Nel ASA

Earnings Release • Aug 19, 2010

Pharma and Imaging Companies interactions have progressed

Pharma and Imaging Companies interactions have progressed

The interim report for the second quarter and the first half of 2010 was

approved by the Board of Directors on 18 August 2010. Please find the

report and the investor presentation attached.

Highlights from the report:

·

Distributor sales continue to be slow and below expectations - BCtect®

is promoted by the first clinic in UK and 6 more is starting after

summer

·

Strength of IP and competitive position drives Pharma and PET imaging

companies' interest in DiaGenic. Multiple interactions ongoing in

Alzheimers area (ADtect/MCItect)

·

New Board of Directors elected - more focus on partnering options for

DiaGenic

·

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

The sales of ADtect® and BCtect® through distributors are building

slowly and below expectations. The market barriers for direct sales of

new innovative diagnostic products using gene expression remain high.

Providing biomarkers for drug development and companion diagnostics is a

key strategic focus area for DiaGenic and has been a priority in the

last quarter.

World leading Pharma and Imaging companies have expressed their interest

in collaboration with DiaGenic, triggered by our strong IP and

development of ADtect®, - the world's first CE-market blood based test

for early Alzheimer's disease detection, and our unique competitive

advantage and capabilities in developing biomarkers by measuring gene

expression in blood. These companies state the need for an easy to use

biomarker and finally an IVD approved diagnostic test, such as a blood

test, for patient selection for treatment or for qualifying to a high

cost PET imaging.

DiaGenic's vision for such collaborations is companion diagnostic

products with the use of DiaGenic's blood based tests together with a

new drug or imaging product. DiaGenic recognises the extensive marketing

and sales organizations such companies represent.

Supporting the renewed focus, in June a new board of Directors was

elected. The Board has extensive experience from international

pharmaceutical industry, chaired by Henrik Lund MD PhD, former Vice

President in AstraZeneca and vice-chairman Ingrid Wiik M Pharm & MSc,

former CEO in the NYSE listed Alpharma Inc. Also 4 of the other board

members have background from this industry segment.

After the second quarter, the company received "Notice of Allowance" in

Europe for its family 3 patent application. The claims allowed cover a

set of gene sequences for diagnosis of breast cancer. The patent when

granted will be valid in 30 European countries. DiaGenic has now more

than 100 patents (granted/allowed) within the three patent families,

reflecting its position as a world leader among molecular diagnostic

companies involved in developing blood based gene expression tests.  

Comprehensive income totalled NOK -10.5 million for the second quarter

in 2010 compared with NOK -7.5 million in the corresponding period in

2009. Total operating costs for the second quarter in 2010 amounted to

NOK 10.5 million compared with NOK 7.6 million in the second quarter in

2009. The company's cash and cash equivalents totalled NOK 19.8 million

at 30 June 2010.

During the first half of 2010 the Company issued 16 million warrants.

Each warrant holds the right to subscribe for one new share in the

Company at a subscription price of NOK 3.25 per share. The due date to

call the warrants is set to 22 September 2010.

Future prospects

· Accelerate the companion diagnostics strategy, including marketing

of our biomarkers to the pharmaceutical and imaging industry, leading to

partnering agreements.

· Gain market acceptance of BCtect® and ADtect® in selected countries

in Europe.

· Continue with ADtect® US market entry plan

Attachments: The Interim Report and Presentation 

Contact:

Erik Christensen, CEO

Telephone: 47 95939918

e-mail: erik.christensen@diagenic.com