Spectral Diagnostics Provides Corporate Update

SPECTRAL DIAGNOSTICS PROVIDES CORPORATE UPDATE TORONTO, Canada - January 4, 2012 - Spectral Diagnostics Inc., (TSX:SDI), a Phase III company developing the first theranostics treatment for severe sepsis and septic shock, today provided a general, corporate update on its activities.

"2011 was a significant year for Spectral," said Dr. Paul Walker, President and CEO of Spectral Diagnostics. "The Company received approval from the U.S. Food and Drug Administration to expand its Phase III EUPHRATES trial in severe sepsis and septic shock, completed a $10 million financing and expanded its investor base. Collectively, these developments should help the Company achieve its clinical milestones over the next few years."
Management anticipates there are several factors that could impact Spectral's valuation in 2012 and beyond. These include:

Spectral is well financed and its common shares are more liquid

- As at December 31, 2011, Spectral has approximately $18.5 million cash and cash equivalents
- The Company's shareholder base has increased to an estimated 7,000 retail and institutional shareholders
- In 2011, liquidity saw a fourfold increase in daily average trading volume versus 2010

Expansion of the EUPHRATES trial

- The FDA approved the expansion of the trial to 30 clinical trial sites (from 15), including international locations
- Spectral obtained additional market rights for Toraymyxin in Canada and announced the planned expansion of the trial into Canada
- Spectral reorganized for the expansion, including contracting with a new contract research organization
- Interim clinical data is targeted for the end of 2012, or early 2013, depending on the site uptake and patient enrolment rates, with receipt of final data approximately one year later

The severe sepsis market, estimated to be worth more than $1 billion, has lost its only approved product

- Eli Lilly withdrew Xigris, the only approved drug for severe sepsis, after failing to demonstrate efficacy in a post marketing study

Competitors' trials continue to face recruitment and efficacy challenges that Spectral has planned for

- In addition to Xigris, Eisai's Eritorin failed to demonstrate efficacy in its Phase III trial for severe sepsis
- A common challenge for these, and other failed or ongoing trials, has been the balancing of a desire for rapid patient recruitment against the need to get the right patients, who are sick
enough, into the trial in order to demonstrate efficacy
"There are no shortcuts when it comes to running a successful sepsis clinical trial," added Dr. Walker. "Our focus continues to be on carefully selecting high performing clinical sites and enrolling only those endotoxemic patients at highest risk of sepsis-related mortality. The EUPHRATES trial is the only late- stage sepsis trial to use a biomarker, the EAA™ measurement for endotoxin, as entry criteria to identify patients most likely to respond to treatment. In this way, we believe that our EUPHRATES trial is best positioned to have the greatest likelihood of success."

About Spectral Diagnostics

Spectral is a Phase III company seeking U.S. FDA approval for its lead theranostics product for the treatment for severe sepsis and septic shock. Toraymyxin is a therapeutic hemoperfusion device that removes endotoxin, which can cause sepsis, from the bloodstream. Directed by the Company's
Endotoxin Activity Assay (EAA™), the only FDA cleared diagnostic for the risk of developing sepsis,
Spectral's EUPHRATES trial is the world's first theranostics trial in the area of sepsis.
Toraymyxin has been approved for therapeutic use in 18 countries, and has been used safely and effectively in more than 80,000 patients to date. In March, 2009, Spectral obtained the exclusive development and commercial rights in the U.S. for Toraymyxin, and in November, 2010, signed an exclusive distribution agreement for this product in Canada. More than 250,000 patients are diagnosed with severe sepsis and septic shock in North America each year, representing a greater than $1 billion market opportunity for Spectral. Spectral is listed on the Toronto Stock Exchange under the symbol SDI.
For further information please visit www.spectraldx.com
For further information please contact:
Anthony Businskas
Executive Vice President and CFO
416-626-3233 ext. 2200
Adam Peeler Investor Relations TMX Equicom
416-815-0700 ext. 225 [e-mail]

Forward-looking statement

Information in this news release that is not current or historical factual information may constitute forward- looking information within the meaning of securities laws. Implicit in this information, particularly in respect of the future outlook of Spectral and anticipated events or results, are assumptions based on beliefs of Spectral's senior management as well as information currently available to it. While these assumptions were considered reasonable by Spectral at the time of preparation, they may prove to be incorrect. Readers are cautioned that actual results are subject to a number of risks and uncertainties, including the availability of funds and resources to pursue R&D projects, the successful and timely completion of clinical studies, the ability of Spectral to take advantage of business opportunities in the biomedical industry, the granting of necessary approvals by regulatory authorities as well as general economic, market and business conditions, and could differ materially from what is currently expected.

The TSX has not reviewed and does not accept responsibility for the adequacy or accuracy of this statement.