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

Thanks, Morgan, and I appreciate everyone being on this call to discuss the results for fiscal year 2025. Joining me today are our Chief Medical Officer, Dr. Julie Krop, along with our Chief Financial Officer, Scott Kellen. If we take a brief look backward, 2025 stands out as a period when our pipeline advanced considerably and we hit several important milestones. As many of you are aware, DM199, our most advanced product candidate, is a recombinant version of KLK1, a protein that occurs naturally — specifically a serum protease whose action takes place via bradykinin 2 receptors located in the endothelium, or walls, of blood vessels, leading to higher amounts of nitric oxide, prostacyclin, and endothelial-derived hyperpolarizing factor. When these factors work together, the result could be a more powerful improvement in blood flow and vascular health than what any single factor achieves on its own; our view is that this mechanism explains why DM199 fits so well for bettering patient outcomes in preeclampsia, fetal growth restriction, acute ischemic stroke, and additional indications tied to vascular pathology. At this point I'll hand things over to Julie, who will give an update on the programs we have in preeclampsia and stroke.

Thanks, Rick, and good morning to all of you. To begin with our preeclampsia program, 2025 represented an exceptionally robust year of advancement. During July, we reported favorable interim findings from Part 1a, the dose-escalation segment of our investigator-sponsored Phase II study underway in South Africa. According to those findings, DM199 yielded statistically significant decreases in blood pressure as well as in the uterine artery pulsatility index, which aligns with lowered vascular resistance and points toward a possible gain in blood flow reaching the placenta. Notably, the interim data showed that DM199 failed to cross the placental barrier. Such interim outcomes were seen among hypertensive women anticipated to give birth within the coming 72 hours. In our view, these results reflect an on-target mechanistic response, bolstering DM199's promise as a first-in-class disease-modifying therapy for preeclampsia. The main findings from the interim analysis of Part 1a, drawn specifically from Cohorts 6 through 9 among pregnant women with preeclampsia scheduled for delivery inside 72 hours, are as follows: To start, blood pressure readings revealed unambiguous dose-dependent and statistically significant sustained decreases in systolic as well as diastolic blood pressure, highlighting DM199's capacity to manage maternal hypertension tied to preeclampsia. Next, DM199 meaningfully lowered the uterine artery pulsatility index, a Doppler-based gauge of arterial resistance indicating better uteroplacental perfusion. Third, and of greatest importance, DM199 did not traverse the placental barrier, which puts it in a distinctive position regarding safety and diminished fetal risk within this extremely vulnerable patient group. Via further analysis, we have likewise shown that DM199 is not transmitted to infants via breast milk, adding further support to its restriction to the maternal circulation. This favorable safety profile, paired with DM199's innovative mechanism of action, might permit earlier treatment initiation and a longer treatment period, which could drive meaningful extension of pregnancy absent any extra safety burden; in our view, the improvements observed in vascular resistance mirror restoration of normal endothelial function, aligning with an on-target mechanistic response to DM199 therapy. By enhancing endothelial health, DM199 could tackle the underlying vascular dysfunction that propels the disease, which ought to yield stabilization of maternal vascular pathology and lengthened pregnancy, unlike existing therapies that merely manage symptoms. Considered together, the capacity to lower blood pressure, boost uterine placental perfusion, and restore endothelial function strengthens our confidence in DM199's promise as a first-in-class disease-modifying therapy for this life-threatening condition, for which no approved treatment options currently exist. Throughout the fourth quarter, under Professor Cluver's leadership, enrollment carried on in the Part 1a expansion cohort, which will comprise as many as 12 additional patients so that we obtain a more thorough data set. We expect this cohort to be completed during the first half of 2026. Protocol amendments for Part 1b and 2 of the study are in the final stages. Part 1b will enroll as many as 30 hypertensive women with late-stage preeclampsia anticipated to deliver within 72 hours, in order to further verify the Part 1a results. The people taking part in this will get DM199 through an IV drip given continuously, with the dose adjusted to keep their blood pressure inside the desired range. In Part 2, we'll bring in as many as 30 women who have early onset preeclampsia and who qualify for expectant management — where the aim of treatment is to keep the pregnancy going for as long as we can, while boosting blood flow so the babies grow bigger and healthier. These changes to the protocol are tweaks to the earlier dosing schedules, and they come out of what we learned in Part 1a. For the fetal growth restriction group, we'll be signing up patients who don't have preeclampsia but do have impaired placental function, which widens even further the possible uses of DM199 across placental vascular disorders. We expect the first patient in that group to be dosed in Q2 2026. On top of that — and this matters a lot — we recently got regulatory clearance from Health Canada to launch a global Phase II clinical trial of DM199 in early onset preeclampsia, which is a key regulatory milestone for our PE program. Right now we're wrapping up our plans so that site activation can begin in the second half of the year. Our intention is for this to be a global Phase II study. It's open-label and dose-finding, built to enroll roughly 30 participants who have early onset preeclampsia and are between 24 and 32 weeks of gestation. This expectant management population is made up of patients facing the greatest unmet medical need, the ones for whom safely extending pregnancy could deliver the most meaningful maternal and neonatal impact. The study is going to assess safety, tolerability and preliminary efficacy of DM199, with dosing expected to run until delivery; we're looking at 3 dose levels so we can inform which regimen is optimal for Phase III. Primary endpoints of the study cover maternal pharmacokinetics, plus added confirmation that DM199 doesn't cross the placental barrier — a key safety point for both regulatory review and whether patients accept the treatment. Beyond that, we'll be assessing clinical and biomarker outcomes, among them prolongation of pregnancy, control of blood pressure, uterine artery blood flow, circulating pathogenic biomarkers and renal function. We're also getting ready to ask for approval so the study can be expanded to sites in the U.K. As for the extra reproductive tox study in rabbits that the FDA asked for, preliminary results from a dose range finding study in rabbits indicate that rabbits might not work as a suitable animal model for reproductive toxicology studies involving DM199; the likely reason is an unusual immune response to the recombinant human protein that's specific to rabbits and hasn't shown up in rats, monkeys or humans so far. The thing that matters most to us is that no teratogenic effects turned up in the roughly 200 pups, or baby rabbits, produced in an earlier study. That covered no external, visceral or skeletal malformations. We're now looking at a different animal model to answer the FDA's request, and we'll collaborate with the FDA to find a solution at the same time as we start the Phase II trial in Canada and other jurisdictions that may be possible. Now to our ReMEDy2 trial. 2025 was a good year for our stroke program as well. During the last several months, we've stepped up how closely we work with study sites so we can exchange what works well and encourage some healthy rivalry. On top of that, we brought in extra resources to help sites navigate enrollment as well as the follow-up process, and we're still pursuing further avenues for assisting our study sites; combined with a rise in site activations around the world, these efforts have produced encouraging enrollment momentum across the recent months. Right now, I'm delighted to share that thanks to these added efforts within the United States and Canada, plus our expansion into the U.K. and Europe, we've reached nearly 70% of the 200 participants needed for the interim analysis; at this time we have just about 61 active sites, which includes 4 in the U.K; and another 12 throughout Europe, while roughly 25 additional sites should activate during the coming quarter; given our recent progress, we reaffirm our guidance to finish the interim analysis by the second half of 2026. Since our previous earnings call, an independent Data Safety Monitoring Board meeting took place once 100 patients had enrolled. After examining the safety data from those participants, the independent DSMB recommended unanimously that enrollment proceed with no modification. I'll now hand the call back over to Rick.

Thanks, Julie. We're happy as well to point out that a paper called Endothelial Triple Pathway Basal Relaxation as an adjuvant strategy in resistant hypertension came out not long ago in the Journal of Hypertension. Among the authors was Dr. Luke Laffin, who is a well-known key opinion leader when it comes to treating resistant hypertension. This publication makes clear how much new therapeutic options are needed to bring down blood pressure among patients who have chronic kidney disease. It also brings attention to results from our earlier Phase II REDUX trial, where DM199 showed it could meaningfully decrease blood pressure in patients whose levels were high across a 3-month treatment period. In addition, DM199 was seen to bring down serum potassium levels in patients with elevated potassium, which puts those patients at risk for developing hyperkalemia. We're eager to share more down the road about how DM199 might be used to manage blood pressure in patients with chronic kidney disease. At this point I'd like to turn things over to Scott to go over the financial results for the quarter.

Thanks, Rick, and hello everybody. Yesterday we reported our 2025 full year financial results and submitted our annual report on Form 10-K. Cash, cash equivalents and short-term investments stood at $59.9 million on December 31, 2025. Current liabilities came to $5.1 million, with working capital of $55.5 million, versus $44.1 million in cash and investments, $5.4 million in current liabilities and $39.2 million in working capital on December 31, 2024. That growth in cash and short-term investments reflects net proceeds from common share sales in the company's July 2025 private placement and through its at-the-market offering program; our cash position gives us confidence, and we expect it to support our planned clinical studies and corporate operations through the end of 2027. Net cash used in operating activities across full year 2025 totaled $29.1 million, versus $22.1 million across full year 2024. The main driver of this rise is the larger net loss for full year 2025 relative to the earlier year period. Now to the income statement. Research and development expenses grew to $24.6 million for the year ended December 31, 2025, from $19.1 million in the prior year. That $5.5 million increase stems from a mix of factors, among them continuing our ReMEDy2 clinical trial and its global expansion, growth of our clinical team in both the prior and current year periods, and higher noncash share-based compensation costs. Partially offsetting these increases were cost reductions tied to manufacturing process development work performed and completed in the prior year period. Our general and administrative expenses reached $9.8 million for full year 2025, up from $7.6 million for full year 2024. G&A expenses rose by $2.2 million owing to a number of factors, among them increased noncash share-based compensation expense, increased personnel costs, increased investor relations expenses and increased patent prosecution costs. With that, let me ask the operator to open the lines for questions.

We have several questions. Let's stay on preeclampsia for now, if that works. To start, I want to ask about what you shared on the rabbit preclinical trials related to U.S. IND approval. Help us grasp your early thinking on using a different species with the FDA. Which alternative preclinical models are most suitable for reproductive tox studies? That's my first question. Could you go into a bit more detail on that? Also, regarding the ISP — and obviously there are many strong signals we'll keep seeing there — what important insights do you expect to apply to the early onset preeclampsia cohort? Turning to Part 2 and Part 3, and fetal growth as well — might we receive some sort of update before the year is out? Basically, could you clarify what the current status is regarding possible timing for those? Also, ahead of the U.S. trial, Julia, we've gotten the broad strokes about readiness before proceeding stateside, though it would help to hear how those discussions are shaping up. What factors is the team prioritizing as it selects the appropriate investigators for the preeclampsia study? And lastly, if there's room for one small CKD question — obviously that represents a major opportunity. At what point might you share a detailed strategy, or a more comprehensive one, for advancing DM199 in CKD patients who have treatment-resistant hypertension?

Let me start with the CKD piece, since that was the fourth question. We're genuinely enthusiastic about what our drug could do for blood pressure reduction—that effect has shown up plainly across many trials. There's a significant unmet medical need here, especially among individuals dealing with chronic kidney disease, since a large share of them carry high potassium concentrations, which places them in danger of hyperkalemia. So to start with, we have the chance to provide treatment for these people and bring their blood pressure under control at a point when they truly lack many alternatives, and what our earlier study revealed was the capacity to bring potassium readings down, something that could represent a really promising opening. That said, our main priority at this moment is actually the program we have for preeclampsia and stroke. When the timing is right, we'll explore the possibility of moving forward into CKD. At this point, though, our priority for the near term is making sure we stay tightly focused on the remaining two programs we have; after that, I might pass things over to Julie.

Sure, Stacy — those are all excellent questions. At this point, I believe it's too early to specify precisely which species we'll be concentrating on. What we want to do first is — we've filed a package with the FDA, and we're continuing discussions with them regarding suitable models. We have several suitable models under consideration; but as I said, we'll wait and provide an update after that discussion takes place. Then, regarding what you asked about lessons from earlier cohorts, I believe we have a better grasp of the PK following those initial studies. And one takeaway we're carrying forward involves our early onset studies relying solely on subcutaneous administration and likely saving the IV for later onset, just as we've done before. So that was one piece. On the topic of site selection, we're putting strong emphasis on choosing sites that bring both preeclampsia study experience and a practice well matched to early onset expectant management — something certain sites handle very skillfully while others take a more cautious approach about when to deliver patients. So once again, it's that balancing act between treating — between the health of the mother and the health of the baby, and ensuring we pick centers comfortable with keeping the mother on board despite some severe — potentially severe complications occurring, where it seems they can stabilize her sufficiently to extend the pregnancy. So those are roughly the factors we're concentrating on.

Let me ask two things quickly. When it comes to evaluating DM199 in earlier onset preeclampsia, how are you weighing the possible danger that the protein could pass through the placental barrier at that point? And what data do you have indicating that in that context too, it won't cross into the placenta to any significant degree? Then regarding the interim analysis for the Phase II/III stroke program, what outcomes might we see? Are there stopping rules, whether positive or negative, or resizing rules? Could you tell us a bit more about what you anticipate the interim will tell us?

Absolutely. Appreciate it, Josh. Let's begin with early onset and placental crossing. Our view is that it won't occur. What I mean is, by now we've treated over 35-plus patients who mostly had later onset preeclampsia, and no crossing was observed there. Passing the placental barrier requires a size of roughly 500 daltons, while our protein comes in at about 26 kilodaltos, making it 50x bigger; so if it happened, that would be extremely surprising. We ran an earlier rat model study as well, and again saw nothing. So at this stage it's really just one more box to check, though we're quite confident given that no crossing appeared in the South African patient population; as for your second question, the Phase II/III stroke program that's ongoing, concerning the interim analysis, to begin with, should no drug effect appear, we'll stop the trial because of lack of efficacy. If not, there will be a resample size, with the sample size falling somewhere between 300 and 728. The way we built this trial, and our base case belief, is that when a drug effect shows up that's similar to what we saw in Phase II, which itself is similar to the numerous studies demonstrating the human urinary form of the study in China. With the modified ranking score of 0 to 1 serving as the primary endpoint, we expect that if we observe, once again, a comparable drug effect, we'll ideally be looking at somewhere in the 300 to 350 range. Should we need to exceed 500 patients, then we'll truly need to assess what comes next for the program, particularly given the strong prospects we see for the preeclampsia program as well.

I just want to ask about that Part 1a expansion cohort. Given how many patients Dr. Cluver treats every week, it feels like things are moving slower than I'd have expected. Is she being cautious and methodical on purpose? Or is there another explanation? Any extra detail on that expansion cohort would be helpful.

Sure. Yes, that's a fair question. The cause really was staffing difficulties that Cathy Cluver encountered at her site. We gave some extra financial backing not long ago. And now that a couple of new nurses have been brought on within the past few weeks, we expect enrollment will start climbing once more.

Then, to build on that point — assuming I grasped both the press release and what you said, do Parts 1b and 2 (I misspoke a moment ago with Parts 2 and 3) require that the expansion cohort finish before they begin? Or would they start before that cohort is entirely done?

Regarding those — a handful of protocol amendments from us are moving through the process soon. As a result, we expect those 2 cohorts to kick off later in Q2. The Part 1a expansion study continues right now and should also wrap up during Q2.