Press Release

Stockholm, October 7, 2004
Diamyd starts larger trial in type 2 diabetes patients in Sweden
At the International Diabetes Federation meeting in Los Angeles, USA, it will be announced today that a larger clinical trial with Diamyd™ will start in type 2 diabetes patients in Sweden.
"This new study implies a major step towards registration of Diamyd™ for treatment of type II diabetes with GAD antibodies", says CEO Anders Essen-Möller. "The prospect for further development of this therapeutic into treatment for type I diabetes as well as finally into a vaccine has been considerably enhanced."

For a new pharmaceutical to be approved - i.e registered - two phase III studies are required which must be carried out on a larger number of patients and show positive results. The approved study is intended to be one of these pivotal studies designed to provide statistically significant positive effects and enable registration.

The Medical Products Agency in Uppsala and the Ethical Committee of Lund University have approved a larger study to investigate the efficacy of the diabetes pharmaceutical in 160 patients with type 2 diabetes and antibodies to GAD (i.e. patients with LADA). The study is to be carried out by Clinical Data Care AB at some 15 clinics throughout Sweden and is to start immediately under the leadership of Professor Carl-David Agardh of Malmö University Hospital. Professor Agardh confirmed at an international LADA symposium in Munich, Germany in September that the patients who received two injections of 20µg in a previous phase II study showed significantly improved insulin and blood sugar levels 24 month after treatment.

The new study, which is randomized, double blind and placebo controlled, includes 160 patients diagnosed with type 2 diabetes with antibodies to GAD. The active group will receive two injections 30 days apart of a 20µg dose of Diamyd™. The aim of the study is to demonstrate the ability of Diamyd™ to inhibit the autoimmune attack that results in destruction of insulin-producing beta cells. Important scientific papers have been published that indicate that the retention by patients of even a small capacity to produce their own insulin significantly improves the prognosis for the complications resulting from diabetes.

It is estimated that 194 million people worldwide aged between 20 and 79 have diabetes. The majority (ca. 90%) of these have type 2 diabetes (adult-onset diabetes). This number is expected to rise to 330 million by 2025 (source: the International Diabetes Federation). In addition, there is about an equal number of individuals with elevated blood sugar levels (pre-diabetes). The cost of diabetes in Western countries is about 7% of the total healthcare budget or over $100 billion a year in the US alone.

Type 2 diabetes is - at least at the onset - characterized by chronic high blood sugar levels caused by an increasing insensitivity to insulin that cannot be compensated for by the patient´s beta cells producing more insulin (overproduction). As the overproducing beta cells die of exhaustion, beta cell autoantigens such as GAD are released and presented to macrophages and other blood cells belonging to the immune system. This in turn triggers an immune process in about 10% of the patients (i.e those with LADA) where the immune system attacks and kills beta cells that have autoantigen fragments on the cell surface.

Diamyd™ is designed to prevent and treat this autoimmune process in type 2 diabetes patients so that this group can fully benefit from treatment with modern pharmaceuticals for reduced insulin sensitivity and other aspects of the metabolic syndrome.

Applications based on the Company´s GAD platform

Diabetes
The first application of Diamyd™ will be type 2 diabetes patients with antibodies to GAD (LADA patients). The rationales for this are as follows: The patients are adults; they already have diabetes and regularly seek medical treatment. The LADA patients have more beta cells than patients presenting with type 1 diabetes and are likely to be earlier in the autoimmune disease process treatment is begun, the greater the chance of Diamyd™ having an effect. Furthermore, the "LADA market" size justifies development of this pharmaceutical. The next application is the treatment of new-onset type 1 diabetes patients. A further objective is to vaccinate children to prevent the illness.

Obesity
The GAD gene has been identified as a candidate for obesity. The Company intends to investigate the possibility of developing a pharmaceutical for obesity based on GAD65.

Parkinson/Epilepsy
GAD-based therapy is being evaluated by other players for the treatment of Parkinson´s disease. Diamyd Medical intends to issue licenses for GAD-based gene therapy of Parkinson´s disease.

Battens/SMS
Antibodies to GAD are found in patients with the rare movement disorders Battens and SMS. Diamyd Medical has started preclinical studies aiming at entering in to a small-scale clinical trials.

About Diamyd Medical
Diamyd Medical focuses on the development of pharmaceuticals based on the GAD65 (glutamic acid decarboxylase) technology platform. GAD65 is one of the target molecules when the body´s own immune defense attacks the beta cells in the pancreas. GAD65 is also an important enzyme in neurotransmission and is therefore believed to play an important role in several neurological illnesses.

Diamyd Medical´s most advanced project is Diamyd™ where a Phase II study has been completed. The Company´s business concept is to apply its skills and contact networks within immunology, biotechnology and business development to identify and initially develop pharmaceutical projects after which cooperation will be sought with established pharmaceutical companies.

Diamyd shares (DIAM B) are traded on the Stockholm Stock Exchange´s O-list.

About Diamyd Medical:
Diamyd Medical focuses on the development of pharmaceuticals based on the GAD65 (glutamic acid decarboxylase) technology platform. GAD65 is one of the target molecules when the body´s own immune defense attacks the beta cells in the pancreas. GAD65 is also an important enzyme in neurotransmission and is therefore believed to play an important role in several neurological illnesses.

Diamyd Medical´s most advanced project is Diamyd™ where a Phase II study has been completed. The Company´s business concept is to apply its skills and contact networks within immunology, biotechnology and business development to identify and initially develop pharmaceutical projects after which cooperation will be sought with established pharmaceutical companies.

Diamyd shares (DIAM B) are traded on the Stockholm Stock Exchange O-list.

For further information, please contact:
Anders Essen-Möller, Phone: +46 8-661 00 26.

Diamyd Medical AB (publ). Linnégatan 89 B,
SE-115 23 Stockholm, Sweden.
Tel: +46 8-661 00 26, 661 12 25, fax: +46 8-661 63 68
or email: info@diamyd.com Corporate ID no. 556530-1420.


This document contains certain information about the general situation, the present and the future. This information should be considered as reflecting current opinions and plans. No guarantees are given or implied that it is correct. Please note that this press release was released in Swedish language. No guarantee can be given regarding authenticity of the opinions of historical present or future results.