Q2 2024 DiaMedica Therapeutics Inc Earnings Call

August 8, 2024

Good morning ladies and gentlemen and welcome to the DiaMedica Therapeutics second quarter 2024 conference call. An audio recording of the webcast will be available shortly after the call today on DiaMedica's website at www.diamedica.com in the investor relations section.

Operator: Second Quarter 2024 Conference Call. An audio recording of the webcast will be available shortly after the call today on DiaMedica's website at www.diamedica.com in the Investor Relations section. Before DiaMedica 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.

Unknown Executive: 2024 Conference Call. An audio recording of the webcast will be available shortly after the call today on DiaMedica's website at www.diamedica.com in the Investor Relations section. Before DiaMedica 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 the Second Quarter Report on Form 10-Q.

Unknown Executive: 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 8, 2024, 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.

Before DiaMedica 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 the second quarter report on Form 10-Q .

Operator: Under the heading Risk Factors in DiaMedica's most recent annual report on Form 10-K and the second quarter 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 8, 2024, and may no longer be accurate at the time of any replay or transcript re-reading. DiaMedica disclaims any duty to update its forward-looking statements.

Speaker Change: 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 8, 2024, and may no longer be accurate at the time of any replay or transcript rereading.

Operator: 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, DiaMedica's President and Chief Executive Officer. Mr. Pauls, you may begin.

Rick Pauls: 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, Mr. Rick Pauls, DiaMedica's President and Chief Executive Officer. Mr. Pauls, you may begin.

Lorianne Masuoka: www.diamedica.com

Rick Pauls: Thank you, Operator. Hello, everyone, and welcome to our second quarter conference call. I am joined this morning by Dr. Lorianne Masuoka, our Chief Medical Officer, and Scott Kellen, our Chief Financial Officer. We continue to make progress on our Remedy-2 trial, and we believe we're on track for the interim analysis. The level of interest from sites and potential investigators remains high, and we will likely have to turn down some of the sites

Speaker Change: We continue to make progress on our Remedy-2 trial, and we believe we're on track for the interim analysis.

Speaker Change: The level of interest from sites and potential investigators remains high, and we will likely have to turn down some of the sites.

Rick Pauls: I am grateful to our entire team. Everyone is working tirelessly to engage the highest quality research sites and facilitate their participation in the Remedy-2 trial. Now, I will turn you over to Lorianne for a brief update on our stroke program.

Speaker Change: I am grateful to our entire team. Everyone is working tirelessly to engage the highest quality research sites and facilitate their participation in the Remedy-2 trial. Let me turn you over to Lorianne for a brief update on our stroke program.

Lorianne Masuoka: Thanks, Rick. Let me start by echoing Rick's comments.

Lorianne Masuoka: Thanks, Rick. Let me start by echoing Rick's comments. We are making solid progress with our site activation activities, and we are gaining a much welcomed momentum for the Remedy-2 trial.

Lorianne Masuoka: We are making solid progress with our site activation activities, and we are gaining much-welcomed momentum for the Remedy 2 trial. However, moving sites through the startup process continues to be very challenging, and we believe this is due to the effects of continued staffing shortages at research hospitals.

Speaker Change: Moving sites to the startup process continues to be very challenging. We believe this is due to the effects of continued staffing shortages at research hospitals. We believe that much of the momentum gain is related to increasingly using our people to lead direct communications with the study sites.

Lorianne Masuoka: We believe that much of the momentum gain is related to increasingly using our people to lead direct communications with the study sites. Many sites have already noted their appreciation for the responsiveness and clarity in being able to deal directly with DiaMedica personnel. As a result, we are seeing more rapid responses from both existing sites and sites working through the startup process. As part of building this momentum, we have identified 15 sites which we believe have the highest potential to rapidly enroll, meaning the ability to enroll multiple participants each month.

Speaker Change: Many sites have already noted their appreciation for the responsiveness and clarity in being able to deal directly with DiaMedica personnel. As a result, we're seeing more rapid responses from both existing sites and sites working through the startup process.

Lorianne Masuoka: We have prioritized recruiting and engaging these 15 sites, and by the end of this quarter, we expect to have at least nine of those 15 sites active. For perspective, just 15 sites enrolling 1.6 participants each month would get us to our interim analysis enrollment within six months. As part of our ongoing engagement with study sites, we held a meeting of principal investigators and study coordinators on July 18. The purpose of the meeting was to begin to establish a dialogue amongst the study teams and to compare notes on their experiences, and to build some friendly competition between the study teams.

Speaker Change: As part of building this momentum, we have identified 15 sites which we believe have the highest potential to rapidly enroll, meaning the ability to enroll multiple participants each month.

Lorianne Masuoka: We have prioritized recruiting and engaging these 15 sites, and by the end of this quarter, we expect to have at least nine of those 15 sites active. For perspective, just 15 sites enrolling 1.6 participants each month would get us to our interim analysis enrollment within six months. As part of our ongoing engagement with study sites, we held a meeting of principal investigators and study coordinators on July 18th. The purpose of the meeting was to begin to establish a dialogue amongst the study teams and to compare notes on their experiences, and to build some friendly competition between the study teams.

Speaker Change: We have prioritized recruiting and engaging these 15 sites. By the end of this quarter, we expect to have at least nine of those 15 sites active. For perspective, just 15 sites enrolling, 1.6 participants each month, would get us to our interim analysis enrollment within six months.

Speaker Change: As part of our ongoing engagement with study sites, we held a meeting of principal investigators and study coordinators on July 18th.

Speaker Change: The purpose of the meeting was to begin to establish a dialogue amongst the study teams and compare notes on their experiences and build some friendly competition between the study teams.

Lorianne Masuoka: At this meeting, we had a tremendous dialogue with our clinical research teams, getting their thoughts on a variety of sticking points in both the site activation and participant enrollment processes. We continue to work on mitigating or eliminating impediments to increase efficiencies and ensure that study sites feel well-supported.

Lorianne Masuoka: At this meeting, we had a tremendous dialogue with our clinical research teams, getting their thoughts on a variety of sticking points in both the site activation and participant enrollment processes. We continued to work on mitigating or eliminating impediments to increase efficiencies and ensure that study sites feel well-supported.

Speaker Change: At this meeting, we had a tremendous dialogue with our clinical research teams, getting their thoughts on a variety of sticking points in both the site activation and participant enrollment processes.

Rick Pauls: We continue to work on mitigating or eliminating impediments to increase efficiencies and ensure that study sites feel well supported. I will now turn the call back over to Rick.

Rick Pauls: I will now turn the call back over to Rick.

Rick Pauls: Thank you, Lorianne. Our focus with respect to the REMEDY-2 trial remains centered on building momentum with high-quality research institutions. Based upon the progress of the team, we believe that we will be able to achieve full enrollment for the 144-page REMEDY-2 for the interim analysis by the end of the first quarter of 2025. This quarter, we were also very excited to announce our next indication and begin discussing the significant benefits that DM-189 may bring to preeclampsia patients, a severe hypertensive disorder of pregnancy, which currently has no approved therapeutic options in the U.S. or Europe.

Rick Pauls: Thank you, Lorianne. Our focus with respect to the Remedy-2 trial remains centered on building momentum with high-quality research institutions. Based upon the progress of the team, we believe that we will be able to achieve full enrollment for the 144 patients.

Speaker Change: for the interim analysis by the end of the first quarter of 2025.

Rick Pauls: This quarter, we were also very excited to announce our next indication and begin discussing the significant benefits that DM-189 may bring to preeclampsia patients, a severe hypertensive disorder in pregnant women. Last month, we also had the opportunity to introduce our highly respected preeclampsia research team during a key opinion leader call, where they were able to provide their insights and excitement for DM-199 firsthand to treat pree I'd like to ask Lorianne to speak a little bit more about the preeclampsia program. Lorianne?

Rick Pauls: We believe that DM-19 is uniquely suited to this patient population. Last month, we also had the opportunity to introduce our highly respected preeclampsia research team during a key opinion leader call, where they were able to provide their insights and excitement for DM-199 firsthand to treat preeclampsia. We are incredibly fortunate to be working with this team and to be able to support them in the conduct of the study without distracting a clinical operations team from a remedy for stroke. I'd like to ask Lorianne to speak a little bit more about the preeclampsia program. Lorianne?

Rick Pauls: which currently has no approved therapeutic options in the U.S. or Europe . We believe that DM-19 is uniquely suited in this patient population.

Rick Pauls: Last month we also had the opportunity to introduce our highly respected preeclampsia research team during a key opinion leader call where they were able to provide their insights and excitement for DM-199 firsthand to treat preeclampsia.

Lorianne Masuoka: We are incredibly fortunate to be working with this team and being able to support them in the conduct of the study without distracting a clinical operations team from a remedy to stroke trial. I'd like to ask Lorianne to speak a little bit more about the preeclampsia program. Lorianne?

Lorianne Masuoka: Thanks, Rick. I won't reiterate the information in the press release. If you have specific questions, I'll be happy to answer them during the Q&A. But I do, however, want to point out how excited we are to be working with Professor Stephen Tong, MD, PhD, from the University of Melbourne, Professor Catherine Cluver, MD, PhD, from Stellenbosch University, and Professor Susan Walker, MD, PhD, from the University of Melbourne. Globally, this team has one of the highest levels of experience in studying preeclampsia and trialing various potential therapeutics. We are very fortunate to be able to work with them. They graciously participated in a KOL call for us last month.

Lorianne Masuoka: Thanks, Rick. I won't reiterate the information in the press release. If you have specific questions, I'll be happy to answer them during the Q&A.

Lorianne Masuoka: Thanks, Rick.

Lorianne Masuoka: I won't reiterate the information in the press release. If you have specific questions, I'll be happy to answer them during the Q&A.

Lorianne Masuoka: I do, however, want to point out how excited we are to be working with Professor Stephen Tong, MD, PhD, from the University of Melbourne, Professor Catherine Cluver, MD, PhD, from Stellenbosch University, and Professor Susan Walker, MD, PhD, from the University of Melbourne. Globally, this team has one of the highest levels of experience in studying preeclampsia and trialing various potential therapeutics. We are very fortunate to be able to work with them. They graciously participated in a KOL call for us last month.

Speaker Change: I do, however, want to point out how excited we are to be working with Professor Stephen Tong, MD, PhD, from the University of Melbourne, Professor Catherine Cluver, MD, PhD, from Stellenbosch University, and Professor Susan Walker, MD, PhD, from the University of Melbourne.

Speaker Change: Globally, this team has one of the highest levels of experience in studying preeclampsia and trialing various potential therapeutics.

Speaker Change: We are very fortunate to be able to work with them. They graciously participated in a KOL call for us last month.

Lorianne Masuoka: As discussed on that call, treatment options for preeclampsia are very limited due to risks associated with therapeutics that cross the placental barrier and adversely affect the baby. ACE inhibitors and ARBs, first-line treatments for hypertension, are contraindicated for this very reason. The only recent new treatment to show some potential to lower blood pressure in these women was sildenafil, which augments the nitric oxide signaling pathway. Unfortunately, because it's a small-molecule drug, it passes the placental barrier and causes serious issues for the fetus.

Lorianne Masuoka: As discussed on that call, treatment options for preeclampsia are very limited due to risks associated with therapeutics that cross the placental barrier and adversely affect the baby. ACE inhibitors and ARBs, first-line treatments for hypertension, are contraindicated for this very reason. The only recent new treatment to show some potential to lower blood pressure in these women was sildenafil, which augments the nitric oxide signaling pathway. Unfortunately, because it's a small molecule drug, it passes the placental barrier and causes serious issues for the fetus.

Speaker Change: As was discussed at that call, treatment options for preeclampsia are very limited due to risks associated with therapeutics that cross the placental barrier and adversely affect the baby.

Speaker Change: ACE inhibitors and ARBs, first-line treatments for hypertension, are contraindicated for this very reason. The only recent new treatment to show some potential to lower blood pressure in these women was sildenafil, which augments the nitric oxide signaling pathway.

Lorianne Masuoka: Our research team is highly interested in DM-199 as it has demonstrated the ability to increase the production of nitric oxide and other beneficial molecules, including prostacyclin and endothelium-derived hyperpolarizing factors. However, given that DM-199 is a large molecule, it is highly unlikely to cross the placental barrier, something confirmed in non-clinical testing. Preeclampsia is usually marked by a rapid spike in blood pressure, potentially causing seizures, stroke, multiple organ failure, and even death of the mother or baby.

Speaker Change: Unfortunately, because it's a small molecule drug, it passes the placental barrier and causes serious issues for the babies.

Lorianne Masuoka: Our research team is highly interested in DM-199, as it has demonstrated the ability to increase the production of nitric oxide and other beneficial molecules, including prostacyclin and endothelium-derived hyperpolarizing factors. However, given that DM-199 is a large molecule, it is highly unlikely to cross the placental barrier, something confirmed in non-clinical testing.

Speaker Change: Our research team is highly interested in DM-199 as it has demonstrated the ability to increase production of nitric oxide and other beneficial molecules including prostacyclin and endothelium-derived hyperpolarizing factors.

Speaker Change: Given that DM-199 is a large molecule, it is highly unlikely to cross the placental barrier, something confirmed in non-clinical testing.

Speaker Change: Preeclampsia is usually marked by a rapid spike in blood pressure, potentially causing seizures, stroke, multiple organ failure, and even death of the mother or baby. As of today, the only way to stop disease progression is to deliver the baby, which is oftentimes done prematurely.

Lorianne Masuoka: As of today, the only way to stop disease progression is to deliver the baby, which is oftentimes done prematurely. Preeclampsia and related hypertensive disorders of pregnancy affect 5 to 8% of all births in the U.S., impacting approximately 180 to 300,000 patients annually, and the number is growing. Clearly, as we saw two years ago in the Remedy-2 trial, DM-199 has the ability to rapidly reduce blood pressure, and we're optimistic that DM-199 can reduce blood pressure in this population as well.

Speaker Change: Preeclampsia and related hypertensive disorders of pregnancy affect 5-8% of all births in the U.S., impacting approximately 180-300,000 patients annually, and it is growing.

Speaker Change: Clearly, as we saw two years ago in the Remedy-2 trial, DM-199 has the ability to rapidly reduce blood pressure, and we're optimistic that DM-199 can reduce blood pressure in this population group as well.

Lorianne Masuoka: We also aim to demonstrate that DM-199 dilates the intrauterine arteries and improves blood flow to the placenta. If proven, this would suggest that DM-199 has the potential to be a disease-modifying therapy and enhance fetal growth. We believe DM-199 has first-in-class and best-in-class potential for preeclampsia, with the ability to improve outcomes for both the fetus and the mother. And, of course, we don't have to wait long for our initial signals. We expect Professor Cluver to begin enrolling in the fourth quarter of this year, with top-line results available sometime in the first half of 2025. After having experienced my own bout of severe preeclampsia, I'm very excited to be part of developing a potential treatment for this potentially life-threatening condition.

Speaker Change: We also aim to demonstrate that DM-199 dilates the intrauterine arteries and improves blood flow to the placenta.

Speaker Change: If proven, this would suggest that DM-199 has the potential to be a disease-modifying therapy and enhance fetal growth.

Speaker Change: We believe DM-199 has first-in-class and best-in-class potential for preeclampsia, with the ability to improve outcomes for both the fetus and the mother. And, of course, we don't have to wait long for our initial signals.

Speaker Change: We expect Professor Cluver to begin enrolling in the fourth quarter of this year with top-line results available sometime in the first half of 2025.

Speaker Change: After having experienced my own bout of severe preeclampsia, I'm very excited to be part of developing a potential treatment for this potentially life-threatening condition.

Rick Pauls: Thank you, Lorianne. It's also important to highlight the efficiency of this trial. From a data standpoint, we will gain valuable insight into DM-19's potential to lower blood pressure and dilate the interuterine arteries in preeclampsia patients. Now, I'd like to hand the call over to Scott Kellen to review this quarter's financial results. Thanks, Rick, and good morning.

Rick Pauls: Thank you, Lorianne. It's also important to highlight the efficiency of this trial. From a data standpoint, we'll gain valuable insight into DM-19's potential to lower blood pressure and dilate the interuterine arteries in preeclampsia patients, with results in the first half of 2025. Moreover, with our research collaborators conducting the trial, it keeps our clinical operations group focused on the Remedy-2 trial. Now I'd like to hand the call over to Scott Kellen to review this quarter's financial results. Thanks, Rick, and good morning.

Speaker Change: Thank you, Lorianne. It's also important to highlight the efficiency of this trial. From a data standpoint, we'll gain valuable insight into DM-189's potential to lower blood pressure and dilate the interuterine arteries in preeclampsia patients.

Speaker Change: with results in the first half of 2025. Moreover, with our research collaborators conducting the trial, it keeps our clinical operations group focused on the Remedy-2 trial.

Speaker Change: Now I'd like to hand the call over to Scott Kellen to review this quarter's financial results.

Scott Kellen: Thanks, Rick, and good morning, everyone. And thank you for being part of today's call.

Scott Kellen: We topped up our balance sheet considerably in June with the completion of an $11.8 million private placement with accredited investors, effectively extending our cash runway into Q3 of 2026. The net proceeds from this transaction were approximately $11.7 million. With this financing, our June 30, 2024 combined cash, cash equivalents, and investments increased to $54.1 million, up from $52.9 million as of the end of 2023. Net cash used in operating activities for the six months ended June 30, 2024 was $11.2 million, compared to $10.1 million in the same period of the prior year. The increase in cash used in operating activities was driven primarily by the advance of deposit funds to vendors supporting a Remedy-2 clinical trial during the current year period.

Speaker Change: and

Scott Kellen: Thanks, Rick, and good morning, everyone, and thank you for being part of today's call.

Scott Kellen: We topped up our balance sheet considerably in June with the completion of an $11.8 million private placement with accredited investors.

Speaker Change: Effectively extending our cash runway into Q3 of 2026.

Speaker Change: Net proceeds from this transaction were approximately $11.7 million.

Scott Kellen: With this financing, our June 30, 2024 combined cash, cash equivalents, and investments increased to $54.1 million, up from $52.9 million as of the end of 2023. Net cash used in operating activities for the six months ended June 30, 2024, was $11.2 million, compared to $10.1 million in the same period of the prior year and the completion in 2023 of the in-use study work performed to address the clinical hold on a Remedy 2 trial.

Speaker Change: With this financing, our June 30, 2024 combined cash, cash equivalents, and investments increased to $54.1 million, up from $52.9 million as of the end of 2023.

Scott Kellen: Net cash used in operating activities for the six months ended June 30, 2024 was $11.2 million, compared to $10.1 million in the same period of the prior year.

Scott Kellen: The increase in cash used in operating activities was driven primarily by the advance of deposit funds to vendors supporting a Remedy-2 clinical trial during the current year period.

Scott Kellen: Our research and development expenses increased to $3.9 million for the three months ended June 30, 2024, up from $2.5 million in the prior year period. R&D expenses increased to $7.6 million for the six months ended June 30, 2024, compared to $6.2 million for the six months ended June 30, 2023. These increases relate to the continuation of our Remedy 2 clinical trial and increased staffing costs driven by the expansion of our clinical team.

Scott Kellen: Our research and development expenses increased to $3.9 million for the three months ended June 30, 2024, up from $2.5 million in the prior year period.

Scott Kellen: These increases were partially offset by cost reductions related to clinical trial work completed in 2023, specifically our Phase 1c and Redux trials and the completion in 2023 of the in-use study work performed to address the clinical hold on a Remedy 2 trial. We expect our R&D expenses to increase moderately relative to recent prior periods as we globally expand the REM-22 trial and site activations and participant enrollment continue. Our general and administrative expenses were $1.7 million for the three months ended June 30, 2024, down from $2.2 million for the three months ended June 30, 2023.

Scott Kellen: R&D expenses increased to $7.6 million for the six months ended June 30, 2024, compared to $6.2 million for the six months ended June 30, 2023.

Scott Kellen: These increases related to the continuation of our Remedy-2 clinical trial and increased staffing costs driven by the expansion of our clinical team.

Scott Kellen: These increases were partially offset by cost reductions related to clinical trial work completed in 2023, specifically our Phase Ic and Redux trials.

Scott Kellen: And the completion in 2023 of the in-use study work performed to address the clinical hold on a Remedy-2 trial.

Scott Kellen: We expect our R&D expenses to increase moderately relative to recent prior periods as we globally expand the REM-22 trial and site activations and participant enrollment continue, partially offset by increased personnel costs related to the expansion of our team and an increased non-cash share based compensation cost. We expect our GNA expenses to remain steady as compared to recent prior periods. Other income net was $526,000 and $1.1 million for the three and six months ended June 30, 2024, respectively, compared to 271,000 and 527,000 for the three and six months ended June 30, 2023, respectively. These increases were driven by increased interest income recognized during the current year periods related to higher marketable securities balances during the current year periods as compared to the same periods in the prior year.

Scott Kellen: We expect our R&D expenses to increase moderately relative to recent prior periods as we globally expand the REM-82 trial and site activations and participant enrollment continue.

Scott Kellen: Our general and administrative expenses were $1.7 million for the three months ended June 30, 2024, down from $2.2 million for the three months ended June 30, 2023.

Scott Kellen: G&A expenses were $3.8 million for the six months ended June 30, 2024, down from $4.1 million for the six months ended June 30, 2023. These decreases resulted from the combination of a reduction in the cost of directors and officers liability insurance premiums and decreased legal fees incurred in connection with our lawsuit against PRA Netherlands, partially offset by increased personnel costs related to the expansion of our team and an increased non-cash share based compensation cost.

Scott Kellen: gnaa expenses were three point eight million for the six months end june thirty two thousandyand twenty four down from four point one million for the six months and june thirty two thousand and twenty three

Scott Kellen: These decreases resulted from the combination of a reduction in the cost of directors' and officers' liability insurance premiums and decreased legal fees incurred in connection with our lawsuit against PRA Netherlands.

Scott Kellen: partially offset by increased personnel costs related to the expanding of our team and an increased non-cash share based compensation costs.

Scott Kellen: We expect our GNA expenses to remain steady as compared to recent prior periods. Other income net was $526,000 and $1.1 million for the three and six months ended June 30, 2024, respectively, compared to 271,000 and 527,000 for the three and six months ended June 30, 2023, respectively. These increases were driven by increased interest income recognized during the current year periods related to higher marketable securities balances during the current year periods as compared to the same periods in the prior year.

Scott Kellen: we expect our gna expenses to remain steady as compared to recent prior periods

Scott Kellen: Other income net was $526,000 and $1.1 million for the three and six months ended June 30, 2024, respectively.

Scott Kellen: compared to two hundred and seventy one thousand and five hundred twenty seven thousand for the three and six months endended junethirty two thousand and twenty three respectively

Speaker Change: These increases were driven by increased interest income recognized during the current year periods related to higher marketable securities balances during the current year periods as compared to the same periods in the prior year.

Scott Kellen: With that, let me ask the operator to open the lines for questions.

Operator: With that, let me ask the operator to open the lines for questions.

Speaker Change: With that, let me ask the operator to open the lines for questions.

Operator: Thank you very much. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the number on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline the polling process, please press the star followed by the two. If you're using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. The first question comes from Thomas Flaten with Lake Street. Please go ahead.

Operator: Thank you very much. Ladies and gentlemen, you will now begin the question and answer session. Should you have a question, please press the star followed by the one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the two. If you're using a speakerphone, please lift the handset before pressing any keys.

Speaker Change: Thank you very much. Ladies and gentlemen, you will now begin the question and answer session. Should you have a question, please press the star followed by the one on your touchtone phone. You will hear a prompt that your hand has been raised.

Speaker Change: Should you wish to decline from the polling process, please press the star followed by the 2. If you are using a speakerphone, please lift the handset before pressing any keys. One moment please for your first question.

Operator: One moment, please, for your first question. The first question comes from Thomas Flaten with Lake Street. Please go ahead.

thomas fleton: first question comes from thomas fleton with least lake street please go ahead

Thomas Flaten: Good morning, I appreciate you taking the questions. Rick, just to clarify, or perhaps Lorianne, at the end, during your first quarter results call, you indicated that there were eight sites that were active, and I know you're focused on the 15. How many are active and enrolling as we speak?

Speaker Change: Good morning, I appreciate you taking the questions. Rick, just to clarify or perhaps Lorianne, at the end during your first quarter results call you indicated that there were eight sites that were active and I know you're focused on the 15. How many are active and enrolling as we speak?

Rick Pauls: Florianne, do you want to take this one?

Lorianne Masuoka: Certainly. As you may have seen on clinicaltrials.gov, it lists eight sites. However, there is always a lag between the actuals and what is on the clinicaltrials.gov website. We currently have 13 sites activated.

Speaker Change: Florianne, do you want to take that one?

Florianne: Certainly. So, as you may have seen on clinicaltrials.gov, it lists eight sites. There is always a lag between actuals and what is on the clinicaltrials.gov website. We currently have 13 sites activated.

Lorianne Masuoka: Great. And is their enrollment pacing the way, at least as good as your conservative estimate for the enrollment, or are they more high-enroller type sites?

Speaker Change: Great. And is their enrollment pacing the way, at least as good as your conservative estimate for the enrollment, or are they more high enroller type sites?

Lorianne Masuoka: It's a combination of high enroller sites and sites that we feel are not quite as high enrolling. We believe we'll have 9 out of the 15 high enrolling sites, the top 15 high enrolling sites, up and running by the end of Q3. So, does that answer your question?

Speaker Change: It's a combination of high enroller sites and sites that we feel are not quite as high enrolling. We believe we'll have nine out of the 15 high enrolling top 15 high enrolling sites up and running by the end of Q3. So does that answer your question?

Lorianne Masuoka: Yes, that's super helpful. Thank you. And with respect to the preeclampsia study, you guys are in the regulatory process in South Africa right now. Is that being led by you guys or Dr. Cluver and her team? And is it a dynamic process? Do you have any sense of how that's going?

Thomas Flaten: Yeah, that's super helpful. Thank you. And with respect to the preeclampsia study, you guys are in the regulatory process in South Africa right now. Is that being led by you guys or Dr. Cluver and her team? And is it a dynamic process? Do you have any sense of how that's going?

Speaker Change: Yeah, that's super helpful. Thank you. And with respect to the preeclampsia study, you guys are in the regulatory process in South Africa right now. Is that being led by you guys or Dr. Cluver and her team? And is it a dynamic process? Do you have any sense of how that's going?

Operator: Second Quarter, 2024, Conference Call. An audio recording of the webcast will be available shortly after the call today on DiaMedica's website at www.diametica.com and the investor relations section. Before DiaMedica 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. Or information including factors that could cause actual results to differ from projected results appears in the section entitled cautionary cautionary statement, note regarding forward-looking statements in the company's press release issued yesterday, and under the heading risk factors in Diametica's most recent annual report on Form 10K and the Second Quarter Report on Form 10Q.

Rick Pauls: Yeah, that's being led by Dr. Cluver and her team, and it appears to be going extremely well.

Speaker Change: yeah that being led by dr cuver and her team and it appears to be going extremely well

Thomas Flaten: Excellent. I appreciate you taking the time to answer the questions. Thank you.

Operator: Diametica's SEC filings are available at www.scc.gov and on its website. Please also note that any comments made on today's call, speak only as of today. August 8th, 2020, 2024, and may no longer be accurate at the time of any replay or transcript rereading. Diametica disclaims any duty to update its forward-looking statements.

Thomas Flaten: Excellent. I appreciate you taking the questions. Thank you. Your next question comes from Chase Knickerbocker with Craig Hallam. Please go ahead.

Chase Knickerbocker: Your next question comes from Chase Knickerbocker with Craig Hallam. Please go ahead.

Speaker Change: Excellent, I appreciate taking the questions. Thank you.

Speaker Change: Your next question comes from Chase Knickerbocker with Craig Hallam. Please go ahead.

Operator: Hi guys, it's Jacob on for Chase. So just one question for me.

Chase Knickerbocker: hi guys it's jacobon for chase so just one question for me do you feel good about the screening criteria you have in place anything causing screening failures that has surprised you

Unknown Executive: We do feel good about our screening process. We are always looking for ways to improve our enrollment rate, and so there may be some future developments coming down the pipe. But at the moment, we feel that we're enrolling a population for whom there is very little, or nothing actually, that can be done to help them. So this is a very large patient population with no other treatment options.

Speaker Change: We do feel good about our screening process. We are always looking for ways to improve our enrollment rate.

Speaker Change: and so there may be some future developments coming down the pipe.

Speaker Change: But at the moment, we feel that we are enrolling a population for whom there is very little or nothing, actually, that can be done to help them. So this is a very large patient population with no other treatment option.

Operator: Following the prepared remarks, we will open the full lines for questions.

Lorianne Masuoka: Unknown Executive, Lorianne Masuoka

Operator: And we do not have any further questions at this time. Mr. Pauls, I will turn the call over to you for closing comments.

Rick Pauls: I would now like to introduce your host for today's call, Mr. Rick Pauls, Diametica's President and Chief Executive Officer, Mr. Pauls, you may begin. Thank you, Operator. Hello, everyone, and welcome to our second quarter conference call. I am joined this morning by Dr. Lourian, Mosul Oka, our Chief Medical Officer, and Scott Kellen, our Chief Financial Officer. We continue to make progress on a remedy-to-trial, and we believe we're on track for the intern analysis. The level of interest from sites and potential investigators remains high, and we will likely have to turn down some of the sites.

Chase Knickerbocker: And we do not have any further questions at this time. Mr. Pauls, I will turn the call over to you for closing comments.

Rick Pauls: Alright, thank you. So we'd like to thank everyone for joining us this morning and for your continued support. We look forward to the next update. And with that, this concludes our call today. Thank you.

Speaker Change: Alright, thank you. So we'd like to thank everyone for joining us this morning and for your continued support. We look forward to the next update. And with that, this concludes our call today. Thank you. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.

Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.

Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating.

Rick Pauls: I am grateful to our entire team. Everyone is working tirelessly to engage the highest-quality research sites and facilitate their participation in the remedy-to-trial.

Lorianne Masuoka: Let me turn you over to Lourian for a brief update on our stroke program. Thanks, Rick. Let me start by echoing Rick's comments. We are making solid progress with our site activation activities, and we are gaining a much welcome momentum for the remedy-to-trial. Moving sites to the start-up process continues to be very challenging. We believe this is due to the effects of continued staffing shortages at research hospitals. We believe that much of the momentum gain is related to increasingly using our people to lead direct communications with the study sites.

Lorianne Masuoka: Many sites have already noted their appreciation for the responsiveness and clarity in being able to deal directly with Diomedica personnel. As a result, we're seeing more rapid responses from both existing sites and sites working through the start-up process. As part of building this momentum, we have identified 15 sites which we believe have the highest potential to rapidly enroll, meaning the ability to enroll multiple participants each month. We have prioritized recruiting and engaging these 15 sites.

Lorianne Masuoka: By the end of this quarter, we expect to have at least nine of those 15 sites active. For perspective, just 15 sites enrolling 1.6 participants each month would get us to our interim analysis enrollment within six months.

Lorianne Masuoka: As part of our ongoing engagement with study sites, we held a meeting of principal investigators and study coordinators on July 18th. The purpose of the meeting was to begin to establish a dialogue amongst the study teams and compare notes on their experiences and build some friendly competition between the study teams. At this meeting, we had a tremendous dialogue with our clinical research teams, getting their thoughts on a variety of sticking points in both the site activation and participant enrollment processes. We continued to work on mitigating or eliminating impediments to increase efficiencies and ensure that study sites feel well-supported.

Rick Pauls: I will now turn the call back over to Rick. Thank you, Lorianne. Our focus with respect to the Remini-2 trial remains centered on building momentum with high-quality research institutions.

Rick Pauls: Based upon the progress of the team, we believe that we'll be able to achieve full enrollment for the 144 patients for the interim analysis by the end of the first quarter 2025. This quarter, we were also very excited to announce our next indication and begin discussing the significant benefits that DM-19 may bring to pre-campsia patients. It's severe hypertensive disorder pregnancy, which currently has no approved therapeutic options in the US or Europe.

Rick Pauls: We believe that DM-19 is uniquely suited in this patient population. Last month, we also had the opportunity to introduce our highly respected pre-campsia research team during a key opinion leader call, where they were able to provide their insights and excitement for DM-199 first-hand to treat pre-campsia. We are incredibly fortunate to be working with this team and be able to support them in the conduct of the study without distracting their clinical operations team from a Remini-2 stroke trial.

Lorianne Masuoka: I'd like to ask Lorianne to speak a little bit more about the pre-campsia program. Lorianne? Thanks, Rick.

Lorianne Masuoka: I won't reiterate the information in the press release. If you have specific questions, I'll be happy to answer them during the Q&A. I do however want to point out how excited we are to be working with Professor Steven Tongue, MD-PhD from the University of Melbourne, Professor Catherine Cluver, MD-PhD from Spell and Bosch University, and Professor Susan Walker, MD-PhD from the University of Melbourne. Globally, this team has one of the highest levels of experience in studying pre-campsia and trialling various potential therapeutics.

Lorianne Masuoka: We are very fortunate to be able to work with them. They graciously participated in a KOL call for us last month. As was discussed at that call, treatment options for pre-campsia are very limited due to risks associated with therapeutics that cross the percentile barrier and adversely affect the baby. ACE inhibitors and ARB's first-line treatments for hypertension are contraindicated for this very reason. The only recent new treatment to show some potential to lower blood pressure in these women was cell benefit, which augments the nitric oxide signaling pathway.

Lorianne Masuoka: Unfortunately, because it's a small molecule drug, it passes the percentile barrier and causes serious issues for the babies. Our research team is highly interested in DM-199, as it has demonstrated the ability to increase production of nitric oxide and other beneficial molecules, including prostate cyclone and endothelium derived hyperpolarizing factors. Given that DM-199 is a large molecule, it is highly unlikely to cross the percentile barrier, something confirmed in non-clinical testing.

Lorianne Masuoka: Pre-campsia is usually marked by a rapid spike in blood pressure, potentially causing seizures, stroke, multiple organ failure, and even death of the mother or baby. As of today, the only way to stop disease progression is to deliver the baby, which is oftentimes done prematurely. Pre-campsia and related hypertensive disorders of pregnancy affect 5-8% of all births in the US, impacting approximately 180-300,000 patients annually, and it is growing. Clearly, as we saw two years ago in the remedy to trial, DM-199 has the ability to rapidly reduce blood pressure, and we're optimistic that DM-199 can reduce blood pressure in this population group as well.

Lorianne Masuoka: We also aim to demonstrate that DM-199 dilates the intrauterine arteries and improves blood flow to the placenta. If proven, this would suggest that DM-199 has the potential to be a disease-modifying therapy and enhanced fetal growth. We believe DM-199 has first-in-class and best-in-class potential for pre-eclampsia with the ability to improve outcomes for both the fetus and the mother, and of course, we don't have to wait long for our initial signals. We expect Professor Cluver to begin enrolling in the fourth quarter of this year with top-line results available from time in the first half of 2025.

Lorianne Masuoka: After having experienced my own battle severe pre-eclampsia, I'm very excited to be part of developing a potential treatment for this potentially life-threatening Thank you, Lorianne.

Lorianne Masuoka: It's also important to highlight the efficiency of this trial. From a data standpoint, we'll gain valuable insights into DM-19's potential to lower blood pressure, and dilate the interuter and arteries in pre-campsia patients, with results in the first half of 2025. Moreover, with our research collaborators conducting the trial, it keeps our clinical operations group focused on the remedy to trial.

Scott Kellen: Now, I'd like to hand the call over 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. We topped up our balance sheet considerably in June, with the completion of an $11.8 million private placement with accredited investors, effectively extending our cash runway into Q3 of 2026. Net proceeds from this transaction were approximately $11.7 million. With this financing, our June 30, 2024 combined cash, cash equivalents, and investments increased to $54.1 million, up from $52.9 million as of the end of 2023.

Scott Kellen: Net cash used in operating activities for the six months and in June 30, 2024 was $11.2 million, compared to $10.1 million in the same period of the prior year. The increase in cash used in operating activities was driven primarily by the advanced deposit funds to vendors supporting our remedy to clinical trial during the current year period. Our research and development expenses increased to $3.9 million for the three months ended June 30, 2024, up from $2.5 million in the prior year period.

Scott Kellen: R&D expenses increased to $7.6 million for the six months ended June 30, 2024, compared to $6.2 million for the six months ended June 30, 2023. These increases related to the continuation of our remedy to clinical trial and increased staffing costs driven by the expansion of our clinical team. These increases were partially offset by cost reductions related to clinical trial work completed in 2023, specifically our Phase I, C, and Redox trials. And the completion in 2023 of the in-use study work performed to address the clinical hold on our remedy to trial.

Scott Kellen: We expect our R&D expenses to increase moderately relative to recent prior periods, as we globally expand the remedy to trial and site activations and participant enrollment continue. Our general and administrative expenses were $1.7 million for the three months ended June 30, 2024, down from $2.2 million for the three months ended June 30, 2023. GNA expenses were $3.8 million for the six months ended June 30, 2024, down from $4.1 million for the six months ended June 30, 2023.

Scott Kellen: These decreases resulted from the combination of a reduction in the cost of directors and officers liability insurance premiums, and decreased legal fees incurred in connection with our lawsuit against PRA and other ones. Partially offset by increased personnel costs related to the expanding of our team and increased non-cash share-based compensation.

Scott Kellen: Dr. Pauls. We expect our GNA expenses to remain steady as compared to recent prior periods. Other income net was 526,000 and 1.1 million for the three in six months ended June 30, 2024 respectively, compared to 271,000 and 527,000 for the three in six months ended June 30, 2023 respectively. These increases were driven by increased interest income recognized during the current year periods related to higher marketable securities balances during the current year periods as compared to the same periods in the prior year.

Scott Kellen: With that, let me ask the operator to open the lines for questions. Thank you very much. Ladies and gentlemen, you will now begin to question an answer session. Should you have a question, please press the star followed by the one on your touch tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the two. If you're using a speaker phone, please lift the handset before pressing any keys. One moment please for your first question.

Operator: First question comes from Thomas Flaton with Lakes Creek. Please go ahead.

Lorianne Masuoka: Good morning. I appreciate you taking the questions. Eric, just to clarify, or perhaps Lorraine, at the end, during your first quarter results call, you indicated that there were eight sites that were active, and I know you're focused on the 15. How many are active and enrolling as we speak? We're going to take that one. Certainly. As you may have seen on ClinicalTrials.gov, it lists eight sites. There is always a lag between actuals and what is on the ClinicalTrials.gov website. We currently have 13 sites activated.

Lorianne Masuoka: Great. Is there enrollment pacing the way, at least as good as your conservative estimate for the enrollment? Are they more high enrolled type sites? With the combination of high enrolling sites and sites that we feel are not quite as high enrolling, we believe we'll have nine out of the 15 high enrolling top 15 high enrolling sites up and running by the end of Q3. So does that answer your question? Yeah, that's super helpful. Thank you.

Lorianne Masuoka: And with respect to the preeclampsia study, you guys are in the regulatory process in South Africa right now. Is that being led by you guys or Dr. Cluver and her team, and is it a dynamic process? Do you have any sense of how that's going? Yeah, that's being led by Dr. Cluver and her team, and it appears to be going extremely well.

Lorianne Masuoka: Excellent. I appreciate taking the questions. Thank you.

Lorianne Masuoka: Here next question comes from Chase Nickerbocker with Craig Hallum. Please go ahead. Hi guys, it's Jacob on for Chase. So just one question for me. Do you feel good about the screening criteria you have in place? Anything causing screening failures that has surprised you? We do feel good about our screening process. We are always looking for ways to improve enrollment rates, so there will be some future developments coming down the pipe.

Lorianne Masuoka: But at the moment, we feel that we are only a population for whom there is very little or nothing actually that can be done to help them. So this is a very large placement population with no other treatment option.

Rick Pauls: And we do not have any further questions at this time, Mr. Pauls, I will turn the call over to you for closing comments. Thank you. So we'd like to thank everyone for joining us this morning and for your continued support. We look forward to the next update and with that this concludes our call today. Thank you.

Operator: Ladies and gentlemen, this concludes your conference call for today.

Operator: We thank you for participating and ask that you please disconnect your lines.

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