Financial Statement 13/14

September 2013 – August 2014, Diamyd Medical AB (publ), Fiscal year 2013/2014
Reporting period, June 1, 2014 – August 31, 2014

  · Net sales amounted to MSEK 0.2 (0,1)
  · Loss before tax amounted to MSEK -3.3 (-4.3)
  · Liquid assets and short term investments amounted to MSEK 35.7 (65.5) as of
August 31, 2014

Full year, September 1, 2013 – August 31, 2014

  · Net sales amounted to MSEK 0.4 (0.1)
  · Loss before tax amounted to MSEK -16.0 (-12.6)

Significant events during the reporting period

  · Clinical study with Diamyd Medical’s diabetes vaccine fully recruited
  · Diamyd Medical reinforces focus on business development
  · Study with Diamyd Medical’s diabetes vaccine awarded EU-funding

Significant events after the reporting period

  · Diamyd-licensed technology cures diabetes in pre-clinical model
  · New method to give Diamyd® will be tested in adults with type 1 diabetes
  · Diamyd Medical and Protein Sciences deepen commitment to develop new
treatment for diabetes

CEO comments
Diamyd Medical has made a flying start to the autumn and the company is a hive
of activity. Among all these activities, we will manufacture fresh GAD protein
at our long-term partner Protein Sciences Corporation. The GAD protein is the
active substance in the diabetes vaccine Diamyd®, which is being developed for
the treatment and prevention of autoimmune diabetes. Since a portion of the
payment is being made in Diamyd shares, Protein Sciences will become a strategic
and one of the largest shareholders in Diamyd Medical. Having a well-established
manufacturing process for Diamyd® in place represents a substantial value and
further deepening the relationship with Protein Sciences in this manner is very
positive for ensuring long-term manufacturing.

We are meeting increasing interest for conducting studies with the diabetes
vaccine so it is strategically important that we keep the production process
updated and, continuously, ensure that GAD protein and ready-for-use Diamyd® are
available for clinical trials. Diamyd® is the Antigen-Based Therapy (ABT) that
is at the forefront of development and can be used on children due to its
favorable safety profile demonstrated in extensive earlier clinical trials.
Together with researchers, we strongly believe in attacking the disease process
for type 1 diabetes from several angles simultaneously by combining Diamyd® with
other drugs and we are preparing such combination trials together with half a
dozen different groups. The preparations for several of these have progressed as
far as discussions with the regulatory authorities.

A new investigator-initiated trial with Diamyd® recently received approval from
the Swedish Medical Products Agency and is being launched. In analogy to the
development in allergy therapy, where the administration of allergen into lymph
nodes significantly improved the efficacy, in this study, a low dose of Diamyd®
will be administered directly into lymph nodes in combination with vitamin D
treatment. Initially, this exciting concept will be tested on a small group of
adult patients recently diagnosed with type 1 diabetes. The entire study will be
conducted at Linköping University under Professor Johnny Ludvigsson.

Another investigator-initiated combination trial where discussions are ongoing
with the US Food and Drug Administration (FDA) pertains to the combination of
Diamyd® and gamma amino butyric acid (GABA). Last year, Diamyd Medical secured a
license from the University of California, Los Angeles (UCLA) to the exclusive
intellectual rights for GABA for the treatment of diabetes, among other
conditions. The idea of combining GABA with Antigen-Based Therapy (ABT) for type
1 diabetes gained further support from a scientific paper at the beginning of
September. In the paper, scientists at UCLA confirmed previous findings, that
combination therapy with GABA and ABT acts synergistically when treating non
-obese diabetic (NOD) mice, a model for type 1 diabetes. The new paper concludes
that the use of GABA in combination with ABT also has potential for type 1
diabetes intervention in humans.

In parallel with the planning of new trials, one of the world’s first
combination trials is ongoing in Sweden – DIABGAD-1. Slightly more than 60
children and adolescents with newly diagnosed type 1 diabetes are participating
in the trial and testing Diamyd® in a unique combination with vitamin D and
ibuprofen. The trial received a nice contribution corresponding to about SEK 1.1
million in EU funding at the end of August. The expectation is to be able to
present the results from the first six months of the trial at the start of 2015
with a focus on immunological markers. Later in 2015, the 15-month results
should also be available from the trial and these will be able to say more about
the effects of the treatment on the patients’ ability to produce their own
insulin.

Having widened the Company’s focus areas during the fiscal year through
investments in the Swedish company Cellaviva, which is establishing a bank for
umbilical cord blood and stem cell research, and the US medical technology
company Companion Medical, we are now looking to leverage the increasing
interest in Diamyd® and investing energy in identifying collaboration partners.

Stockholm, October 15, 2014

Peter Zerhouni
President and CEO Diamyd Medical AB (publ)

Significant events during the reporting period

June 1, 2014 – August 31, 2014

Clinical study with Diamyd Medical’s diabetes vaccine fully recruited
All participants have 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.

Diamyd Medical reinforces focus on business development
Diamyd Medical’s lead candidate therapeutic Diamyd® for treatment and prevention
of type 1 diabetes experiences an increased interest. Consensus is that the
disease must be attacked by inducing tolerance to beta cell auto-antigens at a
time when the inflammatory components of the immune system are kept at bay.
Diamyd® is the furthest developed beta cell specific auto-antigen (GAD65
formulated in alum) available and the Company is currently in discussion with
half a dozen parties about new combination studies. Diamyd Medical is therefore
preparing to meet this increased interest by reinforcing its focus on business
development. To make available further management resources for this, the Board
has asked the Company Chairman, Anders Essen-Möller, to assume responsibility
for Diamyd Medical’s external communication, with the aim of meeting the
interest from potential partners and other stakeholders.

Study with Diamyd Medical’s diabetes vaccine awarded EU-funding
The ongoing combination study DIABGAD-1 has been awarded EUR 120 000,
corresponding to about SEK 1.1 million, in EU-funding. The grant comes from an
FP7 project where Linköping University and Diamyd Medical are included. The
DIABGAD study aims to evaluate whether vitamin D and ibuprofen act
synergistically with the diabetes vaccine Diamyd® in order to preserve the
insulin producing capacity in children newly diagnosed with type 1 diabetes. The
first results from the study are expected to be presented in the beginning of
2015.

Significant events after the reporting period

Diamyd-licensed technology cures diabetes in pre-clinical model
Researchers at UCLA have confirmed earlier findings that combinations of GABA
and Antigen Based Therapy (ABT) works synergistically as a treatment in the NOD
mouse model of type 1 diabetes. Diamyd Medical is the exclusive licensee for the
commercialization of UCLA’s GABA technology for metabolic diseases including in
diabetes.

New method to give Diamyd® will be tested in adults with type 1 diabetes
A new way to give Diamyd® will be tested in a clinical study with five adults
newly diagnosed with type 1 diabetes. The investigator initiated study has been
approved by the Swedish MPA. In analogy to the development in allergy therapy,
where the administration of allergen into lymph nodes has significantly improved
the efficacy, Diamyd® will in this study be administered directly into lymph
nodes in combination with treatment with vitamin D.

Diamyd Medical and Protein Sciences deepen commitment to develop new treatment
for diabetes
Protein Sciences has broadened its commitment to diabetes and become a strategic
and significant shareholder in Diamyd Medical, its long-time partner in this
domain. Protein Sciences will manufacture product for upcoming late stage
clinical trials for type 1 diabetes involving Diamyd Medical’s recombinant GAD
(glutamic acid decarboxylase) protein made using Protein Sciences’ proprietary
Baculovirus Expression Vector System (BEVS) technology. The diabetes vaccine
Diamyd® (GAD formulated with alum) has been evaluated as a monotherapy for type
1 diabetes in a Phase III study and data suggests that Diamyd® may be a critical
component of combination therapies that pairs the tolerance-inducing GAD antigen
with anti-inflammatory agents for the treatment and prevention of type 1
diabetes. This is being evaluated in ongoing and upcoming Phase II studies.

*** 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 (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.