DiaMedica Inc. Announces Influenza Program and Enters Into an Evaluation Agreement With the U.S. National Institute of Allergy And Infectious Diseases (NIAID) for Influenza Infections

WINNIPEG, MANITOBA--(Marketwire - January 26, 2011) - DiaMedica (TSX VENTURE: DMA) is pleased to announce preliminary results of its influenza program with its monoclonal antibody program (mAb) and the entering into an evaluation agreement with the National Institute of Allergy and Infectious Diseases (NIAID), a component of the U.S. National Institute of Health (NIH), to further test for the treatment of influenza infection in animal models.

DiaMedica’s mAb was able to dose dependently prevent influenza replication in an in vitro host cell model.

“The Company believes that the mechanism of the mAb inhibits a key host protein, GSK3B, that can prevent influenza entry and/or replication in host cells. Thus the mAb has the potential to protect against all strains of influenza viruses because the antibody is targeting the host cells and not the influenza virus itself,” stated Dr. Mark Williams, VP Research.

The upcoming animal studies are being conducted under the antiviral screening program offered by the U.S. Division of Microbiology and Infectious Diseases (DMID) of the NIAID, a part of the NIH. The studies conducted by Utah State University are focused on providing key efficacy data towards supporting the filing of an Investigational New Drug (IND) application to treat influenza for the novel mAb.

About NIAID

National Institute of Allergy and Infectious Diseases (NIAID) conducts and supports basic and applied research to better understand, treat, and ultimately prevent infectious, immunologic, and allergic diseases. For more than 60 years, NIAID research has led to new therapies, vaccines, diagnostic tests, and other technologies that have improved the health of millions of people in the United States and around the world.

NIAID support for influenza research over the past several years has greatly improved our preparedness for and ability to respond to a pandemic influenza. Scientists in NIAID laboratories and NIAID contractors worldwide began studying diverse influenza viruses well before the outbreak of the 2009 HINI influenza, and are continuing to prepare for seasonal as well as pandemic influenza outbreaks.

About DiaMedica

DiaMedica is a biopharmaceutical company developing novel treatments for diabetes and other disorders. Two of DiaMedica’s products, DM-71 and DM-99 have demonstrated phase II human efficacy in lowering blood glucose levels in people diagnosed with type 2 diabetes.

DiaMedica’s lead product DM-199 is an improved, recombinant form of the naturally-occurring DM-99 to treat diabetes while also demonstrating activity in neurological and autoimmune disorders. The Company has shown 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.

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.