Financial Statement 15/16

September 2015 – August 2016, Diamyd Medical AB (publ), Fiscal year 2015/2016
Reporting period, June 1, 2016 – August 31, 2016

  · Net result amounted to MSEK -4.8 (-4.2)
  · Net result per share amounted to SEK -0.2 (-0.2)
  · Cash flow from operating activities amounted to MSEK -4.1 (-4.1)
  · Liquid assets and short term investments amounted at the end of the period
to MSEK 31.4 (29.7)

Full year, September 1, 2015 – August 31, 2016

  · Net result amounted to MSEK -32.0 (-21.4), of which impairment of holding in
associated company amounted to MSEK -13.5 (0)
  · Net result per share amounted to SEK -1.3 (-1.0)
  · Cash flow from operating activities amounted to MSEK -17.8 (-18.3)

Significant events during the reporting period

  · Diamyd Medical signs agreement with Janssen R&D, JDRF and UAB regarding
ongoing GABA/GAD-trial
  · Companion Medical receives FDA clearance
  · Diamyd Medical and researchers at UCLA agree on a new preclinical trial
  · The associated company Cellaviva withdraws new share issue. Diamyd Medical
makes an impairment of its previous holding of MSEK 13.5. Cellaviva, that after
the period changed name to NextCell Pharma AB, is refinanced and intends to
increase its focus on the development of therapeutic stem cell products

Significant events after the reporting period

  · Positive effect of Diamyd® is supported in new scientific article
  · The Swedish Medical Products Agency approves extension of Diamyd® trial
  · Board member of Diamyd Medical resigns from the Board
  · Diamyd Medical expands activities to both type 1 and type 2 diabetes as well
as rheumatoid arthritis with proprietary GABA drug
  · The Phase II study EDCR IIa is fully enrolled and results from the
prevention study DiAPREV-IT 1 are expected to be presented during the first
quarter of 2017
  ·

CEO comments
Dear Shareholders,

We have now closed the books on an intensive and exciting fiscal year – a year
in which my role as the new CEO of Diamyd Medical was characterized by a focus
on strategy and business development. My goal has been to further strengthen the
company’s licensing possibilities and thus the core of our business model.

So what have we accomplished during the year and how will the results of this
work benefit you as a shareholder? To achieve the goal of strengthening our
licensing offering, we focused on three stages: 1) evaluating our existing
assets, 2) developing the most promising of these assets, and 3) marketing these
assets through active participation in conferences and partnering events.

Our flagship project is the diabetes vaccine Diamyd®, where we currently have
six ongoing Phase II trials focused on preventing or curing autoimmune diabetes.
Combination studies have continued to attract growing interest, a trend that was
particularly noticeable at the largest diabetes conference of the year: the 76th
American Diabetes Association (ADA) Scientific Sessions. Opinion makers in the
field clearly advocate studies that are in line with Diamyd Medical’s
development strategy and the scientific basis for our clinical work on antigen
-specific immunotherapy – most recently in an article published only a week ago
in the scientific journal Diabetologia. In this article, a team of highly
respected researchers in the area of type 1 diabetes demonstrate in a
comprehensive analysis that the probability of the diabetes vaccine yielding a
positive biological effect is very high. The preliminary results of ongoing
studies during the fiscal year also demonstrated the feasibility of
administering our vaccine directly into the lymph nodes – a patent-pending
concept that we look forward with great interest to evaluating on a larger scale
and in further detail.

We have clearly advanced our positions with respect to GABA, which has shown
excellent potential to be developed into an attractive pharmaceutical for the
treatment of diabetes and other inflammatory disorders. In other positive news,
after a long period of negotiation, we were finally able to sign an agreement
with JDRF, Janssen R&D and the University of Alabama concerning the ongoing
GABA/Diamyd® study in Birmingham, Alabama. According to the agreement, resources
will be provided to increase the number of patients enrolled in the GABA arm of
the study and to analyze additional GABA-related biomarkers. The interest shown
by the major players and opinion makers and the research showing the potential
of GABA formed the basis for the recently announced expansion of our operations
to include a proprietary GABA drug product. Our current focus on autoimmune
diabetes is now being expanded to include type 2 diabetes and rheumatoid
arthritis, where there is a significant need for better, safer drugs and
intensifying competition for market shares among pharmaceutical giants. For
Diamyd Medical, this means even greater interest in our offering.

Several milestones will be achieved during the coming year, including the final
results from two ongoing Phase II trials with the diabetes vaccine Diamyd®
during the first half of 2017 and preliminary results from ongoing open studies.
Diamyd Medical will be represented at the most important conferences and
partnering events, and the exciting expansion and introduction of a proprietary
GABA drug product will attract greater news coverage and interest from potential
partners. We are now entering the new fiscal year with a great sense of
excitement and confidence, and I would like to thank you, our shareholders, for
your continued trust.

Stockholm, October 12, 2016
Ulf Hannelius
President and CEO of Diamyd Medical AB (publ)

Significant events during the reporting period

Diamyd Medical signs agreement with Janssen R&D, JDRF and UAB regarding ongoing
GABA/GAD-trial
Diamyd Medical signs an agreement with Janssen Research & Development, the
Juvenile Diabetes Research Foundation (JDRF) and the University of Alabama at
Birmingham regarding the ongoing clinical trial “Effect of GABA or Combination
GABA/GAD on the Progression of Type 1 Diabetes Mellitus in Children”. The
agreement entails that Janssen Research & Development and JDRF will support the
trial with approximately USD 600 000 to be used to study GABA-biomarkers and to
increase the number of patients in the trial.

Companion Medical receives FDA clearance
Companion Medical, Inc. receives 510(k) clearance from the FDA for the InPen®
system, an intelligent insulin administration system and smartphone application.
Diamyd Medical owns 8.5% of Companion Medical and holds the distribution rights
for future products in the Nordic countries.

Diamyd Medical and researchers at UCLA agree on new preclinical trial
Diamyd Medical agrees with researchers at the University of California, Los
Angeles (UCLA) on the conduct of a new preclinical trial to evaluate if GABA in
combination with both autoantigens GAD 65 and proinsulin improves efficacy even
further. Strong synergistic effects have earlier been reported in an animal
model with GABA in combination with either GAD65 or proinsulin. Diamyd Medical
licenses exclusive rights from UCLA for the therapeutic use of GABA alone or in
combination with antigens for the treatment of diabetes and other inflammation
-related conditions.

Diamyd Medical’s associated company Cellaviva withdraws new share issue. Diamyd
Medical makes an impairment of its previous shareholding. Cellaviva is
refinanced and intends to increase its focus on the development of therapeutic
stem cell products
Diamyd Medical’s associated company Cellaviva withdraws a new share issue due to
low participation. Cellaviva, that after the period changed name to NextCell
Pharma AB, is refinanced by approximately MSEK 8.2 through the exercise of a
convertible loan of about MSEK 2.7 and a capital contribution of approximately
MSEK 5.5, of which Diamyd Medical’s shares amount to MSEK 1.3 and MSEK 1,
respectively. NextCell Pharma intends to increase its focus on the development
of therapeutic stem cell products. Diamyd Medical announces concurrently in its
quarterly report that an impairment is made of the previous holding of
approximately MSEK 13.5.

Significant events after the reporting period

Positive effect of Diamyd® is supported in new scientific article
A comprehensive analysis of previously published clinical studies shows that the
diabetes vaccine Diamyd® with great probability reduces the loss of C-peptide, a
measure of endogenous insulin production, by 15-20%. The analysis is made by
internationally leading researchers in type 1 diabetes, and has been published
in the journal Diabetologia. Diamyd Medical has previously announced, by press
release February 2, 2015, that the basis for the now confirmed results was
published in an abstract for a scientific conference.

The Swedish Medical Products Agency approves extension of Diamyd® trial
DIAGNODE-1, an open clinical pilot trial where the diabetes vaccine Diamyd® is
tested by given directly into the lymph node, has been approved by the Swedish
Medical Products Agency and the Ethics Committee to be expanded from nine to
fifteen patients.

Board member of Diamyd Medical resigns from the Board
Board member Fredrik Åhlander has been convicted (accepted a punishment of 15
600 SEK in fines) for an insider offense. The offense occurred before Åhlander
was elected to the Board of Diamyd Medical and did not concern the Diamyd
Medical share. Fredrik Åhlander requests own resignation from Diamyd Medical's
Board with immediate effect.

Diamyd Medical expands activities to both type 1 and type 2 diabetes as well as
rheumatoid arthritis with proprietary GABA drug
Diamyd Medical announces that its activities will expand to include both type 1
and type 2 diabetes as well as rheumatoid arthritis, which is planned to be
pursued through the development of a proprietary GABA drug product.

The Phase II study EDCR IIa is fully enrolled and results from the prevention
study DiAPREV-IT 1 are expected to be presented during the first quarter of 2017
The phase II study EDCR IIa is fully enrolled and results from a first
evaluation after 6 months are estimated to be presented during the second
quarter of 2017. Diamyd Medical also announces that results from the placebo
-controlled prevention study DiAPREV-IT 1 are expected to be presented during
the first quarter of 2017.

Business overview
Diamyd Medical is dedicated to finding a cure for diabetes and other serious
inflammatory diseases through pharmaceutical development and investments in stem
cell and medical technology.

Diamyd Medical develops the diabetes vaccine Diamyd®, an antigen-specific
immunotherapy based on the exclusively licensed GAD-molecule. At this time six
clinical studies are ongoing with Diamyd®. GABA constitutes alongside with the
diabetes vaccine a key asset in Diamyd Medical and the Company uses its GABA in
-licensed technology to develop a proprietary GABA drug product. Diamyd Medical
is one of the major shareholders in the stem cell company NextCell Pharma AB
(previously named Cellaviva AB). Diamyd Medical also has holdings in the medtech
company Companion Medical, Inc., San Diego, USA and in the gene therapy company
Periphagen, Inc., Pittsburgh, USA.

Diamyd Medical’s B-share is traded on Nasdaq Stockholm First North under the
ticker DMYD B. Remium Nordic AB is the Company’s Certified Adviser. Further
information is available on the Company’s website: www.diamyd.com.

Development of proprietary GABA drug
As a further development of the potential of GABA, Diamyd Medical broadens its
operations towards both type 1 and type 2 diabetes and rheumatoid arthritis,
which is planned to be pursued by the development of a proprietary GABA-drug
product. By producing its own GABA, Diamyd Medical will gain full control of
product development. The first development stage of a GABA drug product will,
with a preferred provider for GMP production and with preclinical studies,
determine formulation technology and dosage. At a later stage the production can
be scaled up in alignment with the clinical development strategy including
formulation, administration and dosage of the drug.

On-going combination trials with Diamyd®
Type 1 diabetes is a devastating disease which requires daily treatment with
insulin to sustain life. The importance of finding a cure should not be
underestimated. The diabetes vaccine Diamyd® has been used in clinical studies
with more than 1,000 patients and has shown a good safety profile. Subsequent
development is focused on combination trials to enhance efficacy. Diamyd® is
easy to administer in any clinical setting. The potential annual market is
estimated to several billion dollars per year. Six researcher-initiated clinical
trials are ongoing combining Diamyd® with various other immunomodulatory
compounds; etanercept, ibuprofen, vitamin D and GABA.

  · DIABGAD- 1 – COMBINING DIAMYD® WITH IBUPROFEN AND VITAMIN D

A placebo-controlled trial, where Diamyd® is being tested in combination with
ibuprofen and vitamin D. The trial 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 own capacity to produce insulin. The trial runs at nine clinics in
Sweden and is led by Professor Johnny Ludvigsson at Linköping University,
Sweden. 30 month results from the trial are expected during the first half year
of 2017.

  · DIAGNODE -1 – DIAMYD® IN LYMPH GLANDS IN COMBINATION WITH VITAMIN D

An open label trial, where Diamyd® is administered directly into lymph nodes in
combination with treatment with vitamin D. The trial comprises fifteen patients
between the ages of 12 and 30 newly diagnosed with type 1 diabetes, and will
continue for a total of 30 months. The aim of the trial is to evaluate the
safety of the combination treatment and the effect on the immune system and the
patients’ insulin producing capacity. The trial is led by Professor Johnny
Ludvigsson at Linköping University, Sweden. The first patient was included in
the trial in February 2015.

  · GABA/ DIAMYD® – COMBINING DIAMYD® WITH GABA

A placebo-controlled trial, where Diamyd®is being tested in combination with
GABA. In accordance with agreement with Jansen Research & Development and JDRF
the trial was recently expanded to comprise 95 patients between the ages of 4
and 18 recently diagnosed with type 1 diabetes. The trial 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 trial is led by Dr. Alexandra
Martin at the University of Alabama at Birmingham, USA. The first patient was
included in the trial in March 2015.

  · EDCR IIa – COMBINING DIAMYD® WITH ETANERCEPT AND VITAMIN D

An open label trial, where Diamyd®is combined with etanercept and vitamin D. The
trial comprises 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 trial is to evaluate the safety of the combination treatment and the
effect on the immune system and the patients’ insulin producing capacity. The
trial is led by Professor Johnny Ludvigsson at Linköping University, Sweden. All
patients were included in September 2016 and 6 month results are expected during
the second quarter of 2017.

  · DiAPREV-IT 1– DIAMYD®

A placebo-controlled trial, where Diamyd® is being tested in children at high
risk of developing 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 trial, which will last for five years. The aim of the trial is to evaluate
whether Diamyd® can delay or prevent the participants from presenting with type
1 diabetes. The trial is led by Dr. Helena Elding Larsson at Lund University,
Sweden. Five year results are expected during the first quarter of 2017.

  · DiAPREV-IT 2 – COMBINING DIAMYD® WITH VITAMIN D

A placebo-controlled trial, where Diamyd® is being tested in combination with
vitamin D in children at high risk of developing 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 trial, which will last for five years. The
aim of the trial is to evaluate whether Diamyd® can delay or prevent the
participants from presenting with type 1 diabetes. The trial is led by Dr.
Helena Elding Larsson at Lund University, Sweden. The first patient was included
in March 2015.

*** To read the complete report, please see attached pdf, or visit
www.diamyd.com ***
For more information, please contact:
Ulf Hannelius, President and CEO, phone: +46 736 35 42 41
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

This information is information that Diamyd Medical AB is obliged to make public
pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The
information was submitted for publication, through the agency of the contact
person set out above, at 08.30 CET on October 12, 2016.

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.