DiaMedica Therapeutics(DMAC) - 2021 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements 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 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] Condensed Consolidated Statements of Operations and Comprehensive Loss 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] Condensed Consolidated Statements of Cash Flows 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] - 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][57] Notes to the Condensed Consolidated Financial Statements - 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][30] - 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][32] - 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] Management's Discussion and Analysis of Financial Condition and Results of Operations 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 - 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][77] - 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] - 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][81] Results of Operations 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] - G&A expenses increased slightly, primarily due to higher costs for directors and officers liability insurance, personnel, and non-cash share-based compensation[94] Liquidity and Capital Resources 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] - 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][105] Quantitative and Qualitative Disclosures about Market Risk 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] Controls and Procedures 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] - 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] PART II. OTHER INFORMATION Legal Proceedings 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] - 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] Risk Factors 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] Unregistered Sales of Equity Securities and Use of Proceeds 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] Defaults Upon Senior Securities None - The company reported no defaults upon senior securities[118] Mine Safety Disclosures Not applicable - This item is not applicable to the company[120] Other Information Not applicable - This item is not applicable to the company[121] Exhibits 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]