DMAC

Business Context and Reporting Period

Company: DiaMedica Therapeutics Inc. (DMAC)
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: September 30, 2025
Business Overview: DiaMedica is a clinical-stage biopharmaceutical company developing DM199, a recombinant form of human tissue kallikrein-1 (KLK1), for the treatment of preeclampsia (PE) and acute ischemic stroke (AIS). The company has no commercial product revenue and relies on equity financing and interest income.

Key Financial Metrics

Cash Flow (Nine Months Ended Sept 30, 2025):
- Operating Activities: $(21,297) used
- Investing Activities: $(10,187) used
- Financing Activities: $31,785 provided

Material Changes vs. Prior Period

• Increased Operating Expenses: Research and Development (R&D) expenses increased to $6.4 million for Q3 2025 from $5.0 million in Q3 2024. General and Administrative (G&A) expenses rose to $2.6 million from $1.9 million. YTD R&D expenses were $17.9 million compared to $12.6 million in the prior year.
• Financing Activity: In July 2025, the company completed a private placement raising approximately $30.0 million in net proceeds from the sale of 8.6 million shares at $3.50 per share. Additionally, $1.6 million was raised via an At-The-Market (ATM) offering.
• Share Count: Outstanding shares increased from 42.8 million (Dec 31, 2024) to 52.1 million (Sept 30, 2025) due to the private placement, ATM sales, and option exercises.
• Interest Income Decline: Other income decreased due to lower average marketable securities balances in the current period compared to the prior year.

Outlook, Risks, and Management Commentary

Clinical Progress

• Preeclampsia (PE): Interim results from Part 1a of the Phase 2 investigator-sponsored study (N=28) released in July 2025 showed DM199 was safe, well-tolerated, and demonstrated rapid, statistically significant blood pressure reductions with no placental transfer. Part 1b is preparing to initiate.
• Acute Ischemic Stroke (AIS): The Phase 2/3 ReMEDy2 trial is ongoing but facing slower-than-expected site activations and enrollment. Management attributes this to staffing shortages, protocol logistics, and competition. The interim analysis is now estimated for the second half of 2026.

Liquidity and Capital Resources

Management expects current cash resources ($55.3 million) to fund operations for at least the next 12 months. However, the company anticipates needing substantial additional capital to complete clinical trials and regulatory activities. Future funding requirements depend on trial enrollment rates and potential expansion.

Risks and Contingencies

• Enrollment Delays: Continued delays in the ReMEDy2 trial could increase costs and delay regulatory approval.
• Regulatory Uncertainty: Risks related to FDA staffing and funding levels could impact review timelines.
• Legal Proceedings: A long-standing dispute with ICON/PRA Netherlands regarding clinical data was settled in October 2025 via a mutual release agreement.
• Forward-Looking Statements: Success of future trials is not guaranteed, and the company may need to raise additional capital on unfavorable terms or dilute shareholders.

Investor Verification Checklist

• Cash Runway: Verify if the $55.3 million in liquid assets is sufficient given the increased burn rate and potential delays in the ReMEDy2 trial.
• Enrollment Metrics: Monitor upcoming updates on ReMEDy2 trial site activation and patient enrollment rates to assess the validity of the H2 2026 interim analysis timeline.
• Dilution Risk: Review the remaining capacity under the $100 million ATM facility and the impact of future equity raises on share price.
• PE Trial Next Steps: Confirm the timeline for the initiation of Part 1b of the PE study following the positive Part 1a interim results.
• Legal Resolution: Ensure the settlement with ICON/PRA Netherlands fully resolves data access issues without further financial liability.