DiaMedica Inc.

DiaMedica Inc.

July 14, 2008 09:16 ET

DiaMedica Meets Primary Endpoint from Phase II DM-83 Study in Type 2 Diabetes

WINNIPEG, MANITOBA--(Marketwire - July 14, 2008) - DiaMedica Inc. (TSX VENTURE:DMA) ("DiaMedica"), a drug discovery and development company focused on novel treatments for Type 2 diabetes, today announces top-line results of a Phase II trial showing that its investigational drug DM-83 met the primary endpoint by lowering peak insulin levels in diabetic patients. The single dose, placebo controlled, single-blind, cross-over study in patients with Type 2 diabetes, using a meal tolerance model showed a statistically significant reduction (23%) of insulin compared to placebo (p equals 0.0064). Peak changes in glucose levels were not statistically different between the two groups (p equals 0.2). There were no adverse events or observed side effects in the treatment group and DM-83 was well tolerated in this trial.

The Phase II trial was conducted in the European Union and was designed to demonstrate DM-83's effect on postprandial glucose and/or insulin levels in 20 Type 2 diabetics after they consumed a single standard meal (the study's primary endpoint). Each patient in this crossover study was administered DM-83 as well as the placebo and therefore served as their own control. All patients maintained concurrent therapeutic treatments during the course of this Phase II trial including diabetes medications used to stabilize glucose levels.

"The effect of DM-83 in the Phase II trial, given in a single dose, one hour before consuming a liquid test meal, is consistent with our extensive basic preclinical research related to this novel discovery. We believe that the fundamental metabolic problem a diabetic has is the processing of nutrients within a meal. Our technology targets a dysfunctional nerve signal from the brain to the liver in Type 2 diabetic patients. DM-83 was designed to provide a dual signal to the liver which results in reversal of the abnormal meal processing", stated Dr. Wayne Lautt, Chief Scientific Officer, DiaMedica, Inc. "This study demonstrated with statistical significance, the ability of DM-83 to reduce the amount of peak insulin required to process glucose."

"We are encouraged by the positive result of this clinical study showing that DM-83 reduced insulin levels and was well tolerated", stated Rick Pauls, President & CEO, DiaMedica Inc. "This trial provided further support for DiaMedica's new approach to the treatment of diabetes. The results of this proof of concept study also supports the treatment approach of our lead product, DM-71, which demonstrated the ability to lower HbA1c, fructosamine and weight in a 12 week Phase II study completed in late 2007. DiaMedica is committed to advancing the development of our nerve signaling treatments for patients affected by Type 2 diabetes. We look forward to completing a full data analysis of the trial results."

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 compounds with well established safety profiles that are used to treat other unrelated human conditions, one of which is to improve cardiovascular conditions. Neither compound has been shown to restore insulin sensitivity on its own, while combining the two results in a synergistic effect that restores insulin sensitivity to near prediabetic levels. DiaMedica is currently pursuing patent protection for new chemical entities based on its previous research of the mechanism of DM-83.

About DiaMedica

DiaMedica is a biotechnology company developing novel treatments for various stages of Type 2 diabetes with three clinical stage products. The Company's lead product, DM-71, demonstrated the ability to reduce HbA1c levels and weight in a Phase IIa human trial. DM-83 showed efficacy in reducing insulin levels in a Phase IIa meal tolerance test. DiaMedica's third clinical stage product is entering a Phase IIa trial in the second half of 2008. DiaMedica is traded under the symbol "DMA" on the Toronto Stock Venture Exchange. For additional information please visit the Company's website at 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, "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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