In Diamyd Medical's European Phase III study in recently diagnosed type 1 diabetes patients, 10 to 20 years old, the antigen-based therapy, Diamyd^®, did not show a statistically significant preservation of beta cell function after 15 months of follow-up compared to placebo, although a small positive effect was seen. Furthermore, Diamyd^® was well tolerated as demonstrated by a similar number of adverse events across treatment groups. Detailed results will be presented at the American Diabetes Association's 71st Scientific Sessions in San Diego, CA, USA, June 24-28, 2011.

As part of a planned, longer-term follow-up, the patients in the European study are currently being followed for an additional 15 months to further evaluate the safety and efficacy of Diamyd^®. An ongoing parallel U.S. Phase III study, DiaPrevent, was fully enrolled in December 2010, and results are expected in the summer of 2012. Several externally funded and researcher-initiated studies are also in progress, including a Phase II study aiming to prevent type 1 diabetes from developing in high risk subjects.

"Although we had hoped for a better outcome of the European Phase III trial, we will now further analyze the study results together with data from other ongoing studies to better understand and determine the precise therapeutic impact of this approach as well as the best path forward for the program," says Peter Zerhouni, Acting President and CEO of Diamyd Medical. "Our vision to find a cure for type 1 diabetes remains firm, and I would like to thank all the study participants, as well as their families and the many doctors and nurses who dedicate themselves to the conduct of this study."

The European Phase III study evaluating Diamyd^® is a multinational, multicenter, double-blind, randomized, placebo-controlled trial. The primary efficacy variable of the study is meal stimulated C-peptide as a measure of beta cell function. The study is being conducted at more than 60 clinics in nine European countries: Finland, France, Germany, Italy, the Netherlands, Slovenia, Spain, Sweden and the UK. The study enrolled more than 320 patients between 10 and 20 years of age who were diagnosed with type 1 diabetes within three months of entering the study. The study includes three treatment arms in which one-third of the patients received four subcutaneous injections of Diamyd^® (days 1, 30, 90 and 270); one-third received two injections of Diamyd^® (days 1 and 30); and one-third received placebo (non-active substance). The CRO, Contract Research Organization, of the study is TFS Trial Form Support AB.

In 2010 the Company signed an agreement with Ortho-McNeil-Janssen Pharmaceuticals, Inc., (OMJPI) for the development and commercialization of Diamyd^®. Under the agreement, OMJPI has the right to fully assume responsibility for the global development upon completing its own review of the Phase III results.