Quarterly Report II 15/16

September 2015 – February 2016
Diamyd Medical AB (publ), Fiscal year 2015/2016
Reporting period, December 1, 2015 – February 29, 2016

  · Net result amounted to MSEK -4.7 (-4.1)
  · Net result per share amounted to SEK -0.2 (-0.2)
  · Cash flow from operating activities amounted to MSEK -4.4 (-3.8)
  · Liquid assets and short term investments amounted at the end of the period
to MSEK 20.4 (25.9)

First half year, September 1, 2015 – February 29, 2016

  · Net result amounted to MSEK -9.0 (-10.0)
  · Net result per share amounted to SEK -0.4 (-0.5)
  · Cash flow from operating activities amounted to MSEK -9.2 (-9.6)

Significant events during the reporting period

  · Preliminary 15-month results from DIABGAD, a 30-month pilot study with the
diabetes vaccine Diamyd® in combination with vitamin D and ibuprofen, were
reported
  · Diamyd Medical plans first interim report from open label pilot study EDCR
IIa with the diabetes vaccine Diamyd® in the first quarter of 2016
  · Diamyd Medical plans first interim report from the study DIAGNODE-1, where
the diabetes vaccine Diamyd® is administered directly into lymph nodes, in the
first quarter of 2016
  · Diamyd Medical CEO proposed as new Chairman for Cellaviva AB
  · Diamyd® administered directly into lymph nodes in young adults with type 1
diabetes – preliminary interim report from DIAGNODE-1
  · Diamyd Medical agrees on new GABA/GAD study
  · Diamyd Medical’s diabetes vaccine and regenerative medicine in synergy
  · Diamyd Medical implements aggressive rights issue which is oversubscribed

Significant events after the reporting period

  · Diamyd® in combination with etanercept and vitamin D shows safety in a first
preliminary interim report
  · Study where Diamyd® is administered directly into lymph nodes, DIAGNODE-1,
is approved for expansion and inclusion of children from 12 years of age

CEO comments

Dear Shareholders,

The second quarter of this fiscal year and the period thereafter have been
exciting and eventful. We presented preliminary reports from three different
ongoing combination studies with the diabetes vaccine Diamyd®: 1) DIABGAD
(Diamyd®/ibuprofen/vitamin D); 2) DIAGNODE (intralymphatic injection of
Diamyd®/vitamin D); 3) EDCR (Diamyd®/etanercept/vitamin D), and all have shown a
good safety profile thus far. We applied for and, after the end of the period,
received approval from both the Swedish Medical Products Agency and the Ethics
Review Board for a certain extension of the DIAGNODE trial, and we are engaged
in discussions regarding an extension of the GABA/Diamyd® trial in
Birmingham/Alabama. An agreement was signed with Uppsala University Hospital to
conduct a new investigator-initiated trial with the combination of GABA/Diamyd®,
however, the trial startup is pending discussions with the Medical Products
Agency and necessary subsequent approvals.

Cellaviva AB, which is now in business saving stem cells from umbilical cords,
and in which we have a shareholding of about 45%, is currently conducting a
bridge financing and has appointed the undersigned as Chairman. According to
many experts, stem cells may revolutionize regenerative and immunomodulatory
therapies for autoimmune, neurological, metabolic, and cardiovascular diseases,
as well as cumulative trauma disorders. Pending evidence for this, so that
public funds possibly may be earmarked for family saving of umbilical cord stem
cells, perhaps primarily for children in risk groups – such as the children of
parents with diabetes or other autoimmune or genetic risk predispositions – it
may be important for Sweden’s future position within the pharmaceutical
industry, that such industry closely cooperates with pharmaceutical research in
joint development efforts. Cellaviva’s early adopters – i.e. its customers – can
therefore be described as breaking new ground for future, not-yet fully
identified, medical applications for own (autologous) stem cells. Diamyd
Medical’s prime interest is to find ways to differentiate umbilical cord stem
cells into insulin-producing beta cells, and we have now initiated an
international application for funding of such research. We have also conducted a
field trip to one of the world’s leading umbilical cord blood banks in Los
Angeles.

Together with a representative from Eli Lilly, we also visited our “8%
shareholding” in San Diego, Companion Medical Inc., which is developing a smart
pen for insulin administration, and we are pleased to report that a 510(k)
Premarket Notification as well as a CE-mark application for clearance to sell
smart insulin pens in Europe have been submitted. However, no forecast or
timeframe for these applications are given.

Finally, a rights issue was implemented, which was over-subscribed to 207
percent and generated MSEK 22 to Diamyd Medical. At today’s date, our cash funds
therefore amount to approximately MSEK 40.

As previously reported, the plan for our world-leading Antigen Based Therapy for
type 1 diabetes, is to evaluate the diabetes vaccine Diamyd®– which has shown a
good safety profile in trials with more than 1,000 patients – together with
various other compounds to receive guidance on which treatment regimen that is
best able to enhance the effect (16%, p=0.1) that was achieved in a previous
European Phase III trial. We aim to cure type 1 diabetes by first inducing
immunological tolerance to the insulin-producing beta cells and then restore the
functional beta cell mass by stem cell therapy.

We are moving forward according to plan. To create value for you, our
shareholders, and for you, with type 1 diabetes.

Stockholm, April 6, 2016
Anders Essen-Möller
President and CEO Diamyd Medical AB (publ)

Significant events during the reporting period

Preliminary 15-month results from DIABGAD – a 30-month pilot study with the
diabetes vaccine Diamyd® in combination with vitamin D and ibuprofen

Diamyd Medical announced from a clinical investigator-initiated pilot study,
DIABGAD-1, that the diabetes vaccine Diamyd® in combination with vitamin D and
ibuprofen after 15 months has a good safety profile with no reported serious
side effects related to the treatment. The data shows that after the initial
phase (referred to partial remission or the honeymoon phase), the group
receiving placebo (non-active substance) lost their ability to produce insulin
at a rate that was 2-3 times faster during the last 9 months of the 15-month
period, compared with the groups receiving active treatment with Diamyd®.
However, viewed over the entire 15-month period no difference between the groups
is observed, but if the more rapid decrease continues in the placebo group until
the end of the study at 30 months, a trend deviation in insulin production may
be observable throughout the full measurement period, that is, including the
remission period.

Diamyd Medical plans first interim report from open label pilot study EDCR IIa
with the diabetes vaccine Diamyd® in the first quarter of 2016

A first six month interim report comprising five patients treated with
etanercept and the diabetes vaccine Diamyd® is intended to be presented during
the first quarter of 2016. The study is open labeled, meaning not placebo
-controlled, and is conducted at nine pediatric diabetes clinics in Sweden.
Professor Johnny Ludvigsson, Linköping University is principal investigator and
sponsor of the study.

Diamyd Medical plans first interim report from the study DIAGNODE-1, where the
diabetes vaccine Diamyd® is administered directly into lymph nodes, in the first
quarter of 2016

Diamyd Medical announces in its first quarterly report for the fiscal year
2015/2016 that a first six month interim report for DIAGNODE-1, a clinical pilot
study where the diabetes vaccine Diamyd® is administered directly into the lymph
node, is intended to be presented during the first quarter of 2016. The study is
open labeled, meaning not placebo-controlled. Professor Johnny Ludvigsson,
Linköping University, is principal investigator and sponsor of the study. The
report also announced that pre-clinical testing is ongoing to produce antigen
presenting cells with the aim to be used in cell therapy treatment.

Diamyd Medical CEO proposed as new Chairman for Cellaviva AB

Diamyd Medical’s CEO, Anders Essen-Möller is proposed as new Chairman of the
Board of Cellaviva AB at Cellaviva’s Annual General Meeting, February 18, 2016.
Diamyd Medical is the largest shareholder of Cellaviva AB, Sweden’s first
biobank for family saving and research on stem cells from the umbilical cord.

Diamyd® administered directly into lymph nodes in young adults with type 1
diabetes – preliminary interim report from DIAGNODE-1

A first six-month interim report from DIAGNODE-1, a clinical pilot study in
which the diabetes vaccine Diamyd® is administered directly into lymph nodes,
preliminarily shows that the treatment appears to be safe and tolerable and that
the clinical progression in patients is positive in terms of the body’s own
capacity to produce insulin, as well as long-term blood sugar and insulin dose.
This preliminary evaluation was submitted by Professor Johnny Ludvigsson,
principal investigator and sponsor of the study, as an abstract for the SSSD
diabetes meeting to be held in Reykjavik in April 2016.

Diamyd Medical agrees on new GABA/GAD study

Diamyd Medical Company signs an agreement with Uppsala University and Uppsala
University Hospital to conduct a clinical study with the diabetes vaccine
Diamyd® combined with one or several GABA-related substances for which the stem
cell researcher Professor Per-Ola Carlsson will be the principal investigator.

Diamyd Medical’s diabetes vaccine and regenerative medicine in synergy

Diamyd Medical is the largest shareholder in Cellaviva AB, which is Sweden’s
first biobank for private family preservation of, and research on, stem cells
from the umbilical cord. In conjunction with the election of Anders Essen
-Möller, Diamyd Medical’s principal owner, as the new Chairman of the Board for
Cellaviva, clarification is provided of Diamyd Medical’s views on the synergies
between the companies.

Diamyd Medical implements aggressive rights issue which is oversubscribed

Diamyd Medical’s Board of Directors decides to offer shareholders to subscribe
for new shares. The offer means that three existing shares shall entitle to
subscription for one new share at SEK 3. Diamyd Medical’s major owners, Bertil
Lindkvist and Anders Essen-Möller, notify that they will take up their share or
the rights issue. There is a substantial interest in the issue and subscription
applications totaling approximately MSEK 45.8 is received, corresponding to a
subscription rate of 207 percent. The Company receives proceeds of MSEK 22.1
before issue expenses.

Significant events after the reporting period

Diamyd® in combination with etanercept and vitamin D shows safety in a first
preliminary interim report

A first six-month interim report comprising five patients in EDCR IIa, a pilot
researcher-initiated clinical study in which the diabetes vaccine Diamyd® is
combined with two other already approved agents, the immunosuppressive drug
etanercept and vitamin D, preliminary shows the treatment is safe and tolerable.
No serious side effects have been reported. This is the first time that this
combination of agents is tested against the complex autoimmune process that
causes type 1 diabetes.

Study where Diamyd® is administered directly into lymph nodes is approved for
expansion and inclusion of children from 12 years of age

DIAGNODE-1, an open-label clinical pilot study in which the diabetes vaccine
Diamyd® is administered directly into lymph nodes, has been approved by the
Swedish Medical Products Agency and the Ethics Review Board to be expanded from
five to nine patients and to include children from 12 years of age.

*** The above is an excerpt from the report. To read the complete report, please
visit www.diamyd.com, or see attached PDF ***
For more information please contact:
Anders Essen-Möller, President and CEO, phone: +46 70 55 10 679
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.