DiaMedica Therapeutics Inc. (DMAC) is a clinical-stage biopharmaceutical company focused on developing innovative treatments for neurological and cardio-renal diseases. The company's lead candidate, DM199, is a recombinant form of the human tissue kallikrein-1 (KLK1) protein, which plays a critical role in regulating local blood flow and vasodilation in the body. DiaMedica is currently conducting a Phase 2/3 clinical trial, called ReMEDy2, to evaluate DM199 for the treatment of acute ischemic stroke (AIS).
Despite the challenges faced in the past year, including a clinical hold on the ReMEDy2 trial that was lifted in June 2023, DiaMedica remains committed to advancing DM199 and is making progress in its global expansion efforts. The company reported a net loss of $19.38 million and no revenue for the fiscal year ended December 31, 2023, with an operating cash outflow of $18.73 million and free cash outflow of $18.75 million.
In the first quarter of 2024, DiaMedica reported a net loss of $5.15 million, with no revenue generated. The company's research and development (R&D) expenses increased to $3.67 million, up from $3.62 million in the same period of the prior year, due to increased costs related to the continuation of the ReMEDy2 trial, partially offset by reductions in costs from completed clinical trials and in-use studies. General and administrative (G&A) expenses also increased to $2.07 million, up from $1.90 million in the first quarter of 2023, primarily driven by increased personnel costs.
Despite the challenges, DiaMedica remains optimistic about the potential of DM199 and is working diligently to address the issues that have impacted the ReMEDy2 trial. The company has recently dosed the first participant since the restart of the trial and is focused on ramping up site activation and participant enrollment.
Business Overview
DiaMedica is a clinical-stage biopharmaceutical company committed to improving the lives of people suffering from serious diseases. The company's lead candidate, DM199, is the first pharmaceutically active recombinant form of the human tissue kallikrein-1 (KLK1) protein to be clinically studied in patients. KLK1 is an established therapeutic modality in Asia, with human urinary KLK1 used for the treatment of acute ischemic stroke (AIS) and porcine KLK1 used for the treatment of cardio-renal disease (CRD), including hypertension.
DiaMedica's long-term goal is to use its patented and in-licensed technologies to establish the company as a leader in the development and commercialization of therapeutic treatments from novel recombinant proteins. The company's current focus is on the treatment of AIS and CRD, with plans to advance DM199 through the required clinical trials to create shareholder value by establishing its clinical and commercial potential.
KLK1 is a serine protease (protein) that plays a critical role in the regulation of local blood flow and vasodilation in the body, as well as an important role in reducing inflammation and oxidative stress. DiaMedica believes DM199 has the potential to treat a variety of diseases where healthy functioning requires sufficient activity of KLK1 and its system, the kallikrein-kinin system (KKS).
ReMEDy2 Clinical Trial
DiaMedica's primary focus is on the development of DM199 for the treatment of AIS. The company is currently conducting the ReMEDy2 clinical trial, a Phase 2/3, adaptive design, randomized, double-blind, placebo-controlled trial intended to enroll approximately 350 patients at up to 100 sites globally. Patients enrolled in the trial will be treated with either DM199 or placebo within 24 hours of the onset of AIS symptoms. The trial excludes patients treated with tissue plasminogen activator (tPA), a thrombolytic agent intended to dissolve blood clots, and those with large vessel occlusions.
The primary endpoint of the ReMEDy2 trial is physical recovery from stroke as measured by the well-established modified Rankin Scale (mRS) at day 90, specifically recovering to an mRS score of 0-1 (mRS range of 0-6). DiaMedica believes that the ReMEDy2 trial has the potential to serve as a pivotal registration study of DM199 in this patient population.
Challenges and Progress in the ReMEDy2 Trial
Prior to the clinical hold of the ReMEDy2 trial, announced in July 2022 and lifted in June 2023, DiaMedica had experienced and is now continuing to experience slower than expected site activations and enrollment. The company believes these conditions may be due to hospital and medical facility staffing shortages, concerns regarding the prior clinically significant hypotension events and circumstances surrounding the previous clinical hold, concerns managing protocol compliance, and competition for research staff and trial subjects due to other pending stroke and neurological trials.
In an effort to mitigate the impact of these factors, DiaMedica made the decision to globally expand the ReMEDy2 trial and is in the process of preparing regulatory submissions and identifying and engaging study sites in Canada, Australia, the United Kingdom, and Europe. The company is working closely with its contract research organization to develop procedures to support both U.S. and global study sites and potential participants as needed.
Despite the challenges, DiaMedica remains optimistic about the potential of DM199 and is focused on continuing to build momentum in the ReMEDy2 trial. The company has recently dosed the first participant since the restart of the trial and is encouraged by the positive feedback from the investigator who dosed this participant, with no observed hypotension. DiaMedica is also working to strengthen its clinical operations team, adding experienced personnel to support the global expansion of the trial.
Cardio-Renal Program
In addition to its focus on AIS, DiaMedica is also developing DM199 for the treatment of cardio-renal disease (CRD), including hypertension. The company currently expects to disclose its plans for the cardio-renal program in the second half of 2024.
Financials
DiaMedica has not generated any revenues from product sales since its inception. The company has financed its operations primarily from public and private sales of equity, the exercise of warrants and stock options, interest income on funds available for investment, and government grants.
For the fiscal year ended December 31, 2023, DiaMedica reported a net loss of $19.38 million and no revenue. The company's operating cash outflow was $18.73 million, and its free cash outflow was $18.75 million. As of March 31, 2024, DiaMedica had total combined cash and investments of $46.5 million, current liabilities of $2.6 million, and working capital of $44.9 million.
In the first quarter of 2024, DiaMedica reported a net loss of $5.15 million, with no revenue generated. The company's R&D expenses increased to $3.67 million, up from $3.62 million in the same period of the prior year, due to increased costs related to the continuation of the ReMEDy2 trial, partially offset by reductions in costs from completed clinical trials and in-use studies. G&A expenses also increased to $2.07 million, up from $1.90 million in the first quarter of 2023, primarily driven by increased personnel costs.
DiaMedica expects its R&D expenses to increase moderately relative to recent prior periods as the global expansion of the ReMEDy2 trial proceeds, and site activations and participant enrollments resume. The company also expects these anticipated increases to be moderated by the clinical trial work and in-use studies completed in 2023. DiaMedica expects its G&A expenses to remain steady as compared to prior periods.
Liquidity
As of March 31, 2024, DiaMedica had total combined cash and investments of $46.5 million, current liabilities of $2.6 million, and working capital of $44.9 million. The decreases in total cash and investments and working capital were due to the combination of the company's net cash used to fund operations and the advance of deposit funds to vendors supporting the ReMEDy2 clinical trial in the current quarter.
DiaMedica believes that its current cash and investments provide a cash runway that will get the company to 2026. However, the amount and timing of the company's future funding requirements will depend on many factors, including the timing and results of its ongoing development efforts, specifically the ReMEDy2 trial, the rate of site activation and enrollment, the effects of site staffing shortages, and competition for research staff and trial subjects due to other stroke and neurological trials.
The company may require significant additional funds earlier than it currently expects and is not assured that it will not need or seek additional funding prior to such time, especially if market conditions for raising additional capital are favorable.
Risks and Challenges
DiaMedica operates in a highly regulated and competitive environment, and the development, manufacturing, and marketing of pharmaceutical products require approval from regulatory agencies, such as the FDA in the United States and the EMA in the European Union. The company's future success is dependent upon the success of its development efforts, its ability to demonstrate clinical progress for its DM199 product candidate, and its ability to obtain required governmental approvals.
The company's ability to license or market and sell its DM199 product candidate, as well as its ability to obtain additional financing to fund its efforts, are also critical to its success. DiaMedica expects to continue to incur significant operating losses as it continues the development and clinical study of, and seeks regulatory approval for, its DM199 product candidate.
Conclusion
DiaMedica Therapeutics Inc. (DMAC) is a clinical-stage biopharmaceutical company focused on developing innovative treatments for neurological and cardio-renal diseases. The company's lead candidate, DM199, is a recombinant form of the human tissue kallikrein-1 (KLK1) protein, which plays a critical role in regulating local blood flow and vasodilation in the body.
Despite the challenges faced in the past year, including a clinical hold on the ReMEDy2 trial that was lifted in June 2023, DiaMedica remains committed to advancing DM199 and is making progress in its global expansion efforts. The company is working diligently to address the issues that have impacted the ReMEDy2 trial and is focused on ramping up site activation and participant enrollment.
While DiaMedica has not generated any revenues from product sales since its inception, the company has financed its operations primarily from public and private sales of equity, the exercise of warrants and stock options, interest income on funds available for investment, and government grants. As of March 31, 2024, the company had total combined cash and investments of $46.5 million, current liabilities of $2.6 million, and working capital of $44.9 million.
DiaMedica's long-term success will depend on its ability to navigate the regulatory landscape, demonstrate the clinical and commercial potential of DM199, and secure the necessary funding to advance its development efforts. The company's focus on the treatment of acute ischemic stroke and cardio-renal disease, as well as its commitment to developing innovative treatments from novel recombinant proteins, make it a company worth watching in the biopharmaceutical industry.