Diamyd Medical Signs Agreement for Diabetes Therapy

STOCKHOLM, Sweden, June 22, 2010 - Diamyd Medical AB has signed an agreement with
Ortho-McNeil-Janssen Pharmaceuticals, Inc. (OMJPI), a Johnson & Johnson
company, to develop and commercialize the Diamyd(R) diabetes therapy.

(Logo: www.newscom.com/cgi-bin/prnh/20080314/297194 )

The agreement relates to the development and world-wide
commercialization of the GAD65 antigen-based therapy (Diamyd(R)) for the
treatment and prevention of type 1 diabetes and associated conditions.

OMJPI will make an upfront payment of USD 45 million, and
under the terms of the agreement, Diamyd has the potential to receive
additional development and sales milestone payments of up to USD 580 million,
as well as tiered royalties on future sales. The parties will equally share
costs for the development program until results from the ongoing EU Phase III
study, expected in the first half of 2011. OMJPI has the right to fully
assume responsibility for the development program upon reviewing the results.

Following its strategy, Diamyd has secured exclusive rights
for commercialization in the Nordic countries. Diamyd also retains the rights
to the therapeutic use of the GAD65 gene and derivatives, fragments and
variants of the GAD65 protein.

"OMJPI is an ideal partner for Diamyd with their significant
global resources and strong commitment to diabetes," says Elisabeth Lindner,
CEO and President of Diamyd Medical. "This agreement will allow Diamyd to
expand and become a significant player as a specialty pharma company in the
Nordic region, but most importantly it should make this transformational beta
cell preserving therapy available to patients around the world."

The transaction is expected to close in the third quarter of
2010, contingent upon clearance under the Hart-Scott-Rodino Anti-Trust
Improvements Act.

Destum Partners Inc, North Carolina, United States, supported
Diamyd Medical in the partner search and acted as advisor through the due
diligence process.

Diamyd is hosting a press conference today, June 22, at 14:00
in Stockholm. For more information visit www.diamyd.com.

About Diamyd(R)

The purpose of the GAD65-based diabetes therapy Diamyd(R) is
to prevent, delay, or stop the autoimmune attack on beta cells in type 1
diabetes and other forms of autoimmune diabetes, thereby preserving the
body's capacity to regulate blood sugar. This reduces the risk for both acute
and long term diabetes complications significantly.

A Phase II study of 70 children and adolescents with type 1
diabetes published in The New England Journal of Medicine in 2008 showed that
Diamyd(R) significantly slowed the progression of the disease in subjects
with newly-diagnosed type 1 diabetes. Phase II data also show reduction of
insulin dependence after five years in treated patients with Latent
Autoimmune Diabetes in Adults (LADA) - a less aggressive form of autoimmune
diabetes that affects adults.

Diamyd(R) is a convenient treatment and has not been
associated with any serious side effects. Diamyd(R) is currently being
evaluated in two parallel Phase III studies in Europe and USA. The European
study is fully enrolled and results are expected in the spring of 2011. The
US study, DiaPrevent, is enrolling patients recently diagnosed with type 1
diabetes. Several externally funded and researcher-initiated studies of the
Diamyd(R) diabetes antigen based therapy are also in progress, including a
Phase II study aiming to prevent type 1 diabetes from developing in high risk
subjects.

About Diamyd Medical

Diamyd Medical is a Swedish public company focusing on the
development of pharmaceuticals for the treatment of autoimmune diabetes and
its complications. The Company has clinical-phase products from two
proprietary technological platforms in its pipeline; the diabetes antigen
based therapy, Diamyd(R) in Phase III and NP2 for chronic pain in Phase I.
The Company has out-licensed the use of the GAD65 gene for treatment of
Parkinson's Disease to Neurologix Inc., New Jersey, United States. Diamyd
Medical's objective is to build a Nordic specialty pharma company in the
diabetes field. The Company's vision is to one day be able to prevent and
cure the autoimmune forms of diabetes.

Diamyd is headquartered in Stockholm, Sweden, with a
subsidiary in Pittsburgh, Pennsylvania, USA. Diamyd is listed on the Nasdaq
OMX Nordic Market Small Cap list (ticker: DIAM B), as well as the OTCQX in
the US (ticker: DMYDY).

This information is disclosed in accordance with the Swedish
Securities Markets Act, the Swedish Financial Instruments Trading Act, or the
requirements stated in the listing agreements.

    Diamyd Medical AB (publ.)
    Karlavagen 108, SE-115 26 Stockholm, Sweden.
    Tel: +46(0)86610026
    Fax: +46(0)86616368
    E-mail: info@diamyd.com
    VAT no: SE556530-142001.

Diamyd Medical AB (publ.), Karlavagen 108, SE-115 26 Stockholm, Sweden, Tel: +46(0)86610026, Fax: +46(0)86616368, E-mail: info at diamyd.com; For more information, please contact: Elisabeth Lindner, President and CEO Diamyd Medical AB (publ.), Phone: +46-8-661-0026; For pictures and press material, please contact: Andreas Ericsson, Diamyd Medical AB (publ.), andreas.ericsson at diamyd.com, Phone: +46-8-661-0026