INSTITUTIONAL INVESTMENT OF US$ 1.5 M IN DIAMYD AT MARKET PRICE

Press Release, Stockholm, Sweden – December 18, 2006 – Diamyd Medical AB
(SWEDEN OMX: DIAM B; US ADR: DMYDY)

Diamyd Medical announces today that a Swedish institutional investor has acquired 70,000 new B-shares in Diamyd Medical. The shares are issued with the support of an authorization given at the recent Annual General Meeting to issue up to 600,000 shares. The price for the purchase was US$ 21 per share which corresponded to the current market price. In order to enable immediate delivery, CEO Anders Essen-Möller has lent the corresponding number of shares until the new shares are registered.

After the capital addition, Diamyd Medical’s liquid funds amount to US$ 15.3 million.

Through the new issue the share capital will increase by US$ 10,100 to US$ 1.41 million, divided over 9,747,478 shares, of which 561,671 A-shares and 9,185,807 B-shares. (US$1=SEK6.91)

“That a Swedish institutional asset manager invests in Diamyd Medical at the prevailing market price is very positive for the Company.” says Anders Essen-Möller, CEO. “We continuously evaluate financing opportunities and with this transaction the Company was able to raise approximately US$1.5 million without offering any discount or incurring any external costs. Overall, the terms of the transaction should be very favorable for the Company and shareholders.”