Quarterly Report III 13/14

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| Source: Diamyd Medical AB (publ)
September 2013 – May 2014, Diamyd Medical AB (publ), Fiscal year 2013/2014
Reporting period March 1, 2014 – May 31, 2014

  · Net sales amounted to MSEK 0 (0)
  · Loss before tax amounted to MSEK -3.6 (-4.0)
  · Liquid assets and short term investments amounted
to MSEK 39 (48) as of May 31, 2014

First nine months, September 1, 2013 – May 31, 2014

  · Net sales amounted to MSEK 0.3 (0)
  · Loss before tax amounted to MSEK -12.8 (-8.3)

Significant events during the reporting period

  · Diamyd Medical’s former sister company Periphagen, Inc. (former Diamyd,
Inc.) secured new financing
  · Diamyd Medical entered the stem cell field with investment in Swedish cord
blood bank
  · Diamyd Medical invested in a US medical device company

Significant events after the reporting period

  · Clinical study with Diamyd Medical’s diabetes vaccine fully recruited

CEO comments
At the beginning of June, the final participants were included in the researcher
-initiated study DIABGAD-1 following intensive and successful recruitment
efforts. Slightly more than 60 children and adolescents with newly diagnosed
type 1 diabetes are participating in the study and testing our diabetes vaccine,
Diamyd®, in a unique combination with vitamin D and ibuprofen. We strongly
believe in attacking the disease process in type 1 diabetes from several angles
simultaneously by combining Diamyd® with other drugs and this is one of the
first such studies anywhere in the world. The Phase II study will also evaluate
the effect of a double dose of Diamyd®. The aim of the treatment is to preserve
the patients’ endogenous insulin production. Now that the last participant has
been treated, we know that the first planned analysis focusing on immunological
markers can be initiated at the end of 2014 and, accordingly, the results
presented at the start of 2015.

The study is being led by Professor Johnny Ludvigsson at Linköping University.
Professor Ludvigsson is ranked as one of the world’s ten most distinguished
researchers of type 1 diabetes according to a recent analysis based on
scientific publications in the field over the last ten years. Professor Mark
Atkinson, who is a member of Diamyd Medical’s Scientific Advisory Board, is
found at second place in the top-ten list and Diamyd Medical also collaborates
with several other top names. The list was published in June at the annual US
diabetes conference that was held in San Francisco and which brought together
over 17,000 participants. As usual, Diamyd Medical was there to network and to
discuss possibilities for future collaborations.

At the same time, there is an ongoing researcher-initiated pilot study with
Diamyd®, called DiAPREV-IT, which is testing whether the diabetes vaccine can
prevent or delay type 1 diabetes in healthy children who are at high risk of
developing the disease. Simply delaying the onset of the disease with the help
of the diabetes vaccine would be a major medical success. The pilot study
currently comprises 50 children aged four and upwards and the research team at
Lund University conducting DiAPREV-IT would like to test the concept on more
children to increase the probability of being able to demonstrate a
statistically significant preventive effect of the diabetes vaccine. The
research team is in discussions with the Swedish Medical Products Agency and
Diamyd Medical about the most appropriate way of increasing the sample size by
means of additional children.

Efforts continue to launch additional researcher-initiated clinical trials with
Diamyd® and we have well-advanced plans in place with several teams of
researchers.

In April, we invested in two exciting startups. The first and largest investment
was in Sweden’s first commercial stem cell bank for private family saving of
umbilical cord blood and other sources of stem cells. Diamyd procured a 46
-percent holding for an investment of MSEK 11.5. The company has taken the name
Cellaviva and is in the process of establishing its operations in close
proximity to Karolinska Institutet's cell therapy and regenerative medicine
programs.

The second investment was in Companion Medical, a newly started medical
technology company in San Diego, in the US, which develops advanced technical
devices for people living with insulin-treated diabetes. For competitive
reasons, Companion Medical does not want us to reveal exactly what it is
developing, more than that it comprises a cost-effective system combining the
best features of existing solutions for delivering insulin to the body together
with advanced data management. It was our presence in the global diabetes world
that generated the opportunity for us to invest in Companion with its highly
skilled and experienced team. In addition to a ten-percent ownership stake,
Diamyd Medical also gains the distribution rights for its future products in the
Nordic region. The investment makes it possible to broaden our diabetes
portfolio in the long term and to enter the medical technology market.

Stockholm, July 2, 2014

Peter Zerhouni
President and CEO Diamyd Medical AB (publ)

Significant events during the reporting period
March 1, 2014 – May 31, 2014

Diamyd Medical’s former sister company secured new financing
Diamyd Medical holds shares in the US gene therapy company Periphagen Holdings,
Inc. Periphagen announced the successful completion of a financing transaction
where a life science fund invests up to USD 16 million, of which USD 6.5 million
has been closed.

Diamyd Medical entered the stem cell field with investment in Swedish cord blood
bank
Diamyd Medical signed an agreement with a group of founding partners and
Karolinska Institutet Holding AB, by which Diamyd Medical agrees to invest SEK
11.5 million for the establishment of a commercial cord blood bank in Sweden for
private family saving of umbilical cord blood and other sources of stem cells.
The intention is also to collect and make available stem cells from umbilical
cord tissue for research purposes in order to advance the fields of stem cells
and regenerative medicine, including research within type 1 diabetes.

Diamyd Medical invested in a US medical device company
Diamyd Medical entered into an agreement to purchase 10 percent of the American
start-up med-tech company Companion Medical, Inc. for corresponding
approximately SEK 1.6 million. Companion Medical develops advanced technical
devices for people living with insulin treated diabetes. Diamyd Medical will
have a seat on the Board of Companion Medical as well as the distribution rights
to Companion Medical’s future products in the Nordic countries.

Significant events after the reporting period

Clinical study with Diamyd Medical’s diabetes vaccine fully recruited
Diamyd Medical announced that all participants had been included in a Phase II
clinical study, DIABGAD-1, in which Diamyd Medical’s diabetes vaccine Diamyd®,
in a unique combination with other drugs, is tested in children and adolescents
recently diagnosed with type 1 diabetes. The first results from the researcher
-initiated study will thereby be available in the beginning of 2015.

*** To read the complete report, please visit www.diamyd.com, or see attached
PDF ***
For more information please contact:
Peter Zerhouni, President and CEO Diamyd Medical AB (publ). Phone: +46 8 661 00
26
Diamyd Medical AB (publ), Kungsgatan 29, SE-111 56 Stockholm, Sweden
Phone: +46 8 661 00 26 Fax: +46 8 661 63 68 E-mail: info@diamyd.com Reg no:
556242-3797

Note: This document has been prepared in both Swedish and English. The Swedish
version shall govern in case of differences between the two documents. The
document contains certain statements about the Company’s operating environment
and future performance. These statements should only be regarded as reflective
of prevailing interpretations. No guarantees can be made that these statements
are free from errors.