Press release, February 5, 2009

Diamyd^® combination trial aimed at regenerating insulin-producing capacity in

established type 1 diabetes gets approval from FDA

Diamyd Medical reports that the US Food and Drug Administration (FDA) has

approved a study designed to preserve and possibly regenerate insulin production

in patients with recent onset type 1 diabetes. The trial will test the diabetes

vaccine Diamyd^® in combination with drugs that are believed to stimulate new

beta cell growth. The aim of the combination therapy is to try to restore lost

insulin-producing capacity in established type 1 diabetes patients.

The study will be carried out and funded by the National Institute of Diabetes

and Kidney Disease (NIDDK), which is part of the National Institutes of Health

(NIH) in Bethesda, MD, USA. Diamyd Medical has developed the clinical protocol

together with NIDDK researchers and will be free to use the study results.

Ethics approval has already been received, and screening of patients for the

study will start in the next few weeks.

This new Phase II study will be the first to combine regenerative agents and

Diamyd^®. The regenerative agents to be evaluated are lansoprazole and

sitagliptin, which are both marketed drugs in the US. The study, to be led by

Professor David Harlan at NIDDK, aims to enroll 82 adult patients. "We are

excited to start this study to investigate if combining Diamyd^® with potentially

regenerative stimuli can meaningfully improve treatment of established type 1

diabetes", says Professor Harlan, chief of the Diabetes Branch at NIDDK and

professor of medicine at the Uniformed Services University of the Health

Sciences.

In type 1 diabetes, insulin-producing cells are gradually destroyed by the

immune system. In early clinical trials, the Diamyd^® vaccine has been shown to

slow the immune attack in recent-onset type 1 diabetes. Researchers hypothesize

that by targeting the immune attack with the Diamyd^® diabetes vaccine and

simultaneously stimulating development of insulin-producing cells, a person's

ability to produce insulin may be preserved and may even be improved. Even a

modest preservation of insulin-producing capacity makes diabetes significantly

easier to control, which reduces the risk of diabetes complications that cause

immeasurable suffering for patients and high costs for society.

Diamyd Medical is also collaborating with the Type 1 Diabetes TrialNet network,

which is initiating a study with Diamyd^® in 126 patients. Other collaborations

involve two prominent type 1 diabetes research groups in the Nordic countries.

"For a small company like Diamyd Medical, cooperating with the world's leading

diabetes institutions to carry out research studies is a very cost efficient

model, because it allows us to focus our own resources on the ongoing Phase III

trials," says Elisabeth Lindner, President and CEO of Diamyd Medical. "We are,

of course, very happy that we are able to explore Life Cycle Management options

for Diamyd^® with the support of key experts in the field, without having to

allocate financial resources."

"With this combination study, Diamyd is continuing its strategic path of

development for Diamyd^® for type 1 diabetes," continues Elisabeth Lindner. "We

have shown that Diamyd^® as a mono-therapy could preserve insulin-producing

capacity in recent-onset type 1 diabetes, as reported in the New England Journal

of Medicine on October 30, 2008. We have a large scale Phase III program running

in Europe and the US that will support this market registration.

In December, study protocols were filed with regulatory authorities in two

Nordic countries for clinical studies aimed at preventing type 1 diabetes in

subjects at high risk of developing the disease.

Treatment of recent-onset patients, prevention in risk patients, and combination

therapy in patients with established disease are the three treatment strategies

envisioned for type 1 diabetes."

For more information, please contact:

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

elisabeth.lindner@diamyd.com

Phone: +46-8-661 0026

For pictures and press material, please contact:

Sonja Catani, Chief Communications Officer Diamyd Medical AB (publ.),

sonja.catani@diamyd.com

Phone: +46-8-661 00 26

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 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 initiated 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