"This is extremely good news that we finally received today", says Elisabeth Lindner, CEO and President of Diamyd Medical. "The granted Orphan Designation confirms the unmet medical need and might speed up the process to get the product available for children with diabetes. It may also give us extended market exclusivity in the US."

Orphan Drugs qualify for several incentives including a seven-year period of market exclusivity in the US, beginning on the date of marketing approval by the FDA. Other potential benefits are tax credits for clinical research, waiver of FDA user fees, study design assistance, and potential funding for clinical studies. Historically, the approval time for Orphan Drugs as a group has been considerably shorter than the approval time for other drugs.

Orphan Drug Designation can be granted for drugs under development for the treatment, prevention or diagnosis of a rare disease or condition. A rare disease is defined in the US as a disease affecting less than 200,000 residents.

The Orphan Drug Designation is granted for rhGAD65, the active ingredient of Diamyd^®, for the treatment of type 1 diabetes with residual beta cell function.

Diamyd Medical is conducting a global Phase III clinical program to investigate whether Diamyd^® can halt or slow the autoimmune destruction of insulin producing beta cells in type 1 diabetes, preserving the body's own ability to control blood sugar levels. The US study, DiaPrevent, is still enrolling patients. An improved blood sugar control reduces the risk for both acute and long-term diabetes complications. Diamyd^® has been shown, in Phase II studies, to preserve the remaining beta cell function in children and adolescents recently diagnosed with type 1 diabetes.

More information about the DiaPrevent diabetes research study can be found at www.diaprevent.com and at www.diaprevent.diamyd.com.