DiaMedica Inc.

DiaMedica Inc.

July 16, 2007 09:45 ET

DiaMedica Provides Update on Phase II Clinical Study of DM-71 in Type 2 Diabetes

WINNIPEG, MANITOBA--(Marketwire - July 16, 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 that the final patient has completed the treatment period in its phase II study evaluating DM-71 in the treatment of type 2 diabetes.

"We are very pleased to have sixty-four patients complete treatment, which should provide us robust numbers for analysis. Based upon the timing of the now completed treatment period the Company expects to be able to publicly announce results in October", stated Dr. Karl-Gunnar Hidinger, President of DiaMedica.

The single dose, single-blinded, placebo controlled, 12 week trial is being conducted at twelve sites across Canada. The study is evaluating the efficacy of DM-71 in patients with type 2 diabetes using standard metabolic and liver function markers including changes in glycated hemoglobin (HbA1c), triglycerides, fasting glucose and fasting insulin.

The trial was designed in collaboration with the Company's scientific advisors Dr. Alan Cherrington, Charles H. Best Professor of Diabetes Research, Vanderbilt University Medical Center, and Dr. Daniel Porte, Emeritus Professor of Medicine, University of California San Diego. Both advisors are past Presidents of the American Diabetes Association. Dr. Philip Hardin of the West Edmonton Diabetes Centre is the Principal Investigator of the trial.

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.

"Type 2 diabetes is growing to epidemic proportions and developing treatment options is a major medical priority", added Dr. Hidinger. "DM-71 has potential as a first in class therapy based on our unique understanding of the mechanism underlying the disease."

About DM-71

DM-71 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. These two molecules act synergistically to address a new target in the treatment of diabetes. As both components of DM-71 have been approved for human use, the Company has been able to advance the product directly into a phase II clinical trial.

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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