DMAC - NASDAQ

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. [Operator Instructions] 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 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 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 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 3 key endothelium-derived vasodilating factors through activation of the bradykinin pathway. These are nitric oxide, prostacyclin and endothelum-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 1a of our investigator-sponsored Phase 2 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 includes the confirmation that DM199 did not cross the placental barrier places DM199 in an 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 U.S. trial. Just to briefly review the interim results Part 1a of the 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 3 key factors: First, blood-pressure data from cohorts 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. 2, improve placental perfusion. In Part 1a of our recent Phase 2 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 placenta perfusion. And 3, we believe that these improvements were driven by improving endothelial function believe to be an on-target mechanistic response to DM199 therapy. By improving or restoring endothelial function (sic) [ dysfunction ], DM199 has the potential to reverse vascular injury caused by preeclampsia. Having the potential to control hypertension, improve endothelia 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 1a, which dose participants at 2.5 micrograms per kg IV and 15 micrograms per kg subcutaneously and further initiated dosing in the expansion cohorts of an 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 1b and 2 protocol amendments are being implemented based on clinical learnings from Part 1a to refine the treatment regimen. Part 1b includes patients, who will be delivering within 72 hours. Part 2 will enroll women with early onset preeclampsia, who are cannabis for expected 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 2 trial will be conducted in early onset preeclampsia patients. This treatment for this group is referred to as expected 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.

Thanks, Rick, and good morning, everyone. We continue to make steady progress in operationalizing our Phase 2b/3 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 this AI and increases in the use of tele neurology. 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 5 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 reestimation. 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.

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

Thanks, Rick, and good morning, everyone. As of September 30, 2025, our cash, cash equivalents and short-term investments were $55.3 million, this compared to $30 million as of June 30, 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 9 months ended September 30, 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 9 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 3- and 9-month periods ending September 30, 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 including its global expansion, progress with the Phase 2 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 3- and 9-month periods ending September 30, 2025. These expenses increased compared to the same time period in 2024, which were $1.9 million and $5.7 million, respectively. The increases in both periods resulted primarily from increased noncash share-based compensation and increased personnel costs incurred in conjunction with expanding our team. Increases in investor relations, patents and professional fees also contributed to the increases in both periods. Overall, our net losses were $8.6 million and $24.0 million for the 3- and 9-month periods ending September 30, 2025. These are higher than the $6.3 million and $16.5 million reported during the same period in 2024. Now let me turn the call back over to Rick.

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

Your first question comes from Stacy Ku with TD Cowen.

Congrats on the progress. So first, as we 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 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. And then second, as it relates to the protocol amendments, maybe can you go into a little bit more detail what you 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.

Sure. Great, Stacy. So starting off with the KOLs. So we've been doing quite extensive reach out with the KOLs really across the U.S. and also basically globally for that matter. And 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. And 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. And just to see that as very encouraging and immediate drops in blood pressure and the fact that we're seeing that very consistently amongst pretty much every patient. And then I think the upside is also encouraging, but still early is the signals of dilation of the intrauterine arteries. And so if this can consist into later-stage studies, I think, this is a clear sign of being disease-modifying. With regards to the protocol, changes that we're looking at. So first for the Part 1b, what we're looking at doing is IV only, in IV into delivery with the ability of the positions to adjust the dosing as needed. And it's almost to be able to dial in the blood pressure to where it needs to be ahead of delivery. And then 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 1a 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.

The next question comes from Thomas Flaten with Lake Street Capital Markets.

Just a follow-up, Rick, on the Part 1b. You kind of wedged in this 12-patient expansion cohort from Part 1a, was that intended to kind of supplement what you had originally intended to do with Part 1b, where you were going to do basically a dose expansion cohort? I'm trying to understand the purpose about the 12-patient cohort given the changes you're contemplating for Part 1b?

Yes, that's exactly it. So this cohort expansion we've done is at Cohort 10, so that's the highest dose we've gone to. And so I'd call this kind of additional work that would really replace what was previously planned for the Part 1b. And then when the Part 1b now will be IV only.

Got it. And then as you ramp-up towards a Phase 2 study here in the U.S., what is the trigger? What data are you waiting for from Dr. Cluver before you actually initiate the study here in the U.S. Is there anything in particular you're waiting for?

No. We've been analyzing the data that we received up to date. We'll be continuing to dosing more patients before that study gets initiated and not just the efficacy and the safety data, but the PK data is also very important that we've been analyzing as well. So we feel we have the data that we need to proceed. But of course, if we get any additional data along the way, that could further help us to refine the -- that protocol is needed. And right now, the plan is for the -- that Phase 2 would be up to approximately 30 participants for the U.S. study.

The next question comes from Chase Knickerbacher with Craig Hallum.

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 comment on 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?

Yes. I mean, I think what we're seeing, Chase is just very clear and immediate drop in blood pressure. Some of these patients in Cohort 10 and even in those that are in the cohort 6 to 9, these patients are all resistant 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 there on, they're on short-acting IV labetalol, and there's no change in blood pressure. And frankly, within minutes of getting DM199, blood pressure is coming down very, very rapidly. And so we're just really encouraged that pretty much every patient is seeing an immediate reduction in blood pressure. So it just gives us a lot of opening statement for this treatment.

And so you've seen an incremental dose response in that tenth 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 the site activation situation sits, including kind of OUS?

Yes. As Julie had mentioned in the prepared remarks, the historical stroke enrollment rates 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 in 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.

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

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

The next question comes from Matthew Caufield with H.C. Wainwright.

Rick and team -- so 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 the meaningful change there in your view at the time of the interim analysis?

Sure. So we had initially the powering and really following what we saw in Phase 2. So in our Phase 2 trial, in the patients not pretreated with mechanical thrombectomy, there was a 15% absolute improvement in the MRS score of 0 to 1. And we also had made an adjustment to the protocol, excluding those with severe, severity stroke patients when they come in. And so when we exclude those patients, we saw a 19% -- but how the study is currently powered is that we see around that 15%, we'd be looking at 300 to 350 patients for the final sample size.

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

Great. Well, 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.