Quarterly Report 3, June 26, 2019

Dear Shareholders and Readers

This June, over 15,000 representatives from industry, health care and academia within the diabetes field, gathered in San Francisco for the 79th Scientific Sessions organized by the American Diabetes Association (ADA). The conference marked a significant step forward for the field and strengthens the case for Diamyd Medical’s mission to cure type 1 diabetes.

Prior to ADA, Diamyd Medical communicated both clinical and immunological results supporting the mechanistic rational and long-term effect of Diamyd® in newly diagnosed patients. The seven patients that had been followed for 30 months in the DIAGNODE-1 trial were in partial disease remission, with well controlled blood sugar levels and low requirements of insulin use. Three of these patients had received a fourth injection, a booster, at month 32. Intriguingly, we also saw increased endogenous insulin production between months 32 and 37 in these patients! The results have been received with great interest during partner discussions and show the potential of intralymphatic injections of Diamyd® to not only slow down but also to actually reverse the disease progression in a safe and specific manner.

With these promising results, I am very pleased to note advances in diabetes research that were presented by other organizations during ADA. Especially important for the type 1 diabetes field were results from a prevention trial presented by the research organization TrialNet, showing that a two-week immunosuppressive therapy with an anti-CD3 monoclonal antibody can delay the time to diagnosis for high risk individuals by approximately two years. Although treatment with anti-CD3 is associated with side effects and requires hospitalization, the positive findings support the notion of immunotherapy in type 1 diabetes. This in turn reflects very positively on the work Diamyd Medical is pursuing. Antigen-specific immunotherapy for type 1 diabetes is on top of mind. I am also encouraged by the fact that there was a session dedicated to autoimmune diabetes in adults (LADA) that highlighted the urgent need for disease-modifying therapies for this large and often misdiagnosed patient population. Defined by autoimmunity against the antigen GAD, autoimmune diabetes in adults represents an indication that fits very well with GAD-specific immunotherapy. Researchers are interested, Big Pharma is interested. There is great potential here for Diamyd®.

In addition to the advances made with Diamyd®, the Remygen® program is progressing well. Recently, the Swedish MPA approved an amendment to the ongoing ReGenerate-1 trial in Uppsala to add a treatment arm that combines our drug candidate Remygen® with the receptor modulating drug Alprazolam. This gives us the possibility to not only evaluate two different doses of Remygen® but also the combination with receptor modulators that preclinical studies have shown to further enhance GABA’s effect of beta cell regeneration and immunomodulation.

In May, Diamyd Medical reached a significant operational milestone when DIAGNODE-2 was reported fully enrolled. Specific regulatory activities are ongoing that prepare and build the case for potential earlier marketing approval for Diamyd®. In parallel, partner discussions are advancing well. With the positive advances we are making I feel confident in finding a partner that has the required know-how, resources and dedication to build and execute the best possible commercial strategy for Diamyd® together with us.

Stockholm, June 26, 2019
Ulf Hannelius
President and CEO, Diamyd Medical AB (publ)

The results have been received with great interest during partner discussions and show the potential of intralymphatic injections of Diamyd®.
Ulf Hannelius, President and CEO