DiaMedica Therapeutics - Earnings Call - Q4 2024

Executive Summary

• DMAC reported FY 2024 results with cash, cash equivalents, and short-term investments of $44.1M and guided runway into Q3 2026, while Q4 disclosure focused on clinical milestones rather than standalone quarterly P&L figures.
• ReMEDy2 stroke trial progressed to 30 activated sites and cleared a DSMB safety review to continue without modification; however, management pushed the interim analysis timing to 1H 2026 to reflect slower-than-expected site activation/enrollment and protocol version 5.0 transitions, despite seeing an early-2025 uptick in enrollments.
• Preeclampsia Phase 2 Part 1A has completed multiple dose cohorts with no SAEs or hypotension observed; preliminary topline safety/efficacy data are expected in Q2 2025, and DM199’s large-molecule profile is not expected to cross the placental barrier—a key safety advantage.
• Strategic catalysts include inclusion of thrombolytic nonresponders and refrigerated storage (to improve site logistics/enrollment), publication of DM199’s AIS mechanism of action in Stroke, and addition of Dan O’Connor (former Ambrx CEO) to the Board.

What Went Well and What Went Wrong

What Went Well

• DSMB safety review concluded ReMEDy2 should continue “without modification,” with no significant safety concerns identified in the first 20 participants.
• Preeclampsia Part 1A: multiple dose cohorts completed; DM199 appeared well tolerated with no serious adverse events or pathological hypotension, with Q2 2025 preliminary read expected.
• Liquidity: CFO reaffirmed runway into Q3 2026 and detailed drivers of cash usage (R&D expansion and manufacturing), positioning the company to reach key clinical milestones.

What Went Wrong

• Interim analysis timing for ReMEDy2 moved to 1H 2026 as site activation/enrollment took longer than anticipated post-COVID staffing shortages, requiring higher-touch engagement; management underestimated startup time.
• R&D expenses rose to $19.1M in FY 2024 (from $13.1M), reflecting continuation/expansion of ReMEDy2 and manufacturing, increasing operating cash burn.
• Guidance cadence changed: prior Q4 2025 interim analysis expectation (and earlier Q1 2025 interim enrollment for 144 patients) was updated to later timing and a larger interim sample (200) to improve precision, delaying the inflection but intended to reduce total trial size/time.

Transcript

Operator (participant)

Good morning, ladies and gentlemen, and welcome to the DiaMedica Therapeutics Full Year 2024 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 DiaMedica's 2024 Annual Report on Form 10-K filed yesterday. 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, March 18, 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 (President and CEO)

Thank you, Operator. Hello, everyone, and welcome to our Full Year 2024 Conference Call. I'm joined this morning by Scott Kellen, our Chief Financial Officer, and Dr. Lorianne Masuoka, our Chief Medical Officer. We're happy to be here today to update you on the progress of our two main clinical development programs. Seeing that our next expected clinical milestone is for our preeclampsia study, I'll ask Lorianne to start with an update on our preeclampsia program, and then we'll turn to our stroke study.

Lorianne Masuoka (CMO)

Thanks, Rick. Starting with preeclampsia, we are very pleased with our progress in this clinical program. Less than a year ago, our collaborators submitted the first draft of the protocol to the Tygerberg Hospital's Ethics Board. Since then, we have obtained ethics approval, clearance from the South African Health Products Regulatory Authority, South Africa's equivalent of the U.S. FDA, and have begun dosing preeclamptic mothers. This marks the first study of DM199 in a pregnancy-related condition, a vulnerable setting where both the mother and fetus are considered patients. We believe these significant accomplishments within a short timeframe underscore DM199's potential as a treatment for this serious condition. All of this was made possible by the strong collaborations we've built with leading KOLs and trialists.

Our partners at the University of Melbourne and Stellenbosch University were immediately drawn to DM199 for its promising safety profile, its ability to produce nitric oxide, and its potential to lower blood pressure. Most notably, DM199 is a protein of a sufficiently large molecular size that it is not expected to cross the placental barrier, offering a key safety advantage for the developing fetus. In contrast, small molecule antihypertensives passively diffuse across the placental barrier, and some are contraindicated in pregnancy because they cause fetal harm. We have repeatedly demonstrated that DM199 can lower blood pressure in humans and believe that this supports the hypothesis that DM199 can lower blood pressure in pregnant women. Compared to other therapeutic areas like oncology, which have advanced more rapidly in recent years, the treatment of pregnancy complications remains outdated. No FDA-approved treatments exist for preeclampsia, despite the growing burden of this disease.

To our knowledge, DM199 is the only novel agent currently being dosed in pregnant women with preeclampsia. Existing blood pressure medications used in preeclampsia do not enhance nitric oxide signaling, which is critically impaired, leading to reduced blood flow to the fetus, nor do they improve preeclamptic endothelial dysfunction; they merely manage symptoms. Preeclampsia is a progressive disease, and these outdated treatments lose effectiveness or fail over time. By augmenting nitric oxide signaling, we hope that DM199 can not only lower blood pressure but also improve underlying endothelial dysfunction, offering benefits such as increased blood flow to the fetus and reduction of dangerously high blood pressure in the mother, going beyond symptom management.

For context on the limitations of existing hypertension treatments, the PRESERVE-1 study of early-onset preeclampsia in the United States found that approximately 50% of women delivered within five to six days of study enrollment due to refractory or uncontrolled hypertension despite receiving maximal intervention. On average, participants delivered before 30 weeks of gestation, exposing the baby to significant risks. This highlights the aggressive and progressive nature of preeclampsia and underscores the urgent need for therapies that can successfully manage symptoms and ultimately go beyond this to target the underlying endothelial dysfunction. At these early gestational ages, every additional day of prolonging pregnancy is crucial. Turning now to our investigator-sponsored phase two trial, we are currently dosing women in Part 1A, the dose escalation portion of the study. Each dose cohort consists of three patients. If no safety concerns arise, we proceed to the next cohort at a higher dose.

Part 1A may include up to 10 cohorts, with the lowest IV dose starting at 0.1 mcg per kg and the highest at 2.5 mcg per kg. For reference, our IV dose in the stroke program is 0.5 mcg per kg. Once a dose is identified in Part 1A that achieves clinically meaningful blood pressure reductions without causing hypotension, we will advance to Part 1B, an expansion cohort of 30 additional patients designed to confirm the optimal dose. We are pleased to report that multiple dosing cohorts in Part 1A have been completed, with DM199 appearing to be well tolerated and no serious adverse events or signs of pathological hypotension being reported. We look forward to sharing results from Part 1A, which we anticipate in the second quarter.

Turning to our stroke program, we are pleased to announce that we have activated 30 clinical sites, which we describe as our critical mass to generate a more steady stream of enrollments. Increasing overall activity levels and communications between sites is important in creating that healthy professional competition to keep our study front of mind amongst our study sites. I would also note that the bulk of these sites are operating under our latest protocol, Version 5.0. This version of the protocol, among other things, allows DM199 to be stored at refrigerated temperature and expands the eligible population to include patients not responding to thrombolytic treatment. Refrigerated storage enables the study drug to be sent with the participant when they leave the hospital, potentially simplifying the logistics of the participant receiving their subcutaneous injections for the entire three-week treatment period.

For patients who haven't improved for at least six hours after thrombolytic treatment, providing the remaining enrollment criteria are met, they may be enrolled in our trial. This change, in addition to increasing the number of potential patients for ReMEDy2, brings in a patient population that can be a good group for evaluation in our trial. In our initial stroke trial, ReMEDy1 post-hoc analysis of similar participants showed the most favorable improvement in the rate of full or nearly full recovery. The protocol also allows for enrollment of patients with occlusions of the M2 segment of the middle cerebral artery and the posterior arteries. This is a very significant change given the recent negative results of three mechanical thrombectomy of middle-sized vessel occlusion studies announced at the IST conference last month. I can share with you that sites are very positive about Version 5 of the protocol.

Building on this, our clinical and medical affairs teams continue to work on ensuring that once activated, study sites feel comfortable and well-supported to enroll participants. In particular, they need to be comfortable that any participant they enroll will be able to receive treatment through the three-week dosing period as the participant moves from the hospital to any intermediate care facility and ultimately home. Developing this comfort level requires a great deal of personal contact between our clinical team and the study sites. By the end of last year, we had a wide variety of resources available to provide any assistance the site might require and open lines of communication to ensure that the sites are aware of such options.

In complementing these efforts, our medical affairs team has been investing time meeting in person with study teams to discuss the potential benefits of DM199 and the importance of the ReMEDy2 trial. This is done in a lunch-and-learn format to maximize the number of site personnel that can hear and engage with us on the trial. The team has also been coordinating peer-to-peer calls between study coordinators so that these professionals can share directly with each other thoughts and ideas on the things that work and don't work in managing participants through the study. Members of senior management have also been visiting the sites projected to be high enrollers. As we look back on the progress we've made to date, we note that even with highly interested physician investigators, it has been and is taking significantly more time to get sites through the engagement, planning, and setup process.

We believe this is related to lower staffing levels in research units in this post-COVID world. In hindsight, our expectation that restoring support for research at study sites would have been a higher priority, but in the end, we underestimated the required startup time. As I described, we've increased our level of engagement to overcome these issues. Though we're very encouraged by the uptick in enrollments in 2025, we've updated our expectations for the interim analysis to the first half of 2026. We'll provide a further update after we hit enrollment of 25%. In other ReMEDy2-related developments, we've had a great experience at the February 2025 International Stroke Conference. This was held in Los Angeles, and our booth received considerable attention, and we hosted a reception for our current and potential study sites, which was very well attended.

At this conference, results from three studies of mechanical thrombectomy and medium vessel occlusions were announced. None of the studies reported success. These results have the potential to benefit ReMEDy2 enrollment in that these patients are candidates for our trial. The European Stroke Conference is coming up in May, and we look forward to another opportunity to build awareness of DM199 and our ReMEDy2 trial. As we announced yesterday, the scheduled safety review of the new IV dosing rates implemented upon resumption of our trial was completed in January. Our Independent Data Safety Monitoring Board conducted a comprehensive review of safety data from all then-enrolled participants, and no significant safety concerns were identified. Their conclusion was that the ReMEDy2 trial should continue without modification.

Also, in February, a paper providing an analysis of the mechanism of action of DM199 and its potential benefit for AIS patients appeared in a peer-reviewed publication entitled "Recombinant Human Tissue Kallikrein-1 for Treating Acute Ischemic Stroke and Preventing Recurrence." This publication is now available online and was published in the February 2025 issue of Stroke. This paper provides scientific insight into DM199's mechanism for increasing collateral circulation and salvaging brain tissue at risk from infarction following an AIS. I'll now turn the call back to Rick. Thanks, Lorianne. I want to take a minute to thank Mr. Dan O'Connor for recently joining our board. He's a tremendously accomplished leader in biotech, and in particular in building companies. We're grateful to have his wisdom and guidance as we move DM199 and DM199 forward and will take every opportunity to learn from his past successes.

Rick Pauls (President and CEO)

Before I turn the call over to Scott, I'd like to add that our team really believes DM199 will be an effective treatment for both stroke and preeclampsia patients. I would also like to recognize our team's hard work and accomplishments over the past year, and I look forward to continuing working with the team as we advance our clinical programs. Know that we are fully committed to moving both clinical programs forward as we have an important opportunity to provide options for patients who currently have no therapeutic treatment options today. Now, I'd like to hand the call over to Scott Kellen to review this quarter's financial results.

Scott Kellen (CFO)

Thanks, Rick. Good morning, everyone. As the operator mentioned, we announced our full year 2024 financial results and filed our annual report on Form 10-K yesterday. These documents are both available on either the DiaMedica or the SEC websites.

As of December 31, 2024, we reported a total combined cash and investments of USD 44.1 million, current liabilities of USD 5.4 million, and working capital of USD 39.2 million. This compares to a total combined cash and investments of USD 52.9 million, USD 2.8 million in current liabilities, and USD 50.9 million in working capital as of the end of December 31, 2023. The decreases in combined cash and investments and in working capital were due primarily to the cash used to fund our operations, partially offset by net proceeds received from the approximately USD 12 million private placement we completed in June of 2024. Net cash used in operating activities for the full year 2024 was USD 22.1 million, compared to USD 18.7 million for the full year 2023.

The increase in cash used in operating activities was driven by the combination of our increased net loss and the advance of deposit funds to vendors supporting our ReMEDy2 trial during 2024. These were partially offset by changes in operating assets and liabilities during 2024, particularly the increase in accrued liabilities related to our ReMEDy2 trial and ongoing manufacturing development activities as of December 31, 2024. We anticipate that our current cash and investments provide us a runway into Q3 of 2026. Turning to the income statement, our research and development expenses increased to USD 19.1 million for the year ended December 31, 2024, up from USD 13.1 million in the prior year. This increase resulted primarily from cost increases driven by the continuation of the ReMEDy2 clinical trial, the expansion of the clinical team, and increased manufacturing and development activity.

Partially offsetting these increases were cost reductions related to the completion of prior clinical and non-clinical trial work in 2023. We expect that R&D expenses will increase moderately relative to recent prior periods as the company expands ReMEDy2 globally and continues our site activation enrollment activities, and as we continue to pursue our DM199 clinical development program into preeclampsia. Our general and administrative expenses were USD 7.6 million for the full year of 2024, down from USD 8.2 million for the full year 2023. This decrease was driven primarily by the combination of decreased legal fees incurred in connection with our lawsuit against PRA Netherlands and reductions in directors and officers' liability insurance premiums. These decreases were partially offset by increased personnel costs associated with expanding our team and increased non-cash share-based compensation costs. DiaMedica expects G&A expenses to remain steady compared to prior periods.

Our net other income for the full year of 2024 was USD 2.3 million, compared to USD 1.9 million for 2023. This increase was driven by our higher level of interest income being recognized related to higher average marketable security balances during 2024 as compared to the prior year. With that, let me ask the operator to open the lines for questions.

Operator (participant)

Thank you so much, ladies and gentlemen. We'll now begin the 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 yourself from the question and answer session, please press star followed by two. If you're using a speakerphone, please lift the handset before pressing any keys. Just a moment for your first question. Your first question comes from Thomas Flaten with Lake Street.

Please go ahead.

Thomas Flaten (Stock Analyst)

Good morning. I appreciate you taking the questions. Lorianne, a couple for you on ReMEDy2. Of the 30 sites that are activated, how many of those are the 15 top sites that you've previously identified, and how many of the 30 are actively enrolling versus being activated?

Lorianne Masuoka (CMO)

Of the 30 sites that we've identified and activated, the top 15 comprise about 13 or so. The vast majority of the top 15 are activated, and many of them are currently enrolling.

Thomas Flaten (Stock Analyst)

Got it. With respect to the DSMB review that you said, I believe you said was completed in January, how much data did they have on those patients? Was it just from the very acute phase, or did they have a full treatment period to review for safety?

Lorianne Masuoka (CMO)

They had the entire database, which means that all of the data that had been entered for those patients were available to the DSMB. What we do is we establish a cutoff date, and then after that cutoff date, we look at all of the data for that patient. It is their entire experience that they have gone through up until that cutoff date.

Thomas Flaten (Stock Analyst)

Understood. Excellent. Thank you for taking the questions. I'll get back into queue.

Operator (participant)

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

Chase Knickerbocker (Senior Research Analyst)

Good morning. Thanks for taking the questions. Sorry if I make you repeat some details here, but maybe just help us out with a couple of the assumptions to kind of get us to a first half 2026 interim assessment.

Just maybe relative to kind of the last kind of updates we received, I mean, what are your expectations around enrollment rates? And as we look at these 30 centers, I mean, what is kind of your ultimate expectation for trial sites activated? Thanks.

Lorianne Masuoka (CMO)

Start there. So we have—

Scott Kellen (CFO)

Go ahead, Lorianne.

Lorianne Masuoka (CMO)

We have 30 sites that are currently active in the United States, but please remember that we are going to also—that we also have five centers that are very active in Georgia. We are going to be opening sites in Canada in the next few weeks, and we are also going to be moving into Australia and into Europe. We will have more than 30 sites. What we anticipate from the interim analysis is the opportunity.

The reason why we increased our sample size from 144 to 200 was the opportunity to decrease the sample size that is needed overall. For example, originally, we were looking at a 14% improvement over placebo and with a 364-patient population. With the 200 interim analysis, we have the possibility if we see that same efficacy rate of having only 300 patients. We anticipate that the interim analysis, although delayed as compared to the original interim analysis, in large part due to increasing the sample size for the interim analysis, could overall save us time and money by reducing the sample size.

Chase Knickerbocker (Senior Research Analyst)

On the overall number of sites, how high do you expect to go at this point?

On the kind of enrollment rate, can you just kind of help us how we should think about it with kind of existing sites and your experience kind of ramping these up now as far as what gets us to that first half 2026 interim?

Lorianne Masuoka (CMO)

Yeah. We are anticipating doubling the number of sites that we are going to be having enrolling. We currently are targeting sites that can enroll about one to two patients per month.

Chase Knickerbocker (Senior Research Analyst)

Of the sites that we've enrolled so far, what number of those are at that rate of one to two per month at this point? Is there an idea of how long it takes at this point to get them to that rate?

Lorianne Masuoka (CMO)

It generally takes about six to 12 months to get a site up and running. Once they're up and running, it takes several weeks for them to start activating and enrolling because they need to get everything ready for enrollment into the trial. We're not, at the moment, disclosing how many of those sites are enrolling, how many patients. We'll give you a fuller picture when we hit 25% enrollment.

Chase Knickerbocker (Senior Research Analyst)

Great. Thank you.

Operator (participant)

Thank you so much. Your next question comes from François Brisebois with Oppenheimer. Please go ahead.

Daniel Goggin (Executive Director of Investments)

Hi, this is Daniel, for Frank. Thanks for taking our questions. Since the amendments that were disclosed last time, particularly with regard to the tPA non-responders, are you starting to see an improvement in the enrollment rate in this particular subpopulation among the activated sites? Yeah. I have one follow-up.

Scott Kellen (CFO)

Sure, Dan. Yeah.

Since the beginning of the year, we have seen a very encouraging increase in terms of enrollment. It's still not kind of where we wanted to be at, but definitely a significant increase that has been driven in part with this protocol amendment where we are including patients that receive tPA that do not respond, M2 patients. Keep in mind that for the protocol version five, most of the activation of that protocol occurred at the end of 2024 and then coming into early into the new year.

Daniel Goggin (Executive Director of Investments)

Thank you. Just in regard to the recent ISC conference that you highlighted, could you give us some more color on the KOL's feedback on DM199 in light of the other studies that were reported there at the conference?

Scott Kellen (CFO)

Sure.

I mean, as Lorianne mentioned in the prepared remarks, the big takeaway was that there was a lot of excitement before the conference on mechanical thrombectomy for these MeVO study patients. So these are medium vessels, typically the M2s. And most of the physicians had thought that those studies would be very positive and would have potentially had a negative impact in terms of our trial and our patient population. The fact that three of those studies failed, one of them actually showed some safety concerns, was very encouraging for our sites, our scientific advisory board. Beyond that, there really wasn't anything exciting at the conference. That was really the big takeaway. Because of this, I think there were a number of other trials that now we've heard are not moving ahead that the mechanical thrombectomy for MeVO.

From an academic research perspective, I think that's going to be very positive for additional capacity for sites to be able to enroll a trial like ours, both those sites that are currently activated and those sites that are coming on board for our trial.

Daniel Goggin (Executive Director of Investments)

Great. Thanks for taking our questions.

Operator (participant)

Thank you so much. Your next question comes from Matthew Caufield with H.C. Wainwright. Please go ahead.

Matthew Caufield (VP of Equity Research)

Hi. Good morning, guys. Thanks for the updates. For the preliminary top line in preeclampsia expected in the second quarter, is there a meaningful threshold for impacting maternal blood pressure that would offer the best read-through or de-risking for heading in?

Lorianne Masuoka (CMO)

Yeah. What we're looking for is about a—what we're looking for is about a 10-20 drop in systolic pressure. We want to get systolic pressure down to about 140 so that they're safely in a good range.

We are also anticipating that on the safety side, there will not be any evidence that DM199 passes the placental barrier. We are also looking at dilation of the intrauterine arteries using Doppler measurements to measure something called pulsatility index, which assesses resistance to blood flow in the uterine arteries. We are looking for a lower pulsatility index, which suggests that there is lower resistance and better placental perfusion. Those are the three things that we are going to be looking at primarily in the phase 1A trial. If we see positive signals in those three areas, that is a huge signal for us to move forward.

Matthew Caufield (VP of Equity Research)

Great. Very helpful. I appreciate that. Just one final question from us. For ReMEDy2, with the inclusion of the thrombolytic non-responders, has the amended statistical analysis plan been finalized with the FDA at this stage? Thanks again.

Lorianne Masuoka (CMO)

Yes, it has.

Matthew Caufield (VP of Equity Research)

Okay.

Great. Thank you, guys.

Operator (participant)

Thank you so much. There are no further questions at this time. I would like to hand the call back over to Rick Pauls for closing remarks.

Rick Pauls (President and CEO)

Thank you, Marissa. We would like to thank everyone for joining us this morning and for your continued support. We are particularly excited about the momentum that we are building in both our stroke and preeclampsia programs. As we advance DM199, a potentially transformative therapy for patients who do not have a treatment option today, the dedication of our team combined with your support positions us strongly for very meaningful progress in 2025. We look forward to sharing updates with you soon. Thank you again. With this, this concludes our call.

Operator (participant)

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.