DiaMedica Announces Positive Final Results in Type 1 Diabetes Study

   DiaMedica Inc., (TSX VENTURE: DMA) is pleased to announce positive final results from its previously announced type 1 diabetes study.

The study was designed to observe the potential protective and/or regenerative effects on beta cells (cells from the pancreas that produce insulin) in a widely accepted type 1 diabetes animal model. DiaMedica, in consultation with Dr. Maureen Gannon at Vanderbilt University, has confirmed that DM-99 can increase new beta cells by 1,277% (p less than 0.01) when administered to diseased animals compared to untreated diseased animals. Beta cell proliferation induced by DM-99 trended to be even greater than replication in non-diseased, untreated control animals.

The increased beta cell proliferation led to physiologically important improvements in the diabetic state. Improvements included the restoration of peak levels of plasma insulin to near normal levels (p less than 0.05) with positive trends of increase in the levels of both pancreatic and plasma insulin, which led to improved blood glucose clearance in a oral glucose tolerance test with DM-99 treatment. On July 8th, DiaMedica reported initial results of the study that included a 68% reduction in fasting blood glucose (p less than 0.05) with DM-99.

"These results are very provocative and would indicate that this compound offers both a level of protection of beta cells in a type 1 diabetes animal model as well as induces their proliferation," stated Dr. Maureen Gannon, Associate professor of Medicine at Vanderbilt University, Division of Diabetes, Endocrinology and Metabolism. "Having a therapeutic compound that can either protect or proliferate beta cells is a key requirement for finding a cure for type 1 diabetes so that therapies involved in replacing or regenerating these cells can work long-term. DM-99 appears to be able to perform both of these functions."

"The ability of DM-99 to significantly increase beta cell replication combined with our earlier data showing the ability of DM-99 to protect against a variety of autoimmune attacks may result in a first in class treatment for type I diabetes", stated Mr. Rick Pauls, President and CEO of DiaMedica. "We are currently developing DM-199, a novel recombinant and humanized form of DM-99 for commercialization."

About DiaMedica

DiaMedica is a biopharmaceutical company focused on developing drugs with the potential to be broadly applicable in treating large unmet diseases including diabetes, autoimmune disorders and neurological diseases by protecting and proliferating a variety of cells. Two of DiaMedica's products have demonstrated human efficacy in lowering blood sugar levels in people diagnosed with Type 2 diabetes with an excellent safety profile. DiaMedica is listed on the TSX Venture Exchange under the trading symbol "DMA".

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.

Contacts: DiaMedica Inc. Rick Pauls 204.477.7590 204.453.3745 (FAX) [e-mail]