Year End Report, Stockholm, October 24, 2008

Year End Report for Diamyd Medical AB (publ), Fiscal Year 2007/2008
(www.omxgroup.com ticker: DIAM B; www.otcqx.com ticker: DMYDY)
September 1, 2007 – August 31, 2008

• The 5-year results of a Phase II study demonstrates that Diamyd® significantly reduces the risk that LADA patients will need insulin treatment
• Great interest in Diamyd at the American ADA conference in June
• The warrants that accompanied the new shares issued during the spring were listed for trading on First North
• Diamyd’s licensing partner Neurologix initiates Phase II studies with GAD in
Parkinson’s disease
• Positive 30-month results of a Phase II study with Diamyd® for type 1 diabetes were published together with an editorial in the most prestigious medical
journal in the world, The New England Journal of Medicine (after reporting
period)
• Ten percent of the type 1 diabetes patients have been screened in a European Diamyd® Phase III study (after reporting period)
• The NTDDS product NP2 with Enkephalin proves to be effective against diabetes pain in preclinical studies (after reporting period)
• Diamyd received great exposure at the EASD conference in Rome (after
reporting period)
• Group net sales for the year amounted to kSEK 1,092 (531). Net sales for the fourth quarter were kSEK 133 (115)
• The loss before taxes for the year amounted to MSEK -63.9 (-53.5). The loss before taxes for the fourth quarter was MSEK -20.3 (-15.6)
• Group liquid assets amounted to MSEK 81.9 (68.8) as of August 31, 2008
• Result per share after dilution was SEK -6.3 (-5.5)

CEO OVERVIEW
The summer has been a time of intense activity for Diamyd Medical. The Swedish part of our Phase III study in type 1 diabetes has begun, and we have applied to regulators and ethics committees in eight more European countries for approval of the study. The study has either been approved or is close to approval in most of the countries, and we have nearly 70 European clinics under contract. In the US we will have 20 clinics under contract soon. The process is time-consuming because the majority of the American clinics have their own local ethics committees, but it is proceeding swiftly nevertheless.

At the time of writing, we have screened more than 10 percent of the patients for the European study, and administered injections to more than 10 percent of the Swedish patients. A handful of patients in the US have received injections up to this point. I am grateful and delighted that our team has such a wonderful spirit of enterprise, and is so committed that we have succeeded with these measures of progress in such a short time and with limited resources.

In October we had a great breakthrough when the prestigious scientific journal The New England Journal of Medicine, together with an editorial published the results of our Phase II study with the diabetes vaccine Diamyd® in children and adolescents with type 1 diabetes. We see this as the ultimate scientific validation of the results of our study.

We also announced the 5-year results of our Phase II study in adult patients with autoimmune diabetes, which demonstrated that treatment with Diamyd® has a significant effect in preventing the need for insulin treatment.

One building block is laid upon another, and they demonstrate unequivocally that the Diamyd® diabetes vaccine has a significant clinical effect and great potential to help children, adolescents and adults with diabetes.

In the turbulent times caused by the financial crisis that is reigning over the entire world, I am both proud and humble that Diamyd Medical has fared so well nevertheless. At the present time we have secure financing and stable long-term owners with decision powers, and our research demonstrates positive results time after time. Diamyd is a virtual company with low fixed costs as well as low variable costs relative to the industry, this minimizes our burn rate.
Our strategy stands firm, and we have achieved our objectives, one after another. We expect to have included the last patient in the Phase III program in the third quarter 2009; the program will then yield the first Phase III results at the end of 2010. At that point we will apply for market approval for the world’s first diabetes vaccine!
Elisabeth Lindner, President and CEO, Diamyd Medical AB

SIGNIFICANT EVENTS DURING THE PERIOD
ADA, Diamyd was well represented at ADA (American Diabetes Association, 68th Annual Meeting), the large American annual diabetes conference that was held in San Francisco this year. GAD and Diamyd’s research were described in three different sessions, and TrialNet president Jay Skyler announced during his presentation that the planned intervention study with Diamyd® for type 1 diabetes is intended to start in the coming months.

The warrants that accompanied each newly issued share from the directed placement of the spring 2008 were listed for trading on the marketplace First North as of June 10, 2008.
Mangold Fondkommission AB has taken over the role of liquidity provider for Diamyd Medical’s B share and warrant as of June 10, 2008.

Phase III studies with Diamyd® for type 1 diabetes began in Europe and the US in the spring and summer. In Europe, Sweden is proceeding according to plan and eight additional European countries are at various stages of the startup process. The study has begun in the US according to plan. Patients have been screened and received injections on both continents.
5-year results from the Diamyd® Phase II study with LADA patients were presented at the EASD conference (European Association For The Study Of Diabetes, 44th Annual Meeting) in Rome, Italy in September. The results demonstrated that, even after five years, vaccination with Diamyd® significantly reduces the risk that LADA (Latent Autoimmune Diabetes in Adults) patients will need insulin treatment. No serious treatment-related side effects were observed in the study, which strengthens the safety profile of Diamyd®.

Diamyd’s licensing partner Neurologix Inc. reported that they have initiated a Phase II study with the GAD gene in Parkinson’s disease. This demonstrates that GAD can also be used successfully in therapeutic areas other than diabetes.

To read the complete report, please see attached pdf, or visit www.diamyd.com