DiaMedica Therapeutics(DMAC) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements The company presents its unaudited financial statements, reporting a net loss of $15.4 million for the six months ended June 30, 2025, and a subsequent capital raise of $29.9 million Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | June 30, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :--- | :--- | :--- | | Current Assets | | | | Cash and cash equivalents | 4,109 | 3,025 | | Marketable securities | 25,929 | 41,122 | | Total current assets | 31,079 | 44,610 | | Total Assets | 31,470 | 46,345 | | Current Liabilities | | | | Accounts payable | 1,261 | 940 | | Accrued liabilities | 2,747 | 4,347 | | Total current liabilities | 4,116 | 5,390 | | Total Shareholders' Equity | 27,170 | 40,718 | Condensed Consolidated Statements of Operations (Unaudited) | Metric ($ in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Research and development | 5,822 | 3,928 | 11,478 | 7,604 | | General and administrative | 2,185 | 1,710 | 4,673 | 3,775 | | Operating loss | (8,007) | (5,638) | (16,151) | (11,379) | | Net loss | (7,699) | (5,119) | (15,406) | (10,270) | | Net loss per share | (0.18) | (0.13) | (0.36) | (0.27) | - The company is a clinical-stage biopharmaceutical firm focused on developing its lead candidate, DM199, a recombinant form of human tissue kallikrein-1 (KLK1), for treating preeclampsia (PE) and acute ischemic stroke (AIS)[20] - The company's ReMEDy2 trial for AIS is experiencing slower than expected site activations and enrollment due to factors like hospital staffing shortages, protocol criteria, and competition from other trials[23] - As of June 30, 2025, the company had an accumulated deficit of $155.4 million, but management expects current cash to be sufficient to fund operations for at least the next 12 months[25][26] - In July 2025, the company completed a private placement, selling 8,606,425 common shares at $3.50 per share, resulting in gross proceeds of $30.1 million and net proceeds of approximately $29.9 million[59] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses clinical program progress, financial performance, and capital resources, confirming sufficient funding for the next 12 months post-fundraising Business Overview DiaMedica is a clinical-stage biopharmaceutical company developing DM199 for Preeclampsia and Acute Ischemic Stroke, leveraging an established therapeutic approach in Asia - The company's lead candidate, DM199, is the first pharmaceutically active recombinant form of the human tissue kallikrein-1 (KLK1) protein being clinically studied for Preeclampsia (PE) and Acute Ischemic Stroke (AIS)[64] - DM199 has been granted Fast Track designation by the FDA for the treatment of AIS, based on the naturally occurring KLK1 protein approved in Asia for decades[65] - The proposed mechanism of action for DM199 involves enhancing blood flow and tissue perfusion by increasing production of nitric oxide (NO) and other vasodilators[66] Clinical Programs The Preeclampsia program shows promising interim results, while the Acute Ischemic Stroke trial faces enrollment delays that are being actively addressed - Interim results from the Phase 2 PE study showed DM199 was safe, well-tolerated, and produced rapid, statistically significant reductions in blood pressure[70] - Based on positive interim PE data, DiaMedica plans to submit an Investigational New Drug (IND) application in the United States in the second half of 2025[71] - The Phase 2/3 ReMEDy2 trial for AIS is experiencing slower than expected enrollment, which the company is mitigating by expanding its clinical team and the trial globally[72] Results of Operations Operating expenses increased year-over-year due to expanded clinical trial activities and higher personnel costs, while other income declined Comparison of Operating Results ($ in thousands) | Expense Category | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Research and development expenses | 11,478 | 7,604 | | General and administrative expenses | 4,673 | 3,775 | | Other income, net | (757) | (1,123) | - The increase in R&D expenses was primarily driven by costs associated with the continuation and global expansion of the ReMEDy2 clinical trial[81] - The increase in G&A expenses was mainly due to higher non-cash share-based compensation and increased personnel costs from team expansion[82] Liquidity and Capital Resources The company holds $30.0 million in cash and securities, with a recent $29.9 million capital raise ensuring sufficient funds for operations for at least the next year Liquidity and Capital Resources Summary ($ in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash, cash equivalents and marketable securities | 30,038 | 44,147 | | Working capital | 26,963 | 39,220 | - Net cash used in operating activities increased to $14.7 million for the six months ended June 30, 2025, compared to $11.2 million for the same period in 2024[86] - The company expects its current cash resources, including the $29.9 million net proceeds from the July 2025 private placement, will be sufficient to fund planned operations for at least the next 12 months[90] Item 3. Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, disclosure for this item is not required - As a smaller reporting company, DiaMedica is not required to provide disclosure pursuant to this item[95] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal controls - 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[96] - There were no changes in the company's internal control over financial reporting during the six months ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls[97] PART II. OTHER INFORMATION Item 1. Legal Proceedings Following a court ruling in favor of ICON/PRA Netherlands, the company has decided to discontinue its pursuit of the legal matter - The company was involved in litigation with Pharmaceutical Research Associates Group B.V. (ICON/PRA Netherlands) regarding clinical study documents and data[99] - On June 24, 2025, a Netherlands Commercial Court (NCC) ruling found that ICON/PRA Netherlands was not in default under the agreement[101] - Following the court's ruling, DiaMedica has decided to discontinue its pursuit of this legal matter[101] Item 1A. Risk Factors New risks include the potential non-replication of promising interim data and delays from changes in FDA funding or staffing - A new risk factor was disclosed: Promising interim data from the ongoing investigator-sponsored Phase 2 study of DM199 for preeclampsia may not be replicated in future studies or trials[104] - Success in early-stage clinical trials does not ensure success in later trials, and failure to replicate promising results could prevent regulatory approval[105][106] - A new risk factor was disclosed regarding potential changes in funding and staffing for the FDA and other government agencies, which could delay product review and approval processes[107] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered equity securities were sold during the quarter ended June 30, 2025 - The company did not sell any unregistered equity securities during the quarterly period ended June 30, 2025[108] Item 3. Defaults Upon Senior Securities This item is not applicable - Not applicable[109] Item 4. Mine Safety Disclosures This item is not applicable - Not applicable[110] Item 5. Other Information No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement during the quarter - During the quarterly period ended June 30, 2025, no directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement[111] Item 6. Exhibits This section lists filed exhibits, including corporate articles, certifications, and financial statements in Inline XBRL format - The report includes several exhibits, such as the Notice of Articles, certifications from the CEO and CFO pursuant to Sarbanes-Oxley Sections 302 and 906, and financial statements in Inline XBRL format[112]