC regulations which are applicable. Notes Note 1 - Sales, kSEK 3 months 3 months 12 months Sep-Nov Sep-Nov Sep-Aug 2005-2006 2004-2005 2004-2005 Sales in Diamyd Diagnostics AB 179 97 610 Sales in Diamyd, Inc. 35 65 263 Invoiced freight 4 5 42 Other income - - 9 Total sales 218 167 883 Note 2 - Operating costs The exchange rate losses assigned to sales, inventory costs and other external costs amounted to SEK -26,000. The exchange rate profits assigned to sales, inventory costs and other external costs amounted to SEK 4,000. Note 3 - Balance for the period The business is making a loss. Deduction for losses in the Swedish company is valued at SEK 0 as a precaution. Note 4 - Shareholders' equity and liabilities All the Company's liabilities do not charge interest. Note 5 - Change to IFRS The change in accounting principles to IFRS has affected the results positively with SEK 56,000. Note 6 - Acquisition of Nurel Since no final analysis has been made in accordance with IFRS 3 of the acquisition of Nurel, the next report will provide a more detailed analysis of these effects. Key Ratios 3 months 3 months 12 months Sep-Nov Sep-Nov Sep-Aug 2005-2006 2004-2005 2004-2005 Return on equity, % -7.0 -4.7 -27.4 Return on capital employed, % -7.0 -4.7 -27.3 Return on total assets, % -6.5 -4.5 -25.8 Equity per share, SEK 12.8 17.3 13.7 Equity per share after dilution, SEK 12.7 17.3 13.7 Cashflow per share, SEK -0.6 -0.7 -4.3 Solidity, % 92.3 95.4 92.0 Number of shares 8,418,043 8,418,043 8,418,043 Average number of shares 8,418,043 8,388,212 8,410,787 Number of shares after dilution 8,451,196 8,388,212 8,442,800 Stockholm, Sweden, January 20,2006 The Board of Diamyd Medical AB (publ) This report was not reviewed by the auditors of Diamyd Medical. UPCOMING REPORTS 6-month report (December-February) 20th April 2006 9-month report (March-May) 28th July 2006 Year End Report (September-August) 26th October 2006 Diamyd Medical financial information is available at www.diamyd.com.
About Diamyd Medical
Diamyd Medical is registered on the Stockholm Stock Exchange O List (OMX: DIAM B). An application has been submitted to trade the shares in the U.S. via a Level 1 ADR Program. The Company conducts therapeutic development based on its GAD (glutamic acid decarboxylase) technology platform. GAD is an enzyme that converts the excitatory neurotransmittor glutamate to the inhibitory transmittor GABA. In this context GAD may have an important role in CNS- and movement related disorders. GAD is also a target pancreatic beta cell autoantigen in autoimmune diabetes such autoimmunity leading to development of insulin-dependence. Diamyd Medical's furthest developed project is Diamyd, which is currently employed in two ongoing clinical trials of both Type 2 and Type 1 diabetes, which are follow-ons of first successful dose finding Phase II trial. With the acquisition of Nurel Therapeutics additional development projects include gene-therapy for diabetes neuropathy pain and cancer.
To learn more about Diamyd Medical, visit the company's web site at www.diamyd.com
For further information contact: CEO Anders Essen-Moller Diamyd Medical AB (publ) (corporate. id. no. 556530-1420) Linnegatan 89B floor 5 SE-115 23 Stockholm Sweden. Tel: +46 (0)8-661 00 26 fax: +46 (0)8-661 63 68 or email: info@diamyd.com.
U.S. Investors: Kathy Price/Emmanuelle Ferrer, The Global Consulting Group, (646) 284-9430/ (646) 284-9421, kprice@hfgcg.com / eferrer@hfgcg.com.
This information includes statements concerning historical present and forward-looking items and is to the "best of knowledge" of the management of Diamyd Medical and the actual status and results achieved by the Company may differ materially from these statements. The Company assumes no obligation to update these statements to reflect actual results changes in assumptions or changes in other factors affecting such statements. The Company's Press Releases Quarterly Reports and Annual Reports ("Information") are translations from the Swedish originals. No guarantees are made that the translation is free from errors.