UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Title of each class Trading Symbol Name of each exchange on which registered Voting common shares, no par value per share DMAC The Nasdaq Stock Market LLC FORM 10-Q (Mark one) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934‐‐ For the transition period from __ ...

Financial Data and Key Metrics Changes - The net loss for Q1 2021 was $3.6 million or $0.19 per share, compared to a net loss of $2.4 million or $0.19 per share for the same period in the prior year [18] - Research and development expenses increased to $2.4 million from $1.4 million year-over-year, attributed to costs for the REDUX Phase 2 CKD study and increased staffing [19] - General and administrative expenses rose slightly to $1.2 million from $1.1 million, primarily due to higher insurance premiums and personnel costs [20] - Cash, cash equivalents, and marketable securities at the end of Q1 2021 were $23.4 million, down from $27.5 million at the end of 2020 [21][22] Business Line Data and Key Metrics Changes - The Acute Ischemic Stroke program is advancing with a Phase 2/3 study of DM199, with the IND submitted on April 16, 2021 [8][9] - Enrollment in the REDUX study reached 70 participants, with full enrollment of the diabetic kidney disease cohort and 70% completion in the IgA Nephropathy cohort [15][16] Market Data and Key Metrics Changes - The company is preparing for discussions with the FDA regarding stroke recurrence as a clinically significant endpoint, following positive results from the ReMEDy Phase 2 study [11][12] Company Strategy and Development Direction - The company plans to submit an application for fast-track designation for DM199 as part of the study initiation [13] - The strategy includes engaging a contract research organization to identify and qualify clinical sites for the upcoming studies [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the timelines for the Phase 2/3 study and does not anticipate significant issues with the IND submission [10][25] - The company expects to report preliminary top-line data from the diabetic kidney disease cohorts during the current quarter [15][28] Other Important Information - The company has sufficient drug supply for the study, with a shelf-life extending two years [49] - The current capital position is expected to fund operations through mid-2022, allowing completion of the REDUX study and initiation of the Phase 2/3 study [22] Q&A Session Summary Question: Status of fast-track designation submission - Management confirmed that the fast-track designation has not yet been submitted but plans to do so after receiving approval to proceed with the study [23][24] Question: Insights on kidney readout data - Management indicated that they would like to see a decrease in UACR proteinuria while maintaining or increasing eGFR [26][27] Question: Patient disposition in DKD trial - Management stated they prefer to wait for complete data before analyzing individual patient outcomes [30] Question: Implications of DKD data for IgA Nephropathy - Management discussed the potential for DM199 to improve kidney function across different causes of kidney disease, with a focus on differences among cohorts [39][40] Question: Timing for FDA approach regarding stroke recurrence - Management is exploring multiple pathways for stroke recurrence, including potential sub-studies or co-primary endpoints [35][36] Question: Activation of study sites - Management confirmed that they are in the process of identifying and activating clinical study sites, aiming for up to 75 sites [46] Question: Initial data readout expectations - Management anticipates interim results in 2022, with the study completion expected in 2023 [51]

[PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) The company reported a net loss of $3.6 million in Q1 2021, up from $2.4 million, driven by higher R&D, with $23.4 million in cash and no revenue [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $3,329 | $7,409 | | Marketable securities | $20,072 | $20,098 | | Total current assets | $24,195 | $27,921 | | **Total assets** | **$24,356** | **$28,095** | | **Liabilities & Equity** | | | | Total current liabilities | $1,178 | $2,028 | | Total liabilities | $1,211 | $2,081 | | Total shareholders' equity | $23,145 | $26,014 | | **Total liabilities and shareholders' equity** | **$24,356** | **$28,095** | - Total assets decreased from **$28.1 million** at year-end 2020 to **$24.4 million** as of March 31, 2021, primarily due to a decrease in cash and cash equivalents used to fund operations[18](index=18&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Statement of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Research and development | $2,406 | $1,349 | | General and administrative | $1,213 | $1,055 | | **Operating loss** | **($3,619)** | **($2,404)** | | **Net loss** | **($3,622)** | **($2,425)** | | **Net loss per share** | **($0.19)** | **($0.19)** | - The net loss increased by approximately **50%** year-over-year, primarily driven by a **78%** increase in Research and Development expenses[20](index=20&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | ($4,313) | ($2,978) | | Net cash used in investing activities | ($9) | ($5,301) | | Net cash provided by financing activities | $242 | $7,696 | | **Net decrease in cash and cash equivalents** | **($4,080)** | **($583)** | - Cash used in operating activities increased to **$4.3 million** in Q1 2021 from **$3.0 million** in Q1 2020, reflecting higher operating losses[26](index=26&type=chunk) - Financing activities in Q1 2021 consisted of **$244,000** from stock option exercises, compared to **$7.7 million** raised from a public offering in Q1 2020[26](index=26&type=chunk)[57](index=57&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) - The company is a clinical-stage entity focused on developing DM199 for acute ischemic stroke (AIS) and chronic kidney disease (CKD) and has not yet generated any revenue from product sales[29](index=29&type=chunk)[30](index=30&type=chunk) - As of March 31, 2021, the company had an accumulated deficit of **$72.5 million** and management expects current cash, cash equivalents, and marketable securities to be sufficient to fund operations for at least the next twelve months[31](index=31&type=chunk)[32](index=32&type=chunk) - During Q1 2021, the company engaged a consulting firm owned by its Vice President of Regulatory Affairs, incurring charges of approximately **$107,000** for quality and regulatory support services[72](index=72&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=16&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses DM199's clinical progress for AIS and CKD, attributing increased net loss to R&D, and confirms sufficient capital for 12 months, with future funding required [Business Overview and Clinical Development](index=16&type=section&id=Business%20Overview%20and%20Clinical%20Development) - The company's primary focus is developing DM199, a recombinant human tissue kallikrein-1 (KLK1) protein, for the treatment of acute ischemic stroke (AIS) and chronic kidney disease (CKD)[76](index=76&type=chunk)[77](index=77&type=chunk) - **AIS Program (ReMEDy2 Study):** Following positive FDA feedback, the company has filed an Investigational New Drug (IND) application for a Phase 2/3 adaptive trial and anticipates starting enrollment in the summer of 2021[79](index=79&type=chunk) - **CKD Program (REDUX Trial):** As of April 30, 2021, **70** of approximately **90** participants have been enrolled across three cohorts, with enrollment slower than expected due to COVID-19, but topline results from Cohort III (Type 2 diabetes) are expected in Q2 2021[80](index=80&type=chunk)[81](index=81&type=chunk) [Results of Operations](index=19&type=section&id=Results%20of%20Operations) Comparison of Operating Expenses (in thousands) | Expense Category | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Research and development | $2,406 | $1,349 | | General and administrative | $1,213 | $1,055 | - R&D expenses increased by **$1.0 million** year-over-year due to increased costs for the REDUX Phase 2 CKD study and preparation for the ReMEDy2 Phase 2/3 stroke study[93](index=93&type=chunk) - G&A expenses increased slightly, primarily due to higher costs for directors and officers liability insurance, personnel, and non-cash share-based compensation[94](index=94&type=chunk) [Liquidity and Capital Resources](index=19&type=section&id=Liquidity%20and%20Capital%20Resources) Key Liquidity Metrics (in thousands) | Metric | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Cash, cash equivalents and marketable securities | $23,400 | $27,507 | | Working capital | $23,017 | $25,893 | - The company expects its current cash resources to be sufficient to complete the REDUX Phase 2 study, initiate the ReMEDy2 Phase 2/3 study, and fund planned operations for at least the next twelve months[104](index=104&type=chunk) - Substantial additional capital will be required to further R&D activities and clinical trials, with future funding potentially sought through equity or debt financings or strategic collaborations[104](index=104&type=chunk)[105](index=105&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=22&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, DiaMedica is not required to provide this disclosure - The company is exempt from this disclosure requirement as it qualifies as a smaller reporting company[110](index=110&type=chunk) [Controls and Procedures](index=22&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective as of March 31, 2021, with no material changes to internal controls during the quarter - Based on an evaluation as of the end of the reporting period, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective[111](index=111&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[112](index=112&type=chunk) [PART II. OTHER INFORMATION](index=23&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=23&type=section&id=Item%201.%20Legal%20Proceedings) The company refiled claims against PRA Netherlands in a Dutch Court in November 2020 after a U.S. court dismissed its 2013 clinical study dispute - The company is in a legal dispute with PRA Netherlands over alleged execution errors in a 2013 clinical trial for DM199[114](index=114&type=chunk) - After its case in U.S. District Court was dismissed, the company has ceased action in the United States and filed a complaint against PRA Netherlands in a Dutch Court in November 2020[114](index=114&type=chunk) [Risk Factors](index=23&type=section&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, DiaMedica is not required to provide this disclosure - The company is exempt from this disclosure requirement as it qualifies as a smaller reporting company[116](index=116&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=23&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not sell any unregistered equity securities during the quarter ended March 31, 2021 - There were no sales of unregistered equity securities during the first quarter of 2021[117](index=117&type=chunk) [Defaults Upon Senior Securities](index=23&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) None - The company reported no defaults upon senior securities[118](index=118&type=chunk) [Mine Safety Disclosures](index=24&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable - This item is not applicable to the company[120](index=120&type=chunk) [Other Information](index=24&type=section&id=Item%205.%20Other%20Information) Not applicable - This item is not applicable to the company[121](index=121&type=chunk) [Exhibits](index=24&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including corporate articles and officer certifications - A list of exhibits filed with the quarterly report is provided, including certifications from the CEO and CFO as required by the Sarbanes-Oxley Act[122](index=122&type=chunk)

Financial Data and Key Metrics Changes - The net loss for the full year of 2020 was $12.3 million or $0.78 per share, compared to a net loss of $10.6 million or $0.89 per share for the prior year, indicating a worsening in financial performance [20] - Research and development expenses increased to $8.3 million in 2020 from $7.9 million in 2019, primarily due to costs associated with the REDUX Phase 2 CKD study [20][21] - General and administrative expenses rose to $4.4 million in 2020 from $3.7 million in 2019, driven by increased non-cash share-based compensation and professional services [23] - Total other income decreased to $0.4 million in 2020 from $1 million in 2019, primarily due to reduced R&D incentives from the Australian Government [24] - Cash, cash equivalents, and marketable securities at the end of Q4 2020 were $27.5 million, up from $7.9 million at the end of 2019, reflecting successful public offerings [25][26] Business Line Data and Key Metrics Changes - The REDUX trial for DM199 in chronic kidney disease (CKD) has enrolled 68 participants, with full enrollment in the diabetic kidney disease cohort and 70% enrollment in the IgA Nephropathy cohort [16][17] - The company anticipates preliminary top-line results from the DKD cohort in Q2 2021, with completion of the IgA Nephropathy and African American cohorts expected in the second half of 2021 [17][18] Market Data and Key Metrics Changes - The FDA accepted the company's request for a pre-IND meeting for the Acute Ischemic Stroke program, indicating a positive regulatory environment for the company's stroke treatment initiatives [6][7] - AstraZeneca's label expansion for Brilinta to reduce stroke recurrence is viewed as a potential opportunity for DM199, which showed an 86% reduction in severe stroke recurrence in prior studies [11][12] Company Strategy and Development Direction - The company is focused on advancing its Acute Ischemic Stroke program and chronic kidney disease studies, with plans to submit an investigational new drug application for the Phase 2/3 study later in March 2021 [8][9] - The strategy includes pursuing IgA Nephropathy as an orphan indication while considering partnerships for broader CKD indications in the future [34][42] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the FDA's guidance for the stroke program, believing it provides a clear path forward [8] - The company is preparing for potential partnerships to support the development of DM199 for both stroke and kidney disease indications, with a focus on obtaining more data before finalizing partnerships [42] Other Important Information - The company plans to host a Stroke Key Opinion Leader Webinar on March 19, 2021, to discuss the treatment landscape for Acute Ischemic Stroke [10] - The company is on track to complete significant milestones, including data readouts for the REDUX study and initiating the Phase 2/3 study in Acute Ischemic Stroke [27] Q&A Session Summary Question: Could you speak to the label expansion for stroke recurrence? - The company plans to reach out to the FDA after filing the IND to discuss clinical paths and powering for the pivotal study [29] Question: Any update on the timing for the pivotal stroke study? - The study is expected to start in summer 2021, with an estimated cost of around $30 million for 350 patients [31] Question: What are the exclusion criteria for the stroke study? - The protocol will exclude patients on tPA or those who have undergone mechanical thrombectomy [38] Question: How will the company handle potential pricing differentials for different indications? - The company is considering distinct product positioning for stroke and kidney disease, with a focus on finding the right partner for both indications [41][42] Question: What new data is anticipated at the upcoming Stroke Conference? - Potential new data may be presented, but specifics will be withheld until the event [43]

DiaMedica Therapeutics Inc. (NASDAQ:DMAC) Q3 2020 Earnings Conference Call November 5, 2020 8:00 AM ET Company Participants Rick Pauls - President & CEO Scott Kellen - CFO Harry Alcorn - Chief Medical Officer Conference Call Participants Alex Nowak - Craig-Hallum Capital Group Thomas Flaten - Lake Street Capital Markets Operator Good morning, ladies and gentlemen, and welcome to the DiaMedica Therapeutics Third Quarter 2020 Conference Call. An audio recording of the webcast will be available shortly after t ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________________________ FORM 10-Q (Mark one) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________ to __________________. Commission File Number: 001-36291 ____________________ DIAMEDICA THERAPEUTICS INC. ...

DiaMedica Therapeutics Inc. (NASDAQ:DMAC) Q2 2020 Earnings Conference Call August 12, 2020 8:00 AM ET Company Participants Rick Pauls - President, Chief Executive Officer Scott Kellen - Chief Financial Officer Harry Alcorn - Chief Medical Officer Conference Call Participants Alexander Nowak - Craig-Hallum Capital Group Thomas Flaten - Lake Street Capital Markets Operator Good morning, ladies and gentlemen, and welcome to the DiaMedica Therapeutics Second Quarter 2020 Financial Results Conference Call. An au ...

[Cautionary Note Regarding Forward-Looking Statements](index=4&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This report contains forward-looking statements based on current expectations that are subject to significant risks and uncertainties - Forward-looking statements are based on management's current expectations and are subject to risks and uncertainties that could negatively affect business, operating results, financial condition, and share price[9](index=9&type=chunk) - Key areas of forward-looking statements include plans for DM199 development, regulatory approval, commercialization, clinical testing success, market acceptance, partnership potential, trial costs and timing, impact of COVID-19, commercialization strategy, regulatory requirements, competition, funding, intellectual property, and use of offering proceeds[10](index=10&type=chunk) - Readers should not rely on forward-looking statements as predictions of future events, and the company does not intend to update them except as required by law[11](index=11&type=chunk) [Part I. Financial Information](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the company's unaudited condensed consolidated financial statements for the period ended June 30, 2020 [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets (In thousands) | Metric | June 30, 2020 (unaudited) | December 31, 2019 | | :--- | :--- | :--- | | **ASSETS** | | | | Cash and cash equivalents | $4,955 | $3,883 | | Marketable securities | $6,844 | $3,995 | | Total current assets | $12,399 | $8,836 | | Total assets | $12,581 | $9,053 | | **LIABILITIES AND EQUITY** | | | | Total current liabilities | $1,217 | $1,318 | | Total non-current liabilities | $92 | $118 | | Total shareholders' equity | $11,272 | $7,617 | | Total liabilities and shareholders' equity | $12,581 | $9,053 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Condensed Consolidated Statements of Operations and Comprehensive Loss (In thousands) | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $1,629 | $1,874 | $3,010 | $4,481 | | General and administrative | $1,079 | $867 | $2,102 | $1,681 | | Operating loss | $(2,708) | $(2,741) | $(5,112) | $(6,162) | | Total other income | $(243) | $(280) | $(231) | $(458) | | Net loss | $(2,474) | $(2,469) | $(4,899) | $(5,721) | | Basic and diluted net loss per share | $(0.17) | $(0.21) | $(0.36) | $(0.48) | [Condensed Consolidated Statements of Shareholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) Changes in Shareholders' Equity (In thousands) | Item | Six Months Ended June 30, 2020 | | :--- | :--- | | Balances at December 31, 2019 | $7,617 | | Issuance of common shares (net of costs) | $7,682 | | Exercise of common stock options | $16 | | Share-based compensation expense | $829 | | Unrealized gain on marketable securities | $27 | | Net loss | $(4,899) | | Balances at June 30, 2020 | $11,272 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (In thousands) | Cash Flow Activity | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | $(3,822) | $(6,005) | | Net cash used in investing activities | $(2,801) | $(7,916) | | Net cash provided by financing activities | $7,695 | $72 | | Net increase (decrease) in cash and cash equivalents | $1,072 | $(13,849) | | Cash and cash equivalents at end of period | $4,955 | $2,974 | [Notes to the Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) These notes provide essential context for the financial statements, covering business activities, risks, and accounting policies [1. Business](index=9&type=section&id=1.%20Business) - DiaMedica Therapeutics Inc. focuses on advancing the clinical and commercial development of a proprietary recombinant Kallikrein-1 protein (KLK1) for kidney and neurological diseases, primarily **chronic kidney disease (CKD)** and **acute ischemic stroke (AIS)**[27](index=27&type=chunk) [2. Risks and Uncertainties](index=9&type=section&id=2.%20Risks%20and%20Uncertainties) - The company operates in a highly regulated and competitive environment, with its initial product candidate, DM199, still in the clinical stage and not expected to be commercially available for **at least three to five years**, if at all[28](index=28&type=chunk) - Clinical testing is adversely impacted by the **COVID-19 pandemic**, causing slower than expected enrollment in the REDUX clinical trial due to safety concerns at study sites[29](index=29&type=chunk) - DiaMedica has incurred **$61.5 million in losses since inception** and expects to continue incurring significant operating losses until product sales or licensing revenues are generated[31](index=31&type=chunk) - Current cash resources are expected to fund operations **through 2021**, including completion of all three cohorts in the REDUX Phase II study, but substantial additional capital will be needed for further R&D and regulatory activities[32](index=32&type=chunk) [3. Summary of Significant Accounting Policies](index=10&type=section&id=3.%20Summary%20of%20Significant%20Accounting%20Policies) - Interim financial statements are prepared in accordance with **US GAAP** and SEC Form 10-Q instructions, reflecting normal recurring accruals[34](index=34&type=chunk) - Cash and cash equivalents include bank deposits, money market funds, and other investments with original maturities of **three months or less**[35](index=35&type=chunk) - Marketable securities, primarily government and corporate obligations and bank CDs, are classified as **available-for-sale**, carried at fair value, with unrealized gains/losses reported in accumulated other comprehensive income[37](index=37&type=chunk) - Fair value measurements are categorized into a three-level hierarchy based on input observability: **Level 1** (quoted prices in active markets), **Level 2** (observable inputs other than Level 1), and **Level 3** (unobservable inputs)[40](index=40&type=chunk)[41](index=41&type=chunk) [4. Marketable Securities](index=11&type=section&id=4.%20Marketable%20Securities) Marketable Securities at Fair Value (In thousands) | Type of Security | June 30, 2020 (Total) | June 30, 2020 (Level 2) | December 31, 2019 (Total) | December 31, 2019 (Level 2) | | :--- | :--- | :--- | :--- | :--- | | Government securities | $4,841 | $4,841 | $1,998 | $1,998 | | Bank certificates of deposit | $2,003 | $2,003 | — | — | | Commercial paper and corporate bonds | — | — | $1,997 | $1,997 | | **Total** | **$6,844** | **$6,844** | **$3,995** | **$3,995** | - All marketable securities are classified as **Level 2** in the fair value hierarchy, with maturities of individual securities less than one year, and the primary objective of the investment policy is principal preservation[42](index=42&type=chunk)[44](index=44&type=chunk) [5. Amounts Receivable](index=12&type=section&id=5.%20Amounts%20Receivable) Amounts Receivable (In thousands) | Type of Receivable | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Research and development incentives | $264 | $793 | | Sales-based taxes receivable | $37 | $13 | | Other | $18 | $17 | | **Total amounts receivable** | **$319** | **$823** | [6. Deposits](index=12&type=section&id=6.%20Deposits) Deposits (In thousands) | Item | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Advances to vendors - current | $46 | $88 | - The company periodically advances interest-free funds to vendors supporting clinical trials, recoverable through invoice reductions, application against final invoices, or refunds[47](index=47&type=chunk) [7. Property and Equipment](index=12&type=section&id=7.%20Property%20and%20Equipment) Property and Equipment, Net (In thousands) | Item | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Furniture and equipment | $51 | $51 | | Computer equipment | $58 | $56 | | Less accumulated depreciation | $(54) | $(43) | | **Property and equipment, net** | **$55** | **$64** | [8. Accrued Liabilities](index=12&type=section&id=8.%20Accrued%20Liabilities) Accrued Liabilities (In thousands) | Type of Accrued Liability | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Accrued clinical study costs | $166 | $433 | | Accrued compensation | $232 | $419 | | Accrued research and other professional fees | $188 | $172 | | Accrued taxes and other liabilities | $23 | $52 | | **Total accrued liabilities** | **$609** | **$1,076** | [9. Operating Lease](index=12&type=section&id=9.%20Operating%20Lease) - The company leases office space under a non-cancelable operating lease that terminates on **August 31, 2022**, with no renewal option[50](index=50&type=chunk) - The estimated incremental borrowing rate used for lease valuation is **9%**[51](index=51&type=chunk) Operating Lease Obligation Maturities (In thousands) | Year | Amount | | :--- | :--- | | 2020 | $33 | | 2021 | $68 | | 2022 | $46 | | **Total lease payments** | **$147** | | Less interest portion | $(15) | | **Present value of lease obligation** | **$132** | [10. Shareholders' Equity](index=14&type=section&id=10.%20Shareholders'%20Equity) - On February 13, 2020, the company issued and sold 2,125,000 common shares in a public offering at $4.00 per share, generating net proceeds of approximately **$7.7 million**[56](index=56&type=chunk) - During the six months ended June 30, 2020, 7,200 common shares were issued from option exercises for **$16,000**[57](index=57&type=chunk) Common Shares Reserved for Future Issuance | Item | Number of Shares | | :--- | :--- | | Stock options outstanding | 1,413,988 | | Deferred share units outstanding | 47,237 | | Shares available for grant under the 2019 Omnibus Incentive Plan | 1,103,551 | | Common shares issuable under common share purchase warrants | 255,000 | | **Total** | **2,819,776** | [11. Net Loss Per Share](index=15&type=section&id=11.%20Net%20Loss%20Per%20Share) Net Loss Per Common Share | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Net loss (in thousands) | $(2,474) | $(2,469) | $(4,899) | $(5,721) | | Weighted average shares outstanding | 14,139,074 | 11,979,401 | 13,623,400 | 11,968,200 | | Basic and diluted net loss per share | $(0.17) | $(0.21) | $(0.36) | $(0.48) | - Diluted EPS is the same as basic EPS because common equivalent shares (stock options, warrants, deferred units) were **anti-dilutive**[60](index=60&type=chunk)[61](index=61&type=chunk) [12. Share-Based Compensation](index=15&type=section&id=12.%20Share-Based%20Compensation) - The 2019 Omnibus Incentive Plan authorizes up to **2,000,000 common shares** for various awards, with options generally vesting over one to three years for employees/directors and one year for non-employees[62](index=62&type=chunk) Share-Based Compensation Expense (In thousands) | Expense Category | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $131 | $67 | $238 | $125 | | General and administrative | $305 | $115 | $591 | $187 | | **Total share-based compensation** | **$436** | **$182** | **$829** | **$312** | Stock Option Activity Summary (In thousands, except share and per share amounts) | Item | Shares Underlying Options Outstanding | Weighted Average Exercise Price Per Share | | :--- | :--- | :--- | | Balances at December 31, 2019 | 1,220,359 | $5.26 | | Granted | 267,332 | $4.75 | | Exercised | (7,200) | $2.21 | | Expired/cancelled | (66,505) | $5.04 | | Balances at June 30, 2020 | 1,413,988 | $5.19 | [13. Subsequent Event](index=16&type=section&id=13.%20Subsequent%20Event) - On August 10, 2020, the company issued and sold 4,600,000 common shares in a public offering at $5.00 per share, resulting in gross proceeds of **$23.0 million** and net proceeds of approximately **$21.1 million**[70](index=70&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition, operational results, liquidity, and the impact of the COVID-19 pandemic [Business Overview](index=18&type=section&id=Business%20Overview) - DiaMedica is a clinical-stage biopharmaceutical company focused on developing novel recombinant proteins, with a primary focus on **chronic kidney disease (CKD)** and **acute ischemic stroke (AIS)**[75](index=75&type=chunk) - The lead drug candidate, **DM199**, is a recombinant form of human tissue kallikrein-1 (KLK1), believed to have potential in treating diseases where KLK1 activity is crucial for local blood flow, vasodilation, inflammation, and oxidative stress[76](index=76&type=chunk) [DM199 Product Candidate Clinical Development](index=18&type=section&id=DM199%20Product%20Candidate%20Clinical%20Development) This section details the progress of DM199 clinical trials, including the REDUX trial for CKD and the ReMEDy trial for AIS [REDUX Clinical Trial (CKD)](index=18&type=section&id=REDUX%20Clinical%20Trial) - The REDUX trial is a multi-center, open-label Phase II clinical trial for CKD, enrolling approximately **90 participants** across three cohorts: non-diabetic, hypertensive African Americans; participants with IgA Nephropathy (IgAN); and participants with Type II diabetes mellitus, CKD, hypertension, and albuminuria[77](index=77&type=chunk) - As of August 5, 2020, **18 subjects were enrolled**, but enrollment is slower than expected due to the COVID-19 pandemic impacting clinical study site activities and patient concerns[79](index=79&type=chunk) - Primary endpoints include safety, tolerability, blood pressure, albuminuria, and kidney function (eGFR and urinary albumin to creatinine ratio)[77](index=77&type=chunk) [ReMEDy Clinical Trial (AIS)](index=20&type=section&id=ReMEDy%20Clinical%20Trial) - The ReMEDy study for acute ischemic stroke (AIS) concluded enrollment in October 2019 with **92 participants**[80](index=80&type=chunk) - Positive top-line results announced May 13, 2020, showed achievement of **primary safety and tolerability endpoints** with no DM199-related serious adverse events[80](index=80&type=chunk) - A therapeutic effect was demonstrated in participants who received tissue plasminogen activator (tPA) prior to enrollment, but not in those receiving mechanical thrombectomy[80](index=80&type=chunk) [Financial Overview](index=20&type=section&id=Financial%20Overview) - The company has not generated product sales revenue and has financed operations through equity sales, warrant/option exercises, interest income, and government grants, incurring an accumulated deficit of **$61.5 million** as of June 30, 2020[82](index=82&type=chunk) - Net losses were **$4.9 million** for the six months ended June 30, 2020, and **$5.7 million** for the same period in 2019[82](index=82&type=chunk) - A subsequent public offering on August 10, 2020, generated approximately **$21.1 million in net proceeds**, which, combined with current cash resources, is expected to fund operations through 2021 and complete the REDUX Phase II study[83](index=83&type=chunk)[85](index=85&type=chunk) - Significant expenses and operating losses are expected to continue, particularly as DM199 advances in clinical development[84](index=84&type=chunk) [Overview of Expense Components](index=21&type=section&id=Overview%20of%20Expense%20Components) This section outlines the primary components of the company's R&D and G&A operating expenses and discusses expected trends [Research and Development Expenses](index=21&type=section&id=Research%20and%20Development%20Expenses) - R&D expenses primarily consist of fees to external service providers (CROs), clinical development obligations, manufacturing costs for DM199, and personnel costs (salaries, benefits, share-based compensation)[86](index=86&type=chunk) - A **delay in the timing of R&D costs** is expected due to the COVID-19 pandemic, but not a significant overall increase in costs[87](index=87&type=chunk) - R&D expenses are expected to **increase in the future** as DM199 progresses to advanced clinical development stages[87](index=87&type=chunk) [General and Administrative Expenses](index=21&type=section&id=General%20and%20Administrative%20Expenses) - G&A expenses include salaries, benefits, share-based compensation for executive, finance, business development, and support functions, as well as insurance, rent, utilities, travel, and professional fees[88](index=88&type=chunk) - G&A expenses are expected to **increase** with the expansion of development and operating activities[88](index=88&type=chunk) - COVID-19 led to temporary office closure and telework, but **no significant additional G&A expenses** were incurred in Q2 2020, nor are they expected going forward, with non-essential travel restricted[89](index=89&type=chunk) [Other (Income) Expense](index=22&type=section&id=Other%20(Income)%20Expense) - Other (income) expense primarily comprises governmental assistance (research incentives), interest income, and foreign currency exchange gains and losses[91](index=91&type=chunk) [Results of Operations](index=22&type=section&id=Results%20of%20Operations) This section analyzes operating results for the three and six months ended June 30, 2020, compared to the same period in 2019 [Research and Development Expenses](index=22&type=section&id=Research%20and%20Development%20Expenses_2) Research and Development Expenses (In thousands) | Period | 2020 | 2019 | Change (YoY) | | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $1,629 | $1,874 | $(245) | | Six Months Ended June 30 | $3,010 | $4,481 | $(1,471) | - The decrease for the six-month period was primarily due to **non-recurring costs of approximately $1.3 million** for a DM199 drug substance production run in H1 2019 and a net decrease in clinical study costs, partially offset by costs for the REDUX Phase II CKD study and increased non-cash share-based compensation[93](index=93&type=chunk) [General and Administrative Expenses](index=22&type=section&id=General%20and%20Administrative%20Expenses_2) General and Administrative Expenses (In thousands) | Period | 2020 | 2019 | Change (YoY) | | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $1,079 | $867 | $212 | | Six Months Ended June 30 | $2,102 | $1,681 | $421 | - The increase for both periods was primarily due to **increased non-cash share-based compensation costs**[94](index=94&type=chunk) [Total Other (Income) Expense](index=22&type=section&id=Total%20Other%20(Income)%20Expense_2) Total Other (Income) Expense (In thousands) | Period | 2020 | 2019 | Change (YoY) | | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $243 | $280 | $(37) | | Six Months Ended June 30 | $231 | $458 | $(227) | - The decrease for the six-month period was primarily related to **reduced R&D incentives** associated with decreased ReMEDy stroke study costs in H1 2019, partially offset by reduced foreign currency transaction losses[95](index=95&type=chunk) [Liquidity and Capital Resources](index=23&type=section&id=Liquidity%20and%20Capital%20Resources) This section details the company's financial liquidity, cash flow activities, and future capital requirements to support operations [Working Capital](index=23&type=section&id=Working%20Capital) Liquidity and Capital Resources (In thousands) | Metric | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Cash, cash equivalents and marketable securities | $11,799 | $7,878 | | Total current liabilities | $1,217 | $1,318 | | Working capital | $11,182 | $7,518 | - The increases in combined cash, cash equivalents, marketable securities, and working capital are primarily due to the **February 2020 public offering** of common shares[99](index=99&type=chunk) [Cash Flows](index=23&type=section&id=Cash%20Flows_2) Cash Flow Data (In thousands) | Cash Flow Activity | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | | Operating activities | $(3,822) | $(6,005) | | Investing activities | $(2,801) | $(7,916) | | Financing activities | $7,695 | $72 | | Net increase (decrease) in cash and cash equivalents | $1,072 | $(13,849) | - Net cash used in operating activities decreased primarily due to a **lower net loss**[100](index=100&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk)[103](index=103&type=chunk) [Capital Requirements](index=23&type=section&id=Capital%20Requirements) - The company has incurred losses since inception, has no product sales revenue, and expects development to regulatory approval to take at least an additional **three to five years**, leading to continued substantial operating losses[104](index=104&type=chunk) - Current cash resources, including **$21.1 million net proceeds** from the August 2020 public offering, are expected to fund operations through 2021 and complete all three cohorts of the REDUX Phase II study[108](index=108&type=chunk) - **Substantial additional capital will be required** for R&D, clinical trials, and regulatory activities, which may be sought through equity/debt financings, strategic collaborations, or licensing agreements[108](index=108&type=chunk)[109](index=109&type=chunk) - Risks of inadequate funding include scaling back operations, delaying DM199 development, licensing rights on unfavorable terms, or divesting assets/ceasing operations[111](index=111&type=chunk) [Off-Balance Sheet Arrangements](index=26&type=section&id=Off-Balance%20Sheet%20Arrangements) - The company has **no off-balance sheet arrangements** that could have a current or reasonably likely future material effect on its financial condition, results of operations, liquidity, capital expenditures, or capital resources[113](index=113&type=chunk) [Critical Accounting Policies and Estimates](index=26&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - There have been **no material changes** to the critical accounting policies and estimates from those disclosed in the annual report on Form 10-K for the fiscal year ended December 31, 2019[114](index=114&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=26&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, DiaMedica is not required to provide quantitative and qualitative disclosures about market risk - The company is not required to provide disclosure regarding quantitative and qualitative market risk as it qualifies as a **smaller reporting company**[115](index=115&type=chunk) [Item 4. Controls and Procedures](index=26&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2020 - Management, with CEO and CFO participation, concluded that disclosure controls and procedures were **effective as of June 30, 2020**, providing reasonable assurance that required information is recorded, processed, summarized, and reported timely[116](index=116&type=chunk) - **No material changes** in internal control over financial reporting occurred during the three months ended June 30, 2020, despite most employees working remotely due to the COVID-19 pandemic[117](index=117&type=chunk) [Part II. Other Information](index=27&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=27&type=section&id=Item%201.%20Legal%20Proceedings) This section details ongoing litigation initiated by DiaMedica against PRA Netherlands and PRA Health Sciences, Inc - DiaMedica initiated litigation against PRA Netherlands and PRA Health Sciences, Inc. in November 2017 (re-filed August 2018) for alleged **breaches of a clinical research agreement**[120](index=120&type=chunk) - The complaint alleges PRA failed to conduct a Type 2 diabetes mellitus study according to protocol, resulting in **confounded secondary efficacy endpoints** due to significant execution errors and protocol deviations[120](index=120&type=chunk) - PRA also allegedly refused to provide full study records, and a motion to transfer the case to the United States District Court, District of Minnesota, filed in February 2019, is still awaiting a decision[120](index=120&type=chunk) [Item 1A. Risk Factors](index=27&type=section&id=Item%201A.%20Risk%20Factors) This section discloses additional risks, primarily focusing on clinical trial disruptions caused by the COVID-19 pandemic - The **COVID-19 pandemic** is significantly disrupting clinical trials, causing delays or difficulties in participant enrollment and retention, initiation of new clinical sites, supply chain, and participant compliance with protocols[123](index=123&type=chunk) - These disruptions could negatively impact the timeline for data readouts, **delay regulatory approvals**, increase operating expenses, and materially affect financial results[125](index=125&type=chunk) - Conducting clinical trials outside the United States carries risks, including potential **non-acceptance of data by the FDA**, the need for additional costly and time-consuming trials, and challenges related to foreign regulatory requirements, exchange fluctuations, and intellectual property protection[127](index=127&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=29&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section confirms no unregistered sales occurred and updates the use of proceeds from the December 2018 IPO - **No unregistered equity securities** were sold or purchased by the company during the quarter ended June 30, 2020[130](index=130&type=chunk)[131](index=131&type=chunk) - The initial public offering in December 2018 generated approximately **$14.7 million in net proceeds** from the sale of 4,100,000 common shares at $4.00 per share[133](index=133&type=chunk) - As of June 30, 2020, approximately **$12.9 million** of the IPO proceeds have been used to fund clinical development of DM199, conduct research activities, and for working capital and general corporate purposes, with no material change in the planned use of proceeds[134](index=134&type=chunk) [Item 3. Defaults Upon Senior Securities](index=30&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there were no defaults upon senior securities during the reporting period - There were **no defaults** upon senior securities[135](index=135&type=chunk) [Item 4. Mine Safety Disclosures](index=30&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates that mine safety disclosures are not applicable to the company - Mine safety disclosures are **not applicable** to the company[136](index=136&type=chunk) [Item 5. Other Information](index=30&type=section&id=Item%205.%20Other%20Information) This section states that there is no other information to report - **No other information** is applicable[137](index=137&type=chunk) [Item 6. Exhibits](index=31&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the quarterly report, including corporate governance and financial documents - Exhibits include corporate governance documents (Notice of Articles, Articles), a Deferred Stock Unit Award Agreement, and certifications from the Chief Executive Officer and Chief Financial Officer pursuant to the **Sarbanes-Oxley Act**[139](index=139&type=chunk)[140](index=140&type=chunk)[141](index=141&type=chunk)[142](index=142&type=chunk) - The financial statements from the quarterly report are also filed in **XBRL format**[143](index=143&type=chunk)

Financial Data and Key Metrics Changes - The net loss for Q1 2020 was $2.4 million or $0.19 per share, compared to a net loss of $3.3 million or $0.27 per share in Q1 2019, indicating an improvement in financial performance [54] - Research and development expenses decreased to $1.4 million in Q1 2020 from $2.6 million in Q1 2019, primarily due to non-recurring costs from the previous year [54][55] - Cash, cash equivalents, and marketable securities increased to $12.6 million at the end of Q1 2020 from $7.9 million at the end of 2019, attributed to a public offering of common shares [58][59] Business Line Data and Key Metrics Changes - The ReMEDy Phase 2 study demonstrated that DM199 was safe and well tolerated, with no serious adverse events related to DM199 reported [10][21] - In the ReMEDy study, DM199 showed a 22% improvement in stroke recoveries for participants not receiving mechanical thrombectomy, with 36% achieving full or near full recovery compared to 14% in the placebo group [29][30] Market Data and Key Metrics Changes - The global incidence of strokes is estimated at 15 million annually, with approximately 690,000 acute ischemic strokes occurring in the U.S. each year, highlighting a significant unmet medical need [18] - 90% of patients suffering from acute ischemic strokes have no direct treatment options, emphasizing the potential market for DM199 [18] Company Strategy and Development Direction - The company plans to request a meeting with regulators to discuss ReMEDy results and potential breakthrough therapy designations, while also evaluating strategic partnerships [44] - The focus remains on the 90% of stroke victims who do not receive thrombectomy, positioning DM199 as a treatment option for this population [28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the safety profile of DM199, which could facilitate regulatory approval and commercialization [41] - The company is closely monitoring the impact of COVID-19 on clinical trials, particularly the REDUX Phase 2 study for chronic kidney disease, and is adapting protocols to ensure participant safety [60][61] Other Important Information - The company has not observed any negative data from the ReMEDy study, reinforcing confidence in the safety and efficacy of DM199 [43] - The REDUX Phase 2 study is currently enrolling participants, with adjustments made to accommodate social distancing guidelines [46][48] Q&A Session Summary Question: Why was mechanical thrombectomy included in the study? - The inclusion was initially excluded but later added for safety assessment and to evaluate potential clinical benefits, as approximately 20% of patients are eligible for thrombectomy [63][64] Question: What was the response from the stroke advisory board regarding the high rate of mechanical thrombectomy enrollment? - The advisory board was surprised by the high enrollment rate and found the safety results encouraging, noting reductions in stroke recurrences [66] Question: How many patients are currently enrolled in the CKD study? - The company has not provided specific enrollment numbers but anticipates updates once clarity on COVID-19 impacts is achieved [71] Question: What are the expectations for FDA approval regarding efficacy and safety? - The company believes that demonstrating similar efficacy to tPA, combined with a strong safety profile, will create an attractive clinical bar for FDA approval [72][75] Question: What is the design of the Phase 2/3 study going forward? - The design may be adaptive, allowing for a transition from Phase 2 to Phase 3 based on initial results from the first 100 patients [77]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________________________ FORM 10-Q (Mark one) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________ to __________________. Commission File Number: 001-36291 ____________________ DIAMEDICA THERAPEUTICS INC. (Exa ...