Press Release Stockholm, May 17, 1999

The May 13 issue of "Science", the recognized US publication, presented the independent results of a diabetes research study by Dr. Ji-Won Yoon, Professor of Microbiology and Infectious Diseases at the University of Calgary (Canada). Dr. Yoon's study concluded that the development of diabetes in animals does not occur if the immune system is prevented from attacking GAD insulin producing cells. In addition, the study demonstrated that transplanted insulin producing cells can survive autoimmune attacks.

The ability of GAD to prevent diabetes was demonstrated in 1993 by Dr. Daniel Kaufman of UCLA. In recent years, scientific/medical debate has focused primarily on whether there are substances more important than GAD for the prevention of diabetes. Dr. Yoon specifically blocked the GAD expressing gene and could thereby prove that modulation of the autoimmune attack against GAD is an effective strategy for preventing diabetes.

Dr. von Boehmer and Dr. Sarukhan, commenting on Dr. Yoon's article in "Science", stated that the research results are a significant step forward for diabetes therapy, with regard to both curing diabetes by transplantation of insulin producing cells, and by preventing diabetes through vaccination. Dr. Yoon compared the way a diabetes vaccine works with how a guard dog protects a family. Yoon explained that when a guard dog becomes accustomed to a family, it does not attack them, which is roughly analogous to the immune system becoming accustomed to the presence of GAD, resulting in the autoimmune system not recognizing insulin producing cells as "foreigners", therefore not "attacking" these cells. (When the immune system attacks and destroys insulin producing cells, juvenile or type-1 diabetes occurs.)

Dr. Robert Goldstein, Medical Director of the Juvenile Diabetes Foundation in the United States, stated that Yoon's research results represent a very important step toward the prevention of autoimmune diabetes by modulating the immune system.

"We are excited about Dr.Yoon's discovery" stated Mr. Grant Gall, Dean of the University of Calgary in a press article in the Calgary Herald. In an interview with the same newspaper, Dr. David Lowell, Research Director of the Julia McFarlane Diabetes Research Center, explained that, "Dr. Yoon's discovery brings us closer to being able to treat diabetes." The Montreal Gazette reported that, "The results provide new information about how diabetes works and how it can be cured."

The results of Dr. Yoon's research study have been reported widely, even outside of scientific circles. On May 14, The Wall Street Journal reported Dr. Yoon's results on its first page and CNN disseminated a story about the recent discovery.

Diamyd Medical AB, quoted on the SBI-list in Stockholm, is developing a GAD based diabetes vaccine, called Diamyd™, to prevent autoimmune diabetes. Development of the GAD based diabetes vaccine commenced in 1994 after it was first discovered that GAD might play an important role in the prevention of autoimmune diabetes. Diamyd Medical licenses the exclusive intellectual property rights for the GAD protein from UCLA, the University of Florida and the University of Washington.

The Managing Director of Diamyd Medical, Anders Essen-Möller, commented that, "It is gratifying to see that independent research results have validated the premise on which the development of our diabetes vaccine is based."

Diamyd Medical is currently involved in a Phase I clinical study with its GAD based diabetes vaccine (Diamyd™). The Phase I studies are expected to be finalized in October 1999. The Company plans to start the Phase II clinical studies at the beginning of the year 2000. The worldwide market for a diabetes vaccine is estimated to be approximately USD 1 billion per year.

Except for historical information, this press release includes forward-looking statements that involve risks and uncertainties, including, but not limited to, the risk that the Diamyd™ vaccine will not successfully complete the regulatory process. Actual results may differ materially from management expectations.