Diamyd Medical Limits Further Investment in the Diabetes Vaccine

  Diamyd Medical Limits Further Investment in the Diabetes Vaccine

Business Wire

STOCKHOLM -- October 29, 2012

Regulatory News:

Diamyd Medical AB (STO:DIAMB) has decided to allocate a maximum of SEK 30
million over three years for the development of the diabetes vaccine Diamyd®.

Diamyd Medical’s liquid assets and short term investments amounted to SEK 380
million as of August 31, 2012. The Board has decided to allocate up to SEK 30
million of these for the further development of the diabetes vaccine Diamyd®
over the next three years. The development activities are gathered in the
subsidiary Diamyd Therapeutics. The diabetes vaccine Diamyd® is based on the
GAD65 protein and is being developed for the treatment and prevention of
autoimmune diabetes. The ambition is to have new scientific results within
three years providing opportunities for partnering with major pharmaceutical
companies or other funding.

Earlier in October, Diamyd Medical announced that it had entered into an
agreement with Periphagen Holdings, Inc. for the sale of the U.S. subsidiary,
Diamyd, Inc., including the development projects based on the Nerve Targeting
Drug Delivery System (NTDDS) with applications in pain and neuropathy among
others. That agreement is subject to approval from Diamyd Medical's
shareholders at an Extraordinary General Meeting to be held on October 30,

“The decisions to sell the NTDDS platform and to limit the development budget
for the diabetes vaccine Diamyd® should be seen as steps in Diamyd Medical's
process to build a company generating a lasting robust return,” says Peter
Zerhouni, President and CEO of Diamyd Medical. “Further information will be
presented in connection with the Annual General Meeting to be held on December

About Diamyd Medical Diamyd Medical was founded in 1996 and is active in the
field of pharmaceutical development. Diamyd Medical is headquartered in
Stockholm, Sweden. The Company’s development project within the area of
diabetes consists of the protein GAD65 for the treatment and prevention of
autoimmune diabetes. A Swedish researcher-initiated Phase II study is ongoing
to evaluate whether GAD65 can prevent type 1 diabetes in children who are at
high risk of developing the disease. The Company’s development projects for
the treatment of chronic pain and neuropathy uses the patented NTDDS (Nerve
Targeting Drug Delivery System) platform to administer therapeutic agents
directly to the nervous system. The NTDDS platform is being divested.

Diamyd Medical also has holdings in the companies Protein Sciences Corporation
(USA) and Mercodia AB (Sweden).

Diamyd shares are listed on Nasdaq OMX (segment Small Cap) in Stockholm
(ticker: DIAM B) and on OTCQX in the US (ticker: DMYDY) administered by the
Pink OTC Markets and the Bank of New York Mellon (PAL). Further information is
available on the Company’s website: www.diamyd.com.

This information is disclosed in accordance with the Swedish Securities
Markets Act, the Swedish Financial Instruments Trading Act, or the
requirements stated in the listing agreements.

Diamyd Medical AB (publ) Karlavägen 108, SE-115 26 Stockholm, Sweden. Phone:
+46 8 661 00 26, Fax: +46 8 661 63 68 E-mail: info@diamyd.com. Reg. no:

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Diamyd Medical AB
Peter Zerhouni, President and CEO
Phone: +46 8 661 00 26
E-mail: press@diamyd.com
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