DiaMedica Inc.

DiaMedica Inc.

September 18, 2007 10:10 ET

DiaMedica Announces Positive Pre-Clinical Results for DM-83

WINNIPEG, MANITOBA--(Marketwire - Sept. 18, 2007) - DiaMedica Inc. (TSX VENTURE:DMA), a clinical stage biotechnology company developing novel treatments for various stages of type 2 diabetes, is pleased to announce positive pre-clinical data for DM-83, its second clinical drug candidate.

Preliminary results from the proof of concept study demonstrated the ability of DM-83 to restore insulin sensitivity to pre-diabetic levels in an in vivo diabetes model. The study is being conducted in the Lautt Laboratory, Department of Pharmacology and Therapeutics, Faculty of Medicine, University of Manitoba.

"Our pre-clinical model has shown that DM-83 is effective at restoring insulin sensitivity and restoring the dysfunctional nerve signal which we recognize as critical in the development of type 2 diabetes", stated Dr. Wayne Lautt, Chief Scientific Officer and Co-Founder of DiaMedica.

"These results strongly support the preparation of our phase II clinical trial application. Based on these findings, our immediate goal is to advance this product into clinical trials as expeditiously as possible", added Dr. Karl-Gunnar Hidinger, President of DiaMedica. "The Company believes DM-83 is positioned to target mid-stage diabetes, which is currently dominated by the thiazolidinedione (TZD) class. Drugs within this class have recently received a 'black-box' warning, and thus DM-83 appears to be positioned to target a considerable medical need."

Diabetes is a widespread and rapidly growing disease, affecting 177 million people world wide. Over 90% of diabetics are of the Type 2 form. Global sales of oral diabetes drugs total $6 billion today and are expected to climb to $11 billion by 2011.

About DM-83

DM-83 has demonstrated the ability to restore insulin sensitivity in a type 2 diabetes animal model. The product is a novel combination of two known drugs with well established safety profiles that are used to treat other unrelated human conditions. This product addresses a new target in the treatment of diabetes.

About DiaMedica

DiaMedica is developing novel treatments for various stages of type 2 diabetes based on a mechanism involving nerve signaling to the liver. Rather than treating the symptoms, DiaMedica addresses the cause of type 2 diabetes with multiple points of intervention. Its lead product, DM-71, is currently in a phase II clinical trial. The Company has two other products in its clinical pipeline, DM-83 and DM-99.

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.

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