DiaMedica's DM-199 for Type 1 Diabetes Significantly Delays Autoimmune Attack and Demonstrates a Dramatic Increase in C-Peptide Levels

WINNIPEG, MANITOBA--(Marketwire - Dec. 5, 2011) - DiaMedica Inc. (TSX VENTURE:DMA) is pleased to announce new compelling Type 1 diabetes data. An in vivo study with the chronic administration of DM-199 significantly delayed the autoimmune attack, preserved beta cell mass and demonstrated a 12-fold increase in circulating C-peptide levels in the non-obese diabetic (NOD) animal model.

"The most compelling results of the study was the significant dose-dependent increase in circulating C-peptide levels, a key indicator of functional beta cells producing insulin," stated Dr. Savinov, MD, from The Sanford Project and lead investigator of the study. "Such an unprecedented increase in C-peptide levels reflects not only improved insulin secretion, but most likely points towards DM-199's ability to stabilize and preserve C-peptide in peripheral blood. These effects of DM-199 treatment can also provide potential benefit to patients suffering from diabetes complications such as diabetic neuropathy (nerve damage which can lead to loss of feeling and limb amputation), nephropathy (progressive kidney disease leading to failure and dialysis) and retinopathy (progressive loss of eyesight)."

"The primary endpoint in most Type 1 diabetes clinical trials is C-peptide levels," stated Rick Pauls, President and CEO of DiaMedica. "The fact that C-peptide levels actually exceeded the normal physiological range and achieved therapeutic concentrations used in clinical studies suggests that DM-199 is a very strong clinical candidate for the treatment of Type 1 diabetes and some of its complications. C-peptide is the primary indicator of functional beta cells producing insulin, as there is a 1:1 relationship between C-peptide and insulin production."

Additionally, the increase in C-peptide levels correlated with preserved beta cell mass, reduced insulitis (inflammation of beta cells) and increased regulatory T cell populations that suppress unwanted immune responses. Furthermore, insulin-producing beta cells in the pancreas were still functional as good glucose control was observed and DM-199 treatment was well tolerated throughout the study (18 weeks).

The results of the DM-199 Type 1 diabetes study will be presented on December 5^th 2011, at the 21st International Diabetes Federation (IDF) World Diabetes Congress (Dubai, UAE) by Dr. Alexei Savinov, MD, from The Sanford Project. The Sanford Project and DiaMedica also intend to publish the results of this study together in a peer-reviewed publication.

About DiaMedica

DiaMedica is a biopharmaceutical company, which develops novel therapeutic compounds aimed to improve the lives of patients with diabetes and other major, medically-unmet diseases. DiaMedica's lead compound, DM-199, represents a novel approach to treating Type 1 and Type 2 diabetes by demonstrating significant results against three major aspects of these diseases. Treatment with DiaMedica's monoclonal antibody, DM-204, has demonstrated significant improvement in glucose control, blood pressure and cholesterol levels in pre-clinical models of Type 2 diabetes.

The company is listed on the TSX Venture Exchange under the trading symbol 'DMA'.

About C-Peptide in Diabetes

Type 1 diabetes is characterized by the body's inability to produce pro-insulin consisting of insulin and C-peptide. C-peptide is a naturally-occurring protein that is produced along with insulin at a 1:1 ratio in the pancreas, it is the primary indicator of functioning insulin producing beta cells. Type 1 and some Type 2 diabetics have deficient levels of C-peptide, which has also been directly associated with complications such as diabetic neuropathy (nerve damage which can lead to loss of feeling and limb amputation), nephropathy (progressive kidney disease leading to failure and dialysis) and retinopathy (progressive loss of eyesight).

Caution Regarding Forward-Looking Information

The statements made in this press release that are not historical facts contain forward-looking information that involves risk and uncertainties. All statements, other than statements of historical facts, which address DiaMedica's expectations, should be considered forward-looking statements. Such statements are based on management's exercise of business judgment as well as assumptions made by and information currently available to management. When used in this document, the words "may", "will", "anticipate", "believe", "estimate", "expect", "intend" and words of similar import, are intended to identify any forward-looking statements. You should not place undue reliance on these forward-looking statements. These statements reflect a current view of future events and are subject to certain risks and uncertainties as contained in the Company's filings with Canadian securities regulatory authorities. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results could differ materially from those anticipated in these forward-looking statements. The Company undertakes no obligation, and does not intend, to update, revise or otherwise publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof, or to reflect the occurrence of any unanticipated events. Although management believes that expectations are based on reasonable assumptions, no assurance can be given that these expectations will materialize.