DIAMYD MEDICAL OUTLICENSES GENE TO NEUROLOGIX FOR TREATMENT OF PARKINSON’S DISEASE

Press Release: Stockholm, Sweden – August 7, 2006 – Diamyd Medical AB (SWEDEN OMXS: DIAM B; USA ADR: DMYDY)

Diamyd Medical announces that it has entered into a non-exclusive license agreement by which Neurologix, Inc., Fort Lee, N.J. (OTCBB: NRGX), obtained rights to use the GAD65 molecule in its development of a therapeutic treatment for Parkinson’s disease. Terms of the agreement include a license execution payment of US $500,000, annual fees of US$ 75,000 from year 2008 as well as milestones and royalties on commercial sales. The news come at an exciting time for Diamyd Medical AB, which will present results of a phase II study with its GAD-based Diamyd™ for Type 1-diabetes later this month.. “This sublicense agreement for Parkinson’s disease demonstrates the broad potential for the GAD65-molecule in diseases of the central nervous system (CNS). And in these diseases its therapeutic mechanism is very different from what it is when treating diabetes,” said Anders Essen-Moller, CEO and President of Diamyd Medical. “Neurologix was first in the world to successfully use GAD-gene therapy in human clinical trials for Parkinson’s disease and we believe that Neurologix is well-positioned to aggressively advance its Parkinson's drug towards market commercialization.” While GAD65 is a major autoantigen in autoimmune diabetes, it is also an enzyme that converts the excitatory neurotransmittor glutamate to the inhibitory transmittor GABA. In this context GAD65 may come to play an important role not only in diabetes treatment but also in treatments of several CNS-related disease states including but not limited to Parkinson’s disease. Diamyd Medical has a worldwide exclusive license from University of California at Los Angeles for the therapeutic use of the GAD65 gene. It is the use of this gene for Parkinson’s disease that now has been sublicensed to Neurologix. About 1.5 million people in the U.S have Parkinson’s disease and around 40,000 new patients are diagnosed with the disease every year. The annual direct health care costs are estimated to US $5.6 billion. “If Neurologix’s Parkinson's therapy is successful with annual sales reaching US $500 million or more, the annual royalty streams under the terms of the present non-exclusive sublicense agreement may potentially reach tens of millions of dollars,” concluded Mr. Essen-Moller.