Q2 2021 DiaMedica Therapeutics Inc Earnings Call
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Good morning, ladies and gentlemen, and welcome to the dire medical Therapeutics second quarter 2021 conference call an audio recording of the webcast will be available shortly after the call today on dire medical website at Www dot the dire medical dot 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 call and actual results to differ materially from those projected in these statements.
More information, including factors that could cause actual results to differ from projected result appears in the session entitled cautionary statement note regarding forward looking statements in the company's press release issued yesterday and under the heading risk factors in dire medical its most recent annual report on form 10-K and.
Subsequent quarterly reports on form 10-Q.
Now your medical SEC filings are available on the SEC's website at Www Dot S. E C Dot G O P and on its website.
Please also note that any comments made on today's call speak only as of today August 12, 2021, and may no longer be accurate at the time of any replay or transcript rereading.
Your medical disclaims any duty to update is for looking statements.
In the prepared remarks, we will open the phone lines for a question to ask a question. During the session you will need to press star one on your telephone.
I'd now like to introduce your host for todays call, Rick Pauls dire medical President and Chief Executive Officer, Mr. Paul You may begin.
Thank you operator, good morning, everyone and thank you for joining US today welcome to our second quarter of 2021 earnings and business call update yesterday. After the markets closed we issued a press release with a business update and a summary of our Q2.2021 financial results 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'm joined this morning by our Chief Financial Officer, Scott Kellen, and our senior Vice President of clinical operations, Dr. Harry Alcorn since we held a clinical update call at the end of June we'll keep our prepared remarks today brief before opening the call for your questions.
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I'll begin by highlighting the positive interim data from our redux phase II chronic kidney disease study, we announced at the end of June our Redux study was designed as a signal finding study in three different causes of chronic kidney disease, and remember kidney function in chronic kidney disease patients declines over time.
It does not improve on its own and there are no therapies that restore kidney function today.
As a result current treatments focus on reducing the rate of the client.
The primary signal or signals that we're looking for from a redox is an absolute decrease in B U H C. R. A measure of Albion urea and stable to increasing Egfr, which would suggest to us the potential to maintain or improve kidney function, which would be completely new in the treatment for patients suffering for crush.
Kidney disease or C J D.
In addition, we're also looking for signals that further demonstrate the mechanism of action for <unk> nine for example, blood pressure reductions in the hypertensive patients along with kidney Biomarkers.
Such mechanisms may be either parts of the improvement in kidney function or provide additional clinical benefit of value to <unk> patients. For example, again, reducing blood pressure may reduce the risk for cardiovascular disease or heart attacks and also strokes.
As we reported in June interim data from redox provided what we believe are meaningful signals of stable to improving kidney function and mechanistically blood pressure control. These signals are consistent with both the hypothesized mechanism of action for <unk> nine and the data from our phase one B study and C. J D.
Patients in the clinical use of porcine <unk> won in Asia today.
The interim results also confirm continue to confirm the excellent safety and Tolerability profile of <unk> nine in the <unk> patient population.
We were particularly encouraged by the data observed in the Iga nephropathy cohort in this group damn money nine demonstrated a statistically significant decrease in the urinary albumin to creatinine ratio or you ACR and stabilizing of the estimated coronary filtration rate or Egfr.
The average decrease in U ACR was 33% in patients with moderate to severe Alban urea with a statistically significant P value of 0.002, which basically tells us that almost all of the participants thus far in this group experienced an improvement in their UAC our level.
In addition, the Egfr levels were stable.
We believe <unk> nine maybe the first compound to reach the FDA is rare secreting guidelines for conditional approval in Iga nephropathy rare cause of CK D, which is a 30% plus reduction in UA C. R over six plus months.
One additional note for color we received requests from three patients in the <unk> cohort to continue treatment for compassionate use <unk>.
The patient vitals, not only improve but they also felt better with D. Nine treatments, it's not often in a study of this size, there's feedback directly from multiple patients and how they feel better or the impact of treatments has improved their quality of life, but hearing this from these patients help us to make all the challenges.
Of developing a new treatment for patients worthwhile.
In total we saw clinical improvements consistent with <unk> mechanism of action across all study cohorts, which we believe is a clear signal that <unk> nine is biologically active including in the diabetic kidney disease cohorts with hypertension, where patients had a statistically significant decrease in blood pressure.
We believe that the combination of these signals mechanistic validation and biologic activity or building a compelling dataset for <unk> nine if the final redux data remains consistent than redux will achieve our objective and affirm our strategy of pursuing rare forms causes of chronic kidney disease with the.
Lead focus remaining with Iga nephropathy.
As a reminder, we expect additional data from this study, including kidney function blood pressure control and I again by Biomarkers, along with dosing level details to be presented at the American Society of Nephrology annual meeting in November of this year.
Turning to our lead program in acute ischemic stroke, our near term focus.
Our I M D.
Application to the FDA for an adaptive phase II III clinical trial of D. A Monday night and it was accepted by the FDA earlier this year in mid May.
Initiation of the trial is on track and we still expect the first study sites to be initiated and opened for enrollment by the end of the summer. It's also important to note that the biological activity and mechanistic signals, including blood pressure reductions and the hypertensive patients and the interim data from the Redux trial gives us even more confidence.
And the potential for Dia morning, nine to improve patient outcomes, following a stroke and to reduce the risk of stroke recurrence.
A remedy to phase II <unk> III trial is a double blinded placebo controlled randomized study of approximately 350 participants based on a 90% powering for statistical significance on the primary endpoint of excellent outcomes with the modified Rankin scale at day 90.
After consultations with a number of regulatory and statistical experts along with vascular neurologists, we're adding the prevention of stroke recurrence as an independent co primary endpoints for the study.
Note. This does not change anything about the design or execution of this study importantly, it gives us a second endpoint, which could also be the basis for approval of <unk> nine is a second separate us.
Stroke reoccurring represents 25% of acute ischemic strokes today. These strokes are more disabling costly and fatal.
If you recall in our remedy to a phase II trial, there was a statistically significant reduction in severe stroke recurrence. This was a 13% reduction on an absolute basis or an 86% reduction on a relative basis to put this into perspective today approximately 25 <unk>.
<unk> are recurrent so out of 100 stroke patients you would anticipate 25 to 100 to have a second stroke based upon the reduction rate observed in a remedy phase II trial that number would drop from 25.100 down to four of 100.
Given the Tennessee recurrent strokes to have a more adverse impact on people inflicted with a stroke. This is a particularly significant potential benefit of <unk> nine and I think you can understand why we wish to move stroke recurrence up to an independent co primary endpoint for the study.
We're also preparing to publish a more comprehensive rationale for <unk> nine and stroke the occurrence.
And this is going to include plaque stabilization in the studio and blood pressure improvements secondary endpoints for the <unk>. Two study will include MRI shift the NIH SS scale. The Barthel index scores that safety tolerability measures and biomarkers related to <unk>.
One.
The remedy study, we'll be targeting up to 80% of acute ischemic stroke patients, who do not have a treatment option today.
These are patients who are not eligible or does it do not received tpa or mechanical thrombectomy.
We believe that remedy two has the potential to serve as a pivotal study of <unk> nine in this patient population we.
We are preparing for up to 75 sites in the U S 172.
With me to we have a sense of the site activation and enrollment pace, we will provide an update unexpected timing for the interim analysis being planned for after approximately 40% of patients have completed the study.
We've also filed an application with the FDA for a fast track designation for damn money nine. This application was submitted in July and as much as we believe it should be granted I remind you that it is not a certainty that it will be issued.
Now I'll ask Scott Kellen to take us through the financial results for the first quarter.
Thank you Rick Good morning, everyone as Rick mentioned, we announced our second quarter financials and filed our quarterly report on form 10-Q yesterday afternoon.
Havent had a chance to review these documents they are both available on either the diet Medicare or the SEC website.
Our research and development expenses for the quarter increased to $2.2 million. This is up from $1.6 million for the three months ended June 32020.
For the six months ended June 30 of 2021, R&D expenses increased to $4.6 million compared to $2.9 million for the prior year period.
The increase for the six months period was primarily due to a number of factors, including cost incurred for our remedy to clinical study.
Increased year over year costs related to manufacturing process development, and our redux phase II <unk> study as well as increased personnel costs associated with additional staff added to support R&D operations. These.
These increases were partially offset by decreased costs incurred for a remedy phase II stroke study, which was completed in the prior year.
General and administrative expenses were $1.2 million for the second quarter up from $1.1 million for the prior year period for the six months ended June 32021, G&A expenses increased to $2.4 million up <unk> 2 million from $2.2 million for the six months ended June 32002.
20.
The increase for the six month comparison was primarily due to increased professional service costs and increased personnel costs to support our expanding clinical operation of our clinical programs.
Turning to the balance sheet, we had cash cash equivalents and marketable securities of $21.3 million. Our current liabilities were $1.4 million with the resulting working capital amount of $20.2 million as of June 32021.
As compared to $27.5 million in cash and securities to.
Zero million and current liabilities and $25.9 million in working capital as of the end of December 31.2020.
The decreases in combined cash cash equivalents in marketable securities and working capital are due primarily to the increased clinical study costs associated with preparing for a pivotal remedy to phase II slash three stroke study costs related to our redux phase II <unk> study and increased costs related.
<unk> manufacturing development.
Net cash used in operating activities for the six months ended June 32021 was $6.4 million compared to $3.8 million for the six months ended June 32020.
This increase relates primarily to the increase in the net loss, partially offset by noncash share based compensation and the effects of changes in operating assets and liabilities.
Looking forward if we continue our operations as currently planned our cash will get us into the third quarter of 2021, I'm, sorry of 2022 and as Im sure. You expect we have options to remove or defer spending that doesn't directly contribute to the advancement of the remedy to pivotal trial to extend this runway closer.
To the end of 'twenty two 2022.
To minimize the additional capital required to get us through the interim analysis for the remedy trial and give us more time to focus on regional partnerships.
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 analyst.
Your first question comes from the line of answer today around <unk> with Guggenheim Securities. Your line is open.
Great. Thank you. Thanks.
Thanks for taking the questions. Just first one for me is just a point of clarification.
On a per diem 199, the fast track was this for stroke, specifically and I guess I wondered if you had any interactions with regulators on the Cta D data since the disclosure at the end of June and if not you know how youre thinking about maybe timing of these interactions, particularly for Iga nephropathy.
Hypertensive African American cohorts. Thanks.
Sure sure. Thanks, Alastair, yes, so the fast track designation was specifically for stroke.
Stroke outcomes, so for the excellent outcomes.
With regard to your second questions. We're just going through the you know continuing to going through the interim results from the Redux study and in looking at potential options moving forward, while we complete them.
Get a more complete completion of the study.
At this point, we still believe that the Iga nephropathy as our lead indication in cars moving forward, while talking to our S. E. B members specifically they are also very encouraged with some of the early data from the AR and the Hypertensive African American so well continue to look at the data.
And while we complete the study it gives us an opportunity to start planning for for next steps moving forward for the kidney program.
Got it great. Thank you.
Your next question comes from the line of Alex Nowak with Craig Hallum Capital Your.
Your line is open.
Great Good morning, everyone.
Maybe to expand off that the next steps can you maybe expand on.
What those next steps put Intel based on the data Youre sitting with ICANN sitting with African Americans today do you think.
<unk> a larger study within those cohorts would be necessary before moving into a pivotal or do you think at this stage a pivotal could certainly be likely.
Yeah, It's a great question, Alex So that's exactly what we're looking at and we're exploring.
Some some different options moving forward and I'm looking at potentially a path forward. So we definitely see a path forward for for kidney disease, but we have some time here now as we finish up the study to determine what that'll be and so specifically, it's going to be looking at a phase <unk> or phase.
III, but also making sure that our focus right now is on our acute ischemic stroke a pivotal trial.
Okay that makes sense and then.
How many sites do you expect to be live on the stroke pivotal this summer and then.
Scott's point about regional partnerships could you maybe expand on that conversations youre, having both on stroke and kidney.
Let's go for the number of sites that we're looking at for the stroke study is right now working with.
Our covance as our CRO and we're looking up to potentially 20 sites to be initiated by the end of the year for the stroke study.
And Alex with respect to partnering as you recall, we were forced to terminate the relationship with Aon The Chinese pharmaceutical company couple of years ago.
When they have they tried to compel us to provide them the manufacturing technology.
And at the time, we talked about wanting to see the <unk> data results.
Before we went too much farther down that path because of the importance of <unk> as an indication in China recall over there, it's 2 million people a year versus 140000 here in the U S.
And so now we have that.
Data in hand, and we're feeling very good about being able to have those conversations.
So I think the best way I can answer your question is to say, yes that we are open to partnering it's our preferred source for additional capital.
And that we.
No. We don't have anything that we can disclose publicly at this time.
Understood I appreciate the.
Commentary on the sites already and maybe just one other question just on your starting to study what sort of additional pushing all.
Buildup or I guess infrastructure buildup do you does the company need to undertake here before starting the pivotal late in the summer.
Yes, great question Alex.
So right now we are looking at.
Hiring a couple of new support people for Harry's clinical team, but we're using a CRO and everything's on track here.
That's great I appreciate the update thank you.
Your next question comes from the line of Thomas Flaten with Lake Street Capital. Your line is open.
Good morning, guys. Thanks for taking the question.
Rick I just wanted to clarify on the co primary endpoint I know you said it was independent and co primary which is a kind of an unusual where choice for me, but so they are completely independent meaning that if you succeed on the the old primary endpoint, regardless of the outcome of the current study. This study could still be successful right is that correct.
Yes, that's right.
So most importantly, adding and stroke recurrence.
As a co primary of independent endpoint, it's not going to jeopardize the powering of the excellent outcomes and mris.
And then for the the publication for kidney week.
Can you just talk a little bit more about what we can expect to see in that whether it be data from all the cohorts. How many patients do you think will be included in that dataset that are fully completed out of the study.
Yeah. So the plan is that we'll have a as complete as possible dataset in terms of the number of patients.
Further clarity on data by by our paint by dosing and also looking at the kidney markers blood pressure in some of the IGN biomarkers.
Great and then just one final one with respect to the ICANN and African American cohorts as the goal now to continue towards full enrollment of 30 patients or is there an opportunity to cut enrollment and use the data that you already have in hand.
Yes, great Great question. So we're currently as we analyze the data the fact already for the IGN group, we have seen a statistically significant improvements with just 11 patients. We are currently exploring the possibility of cutting off the study early.
As we look at the data further.
Excellent thanks for taking the questions.
Your next question comes from the line of Francois Breath voice with Oppenheimer. Your line is open.
Alright, thanks for taking the question, Okay. So I guess on the <unk> side.
We're basically saying here that there might not be a full data.
No readout.
Based on what we've seen already in the interim look is that a fair assumption.
Yeah, I'd say, we're very encouraged already with the interim results. The fact, we did see a greater than 30% reduction if we look at the FDA as guidelines for rare CK D and specifically for conditional approval the the bars and the target is to have a 30 plus percent reduction in the.
Alban urea the ACR over six plus months and so I think we're very encouraged we're already seeing those type of levels already at three months and.
And you know we anticipate when we go to longer six plus months, we think the data will get even better.
Okay, Great and then on the on the stroke side.
Can you just talk about I guess, what what if you hit the.
Prevention of show, Great parents, and not the other endpoint and has the FDA signed off on on any of this stroke recurrence or is this more of an SAP and it makes sense based on the previous data.
Yeah. So this is really following.
Some of the FDA guidance and specifically from a statistical analysis plan.
Using what's called the bond Ferrone Hot.
<unk> procedure. So the premise is that if we first hit statistical significance P value of less than point of five on the M. R. S. Excellent outcomes. It's a win if we also had the statistical significance.
On the stroke recurrence appointed five into win on both endpoints if we miss on the M. R. S. So the P is greater than <unk> five, but then on the stroke recurrence the P values less than <unk> two five.
There'll be alpha splitting but it would be a win what our next steps are we do plan to go talk to the FDA and specifically a type C meeting to discuss having two independent endpoints with no alpha sharing what the premises that we believe that these are our two separate ultimate labels on the product.
Okay. Okay that makes a lot of sense and then just lastly here on the on the interim look of AIA.
I know, there's a lot there there's three different outcomes there possible.
You had mentioned before 2022, when you talk about giving more guidance on timing is that.
Based off in 2022, when that would be or are we not sure. If the interim would still be a 2022 event now.
Yes.
At this point, we wanted before we have formal guidance, we just want to get some clarity here on where the initial enrollment is going to come in so we're still very optimistic and in particular, we feel adding in the stroke recurrence is just one more important reason why we think patients should really consider joining joining dwight joining the study we just want to make sure before we have.
Formal guidance that we had a bit of clarity on how the initial enrollment is coming in.
Understood. Okay, but this is is it fair to say that the impact of the lingering pandemic might not be as as bad for stroke as it is for rare kidney disease or <unk>.
Yes, absolutely that's definitely the case I mean these are patients that you know they've had a stroke they come into the hospital. They they have to make a decision within well within 24 hours.
Of stroke symptoms to decide whether they should join this study this isn't like a kidney study or you know in oncology study, where the patient has some time in trying to decide whether or not they should join the study and we think importantly for for these patients first and foremost. We think this is going to be a safe treatment option and if it.
And top of that potentially improved the stroke outcomes reduce the risk of stroke. The occurrence. We think there should be a very compelling rationale for why they should they should immediately join this study.
Understood. Thank you very much.
I would now like to turn the call back over to Rick Pauls for closing remarks.
Thank you operator and in closing let me reiterate how excited we are to be at the threshold for initiating a pivotal trial for stroke, our optimism for this trial and for patients as ultimate buoyed by tremendously by the clear signals of mechanism and biologic activity observed in the recent interim data from our Redux study. We also look forward to.
Next steps for the <unk> program with a promising therapy for patients we'd like to thank everyone for joining us. This morning. We appreciate your interest and continued support and this concludes our call.
Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.
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