Quarterly Report I 14/15


September 2014 – November 2014, Diamyd Medical AB (publ), Fiscal year 2014/2015
Reporting period, September 1, 2014 – November 30, 2014

  · Net result amounted to MSEK -5.9 (-4.8)
  · Result per share amounted to SEK -0.3 (-0.2)
  · Cash flow from operating activities amounted to MSEK -5.8 (-4.3)
  · Liquid assets and short term investments amounted
to MSEK 29.8 (61.0) at the end of the period

Significant events during the reporting period

  · Diamyd-licensed technology, GABA in combination with Antigen Based Therapy,
cures diabetes in pre-clinical model
  · Diamyd® administered directly into lymph nodes will be tested in adults with
type 1 diabetes
  · Diamyd Medical and Protein Sciences deepen commitment to develop new
treatment for diabetes
  · Pioneering study combining the diabetes vaccine Diamyd® with GABA in
children with type 1 diabetes approved by the US FDA
  · New study to prevent type 1 diabetes with the Diamyd® diabetes vaccine
approved by the Swedish Medical Products Agency
  · Diamyd® in combination with vitamin D and etanercept approved for testing in
children and adolescents with type 1 diabetes
  · Treatment with GABA enhances transplanted human beta cell mass in
preclinical model of type 1 diabetes

Significant events after the reporting period

  · Diamyd Medical’s patent protection extended by ten years to 2032

CEO comments
Following an intense autumn with many positives, Diamyd Medical was able to
start the New Year with yet more good news. On January 6, 2015, the United
States Patent and Trademark Office granted a new patent for GAD65 for the
treatment of autoimmune diseases, including diabetes. The GAD65 protein is the
active substance in the Diamyd® diabetes vaccine and Diamyd Medical has an
exclusive license for the new patent from the University of California, Los
Angeles (UCLA). The term of the new patent runs into January 2032, which is more
than ten years longer than previous US patent protection for the diabetes
vaccine. The longer term should provide time for the remaining development of
Diamyd® and many years of marketing in the US without competition. Diamyd® is
the furthest developed Antigen Based Therapy for type 1 diabetes in the world.

In December, two new batches of GAD65 protein were manufactured by Protein
Sciences in the US. Preliminary analyses indicate that the production went well
even if much analytical work remains before the material can be released for
use. In accordance with the production agreement from September 2014, Diamyd
Medical has issued 100,000 Series B shares to Protein Sciences. Protein Sciences
will receive a further 300,000 Series B shares upon release of the material. In
addition, a cash amount was paid to Protein Sciences for the manufacturing,
which explains the higher costs for the period compared with earlier periods.

The end product Diamyd® is comprised of GAD65 protein from Protein Sciences
formulated with the vaccine adjuvant alum. Thus far, the formulation has been
done in batches of 3,000 vials by Octoplus in the Netherlands, however, they
have recently informed their clients that they plan to phase out their contract
manufacturing services. We have a large stock of ready-for-use diabetes vaccine
that will suffice until autumn 2017 for all studies, so we have plenty of time
to select a new contract manufacturer for the final formulation.

The initial results of the DIABGAD-1 combination study are expected to be
presented in the spring. The study encompasses a total of 64 patients between
the ages of ten and 18 who have been recently diagnosed with type 1 diabetes.
The study will continue for a total of 30 months, but an initial evaluation will
take place now after six months with focus on immunological markers. The
immunological markers can provide an indication of how the treatment has
affected the immune system. However, in this patient group, six months is too
short a time for relevant differences to arise between the treatment groups in
terms of the clinically most interesting variables, for example, the patients’
ability to produce insulin. The 15-month results from the study, that may be
available by the end of 2015, will show what effect the treatment has had on the
ability to produce insulin.

DIABGAD-1 is a researcher-initiated study with the Diamyd® diabetes vaccine, in
which a group of participants also receive the anti-inflammatory substance
ibuprofen. In addition, several of the groups of participating children receive
vitamin D to further steer the immune system in the right direction and,
concurrently, strengthen the beta cells. The aim of the combination treatment is
to preserve the body’s remaining capacity to produce insulin. The study is
taking place at nine clinics in Sweden and is led by Professor Johnny Ludvigsson
at Linköping University.

In addition to DIABGAD-1, the researcher-initiated DiAPREV-IT study is ongoing
in southern Sweden and its results are expected at the end of next year. The
study comprises 50 children that have been found to have an ongoing autoimmune
process, but do not yet have any clinical symptoms of diabetes, and aims to
evaluate whether treatment with Diamyd® can delay or prevent the participants
from presenting with type 1 diabetes. In the autumn, four new researcher
-initiated studies with the Diamyd® diabetes vaccine were approved in Sweden and
the US. Intense efforts are ongoing with getting these studies started and we
expect several of them to start recruiting participants in the first quarter of
2015.

Stockholm, January 21, 2015

Peter Zerhouni

President and CEO Diamyd Medical AB (publ)

Significant events during 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
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.

Pioneering study combining the diabetes vaccine Diamyd® with GABA in children
with type 1 diabetes approved by the US FDA
An investigator initiated study combining the diabetes vaccine Diamyd® and GABA
in children with new onset type 1 diabetes has been approved by the US Food and
Drug Administration. Diamyd Medical and University of Alabama at Birmingham has
entered a Clinical Trial Agreement regarding the study, which will be conducted
at Children’s of Alabama in Birmingham, USA. The combination has shown promising
results in preclinical studies

New study to prevent type 1 diabetes with the Diamyd® diabetes vaccine approved
by the Swedish Medical Products Agency
The Swedish Medical Products Agency has approved the planned new investigator
initiated study with the Diamyd® diabetes vaccine in 80 children at high risk of
presenting with type 1 diabetes. The aim is to test whether the diabetes vaccine
can prevent or delay the onset of type 1 diabetes in the children.

New concept with the Diamyd® diabetes vaccine approved for testing in children
and adolescents with type 1 diabetes
The Swedish Medical Products Agency has approved another new researcher
-initiated combination study with the Diamyd® diabetes vaccine. In the study,
Diamyd® will be combined with two other agents – vitamin D and the
immunosuppressive drug etanercept. This was the fourth researcher-initiated
clinical trial with the Diamyd® diabetes vaccine to receive regulatory approval
in the autumn of 2014. Two other clinical studies with the diabetes vaccine are
already ongoing.

Diamyd-licensed technology enhances transplanted human beta cell mass in
preclinical model of type 1 diabetes
A new scientific paper in the December issue of the journal Diabetes shows that
GABA enhances transplanted human beta cell mass in the NOD mouse model of type 1
diabetes. Diamyd Medical licenses exclusive rights from the University of
California for the therapeutic use of GABA for the treatment of diabetes and
other inflammation-related conditions.

Significant events after the reporting period

Diamyd Medical’s patent protection extended to 2032 in pivotal decision
The Regents of the University of California on behalf of its Los Angeles Campus
(UCLA) has been granted another key US patent for its GAD65 technology on which
the Diamyd® diabetes vaccine is based. The term of the new patent runs into
2032, which is approximately ten years longer than current US patents. Diamyd
Medical is the exclusive licensee to the new patent.

About the Diamyd® diabetes vaccine

Diamyd® is being developed with the objective of preventing, delaying or
stopping the autoimmune attack on beta cells in type 1 diabetes and other forms
of autoimmune diabetes and thus preserve the body’s own ability to produce
insulin. Ongoing development work is aimed at enhancing the efficacy of the
treatment by combining Diamyd® with other agents and to treat earlier in the
disease process. New approaches are being evaluated in several clinical studies
together with different teams of researchers. Two researcher-initiated clinical
studies with Diamyd® are ongoing and an additional four are being launched.

  · DIABGAD-1. A placebo-controlled study, where Diamyd® is being tested in
combination with ibuprofen and vitamin D. The study comprises a total of 64
patients between the ages of 10 and 18 recently diagnosed with type 1 diabetes,
and will continue for a total of 30 months. The aim of the combination treatment
is to preserve the body’s residual capacity to produce insulin. All of the
participants have been enrolled in the study and the initial six-month results,
focusing on immunological markers, are expected to be presented in the spring of
2015. The study runs at nine clinics in Sweden and is led by Professor Johnny
Ludvigsson at Linköping University.

  · DIAPREV-IT. A placebo-controlled study, where Diamyd® is being tested in
children with early stages of type 1 diabetes, meaning that they have been found
to have an ongoing autoimmune process but do not yet have any clinical symptoms
of diabetes. A total of 50 participants from the age of four have been enrolled
in the study, which will last for five years. The aim of the study is to
evaluate whether Diamyd® can delay or prevent the participants from presenting
with type 1 diabetes. The study is taking place in Sweden led by Dr. Helena
Elding Larsson at Lund University. Results are expected at the end of 2016.

  · DIAMYD®/GABA. A placebo-controlled study, where Diamyd® is being tested in
combination with GABA. The study will comprise 75 patients between the ages of 4
and 18 recently diagnosed with type 1 diabetes, and will continue for a total of
12 months. The aim of the combination treatment is to preserve the body’s
residual capacity to produce insulin. The study is taking place in the US led by
Professor Kenneth McCormick at the University of Alabama at Birmingham and is in
the start-up phase.

  · DIAPREV-IT 2. A placebo-controlled study, where Diamyd® is being tested in
combination with vitamin D in children with early stages type 1 diabetes,
meaning that they have been found to have an ongoing autoimmune process but do
not yet have any clinical symptoms of diabetes. A total of 80 participants
between the ages of 4 and 18 will be enrolled in the study, which will last for
five years. The aim of the study is to evaluate whether Diamyd® can delay or
prevent the participants from presenting with type 1 diabetes. The study is
taking place in Sweden led by Dr. Helena Elding Larsson and is in the start-up
phase.

  · DIAGNODE. An open label study, where Diamyd® is administered directly into
lymph nodes in combination with treatment with vitamin D. The study will
comprise five patients between the ages of 18 and 30 who have been newly
diagnosed with type 1 diabetes, and will continue for a total of 30 months. The
aim of the study is to evaluate the safety of the combination treatment and the
effect on the immune system and the patients’ insulin producing capacity. The
study is taking place in Sweden led by Professor Johnny Ludvigsson and is in the
start-up phase.

  · EDCR IIa. An open label study, where Diamyd® is combined with etanercept and
vitamin D. The study will comprise 20 patients between the ages of 8 and 18 who
have been newly diagnosed with type 1 diabetes, and will continue for a total of
30 months. The aim of the study is to evaluate the safety of the combination
treatment and the effect on the immune system and the patients’ insulin
producing capacity. The study is taking place in Sweden led by Professor Johnny
Ludvigsson and is in the start-up phase.

*** 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.

Attachments

01208200.pdf