DiaMedica Inc. Announces Last Patient in for DM-99 Phase II Clinical Trial

WINNIPEG, MANITOBA--(Marketwire - December 23, 2008) - DiaMedica Inc. (TSX VENTURE: DMA), a drug discovery and clinical development company focused on a novel approach to treating type 2 diabetes, today announces last patient in for the phase II proof of concept clinical trial with DM-99, the Company's third drug candidate to enter phase II human trials.

The single-blinded clinical trial being conducted in the European Union will demonstrate DM-99's effectiveness at controlling blood glucose levels in 40 patients with type 2 diabetes with HbA1c levels over 7.5%, after they have consumed a standardized meal. Change in insulin and/or blood glucose levels in time increments over a 4 hour period, post meal consumption, are the study's primary endpoints. Each patient will be tested for the effects of treatment with both DM-99 and a placebo, and will therefore serve as their own control in this cross over study. Results are expected in early Q1 2009.

Pre-clinical animal studies on DM-99 were performed by Dr. David Wasserman, Professor of Molecular Physiology and Biophysics and Ron Santo Chair in Diabetes at the Diabetes Research and Training Center at Vanderbilt University in Nashville, Tennessee. The amount of glucose being metabolized was measured using the hyperinsulinemic euglycemic clamp model which is universally recognized as the gold standard method for measuring insulin sensitivity. Specifically, healthy animals treated with DM-99 were able to metabolize 41% more glucose than untreated healthy animals (p less than 0.04) within the first sixty minutes of the drug being administered. The drug was also shown to have an excellent safety profile.

"The compelling pre-clinical results suggest that DM-99 may act as both an insulin sensitizer and hasten the onset of insulin action", commented Rick Pauls, DiaMedica's President and CEO. "In addition, we have achieved pre-clinical results demonstrating that DM-99 behaves synergistically with GLP-1, which may significantly increase the value of DM-99 as GLP-1 analogs are a promising new class of drugs for type 2 diabetes".

Diabetes is a widespread and rapidly growing disease, affecting over 180 million people world wide with over 90% of people with diabetes being diagnosed with the type 2 form of the disease. According to the World Health Organization, this number is expected to double during the next 15 years while the American Diabetes Association has estimated the annual economic cost in 2007 to the United States to be $174 billion. Global sales of oral diabetes drugs total $8 billion today and are expected to climb to $12 billion by 2011.

About DM-99

DM-99 is an oral biologic compound with a well established safety profile. Pre-clinical results from the Diabetes Research and Training Center at Vanderbilt University have shown that DM-99 is able to increase the uptake of glucose from the blood by over 40% (p less than 0.04) within 60 minutes of administration.

About DiaMedica

DiaMedica is a biopharmaceutical company developing novel treatments for type 2 diabetes. The Company has completed phase IIa clinical trials with DM-71, which demonstrated the ability to reduce HbA1c levels and weight in man and with DM-83, which showed a reduction in the amount of peak insulin required to process glucose. DiaMedica's third drug in clinical development, DM-99 will complete a phase IIa clinical trial in Q1 2009.

Caution Regarding Forward-Looking Information

Certain statements contained in this press release constitute forward-looking information within the meaning of applicable Canadian provincial securities legislation (collectively, "forward-looking statements"). These forward-looking statements relate to, among other things, our objectives, goals, targets, strategies, intentions, plans, beliefs, estimates and outlook, including, without limitation, our anticipated future operating results, and can, in some cases, be identified by the use of words such as "believe," "anticipate," "expect," "intend," "plan," "will," "may" and other similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements.

These statements reflect management's current beliefs and are based on information currently available to management. Certain material factors or assumptions are applied in making forward-looking statements, and actual results may differ materially from those expressed or implied in such statements. Important factors that could cause actual results to differ materially from these expectations include, among other things: DiaMedica's early stage of development, lack of product revenues and history of operating losses, uncertainties related to clinical trials and product development, rapid technological change, uncertainties related to forecasts, competition, potential product liability, additional financing requirements and access to capital, unproven markets, supply of raw materials, income tax matters, management of growth, partnerships for development and commercialization of technology, effects of insurers' willingness to pay for products, system failures, dependence on key personnel, foreign currency risk, risks related to regulatory matters and risks related to intellectual property and other risks detailed from time to time in DiaMedica's filings with Canadian securities regulatory authorities, as well as DiaMedica's ability to anticipate and manage the risks associated with the foregoing. Additional information about these factors and about the material factors or assumptions underlying such forward-looking statements may be found in the body of this news release, as well as under the heading "Risk Factors" contained in DiaMedica's final long-form prospectus dated March 12, 2007. DiaMedica cautions that the foregoing list of important factors that may affect future results is not exhaustive. When relying on DiaMedica's forward-looking statements to make decisions with respect to DiaMedica, investors and others should carefully consider the foregoing factors and other uncertainties and potential events.

These risks and uncertainties should be considered carefully and prospective investors should not place undue reliance on the forward-looking statements. Although the forward-looking statements contained in this press release are based upon what management believes to be reasonable assumptions, DiaMedica cannot provide assurance that actual results will be consistent with these forward-looking statements. DiaMedica undertakes no obligation to update or revise any forward-looking statement.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

DiaMedica Inc.
Kevin Richardson, Ph.D.
(204) 918-3868
(204) 453-3745 (FAX)
Email: krichardson@diamedica.com
Website: www.diamedica.com

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