Quarterly Report 2, March 28, 2018

Dear Shareholders and Readers

So far, patient enrollment for DIAGNODE-2 has exceeded our expectations. A total of 48 patients have been screened, which corresponds to nearly half of the number planned. Of these 48 patients screened, 29 have started the trial. To be able to respond to the considerable interest being shown in the trial, we increased the number of clinics in March. The most recent clinic to join the trial is the pediatrics clinic at the University Hospital of Umeå, which is now open for patient enrollment.

The other week, we announced new results from the ongoing DIAGNODE-1 trial, where a total of nine patients have completed their 15-month follow-up period. In connection with this, we met with potential partners. The results from DIAGNODE-1 remain positive, and confidential discussions are under way with some players regarding licensing of the Diamyd® diabetes vaccine for certain countries. The outcome of these discussions will largely depend on whether an agreement can be reached regarding the financial terms and on the prospective partners’ expertise and involvement in the field of diabetes and pharmaceutical marketing. The progress we have made in the development of the diabetes vaccine has also made an impression on investigators, and we have identified an interest in initiating a trial involving a patient population with latent autoimmune diabetes in adults (LADA). Since our existing resources are primarily focused on the DIAGNODE-2 trial, we are currently proceeding with the application for grants for the trial together with collaboration partners. LADA patients represent a large and often incorrectly treated group of diabetics, who are often misdiagnosed as having type 2 diabetes but actually have a diagnosis that more closely resembles type 1 diabetes, where the disease progression involves an autoimmune attack on the insulin-producing cells.

Regarding Remygen™, our proprietary patent-pending GABA formulation, we are seeing growing interest in our program, partly from companies that have indicated an interest in entering into partnership at an early phase and thereby contributing to the design of the clinical development program. Intellectual property rights, meaning patents and trade secrets, play a very important role in such collaborations, since GABA is a previously known substance. We have a strong and growing patent portfolio; with our own applications and with the patent application we licensed from UCLA in early autumn 2017 where we have chosen to proceed in the US, Canada, Australia, Europe, China, Japan and South Korea. The application covers the combination of GABA and allosteric modulators to increase the efficacy in terms of growth and survival of insulin-producing cells, a highly attractive area for Diamyd Medical.

It may also be interesting to note that, in addition to the above-mentioned patent applications, Diamyd Medical has so far applied for a further seven proprietary patents, including a) antigen-specific treatment of individuals with certain genetic predisposition for type 1 diabetes, b) biomarkers to measure the effect of antigen-specific therapies and c) antigen-specific treatment of autoimmune diseases with concomitant inhibition of complement activation.

I would like to thank all shareholders and others for your interest in our struggle to change the paradigm for the treatment of diabetes.

Stockholm, March 28, 2018
Ulf Hannelius
President and CEO, Diamyd Medical AB (publ)

So far, patient enrollment for DIAGNODE-2 has exceeded our expectations.
Ulf Hannelius, President and CEO