DiaMedica Inc. Initiates Type 1 Diabetes Study; Announces Preliminary Results

WINNIPEG, MANITOBA--(Marketwire - July 08, 2010) - DiaMedica Inc., (TSX VENTURE: DMA) today announces that it has initiated a Type 1 diabetes program. The recently announced Sanomune acquisition allows DiaMedica to expand into Type 1 diabetes. The initiation of this program is based on encouraging preclinical results with DM-99, a naturally occurring protein that the company has previously shown to have clinical efficacy for Type 2 diabetes.

In the study, animals were injected with streptozotocin, a naturally occurring compound known to be toxic to beta cells, to mimic the disease. A week after this streptozotocin treatment, animals were injected twice daily with DM-99 for a period of 21 days at which time fasting blood glucose measurements were taken. Animals treated with DM-99 had a statistically significant 68% (p=0.05) reduction in fasting blood glucose compared to untreated animals. Furthermore, the DM-99 treatment resulted in a positive reduction in total glucose as measured by an oral glucose tolerance test.

"Initial results from this study show that DM-99 was able to reduce fasting blood glucose, an indication that new beta cells may be created or that existing beta cells are being protected from the streptozotocin insult," stated Rick Pauls, President and CEO of DiaMedica. "The final results and analysis of DM-99 on the direct effects upon the pancreas (insulin production and beta cell proliferation) is expected during the summer of 2010."

About Type 1 Diabetes

According to the Juvenile Diabetes Research Foundation, as many as 3 million Americans may have Type 1diabetes, an autoimmune disease that strikes children and adults suddenly and can be fatal. In Type 1 diabetes, the host's own immune system destroys beta cells in the pancreas that normally control blood sugar level by producing insulin. Currently, patients with Type 1 diabetes have to test their blood sugar and give themselves insulin injections multiple times each day, or use a pump daily to control blood sugar levels. Even with intensive care, insulin is not a cure for diabetes, nor does it completely prevent the eventual and devastating complications of diabetes, which may include kidney failure, blindness, heart disease, stroke, and amputation.

About DiaMedica

DiaMedica is a biopharmaceutical company focused on developing novel treatments for diabetes and neurological disorders. The Company's Type 2 diabetes program is based on a critical liver nerve signaling mechanism involved in enhancing insulin sensitivity after meal consumption. Two of DiaMedica's products have previously demonstrated human efficacy in lowering blood sugar levels in people diagnosed with Type 2 diabetes based on this novel nerve signaling mechanism.

DiaMedica has expanded its DM-199 recombinant protein program into neurological and autoimmune disorders. The Company has demonstrated that DM-99, the naturally occurring form of DM-199, confers neural protection (protects brain cells) and triggers neural stem cell proliferation (creates brain cells) for the treatment of numerous neurological disorders including Alzheimer's disease. DiaMedica is listed on the TSX Venture Exchange under the trading symbol "DMA".

For further information please visit www.diamedica.com.

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, the "forward-looking statements"). These forward-looking statements relate to, among other things, DiaMedica's objectives, goals, targets, strategies, intentions, plans, beliefs, estimates and outlook, 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. Specifically, this press release contains forward-looking statements regarding matters such as, but not limited to, the anticipated use of proceeds from the Offering, management's assessment of DiaMedica's future plans, information with respect to the advancement of DiaMedica's research and development programs, and DiaMedica's other estimates and expectations. 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: uncertainties and risks related to our research and development programs, the availability of additional financing, risks and uncertainties relating to the anticipated use of proceeds,

changes in debt and equity markets, 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, the cost and supply of raw materials, management of growth, effects of insurers' willingness to pay for products, risks related to regulatory matters and risks related to intellectual property matters. 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 2009 annual information form. 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. Such forward-looking statements are based on a number of estimates and assumptions, which may prove to be incorrect, including, but not limited to, assumptions regarding the availability of additional financing for research and development companies, and general business and economic conditions.These risks and uncertainties should be considered carefully and investors and others 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. Additional risk factors, factors which could cause actual results to differ materially from expectations, and assumptions relating specifically to our acquisition of Sanomune may be found in our press releases dated February 18, 2010 and April 20, 2010.


Contacts:
DiaMedica Inc.
Kevin Richardson, Ph.D
204.478.5605
204.453.3745 (FAX)
krichardson@diamedica.com

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