On March 23, 2020 DiaMedica Therapeutics Inc. (Nasdaq: DMAC), a clinical-stage biopharmaceutical company focused on developing novel treatments for kidney diseases and neurological disorders, reported its financial results for the year ended December 31, 2019 (Press release, DiaMedica, MAR 23, 2020, View Source [SID1234555757]).
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"DiaMedica set out and achieved some ambitious goals for 2019. We completed a Phase Ib pharmacokinetic study in subjects with chronic kidney disease, which was required to prepare for Phase II work. We assembled a world-class advisory board to guide our chronic kidney disease (CKD) clinical program, and collectively identified several rare forms of CKD to study. We planned and initiated our Phase II work in chronic kidney disease. We accomplished all of this while completing enrollment in our enlarged REMEDY study in acute ischemic stroke. We expect to build upon these accomplishments in 2020 as we work toward advancing DM199, which holds the potential to have significant impact on patients suffering from chronic kidney disease and acute ischemic stroke," stated Rick Pauls, DiaMedica’s President and CEO. "We are excited and cautiously optimistic as we look forward to the Phase II clinical results during 2020 as part of continuing to execute on our clinical development plans during 2020 and we look forward to sharing results as they become available."
Clinical Developments
DM199 for the Treatment of Chronic Kidney Disease
Phase II REDUX Clinical Study in CKD Caused by IgA Nephropathy and African Americans with Hypertension
In October 2019, the FDA accepted the Company’s Phase II clinical trial protocol for the treatment of CKD caused by rare or significant unmet diseases. The trial named REDUX, Latin for restore, is a multi-center, open-label investigation of approximately 60 participants with CKD, who are being enrolled in two cohorts (30 participants per cohort). The study is being conducted in the United States at 12 sites and is focused on participants with two specific causes of CKD. Cohort I is focused on non-diabetic, hypertensive African Americans with Stage II or III CKD. African Americans are at greater risk for CKD than Caucasians, and those who have the APOL1 gene mutation, are at an even higher risk. The study is designed to capture the APOL1 gene mutation as an exploratory biomarker in this cohort. Cohort II is focused on participants with IgA Nephropathy (IgAN). The study will evaluate two dose levels of DM199 within each cohort. Study participants will receive DM199 by subcutaneous injection twice weekly for 95 days. The primary study endpoints include safety, tolerability, blood pressure, albuminuria and kidney function, which will be evaluated by changes from baseline in eGFR and albuminuria, as measured by the UACR. Participant enrollment and dosing for this study commenced in December 2019.
Subject enrollment has been slower than expected, primarily in the African American cohort. Enrollment in the African American cohort has been hindered by a higher level of screen failures related to finding individuals with Stage II or III CKD that are not diabetic. The Company has taken several measures to increase/complete enrollment including increasing the number of clinical study sites to 12. In addition, the current COVID-19 outbreak in the United States, and measures being taken to mitigate the spread of this virus, appear to be adversely affecting the ability of sites to recruit subjects. The REDUX study design provides for registered nurses to make home visits for the majority of subject treatments, a practice consistent with the principle of social distancing recommended by governmental authorities; therefore, the Company does not currently anticipate any treatment disruptions to patients already enrolled. The Company continues to evaluate the impact of COVID-19 on enrollment and is taking steps to mitigate any impact. The Company will provide additional information on when preliminary top-line information will be available as conditions allow.
"We are focused on working with our study sites and home nursing services to ensure that protocols are in place to maximize the safety of study participants and clinical personnel," commented Dr. Harry Alcorn, DiaMedica’s Chief Medical Officer. "We are taking steps to revise our protocol to maximize the subject interactions occurring at home to minimize the impact of social isolation steps on study participation."
DM199 for the Treatment of Acute Ischemic Stroke
DM199 Acute Ischemic Stroke Phase II "REMEDY" Trial Update – Enrollment Completed
As previously announced, DiaMedica completed enrollment in the REMEDY trial, the Company’s Phase II study assessing the safety, tolerability and markers of therapeutic efficacy of DM199 in participants suffering from acute ischemic stroke (AIS). Final enrollment was 92 participants. The markers of therapeutic efficacy will include multiple plasma-based biomarkers (e.g. C-reactive protein), the Modified Rankin Scale, National Institutes of Health Stroke Scale and the Barthel Index. These markers are assessed at multiple points throughout the study, including 90 days post-stroke. The last subject follow-up visit was completed in late January 2020 and the Company is in the process of verifying the completeness and accuracy of the information collected in the clinical database and analyzing the results. The Company expects to release preliminary top-line results in the next few weeks. Full results from REMEDY were expected to be reported at the European Stoke Conference in Vienna, Austria. However, since the conference has been postponed until November 7-9, 2020, the Company is evaluating alternatives for releasing full study results.
Recent Public Offering
On February 11, 2020, DiaMedica completed an offering of its common shares selling an aggregate of 2,125,000 common shares in a public, underwritten offering at a public offering price of $4.00 per share, raising gross proceeds of $8.5 million and net proceeds of $7.7 million, after deducting the underwriting discount and offering expenses. This offering was completed with biotech investment funds. The additional capital should allow DiaMedica to complete its current Phase II clinical studies and fund its operations through 2021.
Financial Results
Research and development (R&D) expenses were $7.9 million for the year ended December 31, 2019 compared to $4.5 million for the year ended December 31, 2018, an increase of $3.4 million. The increase was due to costs of approximately $1.4 million incurred for a new production run of the DM199 drug substance, as well as costs incurred in conjunction with the Phase Ib and Phase II clinical studies in CKD patients and related non-clinical testing. Increased non-cash share-based compensation costs also contributed to the increase. These increases were partially offset by a reduction in costs incurred in conjunction with the REMEDY Phase II clinical study in AIS patients for which we completed enrollment in October 2019.
General and administrative (G&A) expenses were $3.7 million and $2.7 million for the years ended December 31, 2019 and 2018, respectively. This $1.0 million increase was primarily due to costs associated with the Company’s status as a Nasdaq-listed U.S. public reporting company, which commenced in December 2018, including increased professional service, compliance and non-cash share-based compensation costs. Increased personnel costs also contributed to the increase. This increase was partially offset by one-time costs of approximately $360,000 incurred in 2018, associated with the Nasdaq listing process and related legal and accounting fees.
Total other income, net, was $1.0 million for the year ended December 31, 2019 compared to $1.1 million for 2018. This decrease is primarily related to the initial recognition of R&D incentives, from the Australian Government, paid for qualifying research work performed by DiaMedica Australia Pty Ltd. during 2018, which included research work performed in 2017 and 2018. The decrease was partially offset by increased interest income earned on marketable securities during 2019.
Balance Sheet and Cash Flow
The Company had cash, cash equivalents and marketable securities of $7.9 million, or $15.6 million on a pro forma basis, including the $7.7 million in net proceeds from its February 2020 public offering, current liabilities of $1.3 million and working capital of $7.5 million as of December 31, 2019, compared to $16.8 million in cash, cash equivalents and marketable securities, $1.3 million in current liabilities and $16.7 million in working capital as of December 31, 2018. The decreases in cash, cash equivalents and marketable securities and working capital are mainly due to the use of cash to fund operating activities during 2019.
Net cash used in operating activities for the year ended December 31, 2019 was $9.1 million compared to $5.7 million for the year ended December 31, 2018. This increase relates primarily to an increase in the net loss, partially offset by non-cash expenses and the effects of the changes in operating assets and liabilities.
Conference Call Information
DiaMedica management will host a conference call to discuss these results on Tuesday, March 24, 2020, at 7:00 a.m. Central Time:
Date:
Tuesday, March 24, 2020
Time:
7:00 AM CT / 8:00 AM ET
Web access:
Dial In:
(844) 557-8483 (domestic)
(825) 312-2381 (international)
Conference ID:
9270458
Interested parties may access the conference call by dialing in or listening to the simultaneous webcast. Listeners should log on to the website or dial in 15 minutes prior to the call. The webcast will remain available for play back on our website, under investor events and presentations, following the earnings call and for 12 months thereafter. A telephonic replay of the conference call will be available until March 31, 2020, by dialing (800) 585-8367 (US Toll Free), (416) 621-4642 (International), replay passcode 9270458.
About DM199
DM199 is a recombinant (synthetic) form of the human serine protease, KLK1. The KLK1 protein plays an important role in the regulation of diverse physiological processes including blood flow, inflammation, fibrosis, oxidative stress and neurogenesis via a molecular mechanism that increases production of nitric oxide and prostaglandin. KLK1 deficiency may play a role in multiple vascular and fibrotic diseases such as chronic kidney disease, retinopathy, stroke, vascular dementia and resistant hypertension where current treatment options are limited or ineffective. DiaMedica is the first company to have developed a recombinant form of the KLK1 protein. The KLK1 protein, produced from porcine pancreas and human urine, has been used to treat patients in Japan, China and Korea for decades. DM199 is currently being studied in patients with chronic kidney disease and patients with acute ischemic stroke.