DiaMedica Therapeutics - Earnings Call - Q3 2025

Executive Summary

• Q3 2025 delivered continued clinical progress in preeclampsia and fetal growth restriction while acute ischemic stroke (AIS) timelines were pushed out; net loss widened to $8.6M and diluted EPS was ($0.17), modestly missing consensus by $0.01. The company ended Q3 with $55.3M in cash and investments and reiterated runway into 2H 2027.
• Preeclampsia: Part 1a Cohort 10 completed; expansion cohort (up to 12 patients) initiated; in-person pre-IND meeting with FDA held; U.S. Phase 2 expected to focus on early-onset patients under expectant management.
• AIS ReMEDy2: Enrollment nearing 50% of the interim target (200 patients), but management updated interim analysis timing to 2H 2026 due to lower-than-expected enrollment rates stemming from changes in stroke referral patterns (Viz.ai, teleneurology) — a key narrative risk for timelines.
• Capital: July private placement ($30.1M gross) strengthened balance sheet; cash and short-term investments rose from $30.0M at Q2 to $55.3M at Q3, supporting clinical execution into 2H 2027.
• Near-term stock reaction catalyst: Additional details from FDA pre-IND minutes and pace of AIS site activation/enrollment; medium-term catalysts include U.S. Phase 2 PE trial initiation and progressing the South Africa IST expansion cohort.

What Went Well and What Went Wrong

What Went Well

• Cohort 10 completion and initiation of a 12-patient expansion at the expected therapeutic dose level in PE IST; management emphasized consistent, immediate BP reductions and mechanistic signals (uterine artery PI) supportive of disease modification.
• U.S. pre-IND meeting held; management characterized it as productive and expects to update after minutes; U.S. Phase 2 to target early-onset PE under expectant management, the highest unmet-need segment.
• Strengthened liquidity: Q3 cash and short-term investments reached $55.3M, up from $30.0M in Q2, aided by July financing; runway guided into second half of 2027.

Management quote: “We believe that these interim results demonstrate that DM199 has the potential to be a first in class disease modifying treatment option for preeclampsia,” with confirmation DM199 did not cross the placental barrier.

What Went Wrong

• AIS ReMEDy2 interim analysis timing revised to 2H 2026 from Q2 2026 guidance due to slower enrollment tied to referral pattern changes (Viz.ai, teleneurology), reducing eligible patients at comprehensive centers.
• Operating loss widened to $9.0M and net loss to $8.6M; R&D and G&A increased on clinical progress, global expansion and team build, partially offset by prior-year manufacturing development completion.
• Modest EPS miss vs consensus by $0.01 highlights continuing opex intensity without revenue contribution; increases in non-cash share-based comp and professional fees contributed to G&A growth.

Transcript

Operator (participant)

Good morning ladies and gentlemen and welcome to the DiaMedica Therapeutics Q3 2025 Earnings Conference Call. An audio recording of this webcast will be available shortly after the call today on DiaMedica's website at www.diamedica.com in the Investor Relations section. After our speakers' remarks, there will be a question and answer session. If you would like to ask a question during this time, please press star one on your telephone keypad. Before the company 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, appear in the section entitled Cautionary Statement Note Regarding Forward-Looking Statements in the company's press release issued yesterday and under the heading Risk Factors in DiaMedica's most recent Annual Report on Form 10-K and most recent Quarterly Report on Form 10-Q. DiaMedica's SEC filings are available at www.sec.gov and on its website. Please also note that any comments made on today's call speak only as of today, November 13th, 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, we will open the phone lines for questions. I would now like to introduce your host for today's call, Rick Pauls, DiaMedica's President and Chief Executive Officer. Mr. Pauls, you may begin.

Rick Pauls (President and CEO)

Thank you all for joining us for our Q3 2025 earnings call. I am joined this morning by Dr. Julie Krop, our Chief Medical Officer, and Scott Kellen, our Chief Financial Officer. We've continued to make meaningful progress across both our clinical programs since Q2 and I'm pleased to share our recent developments and upcoming milestones with you today. As most of you know, DM199 is our lead product. Candidate is a recombinant form of the naturally occurring human tissue KLK1 protein. KLK1 enhances blood flow and vascular health by increasing levels of three key endothelium-derived vasodilating factors through activation of the bradykinin pathway. These are nitric oxide, prostacyclin, and endothelium-derived hyperpolarizing factor. We believe that this mechanism is why DM199 is well suited to improve patient outcomes for preeclampsia, fetal growth restriction, and acute ischemic stroke indications associated with vascular pathology.

Starting with the preeclampsia program, meaningful progress has been made since we announced the positive interim results in July from part 1-A of our investigator-sponsored phase II trial being conducted in South Africa. We believe that these interim results validate the biological activity of DM199 and provide a strong basis for the expansion of this clinical study into the early onset preeclampsia and fetal growth restriction cohorts. Additionally, this data, which include the confirmation that DM199 did not cross the placental barrier, places DM199 in a unique position with respect to safety and reduced risk in this very vulnerable patient population. We're grateful for Professor Cluver and her team as their work helped us tremendously as we prepare for our planned upcoming. Just to briefly review the interim results, part 1-A of this study was conducted in pregnant women with preeclampsia planned for delivery within 72 hours.

We continue to believe that these interim results demonstrate that DM199 has the potential to be a first in class disease modifying treatment option for preeclampsia. We based our assessment on three key factors. First, blood pressure data from cohort 6 through 9 demonstrated clear dose dependent and statistically significant reductions in both systolic and diastolic blood pressure, signaling DM199's potential to control maternal hypertension associated with preeclampsia. I would point out the importance of this given the results of one of the more recent preeclampsia trials, the PRESERVE-1 antithrombin study in which approximately half of deliveries were initiated due to out of control hypertension, suggesting that better control of blood pressure could have prolonged pregnancies in these patients.

Two, improved placental perfusion. In part 1-A of our recent phase II results, DM199 treatment produced a statistically significant reduction in the uterine artery pulsatility index, a doppler-based assessment of arterial resistance suggesting improved uterine artery blood flow and enhanced placental perfusion, and three, we believe that these improvements were driven by improving endothelial function believed to be an on target mechanistic response to DM199 therapy. By improving or restoring endothelial function, DM199 has the potential to reverse vascular injury caused by preeclampsia. Having the potential to control hypertension, improve endothelial dysfunction, and improve placental perfusion supports our belief in the potential for DM199 to be a first in class disease modifying therapy for this life threatening condition which has no available treatment options.

During the third quarter, Professor Cluver advanced and completed Cohort 10 of part 1-A, which dosed participants at 2.5 micrograms per kg IV and 15 micrograms per kg subcutaneously and further initiated dosing in expansion cohorts of up to 12 additional patients at the expected therapeutic dose level. We anticipate completion of this expansion cohort in the first half of 2026. For parts 1-B and 2, protocol amendments are being implemented based on clinical learnings from part 1-A to refine the treatment regimen. Part 1-B includes patients who will be delivering within 72 hours. Part 2 will enroll women with early onset preeclampsia who are candidates for expectant management or prolongation of pregnancy. Part 3, the fetal growth restriction cohort, includes participants with fetal growth restriction but who do not have preeclampsia. We anticipate screening to start in the coming weeks.

We're also preparing to conduct a phase II preeclampsia trial in the U.S. We completed an in person pre-IND meeting with the FDA where we believe we've had a productive meeting and we look forward to providing an update. After receiving the final meeting minutes, we anticipate the upcoming U.S. phase II trial will be conducted in early onset preeclampsia patients. This treatment for this group is referred to as expectant management, which is the preeclampsia patient population with the greatest unmet medical need. Turning to our stroke program, let me ask Julie to provide an update.

Julie Krop (Chief Medical Officer)

Thanks Rick and good morning everyone. We continue to make steady progress in operationalizing our phase II-B/III ReMEDy2 stroke trial. As the trial has progressed, it's become clear that current enrollment rates are lower than what we initially projected based on historical enrollment data. We believe this is primarily due to changes in stroke referral patterns driven by the adoption of technologies such as Viz.ai and increases in the use of teleneurology. When patients present to smaller community hospitals and are not eligible for mechanical thrombectomy, they are currently more likely than in the past to remain at those hospitals rather than get transferred to the larger comprehensive stroke centers that typically serve as our research sites. As a result, our participating centers are now seeing fewer of our target patient population than they did five or more years ago.

The team continues to develop and implement strategies to offset these challenges and support our clinical sites. Based on this information, we recently updated our ReMEDy2 enrollment forecast using actual enrollment rates from our current clinical trial sites in lieu of the historical rates we originally used. That said, there remains a lot of enthusiasm among the investigators who are highly motivated to find additional treatment options for this high unmet medical need. We continue to make steady progress with enrollment and as of today are approaching 50% of our enrollment target for our interim futility analysis that includes a sample size re-estimation. We now expect the interim analysis based on the first 200 patients to be completed in the second half of 2026.

As a reminder, after reviewing safety data from the first 50 participants in the study, the Independent Data Safety Monitoring Board reported no safety concerns and unanimously recommended that enrollment continue without modification.

Rick Pauls (President and CEO)

Thanks Julie. I would like to now ask Scott. To review the financial results for the quarter.

Scott Kellen (CFO)

Thanks Rick and good morning everyone. As of September 30th, 2025, our cash, cash equivalents, and short term investments were $55.3 million. This compared to $30 million as of June 30th, 2025, and $44.1 million as of our prior year end. Our current cash includes the net proceeds from our July private placement. We feel confident that our current cash position will fund our planned clinical studies and corporate operations into the second half of 2027. We used $21.3 million of net cash in operating activities for the nine months ended September 30th, 2025, compared to $15.6 million for the same period in 2024. This increase is primarily a result of the increase in net loss in the first nine months of 2025 compared to the prior year period, partially offset by changes in operating assets and liabilities during the current year period.

Our R&D expenses were $6.4 million and $17.9 million for the three and nine month periods ending September 30th, 2025. This was an increase from $5 million and $12.6 million for the same time periods in the prior year. Both increases were due primarily to cost increases resulting from the continued progress of the ReMEDy2 clinical trial and including its global expansion progress with the phase II investigator sponsored trial in preeclampsia and the expansion of our clinical team during the current and prior year periods. These increases were partially offset by cost reductions related to manufacturing process development work performed and completed in the prior year periods. Our general and administrative expenses were $2.6 million and $7.3 million for the three and nine month periods ending September 30th, 2025. These expenses increased compared to the same time periods in 2024, which were $1.9 million and $5.7 million respectively.

The increases in both periods resulted primarily from increased non-cash share-based compensation and increased personnel costs incurred in conjunction with expanding our team. Increases in investor relations, patent and professional fees also contributed in both periods. Overall, our net losses were $8.6 million and $24.0 million for the three and nine month periods ending September 30th, 2025. These are higher than the $6.3 million and $16.5 million reported during the same periods in 2024. Now let me turn the call back over to Rick.

Rick Pauls (President and CEO)

Thank you, Scott. We'd like to now open the call for questions. Operator, if you could please introduce the first analyst.

Operator (participant)

Thank you. Your first question comes from Stacy Ku with TD Cowen. Your line is open.

Stacy Ku (Biotechnology Equity Research)

Hey, good morning. Thanks so much for taking your questions and congrats on the progress. First, as you go, a little bigger picture maybe as we await the minutes from the pre-IND FDA meeting, can you talk about the work that you all are doing with the preeclampsia KOL community and clinical trialists to increase awareness of what you've seen so far with the DM199 proof of concept, specifically when it comes to U.S. clinical development, maybe also talk about the key factors you're considering right now for trial sites. That's the first question. The second, as it relates to the protocol amendments, maybe can you go into a little bit more detail what you all are thinking, maybe talk a little bit more about the doses and outcomes that you all are seeing so far. Just help us understand that piece. Thank you so much.

Rick Pauls (President and CEO)

Sure. Great, Stacy. Starting off with the KOLs, we've been doing quite extensive reach out with the KOLs, really across the U.S. and also basically globally for that matter. The feedback that we've been getting has been very encouraging. There hasn't been a drug in development for preeclampsia for a number of years. I think first off the feedback we're getting is the fact that the drug is not crossing the placental barrier is just a very critical safety profile. Just seeing those very encouraging and immediate drops in blood pressure and the fact that we're seeing that very consistently amongst pretty much every patient. I think the upside is it's also encouraging, but still early, is the signals of dilation of the intrauterine arteries.

If this can consist into later stage studies, we think this is a clear sign of being disease modifying with regards to the protocol changes that we're looking at. First, for the part 1-B, what we're looking at doing is IV only and IV until delivery, with the ability of the physicians to adjust the dosing as needed. Almost being able to dial in the blood pressure to where it needs to be ahead of delivery. For the part 2, we're still working on some adjustments on that. Right now we're looking at likely using Cohort 10 from the recently completed part 1-A of the study. In part, in Cohort 10, we see very consistent and very clear drops in blood pressure as we've seen from Cohort 6 to 9.

Stacy Ku (Biotechnology Equity Research)

Understood. Thank you so much.

Rick Pauls (President and CEO)

Thanks, Stacy.

Operator (participant)

The next question comes from Thomas Flaten with Lake Street Capital Markets. Your line is open.

Thomas Flaten (Senior Research Analyst)

Hey, good morning.Thanks for taking the questions. Just a follow up, Rick, on the part 1-B, you kind of wedged in this 12 patient expansion cohort from part 1-A. Was that intended to kind of supplement what you had originally intended to do with part 1-B where you were going to do basically a dose expansion cohort? I'm trying to understand the purpose of that 12 patient cohort given the changes you're contemplating for part 1-B.

Rick Pauls (President and CEO)

Yeah, that's exactly it. This cohort expansion we've done is at cohort 10. That's the highest dose we've gone to. I'd call this kind of additional work that would really replace what was previously planned for the part 1-B. The part 1-B now will be IV only.

Thomas Flaten (Senior Research Analyst)

Got it. As you ramp up towards a phase II study here in the U.S., what is the trigger? What data are you waiting for from Professor Cluver before you actually initiate the study here in the U.S.? Is there anything in particular you're waiting for?

Rick Pauls (President and CEO)

No. We've been analyzing the data that we've received up to date. We'll be continuing to dosing more patients before that study gets initiated. You know, not just the, you know, the efficacy and the safety data, but, you know, the PK data is also very important that we've been analyzing as well. We feel we have the data that we need to proceed. Of course, if, you know, we get any additional data along the way that could further help us to refine that protocol as needed. Right now, the plan is for that phase II would be up to approximately 30 participants for the U.S. study.

Thomas Flaten (Senior Research Analyst)

Excellent. Thanks, Rick.

Rick Pauls (President and CEO)

Thanks, Thomas.

Operator (participant)

The next question comes from Chase Knickerbocker with Craig-Hallum. Your line is open.

Chase Knickerbocker (Senior Equity Research Analyst)

Good morning. Thanks for the questions. Maybe just first, Rick, any more specifics you'd be willing to give on what you saw in Cohort 10 that kind of led to those additional 12 patients? And then that, you know, comment on, you know, potentially that being the dose we're going to take into part 2. Just any additional detail you'd be willing to give on what you've seen in the patients you've dosed in that cohort so far?

Rick Pauls (President and CEO)

Yeah, I mean, I think what we're seeing, Chase, is just very clear and immediate drop in blood pressure. You know, some of these patients in cohort 10 and even, you know, in those that are, you know, in the six to nine, you know, these patients are all resistant to hypertension. They've been on maximum tolerable alpha beta blockers, calcium channel blockers, and they're refractory. They're not seeing any improvement. Some of these patients are coming in, they're on short acting IV labetalol, and there's no change in blood pressure. Frankly, within minutes of getting DM199, blood pressure is coming down very, very rapidly. We're just really encouraged that pretty much every patient is seeing an immediate reduction in blood pressure. It just gives us a lot of hope and excitement for this, for this treatment.

Chase Knickerbocker (Senior Equity Research Analyst)

You have seen an incremental dose response in that 10th cohort and then just second on stroke. If I can, I mean, can you just maybe walk us through, Rick, kind of what your expectations for enrollment rate was and kind of where it sits today, and then if you could give us an update, kind of where, you know, the site activation situation sits, including kind of OUS.

Rick Pauls (President and CEO)

Yeah. As Julie had mentioned in the prepared remarks, you know, the historical stroke enrollment rates were, you know, we were looking at around 0.25 that we had previously using, and we're seeing a little less than this. And so we wanted to provide an update here, revising the guidance. We currently have a little over 35 sites activated. We've got a number that are coming on board. We recently had regulatory clearance in the U.K. We believe we've got Europe coming on board as well here soon. And so I think it's important for us here now that, you know, in the past, instead of looking at historical rates, we're using specific rates that we're seeing at our current sites. So that gives us a little more comfort here in terms of the revised forecast today.

Chase Knickerbocker (Senior Equity Research Analyst)

What is the enrollment rate rec that you're assuming to get to the second half target at this point?

Rick Pauls (President and CEO)

We're not providing that at this point in time, Chase.

Chase Knickerbocker (Senior Equity Research Analyst)

Okay, thank you for the questions.

Rick Pauls (President and CEO)

Yep, thanks, Chase.

Operator (participant)

The next question comes from Matthew Caufield with H.C. Wainwright. Your line is open.

Matthew Caufield (Director and Senior Biotechnology Equity Research Analyst)

Hi. Thank you. Good morning, Rick and team. As the progress is made towards the AIS interim analysis for reaching those target 200 patients regarding the Modified Rankin Scale score, what would reflect a meaningful change there in your view at the time of the interim analysis? Thanks a lot.

Rick Pauls (President and CEO)

Sure. We had initially done the powering and really following what we saw in phase II. In our phase II trial, in the patients not pretreated with mechanical thrombectomy, there was a 15% absolute improvement in the MRS score of 0 to 1. We also had made an adjustment to the protocol excluding those with severe severity stroke patients when they come in. When we exclude those patients, we saw a 19%. How the study is currently powered is that if we see around that 15%, we'd be looking at 300-350 patients for the final sample size.

Matthew Caufield (Director and Senior Biotechnology Equity Research Analyst)

Understood. Thank you. Appreciate it.

Operator (participant)

This concludes the question and answer session. I'll turn the call to Rick for closing remarks.

Rick Pauls (President and CEO)

Great. Thank you all for joining us today. We greatly appreciate your interest in DiaMedica and hope you enjoy the rest of the day. This concludes our call. Thank you.

Operator (participant)

This concludes today's conference call. Thank you for joining. You may now disconnect.