DiaMedica Therapeutics Inc. is a clinical-stage biopharmaceutical company committed to improving the lives of people suffering from severe ischemic diseases. The company’s lead candidate, DM199, is the first pharmaceutically active recombinant synthetic form of the human tissue kallikrein-1 (KLK1) protein serine protease enzyme to be clinically studied in patients.
Business Overview and History:
DiaMedica Therapeutics Inc. was founded in 2000 and is headquartered in Minneapolis, Minnesota. The company’s primary focus has been the development of its lead product candidate, DM199, a recombinant form of the human tissue kallikrein-1 (KLK1) protein. KLK1 is an established therapeutic modality in Asia for the treatment of acute ischemic stroke (AIS) and cardiorenal diseases.
Over the years, DiaMedica has conducted several clinical trials evaluating DM199 for the treatment of AIS, including the ReMEDy1 Phase 2 trial completed in 2023. In 2022, the company faced a setback when a clinical hold was placed on its ReMEDy2 Phase 3 trial of DM199 for AIS after some participants experienced clinically significant hypotension events. DiaMedica worked closely with the FDA to address this issue, and the clinical hold was fully lifted in June 2023. To mitigate the delays caused by this hold, the company has expanded the trial globally and made protocol amendments to accelerate enrollment.
In the case of AIS, DM199 is intended to enhance blood flow and boost neuronal survival in the ischemic penumbra by dilating arterioles surrounding the site of the vascular occlusion and inhibition of apoptosis (neuronal cell death) while also facilitating neuronal remodeling through the promotion of angiogenesis. For preeclampsia, DM199 is intended to lower blood pressure, enhance endothelial health, and increase perfusion to maternal organs and the placenta, potentially improving both maternal and perinatal outcomes.
DiaMedica’s clinical development pipeline currently focuses on the treatment of AIS and PE. The company is conducting a Phase 2/3 adaptive design, randomized, double-blind, placebo-controlled trial (the ReMEDy2 trial) of DM199 for the treatment of AIS. Additionally, DiaMedica is financially supporting the conduct of a Phase 2 open-label, single-center, single-arm, safety and pharmacodynamic, proof-of-concept, investigator-sponsored study of DM199 for the treatment of PE at the Tygerberg Hospital in Cape Town, South Africa.
Financial Highlights:
As of September 30, 2024, DiaMedica had combined cash, cash equivalents, and marketable securities of $50.2 million, working capital of $46.5 million, and shareholders’ equity of $48.0 million. The company’s net cash used in operating activities for the nine months ended September 30, 2024, was $15.6 million, compared to $14.9 million in the same period of the prior year.
DiaMedica’s research and development (R&D) expenses increased to $12.6 million for the nine months ended September 30, 2024, compared to $9.4 million for the nine months ended September 30, 2023. This increase was primarily due to the continuation of the ReMEDy2 trial, the expansion of the company’s clinical team, and increased manufacturing development activity. The company’s general and administrative (G&A) expenses were $5.7 million for the nine months ended September 30, 2024, down from $6.0 million for the nine months ended September 30, 2023, due to reductions in directors and officers liability insurance premiums and decreased legal fees.
For the most recent fiscal year (2023), DiaMedica reported a net loss of $19,381,000, negative operating cash flow of $18,728,000, and negative free cash flow of $18,752,000. In the most recent quarter (Q3 2024), the company reported no revenue, a net loss of $6,274,000, negative operating cash flow of $4,470,000, and negative free cash flow of $4,479,000. These financial results reflect the company’s continued investment in the development of DM199 for the treatment of AIS and PE.
Liquidity:
DiaMedica believes it is adequately financed to continue the ReMEDy2 trial, support the preeclampsia study, and fund its planned operations through the interim analysis of the ReMEDy2 trial, which is now expected in the fourth quarter of 2025. The company’s financial position is solid, with a debt-to-equity ratio of 0, cash and cash equivalents of $4.13 million as of September 30, 2024, and an unlimited available credit line. DiaMedica’s current ratio and quick ratio both stand at 11.81, indicating strong short-term liquidity.
Operational Highlights and Outlook:
During the third quarter of 2024, DiaMedica made significant progress in advancing its clinical programs. The company implemented updates to the ReMEDy2 trial protocol and statistical analysis plan, which are expected to accelerate enrollment rates, improve the probability of success, and potentially reduce the overall study size. Key updates include the inclusion of thrombolytic non-responders, who exhibited the highest response rate in the previous ReMEDy1 trial, and an increase in the interim analysis sample size from 144 to 200 participants.
In the ReMEDy1 Phase II trial, the majority of participants pre-treated with tissue plasminogen activator (tPA) received DM199 late in the 24-hour treatment window, on average 13.5 hours after tPA administration. The response rate for tPA non-responders in the placebo group was 0%, while the response rate for tPA non-responders in the DM199 arm was 25%, which was the highest performance improvement among all subgroups studied.
The inclusion of tPA non-responders in the ReMEDy2 trial is expected to accelerate enrollment rates, with some sites indicating a potential 50-100% increase in enrollment. This change is also anticipated to improve the overall response rate compared to placebo. The increase in the interim analysis sample size is expected to enhance the power of the Bayesian simulation used to forecast the total required sample size and potentially reduce the final sample size from 364 to around 300 participants, leading to substantial cost savings and a shorter overall study timeline.
In the company’s preeclampsia program, DiaMedica received regulatory approval from the South African Health Products Regulatory Authority (SAHPRA) to initiate an investigator-sponsored Phase 2 study of DM199 for the treatment of preeclampsia. The first patient was enrolled in the fourth quarter of 2024, and DiaMedica expects to announce top-line data from Part 1A of the study in the first half of 2025.
Looking ahead, DiaMedica remains focused on advancing its clinical programs and delivering meaningful progress for patients suffering from severe ischemic diseases. The company now expects the interim analysis of the ReMEDy2 trial to be available in Q4 2025, a 4-6 month delay from the previous Q2 2025 guidance. DiaMedica believes its current cash and investments of $50.2 million as of September 30, 2024, will provide a runway to Q3 2026.
Risks and Challenges:
As a clinical-stage biopharmaceutical company, DiaMedica faces several risks and challenges inherent to the drug development process. These include the potential for delays or setbacks in clinical trials, regulatory approval hurdles, and the ability to secure additional funding as needed to support its operations and development efforts.
The company’s ReMEDy2 trial for acute ischemic stroke has previously experienced slower-than-expected site activations and enrollment, which the company believes may be due to factors such as hospital and medical facility staffing shortages, inclusion/exclusion criteria in the study protocol, and competition for research staff and trial subjects. While DiaMedica has implemented mitigation strategies, including expanding its internal clinical team and revising the study protocol, there can be no assurance that these efforts will be successful in addressing these challenges.
Additionally, the investigator-sponsored preeclampsia study introduces additional risks related to timing, regulatory approvals, costs, and enrollment, as DiaMedica has less control over the clinical trial compared to internally managed studies.
Conclusion:
DiaMedica Therapeutics is a clinical-stage biopharmaceutical company at the forefront of developing novel treatments for severe ischemic diseases. With a focus on acute ischemic stroke and preeclampsia, the company’s lead candidate, DM199, has the potential to address significant unmet medical needs and improve patient outcomes. Despite the challenges inherent to the drug development process, DiaMedica remains committed to driving innovation and advancing its clinical programs to create value for shareholders. The company’s recent protocol updates and financial position provide a solid foundation for continued progress in its clinical trials, particularly the ReMEDy2 trial for AIS and the Phase 2 study for preeclampsia. As DiaMedica moves forward, investors will be closely watching the results of these trials and the company’s ability to navigate the complex landscape of drug development and commercialization.
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