Nel ASA

Earnings Release • Oct 29, 2010

Report from third quarter 2010

Report from third quarter 2010

Pharma and Imaging Companies interactions progress according to plan

The interim report for the third quarter 2010 was approved by the Board

of Directors on 28 October 2010. Please find the report and the

corporate presentation attached.

Highlights from the report:

·  Interactions with several leading pharmaceutical and imaging

companies on the use of DiaGenic products, technology and IP, clinical

studies and biobank within the CNS area are progressing according to

plan.

·  Publication of two key scientific manuscripts

·  Notice of Allowance on a family 3 Patent covering 30 countries in

Europe

·  Successful private placement of NOK 70 million, conditional upon

resolution in the general assembly October 29

The new Board of Directors initiated significant changes to the

commercial strategy with a shift towards partner deals with large

international pharma and imaging companies. The strategic and

operational repositioning of the Company will generate revenue through

co-founded R&D collaborative deals, licensing and subsequent product

sales. This strategy requires long term financing of the Company, which

is manifested by the conditional private placement of NOK 70 million.

The key focus area of DiaGenic is to provide biomarkers for drug

development and companion diagnostics. DiaGenic is currently in talks

with several pharma and imaging companies. These discussions explore:

·  the use of ADtect for retrospective analysis of completed phase 3

studies in AD patients

·  DiaGenic's own clinical studies and biobank to develop new tests

for early disease detection (prodromal AD)

·   gene expression analysis in planned prodromal AD studies

·  disease monitoring/progression using enlarged DiaGenic gene sets.

The gene sets were already identified by DiaGenic in earlier whole

genome array studies.

Interactions are progressing according to plan.

DiaGenic has a world class biobank of blood samples totaling more than

1900. This leading biobank has become an important asset of DiaGenic in

the talks with potential pharma partners. Part of the outcome of this

biobank is the two articles accepted for publication in the Journal of

Alzheimer's Disease Volume 23, Number 1. This journal is ranked among

the top journals across all fields of medicine. These articles will

build confidence in ADtect® among clinicians and pharmaceutical

companies and confirm DiaGenic's leading position as a provider of

biomarkers in the CNS field.

In the third quarter, the company received "Notice of Allowance" in

Europe for its family 3 breast cancer patent application. DiaGenic has

now more than 100 patents (granted/allowed) within the three patent

families, reflecting its strong position molecular diagnostic companies

involved in developing blood based gene expression tests.  

Comprehensive income totalled NOK -9.6 million for the third quarter in

2010 compared with NOK -9.3 million in the corresponding period in 2009.

Total operating costs for the third quarter in 2010 amounted to NOK 9.6

million compared with NOK 9.4 million in the third quarter in 2009. The

company's cash and cash equivalents totalled NOK 10.1 million at 30

September 2010.

After the end of the quarter DiaGenic carried out a conditional private

placement of NOK 70 million towards existing and new investors based on

a book building process. The subscription price in the Private Placement

was set to NOK 0.50 per share. To promote equal treatment of the

shareholders, the board of directors of DiaGenic has proposed a

subsequent repair offering directed at existing shareholders of the

Company, as of 6 October 2010, that did not participate in the Private

Placement. It is proposed to issue up to 60 million shares in the

subsequent offering at NOK 0.50 per share. The Private Placement and the

Subsequent Offering is conditional upon necessary resolutions in the

general meeting on 29 October 2010.

Future prospects:

·  Complete the conditional share issue resulting in long term

financing of DiaGenic

·  Implement and expand the companion diagnostics strategy of

biomarkers to the pharmaceutical and imaging industry, leading to

partnering agreements.

Attachments: The interim report and corporate presentation

Contact:

Erik Christensen, CEO

Telephone: 47 95939918

e-mail: erik.christensen@diagenic.com