DMAC - NASDAQ

Good morning, ladies and gentlemen, and welcome to the DiaMedica Therapeutics Q2 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. 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 appears 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, August 13, 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 you for your host for today's call, Rick Pauls, DiaMedica's President and Chief Executive Officer. Mr. Pauls, you may begin.

Thank you all for joining us for our Q2 2025 earnings call I am joined this morning by Scott Kellen, our Chief Financial Officer; and our new Chief Medical Officer, Dr. Julie Krop. We truly have made significant progress since Q1, and I'm happy to be able to share that with you today. Starting with our preeclampsia program. In July, we announced very positive interim results from Part 1a, the ascending dose portion of our investigator-sponsored Phase II trial of DM199 for the treatment of preeclampsia. As a reminder, DM199 is our lead candidate and the recombinant form of the KLK1 protein, which enhances blood flow and vascular health by increasing levels of 3 key endothelial-derived basal diluting factors through the bradykinin pathway. These are nitric oxide, prostacyclin and endothelial-derived hyperpolarizing factor. Preeclampsia is an ischemic condition that affects millions of women worldwide and has no approved treatments and really no viable therapeutic options to target the underlying vascular dysfunction. We held a key opinion leader webinar back in May on the unmet need in preeclampsia and on the potential of DM199 in this indication with professors Baha Sibai, Stephen Tang and Susan Walker, A recording of this webinar is available on DiaMedica website in the Investor Relations section. Based on the interim results from the Part 1a of our Phase II study, we believe that DM199 has the potential to be the first-in-class disease-modifying treatment for preeclampsia. In dosing cohort 6 to 9 of the study, DM199 demonstrated highly statistically significant and clinically meaningful reductions in both systolic and diastolic blood pressure, highlighting its potential efficacy in managing maternal hypertension associated with the disease. DM199 was also found to be safe and generally well tolerated with no evidence of placental transfer at any of the dose levels. a key safety indicator in the development of a treatment for pregnant women. Additionally, treatment with DM199 led to a statistically significant reduction in the uterine artery pulsatility index, suggesting improved uterine artery blood flow and enhanced placental perfusion. Improved perfusion may be a key in reducing placental hypoxia, supporting the potential for DM199 to be a disease- modifying treatment, as well as a treatment for fetal growth restriction. Based on the interim results and recent analysis of the pharmacokinetics, a decision was made to advance to and enroll cohort 10 in Part Ia of the ongoing Phase II trial. From there, we plan to finalize a dosing regimen for the Part 1b as well as for the Part 2 preeclampsia expected management and the Part III fetal growth restriction cohorts, all of which can be enrolled concurrently. For clarity, the remaining parts of the investigator- sponsored preeclampsia trial include Part 1b, an expansion cohort of 30 preeclampsia patients, where the decision has been made to deliver within the next 72 hours, a patient population similar to those dosed in the Part 1a. Part 2, a cohort of 30 patients evaluating DM199 in early onset preeclampsia. In this cohort, patients will start receiving DM199 at first diagnosis with intent to dose DM199 until delivery and demonstrate extension of gestational days along with other key clinical and safety end points. Part 3, a cohort of 30 patients who are experiencing fetal growth restriction or FTR. FTR is a condition in which the fetus is not growing as expected, due to lack of blood flow, oxygen and critical nutrients. The expansion to this indication, which is related to Preeclampsia, is based on our recently announced interim results in which we measure a statistically significant reduction in the pulsatility index, suggesting improved dilation of intrauterine arteries and placental perfusion. In addition, we are now preparing to conduct a Phase IIb pre-game trial in the United States and other countries and are currently preparing our FDA IND application. We look forward to sharing upcoming updates on these cohorts and the new preeclampsia trial. Additional details of the interim Phase II Part 1a results, including a replay of the investor call discussion of the results are available on our website under the Investor Relations tab and can be found in our July 17 results press release. Following the announcement of the positive interim results from Part 1a of the preeclampsia last month, we completed a [ 30 ] million private placement of common shares, which extends our cash runway into the second half of 2027. We intend to use this capital to also fund the new Phase IIb study of DM199 in the United States and other countries for the continued development of our ongoing stroke and preeclampsia programs. Turning to our stroke program. We had a poster presented at this year's 11th European Stroke Organization Conference held in May in Finland. The poster was presented by Dr. J. Volpi from Houston Methodist and cover the safety and clinically relevant outcomes from a ReMEDy1 Phase II clinical trial evaluating DM199 in patients with acute ischemic stroke and pretreated with TPA. We'd like to remind people that in patients pretreated with TPA, DM199 demonstrated a significant improvement in full recoveries when compared to placebo. Turning to our current ReMEDy2 stroke trial. We continue to make progress as enrollment continues, and we expect the interim analysis of the first 200 patients to be completed in Q2 2026. I wanted to take a moment to clarify our communication practices for ReMEDy2 enrollment milestones. We will provide updates during our quarterly conference calls when we have achieved 50% and 75% and of the interim enrollment sample size and press release when we enroll our 200th patient. At present, enrollment is now tracking well above the 25th percent milestone and steadily advancing towards the halfway mark. I would also note that we completed the Data System Monitoring Board or DSMB meeting to review the safety profile required after the first 50 ReMEDy2 participants. The meeting is positive, meaning no safety concerns and at the conclusion of the meeting, the DSMB unanimously concluded that ReMEDy1 enrollment should continue. In other developments, DiaMedica was added to the U.S. small-cap Russell 2000 and the Russell 3000 indexes, enhancing our visibility among the broader investment community, including institutional investors. Finally, Dr. Julie Krop joined our team as Chief Medical Officer this month. She has extensive experience in the biopharma industry working with both clinical and commercial stage organizations and was also previously involved in the development of an orphan drug candidate for the treatment of severe preeclampsia. Dr. Krop adds invaluable experience to our team as we invent DM199 to address the significant unmet needs for both of our key programs. I would now like to ask Scott Kellen, our Chief Financial Officer, to review the financial results for the quarter.

Thank you, Rick, and good morning, everyone. As of June 30, 2025, our cash, cash equivalents and short-term investments were $30 million. compared to $44.1 million as of December 31, 2024. However, including net proceeds from the July private placement, our pro forma cash position is approximately $60 million. As Rick mentioned previously, we feel confident about our current cash position and anticipate that it will fund our planned clinical studies incorporate operations into the second half of 2027. We used $14.7 million of cash in net operating activities for the 6 months ended June 30, 2025, compared to $11.2 million for the same period in 2024. This increase is primarily a result of the increased net loss in the first half of 2025 compared to the prior year period. Our R&D expenses were $5.8 million and $11.5 million for the 3- and 6-month time periods ended June 30, 2025. This was an increase from $3.9 million and $7.6 million for the same time period in the prior year. The increases were due primarily to cost increases resulting from the continued progress of our ReMEDy2 clinical trial, including its global expansion as well as the expansion of the clinical team during the current and prior year periods. These increases were partially offset by cost reductions related to end-use study work performed and completed in the prior year periods. Our general and administrative expenses were $2.2 million and $4.7 million for the 3- and 6-month time periods ended June 30, 2025. These expenses also increased compared to the same time periods in 2024, which were $1.7 million and $3.8 million, respectively. These increases resulted primarily from additional noncash share-based compensation and increased personnel costs, partially offset by reductions in legal fees incurred in connection with our lawsuit against PRA Netherlands. Overall, our net losses were $7.7 million and $15.4 million for the 3- and 6-month periods ending June 30, 2025. These are higher than the $5.1 million and the $10.3 million reported during the same periods in 2024. Now let me turn the call back over to Rick.

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

[Operator Instructions] Your first question comes from Thomas Flaten with Lake Street.

Maybe, Julie, if I can start with you, I'm curious to kind of get your take on why you joined the company particularly in light of your past experience with preeclampsia, but then perhaps even more importantly, your thoughts on the stroke program, which I know is going on in the background.

Yes. Thanks for the question. Hello, everyone. Really having worked in the space of women's health before I really have a strong commitment to this area and really I'm excited by the program that I saw the programs really that I saw at DiaMedica as well as, I think, the team that's in place to execute upon them. So I think preeclampsia and ischemic stroke are both areas of large unmet need. There's de-risked biology, I believe, with the known role of KLK1 protein as both a vasodilator and it's also its role in vascular repair. And I think this product really addresses the underlying pathophysiology of both conditions and has already shown promising clinical data and really evidence even of some biologic activity. So this really excited me when I saw this. So I think for both programs, I'm really excited to be here.

Excellent. And then, Rick, I was -- I know you've got a lot of work that's going to kick off here in preeclampsia. I was wondering if you could maybe map out kind of a calendar for us, right? I'm assuming each of the cohorts in South Africa will enroll at a slightly different rates, given that there are different patients, different types of patients? And then maybe you could clarify the U.S. Phase IIb study, what exactly will be the target indication for that?

Sure. Thanks, Thomas. So in terms of what's coming up next, so the -- we've -- as I mentioned on the prepared remarks, moving into Cohort 10 of the Part 1b that should be starting next week. And we wanted to push the dosing a little bit higher to seeing if we can see any further improvement than what we've already seen which would be wonderful. And then based upon that and some of the pharmacokinetics data that we have already we'll be analyzing that to be moving into the Part 1b. And we'll be able to also be moving into the Part 2, so that will be the expected management. And by expected management, we mean that these patients are first diagnosed, they'll start being treated. And those will be typically early onset patients. And then that's the third cohort that we talked about is the fetal growth restriction. So all 3 of these cohorts can be dosed concurrently. And so as we get -- those studies start, we'll have more updates in terms of some of the time lines. We do know that our site in South Africa, Dr. Cluver just a very unique scenario that if these patients in Cape Town have preeclampsia . They basically all filter into Cathy Cluver' site. And so she gets 4 to 5 preeclampsia a day so we're very encouraged on how rapidly we can get these patients dosed, but we'll have more as the study gets started. For the U.S. study, we're currently planning to file a pre-IND request to the FDA, and that will be followed immediately after with an IND and then looking at getting that study started next year. And we're currently kind of finalizing the protocol. And as we get more clarity and finalize, we'll be sharing that details with the market.

Your next question comes from Chase Knickerbocker with Craig Hallum.

Maybe, Rick, just to start, can you give us an update on current active sites and how enrollment rates are trending in the stroke study? And just secondly, as we're now well across the 25% kind of milestone here. How are you kind of feeling about this new expectation for 2Q '26? Do you feel like it's firmed up at this point? You've got a lot more visibility or just kind of general thoughts there.

Sure. So we're currently at approximately 40 sites. We are at the point now where we're actually dropping off sites that are performing I think that's important with setting the right message to the sites. And then on top of that, we are working to having sites the U.K. and Europe come on board. And so I would say that coming through to last year coming early into the new year, things were very slow with the trial. And we've definitely seen a very encouraging uptick in the last few months. that gives us comfort here with the guidance of Q2 of 2026.

Any thoughts around kind of current enrollment rates?

It really does vary. I mean we haven't publicly stated. I mean what we are seeing kind of a bit of the 80-20 role where we've got smaller number of sites that are producing a large number of patients. And I will mention that last quarter as well, we had an investigators meeting that was really helpful. We had maybe 80, 90 participants from across the country in Canada. And I think that really helped with awareness. And I think that some of these aspects that we're taking, I think, are really going to help us here with continuing the momentum that we're building.

Got it. And then just on preeclampsia. On the U.S. study, I mean, is it a fair -- I think it's probably a fair assumption this will be in expected management. And any sort of additional detail that you would need from Part 1b and Part 2 of the South African study to put that IND in front of FDA? Or do you feel like you kind of have what you mean? .

Yes. So definitely, it's going to be the expected management. That's where we see the real need for this patient population. And so no, I think we -- I mean, the data we've announced here a few weeks ago was just fantastic. I mean we really could not have expected anything better than what we saw. So very encouraged by that. We just thought here that we've got an opportunity here to add in another cohort. So let's do it. And let's see if there's any change, and that may help us to tweak the dosing a little bit more. But we do feel that for this patient population, it's very severe. I mean these are very sick mothers. They have very severe endosteal dysfunction and a lot of basal constrictor. So we do see some value and potentially going a little bit higher on the dose. But what we've seen already, we'd be very happy with going ahead with the dosing in cohort 6 to 9 that we recently announced for the U.S. IND.

And then just last for me, Rick. Could we see something in the Phase IIb where we have a primary endpoint in the study that closely reflects what a pivotal regulatory endpoint will be in a Phase III study? Or just kind of think about -- how should we think about kind of the data generation in that U.S. study?

Yes. I think give us a little bit more time here as we finalize the protocol. We want to make sure we get the right expert opinions around this, and then we'll come out with a very clear path. We feel very comfortable in terms of some recent feedback we've had from the FDA on the primary endpoint. But we wanted to nail this down here before we publicly share what that endpoint will look like.

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

This concludes our call. Thank you.