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Diamyd Medical Broadens Diabetes Pipeline With Acquisition Of Nurel
Therapeutics

STOCKHOLM, Sweden, Dec. 13, 2005 -- Diamyd Medical AB (OMX:DIAMB)
emerged as a global biotechnology company as shareholders approved
the acquisition of Nurel Therapeutics, Inc. at a General Assembly
Meeting in Stockholm yesterday. The Pittsburgh, PA- based biotech
adds significantly to Diamyd Medical's pipeline for diabetes which
now includes both a therapeutic vaccine for autoimmune type 1 and
type 2 diabetes as well as therapies for diabetic pain. The merger
is expected to close on Friday, December 16.

Diamyd shareholders approved the issuance of common stock to Nurel
shareholders in connection with the merger. Nurel shareholders will
receive a total of about 223,208 Diamyd B shares. This reflects an
assumed Diamyd B share value of SEK 55, which corresponded to a 15%
premium as of the deal signature date, the 21st of November. In
addition, Diamyd shareholders approved the issuance of an additional
approximate 110,000 Diamyd shares against convertible loans used
previously to finance Nurel, which in total represents a dilution of
about 4% to Diamyd shareholders. The merger will create strong
synergies between Diamyd Medical and Nurel, while having little
effect on Diamyd's financial position and burn rate.

"Nurel and Diaymd Medical both work in diabetes and both have a GAD-
based lead compound. We differ in that the GAD is used for two
totally different and non-overlapping aspects of diabetes: (1) the
treatment of the actual disease itself, and (2) the treatment of
pain resulting from diabetes. The acquisition of Nurel brings a
tremendous amount of synergy to the table, which makes the deal very
attractive and beneficial to our shareholders," says Anders Essen-
Moller, President and CEO of Diamyd Medical.

Michael Christini, president of Nurel Therapeutics noted, "This is a
significant milestone for both companies. The merger creates a
global biotechnology company with combined portfolios with a strong
diabetes franchise aimed not only at treating diabetes but also the
complications associated with the disease, including peripheral
nerve pain. We are enthusiastic for the synergies this merger will
create and look forward to advancing the product portfolio through
the clinic in both Europe and the U.S."

Nurel has previously received convertible debt funding from
Pittsburgh-based investment groups including UPMC Health Ventures, a
venture fund owned by UPMC, the premier health system in Western
Pennsylvania, USA. Nurel has also received convertible debt funding
from Innovation Works, an economic development organization in
Western Pennsylvania and from the Pittsburgh Life Sciences
Greenhouse, a Western Pennsylvania public/private partnership that
invests in and supports the growth of life sciences companies.

"It's gratifying to see the cutting edge technologies and treatments
developed at the University of Pittsburgh find their way into the
mainstream," said Chuck Bogosta, Managing Director of the University
of Pittsburgh Medical Center's Strategic Business Initiatives. "UPMC
is pleased to have been an early investor in Nurel. The treatments
developed at the university will benefit diabetes patients
everywhere, and we look forward to the new venture flourishing. We
are particularly happy that Diamyd has chosen to open its North
American headquarters in the Pittsburgh region because we believe
strongly that it is an area that has the medical and entrepreneurial
resources needed to help Diamyd's enterprises continue to grow."

Diamyd Medical is focused on developing treatments for diabetes,
both type 1 and type 2, via GAD protein therapy. Its lead drug
candidate, Diamyd(tm), is designed to reduce the need of insulin
injections and prevent the destruction of beta cells. Furthermore,
it may allow for regeneration of beta cells in a non-autoimmune
environment, thus setting the stage for a cure of the disease. The
Company is conducting two clinical trials concurrently. The first
trial is a double blind Phase IIb study in 70 children and
adolescents; results will be announced in about 8 months. The second
study currently underway is a Phase II/III study conducted in 160
adult type 2 diabetes patients with autoantibodies to beta cells;
results will be announced 10 months thereafter. Both studies are
running at 25 clinics in Sweden and all patients are included and
treated. The two studies were initiated after positive results in a
first double blind dose finding Phase II study in 47 type 2 diabetes
patients.

Currently, there is a major unmet need for a drug to treat chronic
pain in patients suffering from diabetic neuropathy and spinal
injury pain, and cancer pain. Preclinical studies show efficacy in
industry accepted animal models and Nurel plans to file an IND in
about 12 months.

Nurel has identified two candidate molecules for the treatment of
chronic pain: (1) GAD for treatment of chronic pain due to diabetes,
and spinal cord injury; and (2) Enkephalin for cancer pain. These
molecules will be delivered to patients with Nurel's proprietary
Nerve-Targeted Gene Delivery System, for which an extensive
intellectual property portfolio has been licensed from the
University of Pittsburgh.

In addition to the pipeline of pain products, Nurel's proprietary
Nerve-Targeted Gene Delivery System for GAD may potentially be used
in several other GAD-related disorders such as schizophrenia,
anorexia, ALS, Parkinson's and epilepsy. This makes it possible to
fully explore the potential of Diamyd Medical's exclusive license to
the recombinant GAD65-molecule.

Nurel's Nerve-Targeted Gene Delivery System can also be used for
targeted deliveries of third party molecules. Nurel is discussing
outlicensing deals with such parties, just as Diamyd is discussing
outlicensing of its GAD65 technology with Neurologix Inc for
Parkinson's.

One early use for Nurel's Nerve-Targeted Gene Delivery System is in
the treatment of gliablastoma, a usually fatal form of brain cancer.
Funding for this project was committed by the U.S. National
Institutes of Health in the form of approximately $1.4 million in
Federal grants to support GMP manufacturing and Phase 1 trials for
NC3, a Nurel multi-gene cancer product. Filing of an IND for first
clinical trials for NC3 is anticipated within the next 12 months.

About Nurel Therapeutics

Nurel therapeutics has developed an innovative new Nerve-Targeted
Gene Delivery System that is specifically designed for delivery of
therapeutic molecules to the nerve system for a large variety of
diseases. Nurel is pursuing development of proprietary therapeutics
focused on treating pain including neuropathic pain that results
from nerve damage due to diabetes or spinal cord injury and cancer
pain; preventing nerve damage by protecting nerve fibers from the
long term affects of diabetes, and an innovative therapy to treat
glioblastoma and other cancers. The Company's first products, NG2
(HSV-GAD) and NPE2 (HSV-enkephalin), deliver therapeutic proteins to
the peripheral nerve cells and effectively reduce pain in industry-
standard animal models. Clinical testing in humans suffering from
chronic pain is scheduled to begin in 2007. Additional information
regarding Nurel can be found at www.nureltx.com.

About Diamyd Medical

Diamyd Medical is registered on the Stockholm Stock Exchange O List
(OMX:DIAMB). An application has been submitted to trade the shares
in the U.S. via a Level 1 ADR Program. The Company conducts
therapeutic development based on its GAD (glutamic acid
decarboxylase) technology platform. GAD is an enzyme that converts
the excitatory neurotransmittor glutamate to the inhibitory
transmittor GABA. In this context GAD may have an important role in
CNS-related disease states. GAD is also a target pancreatic beta
cell autoantigen in autoimmune diabetes, such autoimmunity leading
to development of insulin-dependence. Diamyd Medical's furthest
developed project is Diamyd, which is currently employed in two
ongoing clinical trials of both Type 2 and Type 1 diabetes which are
follow-ons of first successful dose finding Phase II trial which is
now in an open follow up phase.

Diamyd Medical AB (publ). Linnegatan 89 B, SE-115 23 Stockholm,
Sweden. Tel: 08-661 00 26, fax: 08-661 63 68 or email:
info@diamyd.com. Corp ID: 556530-1420.

This information includes statements concerning historical, present
and forward-looking items and is to the "best of knowledge" of the
management of Diamyd Medical and the actual status and results
achieved by the Company may differ materially from these statements.
The Company assumes no obligation to update these statements to
reflect actual results, changes in assumptions or changes in other
factors affecting such statements. The Company's Press Releases,
Quarterly Reports and Annual Reports ("Information") are
translations from the Swedish originals. No guarantees are made that
the translation is free from errors.

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