DiaMedica Therapeutics - Earnings Call - Q1 2025

Executive Summary

• Q1 2025 was operationally solid with clinical execution the focus: DM199 preeclampsia Part 1A topline moved to a tighter late-June/early-July window; Part 1B is expected to start in Q3 2025, and ReMEDy2 interim analysis (first 200 patients) remains targeted for 1H 2026.
• Liquidity remains adequate: cash, cash equivalents and short-term investments of $37.3M at 3/31/25 with runway into Q3 2026, while R&D stepped up as ReMEDy2 expands globally and PE progresses; G&A held steady as guided.
• EPS was in line with S&P Global consensus in Q1 (−$0.18 actual vs −$0.18 est), following a slight miss in Q4 2024 and a slight beat in Q3 2024; revenue remains $0 as a pre-commercial company (S&P Global) [GetEstimates].
• Stock catalysts over the near term are clinical: preeclampsia Part 1A topline (late June/early July), KOL event on May 28, and continued enrollment momentum updates (mid-30s sites active; high-enrolling centers at 1–2/month).

What Went Well and What Went Wrong

• What Went Well

  • Clear near-term clinical catalysts: “preliminary topline safety and efficacy results from Part 1A… anticipated between the second half of June and the first half of July,” with Part 1B targeted for Q3 2025.
  • Stroke trial momentum: management noted “participant enrollment now is between the 20th and 25th percentile mark of patients enrolled for the interim analysis,” and reiterated interim analysis on the first 200 in 1H 2026.
  • Strategic positioning in PE: “to our knowledge, DM199 is the only novel agent currently being studied in pregnant women with preeclampsia,” underscoring first-mover potential in a large unmet need.

• What Went Wrong

  • Modest schedule slippage in PE topline: guidance narrowed to late June/early July from prior Q2 language, driven by lab turnaround (placental transfer assay).
  • Elevated operating cash burn as trials scale: net cash used in ops rose to $7.1M in Q1 2025 vs $6.7M in Q1 2024, largely from higher net loss tied to R&D scaling.
  • Ongoing ReMEDy2 operational complexity: while momentum is building, management still emphasizes the need to concentrate on high-enrolling sites and shutter underperformers to keep pace.

Transcript

Operator (participant)

Good morning, ladies and gentlemen, and welcome to the DiaMedica Therapeutics First Quarter 2025 conference call. An audio recording of the webcast will be available shortly after the call today on DiaMedica's website at www.diamedica.com in the Investor Relations section. Before DiaMedica proceeds with its remarks, please note that the company will be making forward-looking statements on today's call. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in these statements. More information, including factors that could cause actual results to differ from projected results, appears in the section entitled Cautionary Note Regarding Forward-Looking Statements in the company's press release issued yesterday and under the heading Risk Factors in the company's most recent annual report on Form 10-K and most recent quarterly report Form 10-Q. DiaMedica's SEC filings are available on the SEC's website, www.sec.gov, and on its website, diamedica.com.

Please also note that any comments made on today's call speak only as of today, May 14, 2025, and may no longer be accurate at the time of any replay or transcript rereading. DiaMedica disclaims any duty to update its forward-looking statements. Following the prepared remarks, the phone lines will be open for questions. I would now like to turn you over to your host for today's call, Mr. Rick Pauls, DiaMedica's President and Chief Executive Officer. Mr. Pauls?

Rick Pauls (CEO)

Thank you, Operator. Hello, everyone, and welcome to our First Quarter 2025 conference call. I am joined this morning by Scott Kellen, our Chief Financial Officer. Dr. Lorianne Masuoka is currently on short-term medical leave, and we hope she gets well soon. We're happy to be here today to update you on the progress on our two clinical development programs. It has only been a short interval since our last update, thus I will keep my remarks brief. That said, I'm pleased to report that we continue to make substantial progress in both of our clinical development programs. I'll start with an update on our pre-eclampsia program.

Building upon the significant accomplishments of this program within a very short time frame, as we discussed in March, we're pleased to be able to disclose that we believe Part 1A of our phase 2A investigator-sponsored pre-eclampsia trial is very close to identifying a target dose to move forward within Part 1B. Dose selection will be guided primarily by a few key data points, which we expect to be sharing in our upcoming preliminary top-line results from the Part 1A proof-of-concept portion of the trial. These key data points include: one, safety and tolerability, including results of a placental transfer analysis; two, the amount of decrease in systolic and diastolic blood pressure levels; and three, changes in uterine and placental blood flow as assessed by the Doppler ultrasound measurement of the uterine artery pulsatility index.

This measure is important as reductions in the pulsatility index may suggest decreased downstream resistance and improved uterine and placental blood flow, which could also be an indication of disease modifying. Currently, we expect to be in a position to release those preliminary top-line results between the second half of June and the first half of July. The final timing will be primarily dependent on the schedules at the outside laboratories running the various tests, including the pharmacodynamic biomarkers and the assay, which will be used to determine if DM199 crosses the placental barrier. One additional update: May is Pre-eclampsia Awareness Month, and we will be sponsoring a Pre-eclampsia Key Opinion Leader call on May 28th at 8:00 A.M. Eastern. Compared to other therapeutic areas like oncology, which have advanced more rapidly in recent years, the treatment of pregnancy complications remains outdated and is not well understood.

No FDA-approved treatments exist for pre-eclampsia despite the growing burden of this disease. To our knowledge, DM199 is the only novel agent currently being studied in pregnant women with pre-eclampsia. With this KOL event, we will continue our work to educate investors, physicians, and other interested parties on pre-eclampsia as a disease and the current state of treatment. With this background, we will also discuss the design of our current phase 2 trial of DM199 in pre-eclampsia. Turning briefly to our stroke program, enrollment is moving ahead steadily, and we're pleased to announce that participant enrollment now is between the 20% and 25% mark of patients enrolled for the interim analysis. Our next enrollment update will be at the 50% mark.

We believe that our efforts over the past year to engage with sites to promote communications between the sites and to simplify study logistics have been important in driving the recent uptick in enrollment. Accordingly, we reiterated our guidance that the interim analysis on those first 200 participants will be completed in the first half of 2026. I would also note for you that we have engaged an experienced stroke neurologist to support site engagement during Lorianne's leave in order to maintain our enrollment momentum in the ReMEDy2 trial. This individual has spent over 10 years treating stroke patients at a major U.S. research center and also has five years of recent biotech drug development experience. He has been doing a tremendous job connecting with and maintaining our relationships with sites and supporting our recent enrollment momentum.

Now, I'd like to hand the call over to Scott Kellen to review this quarter's financial results.

Scott Kellen (CFO)

Thanks, Rick, and good morning, everyone. As the Operator mentioned, we announced our first quarter 2025 financial results and filed our quarterly report on Form 10-Q yesterday after the markets closed. These documents are both available on either the DiaMedica or the SEC websites. As of March 31, 2025, we reported a total combined cash and investments of $37.3 million, current liabilities of $4.7 million, and working capital of $32.8 million. This compares to a total combined cash and investments of $44.1 million, $5.4 million in current liabilities, and $39.2 million in working capital as of December 31, 2024. The decreases in combined cash and investments and in working capital were due primarily to the net cash used to fund our operations. Net cash used in operating activities for the first quarter of 2025 was $7.1 million, compared to $6.7 million for the first quarter of 2024.

The increase in cash used in operating activities resulted primarily from our increased net loss, partially offset by changes in operating assets and liabilities occurring during the current year period. We anticipate that our current cash and investments provide us a runway into Q3 of 2026. Our research and development expenses increased to $5.7 million for the three months ended March 31st, 2025, up from $3.7 million for the three months ended March 31, 2024. The increase was due primarily to cost increases resulting from the continuation of our ReMEDy2 clinical trial, including our global expansion, increased manufacturing development activity, and the expansion of our clinical team during 2024. These increases were partially offset by cost reductions related to in-use study work performed and completed in the prior year period.

We expect that our R&D expenses will moderately increase in future periods relative to our recent prior periods as we continue our ReMEDy2 trial, including the global expansion and our continued expansion of our DM199 clinical development program in pre-eclampsia. Our general and administrative expenses were $2.5 million and $2.1 million for the three months ended March 31, 2025, and 2024, respectively. This increase resulted primarily from additional non-cash share-based compensation expense recognized as a result of the approval of an extension of the post-termination exercise period for stock options held by a retiring member of our board of directors. We expect G&A expenses to remain steady in future periods as compared to recent prior periods. Our net other income was $443,000 for the three months ended March 31, 2025, compared to $597,000 for the three months ended March 31, 2024.

This decrease was driven by reduced interest income recognized during the current year period related to lower average marketable securities balances during the current year period as compared to the prior year period. With that, let me ask the Operator to open the lines for questions.

Operator (participant)

Thank you so much. Ladies and gentlemen, we will now begin our question and answer session. Should you have a question, please press star followed by one on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to remove your hand from the queue, please press star followed by two. If you're using a speakerphone, please lift the handset before pressing any keys. One moment for your first question. Your first question comes from Thomas Flaten with Lake Street. Please go ahead.

Thomas Flaten (Analyst)

Good morning. I appreciate taking the questions. Hey, Rick, just to clarify, the laboratory test results that seem to be the variable in terms of the readout between June and July, is that primarily the test for DM199 crossing the placental barrier, so in the umbilical cord, or is there something else there that we should be aware of?

Rick Pauls (CEO)

Yeah, Thomas. Yeah, absolutely. That's the main item, is going to be the placental transfer. We have an assay that we're just having finalized in terms of getting to lower limits of detection, and it's just a question of time for them to run it. We wanted to at least give a range today in terms of when we anticipate the results.

Thomas Flaten (Analyst)

Makes sense. I see you mentioned that you're expecting to start Part 1B in Q3. What are the triggers for part II and part III, so the expected management and the fetal growth restriction components of the study?

Rick Pauls (CEO)

I'll start off with the fetal growth restriction. If we see dilation of the intrauterine arteries, our investigators are prepared to move ahead with that cohort. We'll have more to talk about the part II when we daylight the results here in the coming weeks.

Thomas Flaten (Analyst)

Got it. Excellent. I appreciate you taking the questions. Thank you.

Rick Pauls (CEO)

Thanks, Thomas.

Operator (participant)

Your next question comes from Matthew Caulfield with H.C. Wainwright. Please go ahead.

Matthew Caulfield (Analyst)

Hi, good morning, guys. Thanks for taking our question. I was wondering if you could speak to the anticipated read-through or any de-risking between the initial pre-eclampsia data and how that profile could translate to AIS development and the ReMEDy2 trial. Thanks again.

Rick Pauls (CEO)

Sure. I mean, I'll start off by saying that these are definitely two very unique indications. I will add that a positive effect here in pre-eclampsia will just be another confirmation that this protein is active. I would also mention around that we've previously talked about the fact that there are two forms of this protein in Asia that are being used. There is a form of the protein isolated from human urine that today is treating close to 1 million patients per year for acute ischemic stroke. There is also a form of the protein isolated from pig pancreas in both Japan and China. We've been able to track down about 10 publications with that form of the protein to treat pre-eclampsia. I think it will just be very encouraging that we have an active protein.

What we are seeing in some of the validation and rationale for going into both of these indications is what we will call the crude forms in Asia today.

Matthew Caulfield (Analyst)

Thanks a lot. Appreciate it, guys.

Rick Pauls (CEO)

Thank you.

Operator (participant)

Your next question comes from Chase Knickerbocker with Craig-Hallum. Please go ahead.

Chase Knickerbocker (Analyst)

Good morning. Thanks for taking the questions. Rick, just on stroke, it'd be good to kind of get some incremental details on enrollment. I mean, maybe just kind of starting out with those high-volume or potential high-volume centers. Can you kind of give us an update on what percentage of kind of those high-volume accounts are now at that one to two per month that you want to see?

Rick Pauls (CEO)

I would add that as we had kind of talked on past calls, we really did think that there would be a small number of sites, in particular in the U.S., that would drive enrollment. As we're starting to build some momentum, that's clearly what we're starting to see. Some of these high-enrolling sites are seeing the one to two patients per site per month. We are working on just building momentum and then really working hard on some of those other sites to expand the relationship here to encourage. I'd say currently we are above our plan here now, and we're encouraged with the momentum that's being built.

Chase Knickerbocker (Analyst)

Maybe just an update on overall centers as well as, again, it's only been a couple of months here. Have we expanded that past 30? Then maybe on the geographic footprint of those centers, have we started to see some international enrollment come in?

Rick Pauls (CEO)

Yeah. We are currently in the mid-30s. Keeping in mind that there are sites now that are not performing that we are shutting down. We are really, again, focusing on the high-enrolling sites. We also have sites in Georgia that have been performing very well. Sorry, that is the country of Georgia.

Chase Knickerbocker (Analyst)

Yeah. Yeah. Got it. And just kind of, I guess, summing all this up, first half 2026 interim analysis, I think at least implies that enrollment rates continue to pick up. I mean, you're seeing that trajectory in recent weeks, recent months as far as that curve continuing to steepen?

Rick Pauls (CEO)

Yeah, absolutely. Even from the last earnings call, we're definitely seeing an encouraging uptick.

Chase Knickerbocker (Analyst)

Got it. That's it for me. Thanks.

Rick Pauls (CEO)

Great. Thanks, Chase.

Operator (participant)

Your next question comes from Thomas Flaten with Lake Street. Please go ahead.

Thomas Flaten (Analyst)

Yeah. Hey, thanks for taking another question. Just back to pre-eclampsia real quick. The part II and part III, those studies will be primarily based out of South Africa, or are you thinking that there's going to be a U.S. component to those which would necessitate IND filing?

Rick Pauls (CEO)

That part, part II and part III are still part of the same protocol. Our collaborators will not need to go back for regulatory clearance.

Thomas Flaten (Analyst)

At some point, will you expand the study? If so, when into the U.S.?

Rick Pauls (CEO)

We do plan in the future to expand this to the U.S. and global. We will have more to share at a later date. Right now, again, the focus is getting the Part 1A and then moving into Part 1B as well as part II and then part III, hopefully.

Thomas Flaten (Analyst)

Got it. Appreciate it. Thank you.

Rick Pauls (CEO)

Yep. Thanks, Thomas.

Operator (participant)

Thank you. There are no further questions at this time. I would like to turn the call back to Mr. Rick Pauls.

Matthew Caulfield (Analyst)

All right. In closing, we're very encouraged by our steady progress and clear momentum across both the pre-eclampsia and stroke programs. We look forward to sharing upcoming key milestones, including the top-line results from our pre-eclampsia proof-of-concept trial and the interim analysis from our stroke program. We thank our dedicated team, investigators, and importantly, our patients and their families for the continued trust and commitment. Please also mark your calendars for May 28 at 8:00 A.M. Eastern Time for our pre-eclampsia KOL event. We'll be sending out the call-in details via press release early next week. As always, we appreciate the ongoing support of our shareholders and look forward to updating you further in the months ahead. Thank you again for joining our call today. This concludes our call.

Operator (participant)

Ladies and gentlemen, you may now disconnect.