Press Release March 27, 2009

Diamyd Medical licenses novel Pain Product

Diamyd Medical reports today that it has acquired an exclusive license for

Endomorphin technology that may be used for the treatment of pain, including

neuropathic pain, that occurs in diabetes.

"In addition to this newly acquired Endomorphin technology, and our exclusive

licenses for GAD, we also have an ongoing clinical development program with

Enkephalin", says Elisabeth Lindner, President and CEO of Diamyd Medical. With

Enkephalin, GAD and Endomorphin, we have completed our pain portfolio now having

products targeting all three major pain receptors. This gives us a strong

position in the development of products for multiple pain types, including

neuropathic pain that alone has a market potential estimated to more than 3.5

billion dollars".

The Endomorphin technology embodies a direct production and release of

Endomorfin peptides with morphine-like activity directly into the spinal cord

blocking further pain signal generation. Morphine has been used for centuries to

provide pain relief and continues to be an essential tool in modern clinical

pain management. However, in addition to pain relief, Morphine produces a host

of undesirable side effects.

"The newly licensed technology allows focal delivery of Endomorphin directly to

the site of pain using our NTDDS (Nerve Targeting Drug Delivery system)

platform. The localized Endomorphin delivery is not expected to have side

effects like systemic Morphine", states Darren Wolfe, President of Diamyd Inc,

Pittsburgh, USA.

Diamyd Inc, Pittsburgh, PA, USA, is a fully owned subsidiary of Diamyd Medical

and is a leader in the field of drug delivery to the nervous system.

The Endomorphin technology has been the subject to two peer-reviewed

publications including; "Engineering an Endomorphin-2 gene for use in

neuropathic pain therapy" in Pain, 2007, 133:29-38 and "Effects of

transgene-mediated Endomorphin-2 in inflammatory pain" in Eur J Pain, 2008 Epub.

For more information, please contact:

Elisabeth Lindner, President and CEO Diamyd Medical AB (publ.)

Phone: +46-8-661 0026

Darren Wolfe, President Diamyd Inc

Phone +1 412-770-1310

For pictures and press material, please contact:

Alexandra Fleetwood, Director Communications, Diamyd Medical AB,

alexandra.fleetwood@diamyd.com

Phone: +46-8-661 00 26

About Diamyd Medical

Diamyd Medical is a Swedish biopharmaceutical company focusing on development of

pharmaceuticals for treatment of autoimmune diabetes and its complications. The

company's most advanced project is the GAD-based drug Diamyd^® for type 1

diabetes for which Phase III trials are ongoing in both the US and Europe.

Furthermore, the company has ongoing clinical studies within chronic pain, using

its Nerve Targeting Drug Delivery System (NTDDS). The company has also

out-licensed the use of GAD for the treatment of Parkinson's disease.

Diamyd Medical has offices in Sweden and in the US. The share is quoted on the

OMX Stockholm Nordic Exchange (ticker: DIAM B) and on OTCQX in the US (ticker:

DMYDY) administered by the Pink Sheets and the Bank of New York (PAL). Further

information is available on the company's web site: www.diamyd.com.

This information is disclosed in accordance with the Securities Markets Act, the

Financial Instruments Trading Act or demands made in the exchange rules.

Diamyd Medical AB (publ.)

Linnégatan 89 B, SE-115 23 Stockholm, Sweden. Phone: +46 8 661 00 26, Fax: +46 8

661 63 68

E-mail: info@diamyd.com. VATno: SE556530-142001.

(www.omxnordicexchange.com ticker: DIAM B; www.otcqx.com ticker: DMYDY)