10-Q: DiaMedica Q2 2025: Preeclampsia Trial Progress, Stroke Study Delays

DiaMedica Therapeutics reports increased losses in Q2 2025, positive interim data for its preeclampsia trial, but faces continued enrollment delays in its acute ischemic stroke study.

Summary

• DiaMedica Therapeutics incurred a net loss of $15.4 million for the six months ended June 30, 2025, an increase from $10.3 million for the same period in 2024.
• Research and development expenses increased to $11.5 million for the six months ended June 30, 2025, up from $7.6 million in the prior year, primarily due to the ReMEDy2 trial and PE program expansion.
• General and administrative expenses rose to $4.7 million for the six months ended June 30, 2025, compared to $3.8 million in 2024, driven by increased share-based compensation and personnel costs.
• Cash, cash equivalents, and marketable securities totaled $30.0 million as of June 30, 2025, down from $44.1 million at December 31, 2024.
• Interim results from the Phase 2 preeclampsia (PE) study (Part 1a, N=28 subjects) released in July 2025 showed DM199 to be safe, well-tolerated, with clinically-relevant pharmacodynamic activity, no placental transfer, and rapid, statistically significant blood pressure reductions sustained up to 24 hours.
• Preparations are underway to initiate Part 1b of the PE study, treating up to 30 subjects with a dose regimen identified from Part 1a.
• DiaMedica plans to submit an Investigational New Drug (IND) application in the United States for its PE program in the second half of 2025.
• The Phase 2/3 ReMEDy2 clinical trial for acute ischemic stroke (AIS) continues to experience slower than expected site activations and enrollment.
• A private placement of 8,606,425 common shares at $3.50 per share closed in July 2025, generating net proceeds of approximately $29.9 million.
• The company expects its current cash resources, including the recent private placement proceeds, to be sufficient to fund planned operations for at least the next 12 months.
• DiaMedica has decided to discontinue its legal pursuit against ICON/PRA Netherlands following a June 24, 2025 court ruling that found ICON/PRA Netherlands not in default.

Sentiment

Score: 6

Explanation: The sentiment is moderately positive. While the company faces increased losses and significant delays in its key stroke trial, the positive interim data from the preeclampsia trial and the successful capital raise provide a strong counterbalance, extending the cash runway and showing progress in another important program. The discontinuation of the legal dispute also removes a potential distraction.

Positives

• Interim results from the Phase 2 preeclampsia (PE) study (Part 1a, N=28 subjects) demonstrated DM199 appears safe and well-tolerated with clinically-relevant pharmacodynamic activity and no evidence of placental transfer.
• Subjects in the PE study exhibited rapid, statistically significant reductions in blood pressure with duration of effect sustained up to 24 hours post-infusion.
• Animal studies on fertility, embryofetal development, and preand post-natal development support the potential safety of DM199 in pregnant humans.
• DiaMedica plans to submit an Investigational New Drug (IND) application in the United States for its PE program in the second half of 2025, indicating progress towards broader clinical development.
• Successfully completed a private placement in July 2025, raising net proceeds of approximately $29.9 million, which is expected to fund operations for at least the next 12 months.

Negatives

• Net loss increased to $15.4 million for the six months ended June 30, 2025, compared to $10.3 million for the same period in 2024, indicating a higher burn rate.
• Research and development expenses increased significantly to $11.5 million for the six months ended June 30, 2025, from $7.6 million in 2024, contributing to higher operating losses.
• General and administrative expenses also increased to $4.7 million for the six months ended June 30, 2025, from $3.8 million in 2024.
• Other income, net, decreased to $757 thousand for the six months ended June 30, 2025, from $1.1 million in 2024, due to lower average marketable securities balances.
• Cash, cash equivalents, and marketable securities decreased to $30.0 million as of June 30, 2025, from $44.1 million at December 31, 2024, reflecting significant cash usage.
• Net cash used in operating activities increased to $14.7 million for the six months ended June 30, 2025, compared to $11.2 million in 2024, indicating higher cash burn.
• The Phase 2/3 ReMEDy2 clinical trial for acute ischemic stroke (AIS) continues to experience slower than expected site activations and enrollment.

Risks

• Inability to conduct successful clinical testing of DM199 for PE and AIS or meet anticipated milestones and dates.
• Reliance on physician collaborators to successfully complete the Phase 2 PE trial and identify a suitable dose.
• Failure to meet anticipated site activations, enrollment, and interim analysis timing for the Phase 2/3 ReMEDy2 trial due to factors like staffing shortages, study protocol criteria, logistics concerns, prior hypotension events, use of AI/telemedicine, and competition for research staff and subjects.
• Uncertainties relating to regulatory applications and related filing and approval timelines, potentially impacted by changes in funding and staffing levels for government agencies like the FDA.
• Possible occurrence of future adverse events or unfavorable results from the Phase 2 PE trial or ReMEDy2 trial, which could adversely affect current or future trials.
• The adaptive design of the ReMEDy2 trial means the final sample size may vary, and other changes may occur based on FDA input or interim analysis results.
• Inability to obtain and maintain intellectual property protection for DM199.
• Estimates regarding expenses, market opportunity, future revenue, and capital requirements may be inaccurate, leading to a need for additional financing sooner than expected.
• Future trials may fail to replicate promising data seen in earlier preclinical studies and clinical trials, potentially leading to insufficient results for regulatory approval or a restricted product label.
• Changes in funding and staffing for the FDA, SEC, and other government agencies could prevent new products from being developed, approved, or commercialized in a timely manner.

Future Outlook

DiaMedica expects to continue incurring significant operating losses for at least the next few years as it advances its DM199 clinical development programs. Quarterly expenses are anticipated to moderately increase due to the expansion of the PE clinical program and the global continuation of the ReMEDy2 trial, including additional site activations and participant enrollment. Despite the recent capital raise, the company expects to need substantial additional capital to complete R&D activities, clinical studies, regulatory activities, and manufacturing development for DM199 or any future product candidates. Current cash resources, including the $29.9 million net proceeds from the July 2025 private placement, are expected to be sufficient to fund planned operations for at least the next 12 months.

Management Comments

• "We expect our current cash, cash equivalents and marketable securities, including the $29.9 million net proceeds from our July 2025 private placement of common shares, to be sufficient to continue the Phase 2 PE trial, the ReMEDy2 trial, and otherwise fund our planned operations for at least the next 12 months from the date of issuance of these condensed consolidated financial statements."
• "We expect to continue to incur significant expenses and operating losses for at least the next few years."
• "We expect our quarterly expenses will increase moderately relative to recent prior quarterly periods as we continue to advance our DM199 clinical development program into PE and we continue our ReMEDy2 trial, including additional site activations in the U.S. and globally and enrollment of participants in the trial."
• "We have decided to discontinue our pursuit of this matter [ICON/PRA Netherlands litigation]."

Industry Context

DiaMedica operates in the highly competitive biopharmaceutical industry, focusing on developing novel treatments for preeclampsia (PE) and acute ischemic stroke (AIS), both areas with significant unmet medical needs. DM199, a recombinant form of KLK1, is positioned as the first and only rhKLK1 undergoing global clinical development for these indications. In PE, there are currently no approved agents to safely lower maternal blood pressure and/or reduce fetal growth restriction, and DM199's molecular size may prevent placental transfer, offering a potential advantage over traditional vasodilators. For AIS, up to 80% of patients are ineligible for existing clot-busting drugs or mechanical thrombectomy, creating a large patient population with no therapeutic options, which DM199 aims to address. The company notes competition for research staff and trial subjects due to other pending stroke and neurological clinical trials, reflecting a busy development landscape in this therapeutic area.

Comparison to Industry Standards

• DM199 is highlighted as the first pharmaceutically active recombinant form of human tissue kallikrein-1 (KLK1) to be clinically studied in patients for preeclampsia (PE) and acute ischemic stroke (AIS). This positions it uniquely, as naturally occurring KLK1 (extracted from human urine or porcine pancreas) has been an approved therapeutic agent in Asia for decades for AIS and hypertension, but DM199 eliminates pathogen transmission risk.
• In PE, the company aims to address the critical unmet need for safe blood pressure lowering agents that do not cross the placental barrier, a common issue with traditional vasodilators like beta-blockers or ACE inhibitors. DM199's molecular size (~26 kilodaltons) is believed to be too large to cross this barrier, potentially offering a significant safety advantage over existing treatments or those used off-label for essential hypertension.
• For AIS, DM199 targets the large patient population (up to 80%) ineligible for currently approved thrombolytic drugs or mechanical thrombectomy. This represents a substantial market segment with no current therapeutic options, suggesting DM199 could fill a critical gap if successful, unlike existing treatments that are limited by time windows or patient eligibility criteria.

Corporate Governance

Legal Proceedings

• DiaMedica was involved in litigation with ICON/PRA Netherlands regarding clinical study data, stemming from a petition filed on November 23, 2022, for prejudgment attachment of documents.
• The Netherlands Commercial Court (NCC) affirmed DiaMedica's ownership of physical and digital documents related to the clinical studies on April 21, 2023.
• ICON/PRA Netherlands filed an appeal on June 15, 2023.
• On February 7, 2024, the NCC issued a judgment finding an insufficient causal link between PRA Netherlands withholding study data and the damages claimed by DiaMedica.
• DiaMedica appealed this decision on October 15, 2024.
• The NCC consolidated both appeals and held a single hearing on March 20, 2025.
• The NCC ruling on June 24, 2025, found ICON/PRA Netherlands was not in default under the agreement and ruled against all ICON/PRA Netherlands counterclaims.
• DiaMedica has decided to discontinue its pursuit of this matter.

Stakeholder Impact

• **Shareholders:** Experienced dilution from the July 2025 private placement (8.6 million new shares issued). Future dilution is possible as the company expects to need substantial additional capital. The stock price may be influenced by the mixed clinical trial results (positive PE, delayed AIS) and the increased financial losses.
• **Patients:** Potential for new treatment options for preeclampsia and acute ischemic stroke if DM199 successfully completes clinical trials and gains regulatory approval. Delays in the AIS trial mean a longer wait for potential treatment.
• **Employees:** The company has significantly expanded its internal clinical team, indicating growth in personnel to support trial activities.
• **Creditors/Investors:** The successful capital raise provides a cash runway for at least 12 months, reducing immediate liquidity concerns but highlighting the long-term need for further financing.

Next Steps

• Initiate Part 1b of the Phase 2 PE study, treating up to 30 subjects with a dose regimen identified from Part 1a.
• Submit an Investigational New Drug (IND) application in the United States for the PE program in the second half of 2025.
• Continue the Phase 2/3 ReMEDy2 clinical trial for AIS, including efforts to enhance site activations and enrollment.
• Globally expand the ReMEDy2 trial by preparing regulatory filings and engaging study sites in an additional seven European countries, and awaiting approval in the United Kingdom.
• Conduct an interim analysis for the ReMEDy2 trial after the first 200 participants have completed the trial, which will determine the final sample size (300 to 728 patients).

Key Dates

Recommendation

The filing presents a mixed bag of results. On one hand, the positive interim data from the preeclampsia trial is a significant clinical validation for DM199, and the successful $29.9 million capital raise provides crucial liquidity for the next 12 months. These factors suggest potential upside. However, the company's financial losses have increased, and the persistent, well-detailed delays in the pivotal ReMEDy2 stroke trial are a major concern, indicating operational challenges and potential setbacks for its lead program. The discontinuation of the legal dispute is a positive, removing a distraction. A seasoned investor would likely 'hold' to monitor the progress of the PE program (especially the IND submission and Part 1b initiation) and, more critically, to see if the mitigation strategies for the ReMEDy2 trial delays yield tangible improvements in site activation and enrollment. The long-term success hinges on the stroke trial, and its current challenges warrant caution despite the PE progress and improved cash position.

Keywords

Biopharmaceutical, Preeclampsia, Acute Ischemic Stroke, DM199, KLK1, Clinical Trials, Phase 2, Phase 3, Biotech, Drug Development, SEC Filing, 10-Q