DIAMYD INITIATES EUROPEAN SUBMISSION FOR PHASE III STUDIES WITH DIABETES VACCINE

Press Release, Stockholm, Sweden, January 18, 2008 - Diamyd Medical AB
(www.omxgroup.com, ticker: DIAM B; www.otcqx.com, ticker DMYDY)

Diamyd Medical announces that its application to initiate European Phase III
studies with the therapeutic diabetes vaccine Diamyd®, has been initiated. A
submission has been sent today to the Swedish Medicinal Products Agency.
Additional submissions will be sent to other European countries. The study is
proposed to include approximately 300 patients at 30-50 European clinical sites
in 3-5 countries. Principal Investigator for the study will be Professor
Ludvigsson, University of Linkoping, Linkoping, Sweden.

An application to conduct a similar Phase III study in the US was submitted to
the FDA in December, 2007.

“This is another important milestone for Diamyd. We are looking forward, through
the coming national applications, to the gradual inclusion of more European
countries and diabetes clinics in the European Phase III Study”, says Elisabeth
Lindner, CEO Diamyd Medical.

For further information, please contact:
Stockholm office
Elisabeth Lindner
CEO and President 
+46 8 661 0026
investor.relations@diamyd.com

Stockholm office
Anders Essen-Möller
Chairman
+46 8 661 0026
anders.essen-moller@diamyd.com

Pittsburgh office
Michael Christini
President
+1 412 770 1310
michael.christini@diamyd.com

Diamyd Medical AB (publ). Linnégatan 89 B, SE-115 23 Stockholm, Sweden. Tel: +46
8 661 00 26, fax: +46 8 661 63 68 or E-mail: info@diamyd.com. VATno:
SE556530-142001.

About Diamyd Medical
Diamyd Medical is a life science company developing treatments for diabetes and
its complications. The company's furthest developed project is the GAD-based
drug Diamyd® for autoimmune diabetes for which Phase III studies are planned.
Diamyd® has demonstrated significant and positive results in Phase II clinical
trials in Sweden.

GAD65, a major autoantigen in autoimmune diabetes, is the active substance in
Diamyd. GAD65 is also an enzyme that converts the excitatory neurotransmitter
glutamate to the inhibitory transmitter GABA. In this context, GAD may have an
important role not only in diabetes but also in several central nervous
system-related diseases. Diamyd Medical has an exclusive worldwide license from
the University of California at Los Angeles regarding the therapeutic use of the
GAD65 gene.

Diamyd Medical has sublicensed its UCLA GAD Composition of Matter license to
Neurologix, Inc. in Fort Lee, New Jersey for treatment of Parkinson's disease
with an AAV-vector.

Other projects comprise drug development within therapeutic gene transfer using
the exclusively licensed and patent protected Nerve Targeting Drug Delivery
System (NTDDS). The company's lead NTDDS projects include using enkephalin and
GAD for chronic pain, for which a phase I clinical study is planned.

Diamyd Medical has offices in Stockholm, Sweden and Pittsburgh, PA. The Diamyd
Medical share is quoted on the Stockholm Nordic Exchange in Sweden (NOMX ticker:
DIAM B) and on the OTCQX-list in the United States (ticker: DMYDY) administered
by the Pink Sheets and the Bank of New York (PAL). Further information is
available at www.diamyd.com.

Disclaimer: This document contains certain "statements" relating to present
understandings, future events and future performance, including statements
relating to the progress, timing and completion of our research, development and
clinical trials; our ability to market, commercialize and achieve market
acceptance for product candidates; and our current and future strategic partner
relationships. These statements can be affected by inaccurate assumptions or by
known or unknown risks and uncertainties. Diamyd Medical undertakes no
obligation to publicly update such statements, whether because of new
information, future events or otherwise, nor does Diamyd Medical give any
guarantees that the statements, given or implied, are correct. This document is
a translation from the Swedish original. No guarantees are made that the
translation is free from errors.