INTERIM REPORT - Q1 2009

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1 INTERIM REPORT - Q FOR EARLIER DISEASE DETECTION

2 Highlights A quarter dedicated to progress on CE marking Highlights Finalized the necessary analytical work for CE marking of both BCtect and ADtect Awarded 6.

2 2 Highlights A quarter dedicated to progress on CE marking Highlights Finalized the necessary analytical work for CE marking of both BCtect and ADtect Awarded 6.5 mill NOK research grant for development of Parkinson s Disease test Signed term sheet with a pharmaceutical company on development of a new biomarker Strong interest for ADtect and the company when presented the international Alzheimer and Parkinson disease congress in Prague Post quarter highlights Signed distributor contracts for several European countries CE Invitro Diagnostics compliance achieved for ADtect

3 3 Sales and Marketing DiaGenic has communicated at several international meetings the strategy for sales to both the pharmaceutical companies and to the invitro diagnostic market Molecular diagnostics (MDx) India -- Our distributor continues their work on establishing BCtect among key opinion leaders in New Delhi using seeding kits. Several visits to customers by DiaGenic and consultants were performed to support our distributor, SRL Diagnostics, in their scientific marketing to opinion leaders in New Delhi. Increased promotion activities are needed to increase the market uptake. -- A scientific meeting is planned in New Delhi in June for establishing a local user group for BCtect, thereafter a national rollout is planned. Building the distributor model -- A substantial effort has been made with distributors in selected areas of Europe. The negotiations with the larger distributors responsible for several countries demands dialogues on both local and corporate levels. Final agreements await both finalised CE documentation and thorough local market research. After the quarter end:distribution agreements signed: -- Algol Pharma as distributor for Norway, Sweden, Denmark and Finland -- Access Health Care as distributor for Switzerland and Austria -- Genekor as distributor for Greece -- Data Diş Ticaret (a division of the Reysas Group) as distributor for Turkey Biomarkers for drug development The first pharmaceutical company has signed a term sheet with DiaGenic on development of a new biomarker for use in drug development, representing an important validation of DiaGenic s technology for biomarker development. A final agreement awaits the pharmaceutical company s decision, which is dependent on the outcome of its ongoing studies, and thus associated with substantial risk. A targeted promotion effort towards leading pharmaceutical companies for use of CE marked tests into their clinical trials has been initiated. Strong interest from leading pharmaceutical companies was noted when presenting ADtect at the international Alzheimer s and Parkinsons disease congress in Prague. Product development BCtect for early detection of Breast Cancer More than 600 samples have been analyzed to document the clinical and technical quality of BCtect. The calibration model and all technical studies have been completed. All relevant manufacturing documentation on the gene card needed for our CE marking is finalized from Applied Biosystems. ADtect for early detection of Alzheimer s Disease A substantial effort was put in developing the necessary software for analyzing patient s gene expression data and providing the test results. The software has been developed under international quality standards (ISO 62304) and in close cooperation with Applied Biosystems. The software is now generally applicable on our tests. The development of an MCI (Mild Cognitive Impairment) biomarker continues, including blood samples from additional European hospitals. Study participants are monitored over time on development to Alzheimer s disease and to other dementias. Post quarter end: Compliance to the IVD directive for CE marking of ADtect achieved, submission to registration is ongoing. PDtect for early detection of Parkinson s Disease New funding granted A research grant of 6.5 M NOK over 4 years from the Norwegian Research council was awarded, through their BIA (User-directed innovation) program. This is a study that will build upon the Michael J. Fox Foundation financed biomarker project The aim is to develop a diagnostic assay through a multi-centre study with university hospitals in Norway, Sweden and a few other European countries for recruitment of patients and controls. Patents DiaGenic has been informed that a Norwegian patent is ready for grant. This is a broad patent covering development of a standard diagnostic gene transcript pattern for use in blood, where blood is taken distant from the diseased area. This is a broad patent covering many diseases. Q1-2009

4 Finance Financial review Costs in line with fourth quarter, 18 MNOK in cash Comparative figures from the corresponding period last year are shown in parenthesis.

4 4 Finance Financial review Costs in line with fourth quarter, 18 MNOK in cash Comparative figures from the corresponding period last year are shown in parenthesis. Profit and Loss Revenues and research grants DiaGenic had NOK 5k in operating revenues in the first quarter 2009 (NOK 0). Research grants are entered net into the accounts (reducing operating costs). Research grants for the first quarter were NOK 741k (NOK 1,689k). The Alzheimer s project which was supported by the Norwegian Research Council through the FUGE programme ended in Consequently research grants dropped in the first quarter 2009 compared with the corresponding period in Operating costs Total operating costs after deducting research grants were NOK 11,620k for the first quarter (NOK 7,874k). The main reasons for the increase in operating costs are greater activity within sales and marketing as well as product development. Activities in connection with preparation for sales and marketing in Europe are the main driver for the increased level of activity within sales and marketing. Activities carried out as part of the process to declare conformity to the IVD directive (CE mark) drives the increased activity within product development. The number of employees increased from 17 at the end of the first quarter in 2008 to 22 at the end of the first quarter in 2009, and is the reason for the increase in salaries and other social costs. Reduced income from research grants, which is posted as a reduction in operating costs, as well as increased patent and trademark cost are also contributing to increased operating costs in the first quarter of 2009 compared with the corresponding period in Balance sheet Total assets at 31 March 2009 were NOK 25,338k (NOK 20,608k) of which current assets amounted to NOK 21,624k (NOK 17,108k). Cash and cash equivalents accounted for the largest share of current assets at the end of March 2009 with a balance of NOK 18,250k (NOK 12,398k). Inventory of consumables in India were NOK 1,430k at 31 March 2009 (NOK 0). Equity capital at 31 March 2009 amounted to NOK 17,140k (NOK 13,468k). Short-term debt at the end of March was NOK 5,128k (NOK 4,105k), an increase mainly due to changes in accounts payable balances. Non-current debt at the end of the first quarter of 2009 was NOK 3,070k (NOK 3,035k) and relates to the lease of equipment for the company s laboratory and pension liabilities. Cash flow The company s liquid funds are held in bank deposits at 3 different Norwegian banks with high credit ratings. Cash and cash equivalents at 31 March 2009 amounted to NOK 18,250k (NOK 12,398k). The net change in cash and cash equivalents was NOK -9,708k for the first quarter of 2009 (NOK -7,268k). Cash flow from operating activities was NOK -9,282k for the first quarter of 2009 (NOK -7,038k). The increase is mainly due to a greater pre-tax loss and reduced accounts payable balances partly offset by reduced short term receivable balances. Financing and equity With its current cost levels the company is financed for a period of less than one year. Work is therefore proceeding on several different financing alternatives including debt finance, equity finance and research finance. The Board is of the opinion that efforts to secure further funding can be accomplished. This quarterly report has been prepared in accordance with IAS 34. The accounting principles used in this interim report correspond to those used in the annual accounts for the year 2008.

5 5 Finance Outlook Once the CE mark has been achieved DiaGenic will launch BCtect and the ADtect in Europe. Experience from opinion leaders initial reception of BCtect in India has been very useful for planning the launch of the test in European countries. DiaGenic will now allocate resources so that the company s expertise can support distributors actively in Europe. In Parkinson s disease a diagnostic test PDtect is under development. The test is to be further developed into a biomarker for use in pharmaceuticals development. In biomarkers the company states a targeted commitment towards the pharmaceutical industry particularly within neurodegenerative diseases: MCI (mild cognitive impairment, the early stages of dementia) and Alzheimer s and Parkinson s disease. DiaGenic has chosen the very robust, but also relatively expensive gene card Taqman as the basis for our first generation of diagnostic tests. The next generation of tests will use technology that is significantly cheaper in operation and is automated for high volume loads. DiaGenic will start evaluation of the available technologies as soon as capacity is released in the organisation following the CE-marking of BCtect and ADtect. DiaGenic seeks partners and external financing as conditions prior to commencing clinical studies in the USA. Such studies would form the basis for a subsequent application to the FDA for approval of ADtect

6 6 Financial Statement Q PROFIT & LOSS ACCOUNT (figures NOK 1,000) Q1 Q Operating revenues Other revenues Total operating revenue Operating expenses Cost of goods sold Total cost of goods sold Payroll and related costs 5,710 4,061 16,965 Depreciation Other operating expenses 5,684 3,605 18,559 Total operating expenses 11,620 7,874 36,384 Operating profit/loss -11,619-7,874-36,384 Financial income and expenses Financial income ,976 Financial expenses Net financial income/expense ,802 Profit/loss before taxes -11,375-7,712-34,582 Tax on ordinary result Net profit/loss -11,375-7,712-34,582 Other comprehensive income Comprehensive income -11,375-7,712-34,582 Net profit per share (figures in NOK) Net profit per share after delution(nok) BALANCE SHEET (figures NOK 1,000) ASSETS Non-current assets Goodwill Fixed assets 3,142 2,928 3,058 Total non-current assets 3,714 3,500 3,630 Current assets Inventory 1, ,445 Other receivables 1,943 4,709 5,866 Cash and cash equivalents 18,250 12,398 27,958 Total current assets 21,624 17,108 35,270 TOTAL ASSETS 25,338 20,608 38,900 EQUITY AND LIABILITIES Equity Share capital 2,587 2,187 2,587 Paid in equity 25,927 18,993 60,407 Retained earnings -11,375-7,712-34,582 Total equity 17,140 13,468 28,412 Provisions Pension liabilities 2,132 1,735 1,962 Total provisions 2,132 1,735 1,962 Long term debt Other long term debt 938 1,300 1,054 Total long term debt 938 1,300 1,054 Liabilities Accounts payable 1,433 1,549 3,472 Social security, VAT etc. payable ,230 Other current liabilities 2,822 1,964 2,771 Total current liabilities 5,128 4,105 7,473 Total liabilities 8,198 7,140 10,488 TOTAL EQUITY AND LIABILITIES 25,338 20,608 38,900

7 CASH FLOW STATEMENTS (figures NOK thousands) Q1 Q Cash flow from operating activities Pre-tax profit (loss) -11,375-7,712-34,582 Income taxes paid Ordinary depreciation Impairment of fixed assets Fair value granted options/ subscription rights Loss on sale of fixed assets Change in pension scheme liabilities Change in inventories, accounts receiveable and accounts payable -2, Change in other short-term receivables and other short-term liabilities 3, Net cash flow from operating activities -9,282-7,038-31,959 7 Financial Statement Q Cash flow from investment activities Proceeds from sale of fixed assets Acquisitions of fixed assets Net cash flow from investing activities Cash flow from financing activities Contribution of share capital ,508 Payment of long term debt Net cash flow from financing activities ,145 Net change in cash and cash equivalents -9,708-7,268 8,292 Cash and cash equivalents 18,250 12,398 27,958 Changes in Equity and Number of Shares: (figures in NOK/numbers) Share capital Share prem. serve Other reserves Other equity Total equity Number of shares As at 1st of January ,186,826 18,866, ,053,367 43,736,520 Fair value granted subscription rights , ,249 0 Increase of capital - 7 May ,000 41,108, ,508,221 8,000,000 Comprehensive income 01. Jan Dec ,581,853 (34,581,853) 0 Allocation of net loss 0-34,149, ,249 34,581,853-0 As at 31st of December ,586,826 25,825, ,411,984 51,736,520 Fair value granted subscription rights , ,331 0 Comprehensive income 01. Jan March ,374,516 (11,374,516) 0 Allocation of net loss 0-11,272, ,331 11,374,516-0 As at 31st of March ,586,826 14,552, ,139,798 51,736,520

8 DiaGeinc ASA Grenseveien 92 N Oslo Phone: Fax: Homepage: diagenic@diagenic.com

INTERIM REPORT - Q3 2009

INTERIM REPORT - Q3 2009 FOR EARLIER DISEASE DETECTION 2 Highlights Norwegian Research Council Names DiaGenic Most Innovative Company of the Year Highlights Scientific marketing of ADtect and BCtect started