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"The proposed transaction will allow DiaMedica to focus on the development of the DM-199 recombinant protein program for diabetes while expanding into the neurological diseases such as Alzheimer's and Huntington's. We expect that, following the acquisition, DiaMedica will have access to broader financing markets, a strong corporate image to raise capital, and increased business development opportunities" concluded Mr. Pauls.

Pursuant to the letter of intent, entered into with Sanomune and CentreStone Ventures Limited Partnership ("CentreStone"), Sanomune's principal shareholder, DiaMedica is proposing to acquire all of the issued and outstanding shares of Sanomune from Sanomune shareholders in exchange for approximately 12.8 million common shares of DiaMedica, representing 40% of the shares of DiaMedica post acquisition. Completion of the acquisition is subject to certain conditions, including receipt of necessary exchange and regulatory approvals, DiaMedica board and shareholder approval (including any required minority approval), completion of satisfactory due diligence and completion of definitive legal documentation with all Sanomune shareholders, among others. There can be no assurance that all of these conditions will be satisfied. As CentreStone is a "control person" of both DiaMedica and Sanomune, currently holding approximately 22% of the issued and outstanding common shares of DiaMedica and 59% of the issued and outstanding shares of Sanomune, the acquisition will be considered a "related party transaction", and will also be subject to certain requirements of Multilateral Instrument 61-101 ("MI 61-101"). Among these will be the requirement to obtain DiaMedica minority shareholder approval. Post-acquisition, CentreStone is expected to hold approximately 11.8 million (36.8%) shares of DiaMedica. Pursuant to MI 61-101, each of Genesesys Venture Inc., a promoter and Eric Johnstone DiaMedica's Vice President, Finance will be considered "related parties" for the purpose of the proposed transaction.

Bloom Burton & Co. acted as the advisor on the proposed transaction.

Source: DiaMedica Inc.