Full Year 2023 DiaMedica Therapeutics Inc Earnings Call
Good morning, ladies and gentlemen, and welcome to the diabetic therapeutics full year 2023 conference call.
An audio recording of the webcast will be available shortly after the call on di Medical's website at Www Dot diet Medica 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 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 rigs.
<unk> forward looking statements in the company's press release issued yesterday and under the heading risk factors in diabetic as most recent annual report on Form 10-K.
<unk> SEC filings are available at Www Dot FCC dot Gov and on its website. Please also note that any comments made on today's call speak only as of today March 20th 2024 and May no longer be at.
Accurate at the time of any replay or transcript rereading biomedical 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 Mr. Rick Pauls diabetic <unk>, President and Chief Executive Officer.
Mr. Paul you may begin Sir.
Thank you Paul Hello, everyone and welcome to our full year 2023 conference call.
This morning by Lauren Matsuoka, our Chief Medical Officer, and Scott Cohen, our CFO.
To start off the call. This morning, I would like to welcome Laurie and Master of OCA, as our new Chief Medical Officer.
Dr. Matthew OCA has only been with us for a few short months, but it's already making an enormous impact with clinical sites and building strong momentum with current and potential physician investigators Dr.
Dr. Matsuo Kai is a board certified neurologist with more than 25 years of experience building and expanding high value pipelines and then biopharmaceutical industry.
She has a history of building and leading high performing teams in clinical development through all stages and the ultimate approval of new medicines. Her experience also includes playing a key role in developing strategic partnerships and acquisitions of multiple biotechnology companies.
He has served as the chief Medical officer for Epogen ex out Therapeutics Marinus Pharmaceuticals, Cubist pharmaceutical now part of Merck and Nektar Therapeutics. She was also an independent board member at <unk> Pharmaceuticals, which was acquired last year for an upfront premium of over 100% and the potential for an approximate.
And the 200% premium if the contingent value rights are achieved the breadth of her experience includes managing teams in the areas of clinical research Pharmacovigilance, Biostatistics and data management regulatory affairs and clinical operations, we welcomed Marianne on the call today and I am thrilled to have her as a key.
Member of our team.
Thank you Rick I'm excited to join the management team at <unk> for several reasons first <unk> 199 represents a potential breakthrough in the treatment of acute ischemic stroke.
Areas and life threatening condition for which no new approved medical therapy has emerged in over 25 years on the basis of the subgroup analyses of the remedy one study <unk> hundred 99 shows great promise in returning scope patients back to baseline neurologic function and preventing recurrent stroke and death Gaiam medica hosts.
At a booth at the international stroke Conference last month with follow up request to our remedy two trial from over 80 stroke centers 11 of those have already requested participation in our trial. They were enthusiastic about <unk> hundred 90, nine's mechanism of action to increase collateral circulation in the area of ischemic damage after stroke without.
<unk> risk of hemorrhage.
<unk> hundred 99 is more like Revascularization strategies, such as Tpa and mechanical thrombectomy and considerably more promising than the many failed Neuroprotective agent also at this year's International stroke Conference Dr. Scott Kazmir diet medical global principal investigator for remedy to presented a poster at <unk>.
Hawk discussing the remedy to trial design.
The management team and the clinical functions, which I now lead are among the Savviest hardest working and collaborated with which I have worked we've also made some strategic additions to the clinical team that is enhanced productivity and effectiveness.
Finally, the remedy to trial is a thoughtfully conceived designed study that is well managed and I believe will provide definitive evidence of whether <unk> hundred 99 can become an important addition to the treatment options for patients who have suffered an ischemic stroke.
Now, let me provide an update on the remedy to progress as a reminder, our final clinical protocol went into effect in mid November and the first U S sites were activated in December 2023.
Sites activated in December where our fast track centers, who were opened prior to our clinical hold and we are now in the process of expanding to a total of 40 to 50 sites in the United States.
Once the site expresses interest and we select them. It takes approximately three to six months for contracting and IRB approval new.
New site commitment with slow over the holidays, let's.
But beginning in mid January and continuing to the ISC conference in February we had a surge of new site commitments as of today, we have six sites activated with an additional 18 sites in the startup phase and a deep pipeline of 40 additional sites selected for Prequalification business in the U. S is also important to point out that some of the <unk>.
Largest and most reputable stroke research hospitals in the country have decided to join our trial. These new centers have substantial patient volumes in clinical research infrastructure and consistently rank among the top enrolling stroke centers in Aif studies.
As we move into Q2 and early summer, we expect a substantial ramp up in opening U S sites consistent with my past experience in recruiting sites for other studies, we don't expect linear growth and adding new sites and patient volumes and envision more of a hockey stick like ramp up in the U S. During the second half of 2024 and continuing into 2020.
Five.
With respect to additional countries and Canada. The Canadian stroke consortium has endorsed our protocol and made recommendations regarding qualified study sites. We have identified six Canadian hospitals to date to participate and remedy to and can now make our application to health, Canada for approval of our trial.
We expect Canadian sites to commence activation in Q3 of this year in.
In Australia, the Australian stroke trials network has provisionally endorsed our protocol last week and we are moving now to slide study sites and initiate regulatory filing activities. We plan to work with many of the same highly engaged centers, we work with in remedy one as well as new sites recommended by the network, we expect Australian study sites.
To commence activating by the end of the year as well.
In Europe, including the U K, we have to comply with new rules and requirements related to drug manufacturing quality audits, we have nearly completed the additional procedures and documentation required. This work needs to be completed prior to seeking European regulatory approval for this study we plan to pursue sights in select European countries with.
Experienced research team and potential for significantly higher enrollment rate, we expect to commence site activations late this year.
In summary, we expect to have 25% to 30 sites active in recruiting by the end of Q2 and most of the approximately 75 plus sites at the end of 2024, we have been in close contact with our first open sites and we know they are prescreening patients as we were getting questions on eligibility and participant consenting processes.
We anticipate the first posthole participant will be enrolled soon and it can happen any day now.
Then it's an issue of numbers as we get more sites up and running we expect to begin to see enrolment resume and then surge as the bulk of the sites are activated towards the end of the year.
I'd also point out that some competing trials are concluding in the near future freeing up critical study center staff bandwidth and likely increasing the patients that can be approached given all of this we are comfortable and now saying barring any unexpected issues that we anticipate the 144th participant for our interim analysis will be enrolled in Q1.
2025.
I will now turn the call back over to Rick.
Thank you Lorie and I would also remind everyone that as we discussed last quarter. The reason we submitted a protocol revision in October of 2023 was to increase our probability of clinical success, those changes, including narrowing the focus to patients experiencing moderate strokes as indicated by the national institutes of health.
<unk> stroke scale score between five and 15.
In our phase II remedy one trial, there were the patients which demonstrated a greater level of full recovery as measured by the modified Rankin score of zero to one on the six point scale, where there was an 18% improvement of <unk> nine versus placebo.
This compared to the moderate to moderately severe participants, which show a 15% improvement versus placebo.
Importantly, we don't believe that this will dramatically reduce the number of eligible stroke patients. We also took measures aimed at reducing the alpha penalty and the interim analysis. We are confident that these enhancements will provide greater likelihood of clinical success and placed <unk> nine on the fastest path to FDA.
Approval, and importantly, bringing <unk> nine to stroke patients who have no treatment options today are.
Our clinical team has been working diligently to identify qualify and engaged physician investigators and clinical sites and ensure that the sites feel well supported to conduct this trial.
We also recently expanded our clinical operations with addition of Rebecca the Vitry freeze as our vice President of clinical operations in February to further expand and strengthen our clinical operations team leadership. Rebecca was previously head of clinical operations at <unk> Therapeutics.
I would like to now turn the call to Scott Kellen to review this quarter's financial results.
Thanks, Rick and good morning, everyone and thank you for being part of today's call as Rick mentioned, we announced our full year 2023 financial results and filed our annual report on Form 10-K yesterday. These documents again are both available at either the diet medica or the SEC website.
As of December 31, 2023, we reported a total combined cash and investments of $52 9 million current liabilities of $2 8 million and working capital of $50 9 million. This compares with a total combined cash and investments of $33 5 million $2 2 million in current lie.
Abilities, and $31 7 million in working capital as of December 31, 2020 to the.
The increases in cash and investments and in working capital were due primarily to the $36 8 million of net proceeds from our private placements in April and June of last year.
Of course, partially offset by cash used to fund operating activities during fiscal 2003.
Net cash used in operating activities for the year ended December 31, 2023 was $18 7 million compared to $11 5 million in the prior year the.
The increase in cash used in operating activities was driven primarily by the company's higher net loss and increased amortization of discounts on purchases of marketable securities.
Really offset by noncash share based compensation and the effects of changes in operating assets and liabilities during 2003.
We believe that our current cash and investments provide us a runway that will get us to 2026.
Our research and development expenses increased to $13 1 million for the year ended December 31, 2023 up from $7 8 million for the year ended December 31 2022.
This increase was driven principally by cost incurred for the <unk> studies performed to address the previous clinical hold on our remedy to trial.
Costs incurred for the phase <unk> study and increased manufacturing and process development costs for <unk> 199.
Also contributing to the increase were higher personnel costs, including noncash share based compensation associated with expanding the clinical team general and administrative expenses were $8 2 billion for the year ended December 31, 2023 up from $6 2 million in the prior year.
This increase was primarily driven by increased legal fees incurred in connection with the company's lawsuit against PRA and increased personnel costs incurred in conjunction with expanding the companys team.
Increased cost per patent prosecution and noncash share based compensation also contributed to the increased other income was $1 9 million for the year ended December 31, 2023, compared to <unk> 4 million for 2022. This increase was driven by both higher interest rates and increased marketable.
<unk> balances in 2023, following our April and June 23, private placements now before I turn you back over to Rick Let me provide an update on the latest developments with the PRA lawsuit.
The three judge panel recently informed us that they did not find sufficient causal link between PRA breach of our study agreement and the damages we claimed.
Find ourselves in an odd position.
Of having a court finding PRA in breach of the study agreements and that we are entitled to the full results of the study.
Judgment, which PRA is currently appealing by the way.
But not being entitled to at least a return of fees paid under that agreement.
We have until may six to notify PRA in the court of a decision to appeal. We are currently evaluating our options.
With that we would like to open the call for questions. Operator, if you could please open the lines now.
If you would like to ask a question. Please press star one on your telephone keypad now you'll.
You will be placed into the queue in the order received.
Please be prepared to ask your question when prompted.
Once again, if you have a question. Please press star one on your phone.
Yeah.
And our first question comes from Thomas Flaten of Lake Street capital.
Your line is open good morning. Thank.
Thank you. Good morning, appreciate you taking the questions.
With respect to patient enrolment.
Initial sites were activated in December of last year, and we're looking for the first patient soon is.
Is that something we should expect that from activation to actual patient enrollment. We're looking at a three to four month lag is that reasonable or is that unique to the fact that the whole study is starting up.
And do you mind, taking that one.
Sure. So as mentioned earlier many of our study sites are academic institutions and they.
They have multiple layers of IRB approvals and often won't review study contracts until after the IRB approvals have been obtained so we made great progress in opening them shortly after the clinical.
Clinical hold was lifted and the final protocol was finalized in November but it does take them some time to get up and running we have to program their pharmacies.
To be able to do the intravenous infusion and that takes a little bit of time and mostly it's a waiting game. It's a it's an issue of numbers, we need to have a lot more critical mass of clinical sites up and ready to enroll because we never know when the patient is going to come to the emergency room doors.
And another question given given the lag in getting Canada, and Australia up and running it seems that the interim analysis will be heavily weighted towards U S. Patients is there any reason to suspect that that would not be representative of the of the full patient enrollment, which will be more represented by Australia, Canada and.
And the EU.
Well, we anticipate that there will be a mix of patients because remember as we said we would anticipate that EU.
E U and U K, and Canada, Australia will be up and running by the end of year. So we anticipate full enrollment of the interim analysis of 144 patients to be completed by the end of Q1 of 2025. So there will be a mix of patients there will be a.
Number of U S patients, obviously, but we do believe it will be representative.
Okay. I appreciate you taking the questions. Thank you.
Sure.
Okay.
Our next our next question comes from Francois Bruce Wolf of Oppenheimer.
Your line is open.
Hi can you hear me okay.
Yes, yes, right okay.
Perfect Alright.
It's funny reception here so.
I was just wondering so first quarter 'twenty five is what we think enrollment will be complete for the interim rates can you remind us.
Expectations around the interim read in from enrollment just in terms of study design, what would make sense from full enrollment to data timeline anything you can share there would be helpful. Thank you.
Sure. So after patient $1 44 has been dosed there'll be a 90 day follow up and then after that there'll be six to seven weeks.
For database lock and D. SMB reviews, and and then and then and then notice of the recycling size.
Okay, great and in terms of expectations of data can you remind us of possible outcomes is it similar to what it used to be or any changes there.
Sure. So at the interim analysis, if we are not seeing in drug effect. So we're seeing a drug effect of less than approximately 4% versus placebo with the study will be terminated otherwise there will be a re sampling size and they're sampling size will be between 240 and 728 patients.
And so we've had the study powered for a 14%.
As the base case, which would be approximately 350, so if we're seeing a greater effect.
Then we would anticipate seeing a reduction in the size of it we're seeing less of an effect, we'd see an increase.
Okay. Thank you and then the last question is just in terms of the lawsuit.
Those fees do you disclose what those fees were that you were hoping to get reimbursed.
No. Frank this is Scott, we haven't disclosed any of those details thus far.
Okay. That's it for me thank you.
Thanks, Greg.
Yeah.
Our next question comes from Alex Nowak of Craig Hallum.
Your line is open.
Okay, great. Good morning, everyone just.
Just on the timelines here.
<unk> does shift to the right by about a quarter here. So I'm just curious what changed versus the prior targets given on the Q3 call.
Sure. So on the Q3 call what we had disclosed that our our CFO had thought that we could complete.
The interim enrollment by the end of this year and since then we've had more time to better understand the projections for sites enrollment in particular.
And by that we're not comfortable to actually putting out formal guidance of Q1 2025.
Are you finding that it's harder to.
Whether it be activate a site enroll the first patient at a site.
Versus your prior expectation.
No.
No change in terms of that.
Okay.
And then maybe to ask <unk> question, a different way is just how much overall has been spent on the PRA lawsuit and how much of a risk is that.
I guess, if you'd need to appeal it or you don't appeal it isn't a material rest of the cash.
Yeah again, we haven't disclosed those numbers specifically other than noted that it's obviously a significant driver of the increase Alex.
And principally what we kind of get our arms around relative to the appeal is can we put any kind of bands or caps on those fees.
And so that we don't we don't put.
Our current cash runway at risk.
Okay. So in other words, if you have it costs too much.
Keep it costs too much that could be a determining factor in moving forward.
So if you decided not to move forward with an appeal I'm sure you must have some sort of.
You must know what the damage amount is generally so I assume it's not material enough to disclose that right.
I'm not sure I understand the court found no sufficient causal link.
So.
At this point, if we don't appeal.
I don't think they'll change that conclusion.
Okay, well I guess the.
Reading the court document looked like the core wanted you to paid PRA legal fees I'm, just trying to understand what their legal fees ultimately is.
No no we don't have exposure for that the Dutch courts operate a little differently. They have an assigned to Mount the Pik charged us and we had to pay that but.
It wasn't it wasn't determined based upon their on their costs. It was around 40000 U S.
Got it okay alright, thank you so much.
Thanks, Alex.
Yeah.
And seeing no further questions I'll turn the call back over to our host.
Great we'd like to thank everyone for joining us this morning and for your continued support we are building momentum in our remedy to trial and look forward to the next update.
This concludes our call today. Thank you.
The meeting has now concluded.
Thank you for joining and have a pleasant day.
The host has ended this call goodbye.