DiaMedica Therapeutics Inc. (DMAC) Earnings Call Transcript & Summary

Thanks, everyone, for being on the line for our Q2 2025 earnings call. With me this morning are Scott Kellen, our Chief Financial Officer, and Dr. Julie Krop, who has just stepped in as our Chief Medical Officer. Since Q1, we've honestly made a lot of meaningful headway, and I'm glad to walk you through it today. Let's begin with the preeclampsia program. Back in July, we reported highly encouraging interim data from Part 1-A — that's the dose-escalation arm of the investigator-sponsored Phase II study of DM199 in preeclampsia. Just to remind you, DM199 is our lead candidate, a recombinant version of the KLK1 protein. It works by boosting blood flow and vascular health, raising levels of three important endothelial-derived vasodilating factors via the bradykinin pathway: nitric oxide, prostacyclin, and endothelial-derived hyperpolarizing factor. Preeclampsia is an ischemic condition affecting millions of women around the globe, and there are no approved therapies — really no viable therapeutic options that address the underlying vascular dysfunction. In May, we hosted a Key Opinion Leader webinar about the unmet need in preeclampsia and DM199's potential in this indication, featuring Professors Baha Sabai, Steven Tong, and Susan Walker. You can find a recording of that webinar in the Investor Relations section of the DiaMedica website. Given the interim findings from Part 1-A of our Phase II study, we think DM199 could become the first-in-class disease-modifying treatment for preeclampsia. In dosing cohorts 6 to 9, DM199 produced highly statistically significant and clinically meaningful drops in both systolic and diastolic blood pressure, which points to its potential efficacy in managing the maternal hypertension tied to this disease. DM199 also proved safe and generally well tolerated, with no sign of placental transfer at any dose level — a crucial safety marker when developing a treatment for a pregnant woman. On top of that, DM199 treatment brought about a statistically significant decrease in the uterine artery pulsatility index, indicating better uterine artery blood flow and improved placental perfusion. Better perfusion could be key to lowering placental hypoxia, which supports the possibility that DM199 may be a disease-modifying treatment and also a therapy for fetal growth restriction. In light of the interim results and a recent pharmacokinetics analysis, we decided to move forward and enroll Cohort 10 in Part 1-A of the ongoing Phase II trial. From that point, we intend to settle on a dosing regimen for Part 1-B, and also for the Part 2 preeclampsia expected management and Part 3 Fetal Growth Restriction cohorts, all of which can be enrolled at the same time. To be clear, the remaining portions of the investigator-sponsored preeclampsia trial consist of Part 1-B, an expansion cohort of 30 preeclampsia patients who are slated for delivery within the next 72 hours — a population comparable to those dosed in Part 1-A — and Part 2, a cohort of 30 patients assessing DM199 in early-onset preeclampsia. For this group, individuals will begin getting DM199 as soon as they are diagnosed, with the goal of continuing DM199 dosing all the way through delivery, and showing an increase in gestational days as well as other important clinical and safety endpoints. Part 3 involves a group of 30 patients dealing with Fetal Growth Restriction, also called FGR. FGR is a condition where the fetus fails to develop as it should because of insufficient blood flow, oxygen, and essential nutrients. Our move into this indication, which is connected to preeclampsia, stems from interim results we recently announced, where we observed a statistically significant drop in the uterine artery pulsatility index, pointing to better dilation of intrauterine arteries and placental perfusion. Beyond that, we are getting ready to run a Phase II-B preeclampsia trial across the U.S. and other nations, and we are in the process of preparing our FDA IND application. We are eager to provide upcoming updates regarding these cohorts and the new preeclampsia trial. Further specifics about the interim Phase II Part 1-A results, such as a replay of the investor call where the results were discussed, can be accessed on our website within the Investor Relations tab and appear in our July 17th results press release. After we announced the positive interim results from Part 1-A of the preeclampsia effort last month, we closed a $30 million private placement of common shares, pushing our cash runway out into the second half of 2027. Our plan is to use this capital to also support the new Phase II-B study of DM199 in the U.S. and other countries, furthering development of our ongoing stroke and preeclampsia programs. Switching to the stroke program, a poster was shown at this year's 11th European Stroke Organization Conference, which took place in May in Finland. Dr. J. Volpi of Houston Methodist delivered that poster, which addressed safety and clinically relevant outcomes from a REMEDY-1 Phase II clinical trial assessing DM199 in acute ischemic stroke patients who had been pre-treated with TPA. We want to remind everyone that among patients pre-treated with TPA, DM199 produced a meaningful gain in full recoveries relative to placebo. Now, regarding our ongoing REMEDY-2 stroke trial, progress keeps happening as enrollment moves forward, and we anticipate the interim analysis covering the first 200 patients will wrap up in Q2 2026. I want to briefly explain how we handle communication around REMEDY-2 enrollment milestones. We will give updates on our quarterly conference calls once we hit 50% and 75% of the interim enrollment sample size, and issue a press release when our 200th patient is enrolled. Right now, enrollment is running well ahead of the 25% milestone and is steadily nearing the halfway point. I should also mention that we held a Data Safety Monitoring Board, or DSMB, meeting to go over the safety profile needed following the first 50 REMEDY-2 participants. The meeting went well, with no safety issues arising, and once it wrapped up, the DSMB reached a unanimous decision that enrollment for REMEDY-2 ought to keep going. On other fronts, DiaMedica has been included in the U.S. Small-Cap Russell 2000 as well as the Russell 3000 indexes, which boosts how visible we are to the wider investment community, institutional investors among them. And this month, Dr. Julie Krop came aboard as our Chief Medical Officer. Her background in the biopharma sector is extensive, spanning work with organizations at both the clinical and commercial stages, and she was previously part of developing an orphan drug candidate aimed at treating severe preeclampsia. As we push DM199 forward to tackle the considerable unmet needs across both of our key programs, Dr. Krop brings experience of immense value to our team. At this point I'd like to turn things over to Scott Kellen, our Chief Financial Officer, so he can walk through the quarter's financial results.

Thanks, Rick, and good morning to all of you. On June 30, 2025, we held $30 million in cash, cash equivalents, and short-term investments, which compares with $44.1 million on December 31, 2024. That said, when you factor in the net proceeds from the July private placement, our pro forma cash stands at roughly $60 million. Rick said earlier that we're feeling good about where our cash position sits today, and we expect it to carry our planned clinical studies along with corporate operations through the second half of 2027. Net cash used in operating activities came to $14.7 million during the six months that ended June 30, 2025, versus $11.2 million in the equivalent period of 2024. That rise stems mainly from a larger net loss in the first half of 2025 relative to the earlier year period. R&D expenses came in at $5.8 million and $11.5 million for the three-month and six-month periods that ended June 30, 2025. That's up from $3.9 million and $7.6 million during the matching periods a year earlier. The growth was driven chiefly by higher costs tied to ongoing advancement of our REMEDY-2 clinical trial, such as its global expansion, plus growth of the clinical team across the current and prior year periods. Those rises were partly offset by lower costs linked to in-use study work that was performed and finished in the prior year periods. G&A expenses totaled $2.2 million and $4.7 million for the three-month and six-month periods that ended June 30, 2025. Those costs likewise rose relative to the matching periods in 2024, when they were $1.7 million and $3.8 million, respectively. The increases came mainly from added non-cash share-based compensation and higher personnel costs, partly offset by lower legal fees tied to our lawsuit against PRA Netherlands. All told, net losses reached $7.7 million and $15.4 million for the three-month and six-month periods ending June 30, 2025. Those figures exceed the $5.1 million and $10.3 million we reported in the equivalent periods of 2024. With that, I'll hand the call back to Rick.

Appreciate that, Scott. At this point we'd like to begin the Q&A portion. Operator, please go ahead and bring on our first analyst.

Morning. Thanks for letting us ask some things. Julie, perhaps I could begin with you — I'd like to hear what drew you to this company, especially given what you've been through with preeclampsia, and maybe still more significantly, what you think about the stroke effort that I understand is happening behind the scenes.

Sure, I appreciate that. Hi, everybody. Since I've previously spent time working in women's health, this field matters a great deal to me, and the initiative I came across — the initiatives I came across at DiaMedica — got me enthusiastic, along with the group assembled to carry them out. To my mind, preeclampsia and ischemic stroke each represent significant unmet need. The biology has been de-risked, in my view, given what's understood about the KLK1 protein's function as a vasodilator and the part it plays in vascular repair. This product, I believe, gets at the pathophysiology underlying both conditions and has demonstrated encouraging clinical results and even signs of certain biologic activity; seeing that made me quite enthusiastic. I'm genuinely thrilled to be part of both programs.

Great. Rick, I realize there's a great deal of work about to begin on your end regarding preeclampsia. Could you perhaps lay out some sort of timeline for us? My assumption is that every cohort over in South Africa will recruit at somewhat varying speeds, since the patient populations differ and the patient categories differ. Perhaps you could shed some light on the U.S. Phase II-B trial — what precisely is the intended indication there?

Of course. Appreciate it, Thomas. Regarding what lies ahead, like I said during the prepared remarks, we're advancing into Cohort 10 of the Part 1-B, which ought to get underway next week. Our aim was to raise the dosing somewhat to determine whether additional improvement beyond what we've already observed might appear, and that would be fantastic. Building on that, plus certain pharmacokinetics data already in our hands, we'll be reviewing it so we can proceed into the Part 1-B. We'll likewise be in a position to proceed into the Part 2; that one will be expected management. What we mean by expected management is that once these patients receive their diagnosis, treatment will begin. Those will usually be early-onset patients. The third cohort we referenced concerns fetal growth restriction. Dosing across all three of these cohorts may happen at the same time. Once we get those studies underway, we'll provide additional updates regarding certain of the timelines. We do know that our South African site with Dr. Kluivert represents quite a distinctive situation. Should these patients in Cape Town develop preeclampsia, essentially all of them funnel into Kathy Kluivert's site, and she sees 4 to 5 preeclampsia patients daily. We're quite heartened by how quickly we can get these patients dosed, though we'll have more once the study begins; as for the U.S. study, our present plan is to submit a pre-IND request to the FDA, and an IND will follow right after, then we'll look at launching that study next year. Right now we're putting the finishing touches on the protocol, and once things become clearer and it's finalized, we'll share those details with the market.

Excellent. I appreciate it. Thanks, Rick.

Thanks, Thomas.

Morning. Appreciate you taking my questions. Rick, perhaps to kick things off, could you update us on the number of active sites right now and what the enrollment trends look like in the stroke study? Then second, since we've now moved comfortably past that 25% milestone, how are you feeling about this new expectation for Q2 2026? Does it feel like it's firmed up at this point? You have a lot more visibility, or just any general thoughts?

Sure. Right now we're at roughly 40 sites. We've reached the stage where we're actually removing sites that aren't performing. I think that matters, because it sends the right message to the sites. Beyond that, we're working on bringing sites in the U.K. and Europe on board. I'd say that, going through to last year, going early into the new year, the trial was very slow. We've certainly seen a very encouraging uptick over the last few months. That gives us comfort here with the guidance of Q2 of 2026.