8-K: DiaMedica Therapeutics Announces Q2 2024 Results and Provides Business Update

DiaMedica Therapeutics reported its second quarter 2024 financial results, provided a business update, and announced a private placement extending its cash runway into Q3 2026.

Summary

• DiaMedica Therapeutics announced its financial results for the second quarter of 2024, with a net loss of $5.1 million for the quarter and $10.3 million for the six-month period.
• The company's research and development expenses increased to $3.9 million for the quarter and $7.6 million for the six-month period, driven by the ReMEDy2 clinical trial and increased staffing.
• General and administrative expenses decreased to $1.7 million for the quarter and $3.8 million for the six-month period due to lower insurance premiums and legal fees.
• DiaMedica completed a $12 million private placement, receiving net proceeds of approximately $11.7 million, which is expected to extend the company's cash runway into the third quarter of 2026.
• The company's cash, cash equivalents, and investments totaled $54.1 million as of June 30, 2024, with working capital of $51.9 million.
• The ReMEDy2 Phase 2/3 trial for acute ischemic stroke is progressing, with interim enrollment of 144 patients targeted for Q1 2025.
• A Phase 2 investigator-sponsored trial for preeclampsia is scheduled to begin in Q4 2024, with proof-of-concept results targeted for the first half of 2025.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive due to the successful private placement extending the cash runway, progress in clinical trials, and expansion into preeclampsia. However, the company is still operating at a loss and faces risks associated with clinical development.

Positives

• The successful $12 million private placement significantly extends the company's cash runway into Q3 2026.
• The ReMEDy2 trial is progressing with accelerated site activation and no reported cases of hypotension in new participants.
• The expansion into preeclampsia with a Phase 2 trial is a positive step for the company's clinical development program.
• Preclinical studies suggest DM199's potential safety in pregnant humans, as it did not cross the placental barrier in rats.
• The company has a strong cash position with $54.1 million in cash, cash equivalents, and investments.

Negatives

• The company reported a net loss of $5.1 million for the quarter and $10.3 million for the six-month period.
• Research and development expenses have increased significantly due to the ReMEDy2 trial and increased staffing costs.
• Net cash used in operating activities increased to $11.2 million for the six months ended June 30, 2024, compared to $10.1 million for the same period in 2023.

Risks

• The company faces risks associated with the planned clinical expansion into preeclampsia and the planned DM199 Phase 2 trial for preeclampsia.
• There are uncertainties relating to the timing of ReMEDy2 trial site activations and enrollment, regulatory applications, and related filing and approval timelines.
• There is a possibility of additional future adverse events associated with or unfavorable results from the ReMEDy2 trial.
• The company relies on third parties to conduct clinical trials, which introduces risks.
• The company needs to continue to obtain funding for its operations, including funding necessary to complete current and planned clinical trials.

Future Outlook

The company expects to use the net proceeds from the private placement to continue its clinical and product development activities for DM199, including its pivotal Phase 2/3 ReMEDy2 trial for the treatment of acute ischemic stroke and its clinical expansion into preeclampsia, and for other working capital and general corporate purposes. The financing is expected to extend DiaMedica's cash runway into the third quarter of 2026.

Management Comments

• Our clinical team is energized by the progress made over the past 90 days and is eager to activate and better support our high-volume centers, stated Dr. Lorianne Masuoka, DiaMedicas Chief Medical Officer.
• We are also pleased to report that there have been no cases of hypotension in newly enrolled participants.

Industry Context

DiaMedica is focused on developing treatments for severe ischemic diseases, specifically acute ischemic stroke and preeclampsia, which are areas with significant unmet medical needs. The company's approach with DM199, a recombinant form of human tissue kallikrein-1, aligns with the growing interest in novel therapeutic modalities for these conditions. The expansion into preeclampsia addresses a critical gap in available treatments, as there are currently no approved therapeutics for preeclampsia in the United States or Europe.

Comparison to Industry Standards

• DiaMedica's focus on acute ischemic stroke aligns with other companies developing treatments in this space, such as Acticor Biotech and Biogen, though their specific approaches and drug candidates differ.
• The company's preeclampsia program is notable as there are currently no approved therapeutics for this condition in the US or Europe, setting it apart from many other companies.
• The ReMEDy2 trial's design, excluding patients treated with tPA and/or mechanical thrombectomy, targets a specific patient population, which is different from some other stroke trials that may include these patients.
• The company's cash runway extension into Q3 2026, following the private placement, provides a longer period of financial stability compared to some other biotech companies that may have shorter cash runways.

Stakeholder Impact

• Shareholders benefit from the extended cash runway and progress in clinical trials.
• Employees are impacted by the increased staffing costs and the expansion of the clinical team.
• Patients with acute ischemic stroke and preeclampsia may benefit from the development of new treatments.
• Creditors are impacted by the company's financial performance and cash position.

Next Steps

• Continue site activation and enrollment for the ReMEDy2 trial.
• Initiate the Phase 2 preeclampsia trial in Q4 2024.
• Release interim enrollment results for the ReMEDy2 trial in Q1 2025.
• Release proof-of-concept results from the Phase 2 preeclampsia trial in the first half of 2025.

Key Dates

Keywords

DiaMedica Therapeutics, DM199, Acute Ischemic Stroke, Preeclampsia, ReMEDy2 Trial, Clinical Trial, Private Placement, Biopharmaceutical, Rinvecalinase alfa, rhKLK1