DiaMedica Inc. Announces Topline Results From DM-99 Phase IIa Study in Type 2 Diabetes

WINNIPEG, MANITOBA--(Marketwire - March 31, 2009) - DiaMedica Inc. (TSX VENTURE: DMA), a drug discovery and development company focused on novel treatments for Type 2 diabetes today is pleased to announce results of a proof-of-concept phase IIa trial for DM-99, the company’s third drug in clinical development.

The single dose, placebo controlled, single-blind, crossover trial studying 40 patients with type 2 diabetes examined the effect of DM-99 or placebo treatment on plasma glucose and insulin levels after a meal tolerance test. Those patients receiving oral anti-diabetes medications used to stabilize glucose levels continued treatment during the study. During statistical analysis a sequence effect between period 1 and period 2 was observed in this crossover study leaving overall results inconclusive. The underlying cause of this effect is under investigation. Consistent with standard crossover study design upon detection of a sequence effect, the statistical analysis plan was predefined to revert to period 1 results where 20 subjects receiving DM-99 and 20 subjects receiving placebo were both trial and treatment naive.

The trial was powered to demonstrate a therapeutically significant effect defined as a p less than 0.2 with an absolute decrease of at least 10% in glucose and/or insulin. Patients receiving DM-99 in Period 1 showed a decrease in baseline adjusted peak blood glucose concentration of 19% (p equals 0.077) versus those receiving placebo. Patients receiving DM-99 in Period 1 showed a decrease in incremental glucose Area Under the Curve (AUC) 0-240 minutes of 31% (p equals 0.030) versus those receiving placebo. DM-99 was safe and well tolerated with only one report of mild nausea that was considered unlikely related to treatment.

“We are encouraged by the result from this exploratory clinical study along with the results of prior DM-99 pre-clinical data. Our goal was to see a positive trend indicated by changes in blood glucose in type 2 diabetes patients after they have consumed a meal”, stated Reggie Bowerman, President & CEO, DiaMedica Inc. “We believe the results from this proof-of-concept trial support our continued development of the DM-99 program.”

About DiaMedica

DiaMedica is developing novel treatments for type 2 diabetes based on a newly discovered ‘nerve reflex’ mechanism for which the Company has been issued two U.S. patents. DiaMedica completed a successful phase II trial with its lead product, DM-71, which demonstrated the ability to reduce HbA1c (blood sugar) levels and weight in humans. DiaMedica also completed a successful phase II trial with its second compound, DM-83, designed to measure changes in insulin and glucose. The success of this clinical trial was highly significant as DiaMedica believes it validates the novel ‘nerve reflex’ mechanism that would designate the Company’s drugs as first-in-class. Preclinical results from Vanderbilt University have shown that DM-99 is able to cause tissue to increase its uptake of glucose from the blood by over 40% (p less than 0.001) during the first 60 minutes of treatment. DiaMedica has been recognized as one of the Top Ten™ Life Science companies in Canada for the past two years by the Ottawa Centre for Research and Innovation.

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.

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