Q1 2021 DiaMedica Therapeutics Inc Earnings Call

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Ladies and gentlemen, this is the operator today's conference is scheduled to begin momentarily until that time your lines will again be placed on music hold thank you for your patience.

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Good morning, ladies and gentlemen, and welcome to the dire medical Therapeutics first quarter 2021 conference call an audio recording of the webcast will be available shortly after the call today on <unk> website at.

W. W Dot dire medica dot com in the Investor Relations section.

But for 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 note regarding forward looking statements in the company's press release issued yesterday and under the heading risk factors in value of Medica. Most recent annual report on.

Form 10-K.

Biomedical SEC filings are available at Www Dot FCC dot Gov and on its web site.

Please also note that any comments made on today's call speak only as of today may six 2021 and may no longer be accurate at the time of any replay or transcript rereading.

Dire medica disclaims any duty to update its forward looking statements.

Following the prepared remarks, well open the phone lines for questions to ask a question you need to press star one on your telephone.

I would now like to introduce your host for today's call recalls dire medical President and Chief Executive Officer, Mr. Paul You may begin.

Thank you Erika good morning, everyone and thank you for joining US today welcome to our first quarter earnings and business update call yesterday. After the market closed we issued a press release summarizing our Q1 2021 financial results and providing a general update at that time. We also filed our quarterly report on form 10-Q.

Both documents can be found in the Investor Relations section of our website at <unk> Dot com.

I am joined this morning by our Chief Financial Officer, Scott, Kellen, and our Chief Medical Officer, Dr. Harry Alcorn since your last call. It was just a month and a half ago, we will provide a brief update before today before taking your questions.

Let's begin with our acute ischemic stroke program, we're pleased to be moving forward for the phase II <unk> III study of <unk> nine and acute ischemic stroke patients. We submitted the IND for this study on April 16th a bit behind our end of March school, but we use data from additional time to ensure that we have the range study plan.

And the proper statistical analysis to support our proposed adaptive design. The IMD submission is not the pacing item for initiating the study and we have confidence in our current timelines.

For the FDA 30 Day review period concludes at the end of next week as of yesterday, we have not received any communication from the FDA other than other acknowledging receipts of the IMD based upon the feedback we received from the FDA last December we don't anticipate any significant additional questions on the study protocol.

The total is this phase II <unk> III trial will be a double blinded placebo controlled randomized study of approximately 350 participants based upon a 90% powered for statistical significance on the primary endpoint of the modified Rankin scale at day 90.

Secondary endpoints will include stroke recurrence mrf's shift.

NIH SS and the Barthel index, along with depths safety and Tolerability measures and Biomarkers related to <unk>, one and.

In addition to preparing for the phase III <unk> III study.

We also expect to engage the FDA and other discussion regarding stroke the occurrence as a clinically significant endpoint recall that in our remedy phase II study, we observed a statistically significant reduction in recurrent severe strokes.

Specifically, we saw an 86% reduction in the overall study one patient in the DM 109 group compared with 7% in the control group four of which were actually fatal.

We believe this provides a strong signal of the potential for <unk> to improve.

<unk> physical recoveries for stroke victims, and additionally, reduced stroke recurrence and associated with a mechanism, which we believe has stabilized plaque.

Recurrent strokes tend to be more costly disabling and also fatal anything that can be done to reduce the level of recurrence would greatly benefit patients and their health care system.

We also intend to submit an application for fast track designation for.

For <unk> as part of initiating this discussion Dr.

Dr. <unk> led a comprehensive process to finalize the study protocol.

Bringing together a number of key opinion leaders, our scientific advisory board as well as clinical and regulatory experts.

We are engaged for a contract research organization to provide us with the resources to identify qualify and engage up to 75 clinical sites.

Currently our team is focused on getting key operational procedures and services for the study. They are prioritizing time sensitive needs to assure a timely accurate and efficient study in anticipation for initiating the trial this summer subject to FDA authorization.

Turning to our chronic kidney disease program in our Redux trial for key items that we've been waiting for is the preliminary topline data from the diabetic kidney disease cohorts.

The data is currently being compiled we remain on track to provide this data readouts during this quarter and look forward to sharing these results for you in the near term.

Overall enrollments in the <unk> study has reached 70 participants. This includes the full enrollment of the diabetic kidney disease cohorts for 32 participants the Iga nephropathy cohort has reached 70% completion or 'twenty, one participants and enrollment in the African American cohort has reached approximately 16% or 17 parts.

<unk> enrollments in the Iga nephropathy, and the African American cohorts has continued at a slower pace still being impacted with COVID-19. We also have two additional sites identified and quantified that will be activated very shortly.

With a significant declines in new COVID-19 cases, and recent availability of vaccines and these new study sites, we still anticipate completion of both of these cohorts in the second half of 2021.

Now I'll ask Scott Kellen to take us through the financial results for the first quarter.

Thank you Rick good morning, everyone and as Rick mentioned, we announced the first quarter financials and filed our quarterly report on form 10-Q yesterday afternoon.

You haven't had a chance to review these documents they are both available on either of the diabetic for the SEC websites.

Our net loss for the first quarter of 2021 was $3 6 million or <unk> 19 per share.

This compares to a net loss of $2 4 million or <unk> 19 per share for the same period in the prior year.

Our research and development expenses were $2 4 million for the three months ended March 31, 2021, an increase of 1 million from $1 4 million for the three months ended March 31 2020.

The increase was due to a number of factors, including year over year increases in costs incurred for the redux phase II <unk> study and costs associated with an increase in staff levels consulting services and non clinical testing required to support our preparation for the remedy to phase II <unk> III stroke study.

I will now these increases were partially offset by year over year decrease in costs incurred for the remedy phase II stroke study, which completed during 2020.

Our general and administrative expenses were $1 2 million for the three months ended March 31, 2021 up slightly from $1 1 million for the prior year period.

The increase in G&A expenses resulted primarily from increased director and officers liability insurance premiums increased personnel and noncash share based compensation costs.

On the balance sheet. We finished the first quarter of 'twenty, one with cash cash equivalents and marketable securities of $23 4 million current liabilities were $1 2 million and working capital was $23 million. This.

This compares to $27 $5 million in cash.

Cash equivalents and marketable securities $2 million and current liabilities and $25 9 million in working capital as of the end of 2020.

The decreases in combined cash resources and in working capital are due primarily to clinical study costs related to the redux phase II <unk> study and costs associated with preparing for a remedy to phase II <unk> III stroke study.

Our current capital position should allow us to complete all three cohorts the redux phase II clinical study initiate the phase III study in acute ischemic stroke and fund our planned operations through mid 2022 excuse me.

Now, let me turn the call back over to Rick.

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

As a reminder to ask a question you will need to press star one on your telephone switch for all your question press, the pound or hash key.

Your first question comes from the line of Alex Nowak with Craig Hallum capital.

Hey, everyone just wanted to touch based on the breakthrough of the fast track designation. So just to be clear that has not been submitted have you had any communication with the FDA or HHS on that front and then just current timelines or remind us the pathway there.

On whether or not you get that designation.

Sure Good morning, Alex.

So after getting the Greenlight to proceed with this study our plan is to submit to the FDA.

For for fast track designation.

Okay, and Thats, a net 60 day review correct.

Yes, that's right.

Okay, that's great.

Anything that it doesn't sound like you are too worried about the IMD or anything to really no debt.

Might be in the IND submission thats going to give some pause at the FDA or would you expect a pretty vanilla review here.

Yes, I think the short answer we're very confident.

But as you know there's always a chance the FDA will come back with new questions or concerns. It was very helpful. For us. The fact that we did get written feedback from the FDA in December.

And.

We're following their guidance and comments and yes, we're optimistic that this will be.

Let's see that would be positive.

Okay understood and then maybe could you set some guideposts on how to think about the kidney readout PK data the data that we have out there to compare as we got obviously your phase one b that you've done.

Chinese kidney studies in this other.

<unk> drug development. So what would you like to see from Egfr in Niu ACR standpoint to call out as expense.

Yes. So again this is a three month study.

We have two different doses and we're measuring this versus versus baseline and so ideally if we could see a decrease in the UAE CR proteinuria, while seeing a stable to increase in Egfr.

So we'd be very pleased.

Okay understood and then just last question the enrollment for <unk> was completed in December just 90 days puts us at the March so what else is needed at year end, two review and clean up the data for all.

Publishing it and then the <unk>.

Second question I guess for that would you expect a similar timeline for the other two cohorts later this year because the press release mentioned.

Completing the enrollment for the second half of 2021 does that include a readout for the second half for 2021 are just finishing the enrollment.

Alex as it relates to the Redact CK day cohort III decay D.

You are correct currently the laboratory batches some other assays so even though the patients are complete we have to wait for the results to come through we're following a process to ensure the accuracy of the data and we anticipate the day to have to be reported out early June for <unk>.

As it relates to the other two cohorts, one and two respectively. They will be reported out by the end of the year.

That's great I appreciate the update thank you.

Yes.

Your next question comes from the line of Ed <unk> with Guggenheim Securities.

Great. Thanks for taking the question both for.

First question for me.

Have you done anything maybe anecdotal patient disposition.

As they exit the cohorts for.

For the BK D on trial.

We don't like to look at the data individually, we want to make sure that we have a complete set to fully understand and analyze the data and so at this point we are unable to answer that question until we see final report.

Got it and then I guess maybe.

Maybe this may be a similar answer but I think for.

In terms of student debt.

The simple sort of the number of patients in the trials that are on <unk> inhibitors, and I guess really asking modeling equal day data readout itself, but thinking about sort of the implications for phase III design as you would expect maybe more patients to sort of now be.

<unk> and <unk> inhibitors, it in sort of the <unk>.

Or just your thoughts around that.

Yes, So I think the first the plan is we will follow the data based upon the three.

Three cohorts, what we anticipate is the more likely pathway here is for Iga nephropathy, we think that is a.

It's a very clear pathway in terms of a rare disease, where.

The potential to have conditional approval after six months.

Based on proteinuria full approval two years in Egfr.

And then longer term, we see the opportunity for the diabetic kidney disease.

And the data that the mechanism of action of <unk> is really improving vascular churn versus <unk> twos are about.

Excreting glucose via the year and so we think this is a different mechanism that ultimately.

Could be complementary, but thats something that well have to look at close more closely as we analyze our data.

Great. Thank you looking for to all of the updates in March 2021.

Thank you Ed.

Your next question comes from the line of Francis <unk> with Oppenheimer.

Hey, Thanks for taking the questions just a couple here in terms of the stroke recurrent strategy can you just talk about a little bit the timing there of approaching the FDA and what could be the outcome here would this be a secondary outcome. The co primary outcome a whole new study.

Just any thoughts there and then just to complete that answer can you just explain a little bit more on the mechanism of action of stabilizing black and how that would make a lot of sense for stroke recurrence.

Sure so.

What our plans here is after we get the Okay to proceed with the current study as proposed.

We're currently looking at a number of different pathways for.

For stroke recurrence.

This could be a sub study within sub study with the in the.

The phase II <unk> III.

Also looking at the potential for co primary endpoints, but not.

What's not both required.

And.

We're also the possibility for a separate study and so when we look at the face in the phase II data, although against small study.

We talked about earlier, how for severe recurrent strokes, we had set out.

Seven on placebo, one on drug and when you look at ischemic recurrent strokes.

Had six on placebo zero on drug and so if you look at the mechanism of action and we went to a lot of detail on this on our recent KOL events.

We do believe the potential for <unk>, one and <unk> nine to actually stabilize plaque and we feel that this is something that can be applicable for both small vessel medium vessel and large vessel occlusions and so this is something very important to us that we're looking at further.

Minimum, though the ability to.

Reduce stroke recurrence should also be very important part of the rationale and the data that we've seen with our protein and.

The data that's been reported with with the urinary form in Asia today.

Okay, Great and then if I can sneak in a couple more here.

Once the data reads out.

Any read through here, you talked about what you'd like to see on Egfr side. Obviously, it's just three months here and protein area, but any read through that we can think about for the Iga nephropathy data and then on debt data what would be the importance of maybe seeing some important biomarkers on the IGT and <unk>.

Yes.

Purpose of this study is looking at this.

Thats good approach. So we got three different cohorts and we wanted to we feel overall, that's deeply nine will improve kidney function across different causes of kidney disease, but we really would like to see are there differences amongst the cohorts.

I think as you mentioned one other one of the aspects that I think I'm. Most excited about the Iga is the potential for it to be disease, modifying and part of that rationale some of our preclinical work that we've conducted in a type one animal model. We did see a significant increase in T. Regs and also halting the autoimmune attack.

So if that's the case, we think that the.

For the potential for our drug to not just improve kidney function, but potentially to help the autoimmune attack I think could have.

A greater impact in a greater differentiator from other compounds that are in development today.

Okay, Great and then just last one here on the on the stroke study.

In 2022 I guess.

You've talked about an interim results here can you just help us understand is that still blinded is there what goes into that result.

Without necessarily seen the efficacy that we can.

Read through here on the interim one and 2022. Thank you.

Sure. So the plan is after approximately 40% of the patients.

We have completed and followed up.

We will have the DSM will have.

We will have an interim analysis day medica will remain blinded and as it relates three potential outcomes. So one is to continue the study as planned. So if the data is coming in as anticipated. We've powered the study for a 15% absolute improvement in excellent outcomes.

If the data is coming less than anticipated.

Call it between five and 10% we would have the opportunity to increase the study size and if there is no effect to drive a little effect. So if the outcome there.

Less than four five excellent outcomes, then we would terminate the study so I think it should give us a good indication.

In terms of the drug efficacy coming in as anticipated.

Thank you very much.

Thank you Frank.

Your next question comes from the line of Thomas Flaten with Lake Street capital.

Good morning.

Rick I just wanted to follow up on a comment you made a couple of questions ago about the.

The current study you mentioned in the idea of going after co primary endpoints I just wanted to confirm co primary in the sense that you have to get growth for study success or did you mean, two primary endpoints that are discrete.

So it would be we would not want to have to we would not want to have dual endpoints there would be independent. So if we had hit significance on either then it would be it would be a success. So it's still early and but this is something that we are talking to.

Some of the experts with our consultants and advisors and we want to understand.

Is it something that we should we should we should proceed with or not.

At a very minimum this will be an important secondary endpoints that could also be as part of a separate study.

And then just in the.

With the assumption of the R&D clearance, where are you at in terms of.

Activating or identifying the overall number of study sites. I think you mentioned 75 have you identified all of those or can you just give us a sense of where you are.

Quantitatively or qualitatively.

Okay.

Yes, so we are planning up to 75 sites.

We've already identified a number a fair number of the sites already.

Both Louis.

With Harry's network and also with our with our CRO.

And so this has been something we've been started a while back and we're just going to the process for here right now in getting working on getting those sites up and.

We're running so that we can start this study to summer.

And then finally.

On the other two cohorts in the kidney disease study Iga and African Americans is there anything youre seeing in terms of where these patients are coming from I know, it's been a it's been a slog since.

Since the turn of the year is there anything specific in what are you seeing these patients. So how are you how did you determine where those new sites, we're going to be that you would kind of bring online is there I'm. Just curious if you can give us from some color on that.

Sure in the in the <unk>.

TKD space these sites are.

Primarily specializing either in dk day, or an iga or if they have a strong African American hypertensive group and so we want to look at their database, respectively and do.

<unk> says that they actually have the patients that they can recruit and screen for our study before we would engage even qualify insight beyond that so we've been very specific about the demographics, where they're located not only from the database perspective for the patients that they can actually screen and recruit but also the effect of COVID-19 or their clinics physically open.

100%, what's their feeling of the patient population are they willing to come to the clinic and we can share that we've addressed those other I would say social needs to ensure the accuracy of bringing the patients need to be screened.

Okay, and then sorry, just one follow up on that and I believe you said earlier that you would read out.

The other two cohorts by the end of the year. So by implication you would you would have to have those last patient in by what.

July August.

Right to give yourself for three months for some time for for database lock and read out and accomplish et cetera.

Correct.

Okay got it. Thanks appreciate you taking the questions.

Thanks, Sean.

Your next question comes from the line of Elmer Heroes with Roth Capital Partners.

Good morning, gentlemen.

I just have one question related to DM 199, how many doses of the drug you have available.

And on hand.

For the study and what is the shelf life.

And 199.

So the amount of drug that we have on hand is double what is currently required for this the study today. So we have ample amount of drug on hand.

Obviously, the exploration dating is on a rolling basis and right now our exploration day. It goes out an additional two years.

Thanks.

No concern from our end in terms of having to complete a 90 day manufacturing run.

While we run these studies.

Okay. Thank you very much.

Your next question comes from the line.

Jason Mccarthy with Maxim group.

Hey, everyone. Thanks for taking my question. So on assuming everything goes to plan with respect to pioneer approval for this phase III study when can we expect an initial data readout.

And then my second question is do you expect to utilize clinical trial sites outside the U S.

Okay.

That's regulators.

Yes. Thank you Jason So we're planning 75 sites. We're currently working.

With our CFO and the sites in terms of estimating recruitment rates.

Based upon our recruitment rate of one patient every three months per site we need.

Looking at interim results in next year in 2022, and then to complete the study in 2023.

The 75 sites are all going to be in the U S and as we get this up and running we're also looking at expanding this into the into the EU.

Great. Thanks for the additional color I appreciate it.

Thank you Jason.

And there are no further questions at this time.

At this time I will turn the call back over to the speakers for any closing remarks.

Alright, again, we'd like to thank everyone for joining us. This morning, we appreciate your interest and your continued support and please stay safe in these challenging times and this concludes our call today. Thank you.

Thank you for participating you may disconnect at this time.