Q3 2024 DiaMedica Therapeutics Inc Earnings Call
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Speaker Change: Good morning, ladies and gentlemen, and welcome to the diet Medica Therapeutics third quarter 'twenty 'twenty four conference call.
Speaker Change: An audio recording of the webcast will be available shortly after the call today on diet Medical's website at Www Dot diet Medica dotcom.
Speaker Change: In the Investor Relations section.
Speaker Change: Before diabetic 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.
Speaker Change: More information, including factors that could cause actual results to differ from projected results appears in the section entitled cautionary statement regarding 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.
Speaker Change: And the third quarter report on Form 10-Q.
Speaker Change: Di Medicos SEC filings are available at Www Dot S E C dot Gov and on its website.
Please also note that any comments made on today's call speak only as of today November 14th 2024, and May no longer be accurate at the time of any replay or transcript rereading die.
Speaker Change: <unk> disclaims any duty to update its forward looking statements.
Following the prepared remarks, the phone lines will be opened for questions I would now like to introduce your host for today's call. Mr. Rick Pauls Diet Medica is president and Chief Executive Officer. Mr. Pulse you may begin.
Rick Pauls: Thank you operator, Hello, everyone and welcome to our third quarter Conference call I'm joined this morning by Dr. Lorie, and Matsuoka, our Chief Medical Officer, and Scott Collins, Our Chief Financial Officer.
We're making solid progress on both our stroke and frequency programs and we expect 2025 to be a truly transformative year for our company and our shareholders, although activating our top U S sites and our AI as study has taken longer than anticipated I am pleased to report that we now have 13 of our top 15 sites either.
Rick Pauls: Fully activated or with signed clinical trial agreements negotiating this agreement stage is typically the most time consuming part of the site activation process. We anticipate that these sites, especially our top five will enroll a disproportionately large number of patients.
Rick Pauls: Houston Methodist the first of our top five sites to be activated went live in September Chattanooga, Tennessee, and Oregon Health are two more of our anticipated top high priority sites, we have signed contracts with them and their site initiation visits have been scheduled.
Rick Pauls: We anticipate all of our top five U S sites to be activated in recruiting by the end of the year, Canada will also add five to seven sites that should rival the recruitment rates of our U S priority sites as well with the first sites activated before at year end.
Rick Pauls: Laurie will discuss this in more detail, but at the same time, we're bringing on these tier one sites. We're implementing a political update designed to further accelerate enrollment and target high quality patients with significant unmet medical needs. We've taken this site feedback into account and make several small yet impactful changes.
Rick Pauls: Most notably we're now using a newly manufactured drug lot.
Rick Pauls: As for our refrigerated storage of our investigational product previously the drive us frozen requiring an investigational pharmacists to dispense the drug and often these pharmacists only work on Monday to Friday from nine to five.
Well its refrigerated vials, we believe sites will be able to enroll patients after hours and on weekends placed during the drug in the emergency Department.
Rick Pauls: Our Preeclampsia program is also making tremendous strides we are pleased to have quickly secured regulatory approval from the South African health products regulatory authority and just yesterday. The first pregnant participant with preeclampsia wasn't rolled we believe D. Nine has the potential to be disease modifying in preeclampsia.
And hope to demonstrate this in the part one a of the study which will be announced in the first half of 2025, we believe D. Nine has both first and best in class potential for Preeclampsia and Unfortunately, there are no currently approved therapies in the U S. Today.
Lauren: Now, let me turn you over to Lauren.
Lauren: Thanks, Rick today, I would like to start off by covering the recent updates to the remedy to protocol and statistical analysis plan I will be referencing slides displayed on your screen for our web based listeners. These slides were also filed with the SEC in a form 8-K last night.
Speaker Change: Joined died medica in late January of this year and I couldn't be more excited about the opportunity. It quickly became clear that we needed to transform the medical organization and bring clinical site facing activities back to diabetic cat because we were not getting acceptable results from our contract research organization I'm very pleased with.
Speaker Change: Our progress and we will share more details about this momentarily.
Speaker Change: With that transition underway. The next area of attention that we brought to focus with the trial design and statistic analysis plan.
Speaker Change: If you reference slide two of the presentation, we've implemented a series of updates and further clarifications to the remedy to protocol, which we believe are very positive for our trial. These updates were submitted to the SBA at the end of August and as we have received no comment that as of yesterday, we are implementing the new protocol modification.
Speaker Change: The two primary updates to discuss are the inclusion of patients who did not respond to thrombolytic therapy that is treatment thrombolytic studies activates or check the place and the increase of the interim analysis sample size from $1 44 to 200 participants, which dramatically enhances the power of the Bayesian stimulation used to.
<unk> forecast the total required sample size and therefore improve the precision of and confidence in the final sample size determination for the trial.
Speaker Change: I'll discuss each in detail, but note that these changes will help us achieve the following outcomes.
Speaker Change: Number one accelerate per site enrollment rates in previewing. These changes with the clinical sites. Their reaction is that with the inclusion of thrombolytic non responders. They can potentially increase their enrollment significantly some sites indicated as much as 50% to 100%.
Speaker Change: Number two adding thrombolytic non responders is expected to improve our overall response rate compared to placebo. This patient group exhibited the highest response rate of any subgroup in a remedy one phase two study.
I'll discuss further but as we reanalyzed our data. We wanted to include these potentially great patients to increase the probability of success for the remedy to trial.
Speaker Change: And number three with trials using an adaptive design structure. The interim analysis needs to be based upon a number of participants that is large enough to optimize the precision of the estimated final sample size in order to avoid unnecessarily enrolling excess participants.
Speaker Change: Collectively we believe the protocol updates are expected to be very positive for our study sites should increase the probability of success for the remedy to trial and accelerate our timeline to completion. This change may take an additional four to six months to get to the interim enrollment, but it's important that the increased sample size has the potential.
Speaker Change: To reduce the final sample size, which can lead to a shorter overall study timeline and substantial cost savings I want to be emphatically clear that we would not have babies changes. If there was any belief or concern that they would cause even the slightest degradation in quality or efficacy of the trial I emphasize this is <unk>.
I've been developing drugs for 30 years and watched numerous trials fail due to expanding inclusion criteria to boost enrollment.
Speaker Change: Turning to slide three let me go into more detail when examining our data from the remedy one phase III trial, we found that the majority of participants pretreated with T. P. A receive D. M 199 late in the 24 hour treatment window.
Speaker Change: Rising labor, although these patients could have been enrolled as soon as one hour. After tpa was administered on average they were enrolled 13 and a half hours after tpa was administered.
Speaker Change: This is important as it is well established that from Bolitics have a very short half life approximately 24 minutes and are therefore are cleared from the body rapidly. These agents tend to go seven half lives in less than three hours and are effectively cleared from the patient system three hours. After dosing. So if a patient is presenting with persistent modern.
Speaker Change: To severe stroke severity several hours after tpa is cleared from the patient system. It indicates a thrombolytic didn't meaningfully correct. The neurological deficit, we colloquially referred to this type of patient as the tpa or thrombolytic non responder, we want to capture this type of patient because we anticipate they will have a low please.
Speaker Change: C. Bo response rate and there is potential for a significant treatment effect when compared with the M 199 therapy.
Speaker Change: On the right side of this slide you can see the data from our remedy one study in participants treated with tpa prior to enrollment.
Speaker Change: As you can see in the placebo group. The response rate was zero, which we believe are firms that these participants were G. P. A non responders Conversely in the D. M 199 arm. The response rate was 25% that's 25% improvement versus placebo was actually the highest performance improvement among all subgroups.
Speaker Change: Studied in the remedy one trial.
Speaker Change: I also want to note that the primary reason we didn't initially include Tpa non responders in the remedy to study initially was to the significant difference in outcomes based upon how soon after a stroke the patient receives P. P. A those.
Those receiving tpa at one hour post stroke have been shown to do much better than those receiving tpa four hours post stroke at.
Speaker Change: At the time of day America didn't want to introduce this potential variability into the study and the clinical risk of an imbalance of tpa patients in favor of the placebo arm. However, upon considering the remedy one results if we properly define the thrombolytic non responder I believe that we can eliminate this variability risk.
Speaker Change: Turning to slide four here are the details of the inclusion criteria related to Tpa non responders, we spent countless hours with our scientific advisory board and leading vascular neurologists, who consult for diabetics to properly define the inclusion criteria, which are listed on this slide.
Speaker Change: After discussions with our scientific advisory board and stroke neurologists in our trial, we believe the best time to assess when a patient is a non responder is six hours after thrombolytic have been administered.
Speaker Change: If you intervene earlier for example at four hours there is a greater risk of the patient is a delayed responder. If you wait until our 12, there is a risk of more brain tissue dying from the impaired blood flow, we think six hours strikes the right balance and recall in our prior remedy one study do you have 199 was administered on App.
Speaker Change: Bridge 13, and a half hours after T. P. A if we can actually get to patients more quickly we have the potential to improve upon the treatment effects. We already saw in the remedy one trial.
Speaker Change: The second point that I want to emphasize is that at or after that six hour mark the patient must be reevaluated, the neurological deficit must be persistent and fall within the same stroke severity range as non tpa patients, meaning and NIH S. F score between five and 15 and when we say persistent neurological death.
Speaker Change: So said, we mean that the patient cannot have experienced a four point or better improvement in their NIH S that score following thrombolytic treatment, we do not want patients there's still fall within the NIH SS range, but are on a trajectory to recover.
Speaker Change: And finally, the patient must be re scan to rule out worsening as a result of any hemorrhagic transformation. They may have been caused by the tpa and the patient must meet all other criteria as non PPA patients for example, being treated within the same 24 hour window for the stroke symptom onset.
Speaker Change: With this new criteria and we think we've struck the right balance to include a patient population with a significant unmet need and that we anticipate will respond favorably to the M 199.
Speaker Change: Turning to slide five the other key update relates to the size of the interim analysis over the past 20 years I've worked extensively with several leaders and statistical analysis for my studies, whom I've had review our statistical analysis plan based upon the feedback and the potential reduction in the overall trial sample size.
Speaker Change: We made the decision to perform the interim analysis after enrolling 200 patients in increase from the previously planned 144 participants.
Speaker Change: Here on slide six is a very potent demonstration of why we don't want to be undersized at the interim analysis. This is an actual simulation from the model comparing final sample size estimates based upon enrolling 144 and 200 patients at interim for trial integrity purposes, we can't disclose the actual treatment response.
Speaker Change: And placebo response, but any example provided the values are identical and the only difference is the interim sample size.
Speaker Change: As you can see in this scenario at 144 participants the sample size re estimate is 485 participants, whereas at 200 is 339 participants I want to reiterate this is an actual simulation in the model driving our statistical analysis plan from a cost standpoint, this kind of <unk>.
Speaker Change: First could translate into a savings for diabetics of $10 million or more.
Speaker Change: We believe this change has the potential to accelerate completion of the overall study, even though it will delay receipt of our interim analysis results there.
Speaker Change: The effects on timing, if our interim analysis will hopefully be partially offset by expanding our inclusion criteria and including thrombolytic non responder patients previously we were anticipating our interim analysis would be available in the summer of 2025 and now we expect that quarter four of 2025, we believe that we are adequately fine.
Speaker Change: Through the interim analysis.
Speaker Change: Turning to slide six.
Speaker Change: I would reiterate that we firmly believe that the protocol updates will accelerate enrollment rates with the addition of a subgroup of stroke patients that have the potential to be high responder city, and 199 therapy as well as improving the potential commercial value of D. M. 199, further that with the new Statistical analysis plan, we have the best potential for <unk>.
Clinical success with the smallest possible study.
Speaker Change: I will now turn the call back over to Rex.
Speaker Change: Thank you, Larry and our focus with respect to the remedies to trial remains centered on continuing to build momentum with high quality research institutions by way of update as of today. We have the majority of our 15 priority study sites have been activated 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 joining us on today's call.
Scott Kellen: Starting with our financial position our September 32024, combined cash cash equivalents and investments balance is $50 2 million down from $52 9 million as of December 31, 2023.
Scott Kellen: Net cash used in operating activities for the nine months ended September 32024 was $15 6 million compared to $14 9 million in the same period of the prior year.
Scott Kellen: The increase in cash used in operating activities resulted primarily from the combination of our increased net loss in the advance of deposit deposit funds to vendors supporting the remedy to clinical trial during the current year period. These.
Scott Kellen: These increases were partially offset by changes in operating assets and liabilities during the current year period.
Scott Kellen: And we believe that our current cash investments provides us a runway to Q3 of 2026.
Scott Kellen: Our research and development expenses increased to $5 million for the three months ended September 32024 up from $3 3 million in the prior year period.
Scott Kellen: R&D expenses increased to $12 6 million for the nine months ended September 32024, compared to $9 4 million for the nine months ended September 32023.
These increases are due primarily to cost increases, resulting from the continuation of our remedy to clinical trial the expansion of our clinical team and increased manufacturing development activity.
These increases were partially offset by cost reductions related to clinical trial work completed in 2023, including our phase <unk> trials and the completion in 2023 of the in your study work performed to address the prior clinical hold on the remedy to trial.
Scott Kellen: We expect R&D expenses to increase moderately relative to recent prior periods as we globally expand the remedy to trial site Activations and participant enrollment continues.
Scott Kellen: Our general and administrative expenses were $1 9 million for each of the three months ended September 32024 and 2023.
Scott Kellen: G&A expenses were $5 7 million for the nine months ended September 32024 down from 6 million for the nine months ended September 32023.
Scott Kellen: The decrease for the nine months comparison resulted from the combination of reductions in the cost of directors and officers liability insurance premiums.
Scott Kellen: The decrease the legal fees incurred in connection with our law suit against PRA, Netherlands. These decreases were partially offset by increased personnel costs incurred in conjunction with expanding our team and increased noncash share based compensation costs, we expect G&A expenses to remain steady as compared to recent prior.
Scott Kellen: Periods.
Scott Kellen: Other income net was $616001 7 million for the three and nine months ended September 32024, respectively.
Scott Kellen: Compared to $693001 2 million for the three and nine months periods ended September 32023, respectively.
The increase for the nine months comparison was driven by increased interest income recognized during the current year period related to higher marketable securities balances during the current year period as compared to the same period in the prior year.
Speaker Change: With that let me ask the operator to open the lines for questions.
Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by one on your Touchtone phone.
Speaker Change: You'll hear a prompt that your hand has been raised.
Speaker Change: Should you wish to remove you raised hand from the process. Please press star followed by two.
Speaker Change: If you're using a speaker phone please lift the handset before pressing any keys just one moment. Please for your first question.
Speaker Change: Your first question comes from Thomas Flaten with Lake Street. Please go ahead.
Good morning, I. Appreciate you taking the question Marianne just sticking with the remedy to what was the original trumped for for Reevaluating The protocol and Statistical analysis plan was it was it just.
Speaker Change: The higher enrollment rates or was there some other problems.
Speaker Change: Higher discussion that led to these changes.
Speaker Change: It was really a combination of wanting to stimulate enrollment, but also extensive discussions that we had with our S. A b and our K O L experts that we've been working with them. They really were very excited to see what would happen with the patients who had risk.
Speaker Change: Thrombolytic therapy, but were non responders, we worked with statistical experts, who said that they thought that it would be important to have at least half of the patients enrolled before doing a high quality stays in sample size adjustment. So we made the adjustment there based on a lot of statistical and.
Speaker Change: But.
Speaker Change: Got it and then just I guess a somewhat technical question.
Speaker Change: What point will patients be randomized, particularly those under tpa failures, because you want to balance those patients across the two arms and you won't really know if they are failures. If you randomize them prior to getting Tpa. So could you walk us through kind of the nitty gritty on that.
Speaker Change: Yeah. So if patients are randomized them they won't receive tpa there'll be randomized into our study them if they receive tpa prior to randomize them into our study then we'll have to wait six hours before we know is there a non responder and can come into our study.
Speaker Change: Got it and then one final one if I may.
The original plan that you guys laid out the 144 patients was intended to be the interim cohort first 364 patient study and I know you just showed US. An example of the stimulation you did but.
Speaker Change: That was I think 350 patients 200 is the interim analysis. So was the 360 is the 364 still a viable number or how should we think about that because those seem to be at odds with one another.
Speaker Change: Yeah.
Speaker Change: So based on 200 patients at the interim analysis and if we had the same drug effect as previous at 344, we would anticipate a lower total number of patients so below the 364.
Okay got it I appreciate you taking the question. Thank you.
Speaker Change: Thank you. Your next question comes from Chase Knickerbocker at Craig Hallum. Please go ahead.
Chase Knickerbocker: Good morning, Thanks for taking the questions. So just to start off a little bit to make sure I understand it. So can you help me with a bit more color around kind of the assumptions to get to a quicker final readout.
Chase Knickerbocker: You know with these changes from a you know I'll get a higher patient number at the interim I think you might have just answered part of it but it's just with kind of a greater greater certainty around that.
Chase Knickerbocker: Effect Youre seeing and that allows you to re sample smaller.
Chase Knickerbocker: Or is it kind of around the increase in enrollment rate that you would expect for allowing tpa non responders. Thanks.
Speaker Change: Yeah, So basically the way the Bayesian analysis works is that the more patients that you have in the interim analysis. The more precision that you can make around the sample size assessment. So as an example, if we have a 14% excellent outcome right, which is what we originally had calculated when.
Speaker Change: We have the 364 patients.
We could potentially bring that down to 300 with a with an interim analysis of 200, and obviously that would save US a lot of money and would save US a lot of time in enrollment so basically by going to 200. It gives us the opportunity to significantly shave off time the trial and.
Speaker Change: To be much more efficient in terms of how much money we spend on the trial.
Speaker Change: Got it and you may have answered this in jumping around to a couple of calls apologies, but was there anything that you kind of saw on enrollment rates or kind of overall patient care baseline characteristics that kind of drove these changes or was it mainly just around the latter point that you just made thanks.
Speaker Change: Sure.
Speaker Change: Yeah, well, it's not that what we saw in the actual ongoing study was really in consultation with our statistical experts that we made these.
Speaker Change: Changes as we were finalizing the the report for the Bayesian.
Speaker Change: Analysis, that's going along with the SAP for submission to the FDA. So it was really based on expert opinion.
Speaker Change: I can add so part of the of our analysis, we conducted with these tpa patients that did not respond from a phase two trial.
Speaker Change: There was a very low placebo response rate, so a zero, whereas with a 25% improvements with our drug and so if we carry that into our current trial that should greatly helped the statistical analysis plan. So if we have.
Speaker Change: A large number of patients that have a very low placebo, but a strong drug effect it should be very beneficial for our statistical analysis plan.
Speaker Change: What was the N on the Tpa non responders and your previous study how many patients was there a little.
Speaker Change: A total of 20 and then I'll also add part of our analysis included a pretty deep analysis of the human urinary form us.
Speaker Change: In China today, so there's been about a half a dozen clinical studies showing an incremental effect of urinary kill Q1 on top of Tpa and that's also consistent with the discussions we've had with.
Speaker Change: A number of different groups in China.
Speaker Change: People that are treating patients there today.
Got it and just last one for me.
Speaker Change: Does this up or should we think of this as having a material impact to gamble 199, commercial opportunity kind of what what does it kind of expand the would you expect I guess would you expect the potential label to also include those that.
Speaker Change: Bond to Tpa, and and what could that mean kind of for the overall patient opportunity.
Speaker Change: Yeah, we do and we think it'll be of greater interest swell for potential partners. So as we see about a half of patients who get tpa do not respond and so if we're looking at about 10% of patients that have a stroke tpa so 80000 patients.
Speaker Change: And if we were able to expand our label and having another 40000 patients a year.
Speaker Change: There is no greater than $1 billion in additional revenue in the U S. Just for that expansion alone.
Speaker Change: Great. Thanks for taking the questions.
Francois Brisbois: Your next question comes from Francois Brisbois with Oppenheimer. Please go ahead.
Speaker Change: Hi, This is Dan on for Brian. Thanks for taking my question just a quick one.
Speaker Change: Whats the timeline here.
Speaker Change: Previously with the interim enrollment of 144, you had targeted for first quarter 'twenty five.
Speaker Change: Now with the 200.
Speaker Change: Any guidance in terms of when we should be expecting the enrollment to complete.
Speaker Change: Yeah, so with the intended plan to have the interim analysis in Q4, we would be looking at some time.
Speaker Change: Next summer.
Speaker Change: Great. Thanks for taking my questions.
Speaker Change: Your next question comes from Matthew Coffield with H C. Wainwright. Please go ahead.
Speaker Change: Hi, Good morning, guys and thanks for taking our questions.
Speaker Change: So for Preeclampsia, there was mention of the frozen averse refrigerated vials with the dosing now commenced will will there be any patients that would've received one versus the other and are there any complicating factors to consider there.
Speaker Change: So initially the patients will receive the frozen products, but its really not an issue with.
Speaker Change: This particular site, primarily they are going to be using the refrigerated product.
Speaker Change: Yeah.
Speaker Change: Understood and obviously there is no anticipation of any distinction between one versus the other.
Speaker Change: No they're absolutely identical.
Speaker Change: Okay got it thank you.
Speaker Change: And then also for remedy to.
Speaker Change: There was mention of the.
Speaker Change: No FDA comments received to date and obviously proceeding.
Do you feel there's any risk the agency provide subsequent feedback at this point necessitating trial modification once the changes are now up and running.
Speaker Change: Thanks again.
Yeah. So traditionally the F. D. A response within 30 days after submission of any protocol amendment or supplemental information, we're well past the 30 day Mark so the chances of additional FDA feedback becomes less and less overtime. So right now I would say our chances are receiving subs.
Speaker Change: It is FDA feedback is relatively low.
Speaker Change: Gotcha, Okay, great I guess.
Speaker Change: No answers a good answer for that case, so I appreciate it that's right.
Speaker Change: The FDA that is.
Speaker Change: That's right.
Speaker Change: Great. Thank you guys.
Speaker Change: Okay.
Speaker Change: Thank you there are no further questions at this time I would now turn the call back to Mr. Rick Pulse.
Speaker Change: Okay.
Rick Pulse: Great. So we'd like to thank everyone for joining us this morning and for your continued support we look forward to a very exciting 2025 and to our next update this concludes our call today. Thank you.
Speaker Change: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
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