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Operator: Good morning ladies and gentlemen and welcome to the DiaMedica Therapeutics Third Quarter 2024 Conference Call. An audio recording of the webcast will be available shortly after the call today on DiaMedica’s website at www.diamedica.com in the Investor Relations section. Before DiaMedica proceeds with its remarks, please note that the company will be making forward-looking statements on today’s call. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in these statements. More information, including factors that could cause actual results to differ from projected results appears in the section entitled Cautionary Statement Note regarding forward-looking statements.

In the company’s press release issued yesterday and under the heading Risk Factors in DiaMedica’s most recent annual report on Form 10-K and the third quarter report on Form 10-Q. DiaMedica’s SEC filings are available at www.sec.gov and on its website. Please also note that any comments made on today’s call speak only as of today, November 14, 2024 and may no longer be accurate at the time of any replay or transcript rereading. DiaMedica disclaims any duty to update its forward-looking statements. Following the prepared remarks, the phone lines will be open for questions. I would now like to introduce your host for today’s call, Mr. Rick Pauls, DiaMedica’s President and Chief Executive Officer. Mr. Pauls, you may begin.

Rick Pauls: Thank you, operator. Hello, everyone and welcome to our third quarter conference call. I’m joined this morning by Dr. Lorianne Masuoka, our Chief Medical Officer; and Scott Kellen, our Chief Financial Officer. We’re making solid progress on both our stroke and preeclampsia programs and we expect 2025 to be a truly transformative year for our company and our shareholders. Although activating our top U.S. sites in our AIS study has taken longer than anticipated, I’m pleased to report that we now have 13 of our top 15 sites, either fully activated or with signed clinical trial agreements, negotiating this agreement stage is typically the most time-consuming part of the site activation process. We anticipate that these sites, especially our top 5 will enroll a disproportionately large number of patients.

Houston Methodist, the first of our top 5 sites to be activated went live in September. Chattanooga, Tennessee and Oregon Health are 2 more of our anticipated top 5 priority sites. We have signed contracts with them and their site initiation visits have been scheduled. We anticipate all of our top 5 U.S. sites to be activated in recruiting by the end of the year. Canada will also add 5 to 7 sites that should rival the recruitment rates of our U.S. priority sites as well, with the first sites activated before year-end. Lorianne will discuss this in more detail but at the same time, we’re bringing on these Tier 1 sites. We’re implementing a protocol update designed to further accelerate enrollment and target high-quality patients with significant unmet medical needs.

We’ve taken this sites feedback into account and made several small yet impactful changes. Most notably, we’re now using a newly manufactured drug lot that allows for a refrigerated storage of our investigational product. Previously, the drug was frozen requiring an investigational pharmacist to dispense the drug and often these pharmacists only work on Mondays through Friday, from 9 to 5. With refrigerated vials, we believe sites will be able to enroll patients after hours and on weekends by storing the drug in the emergency departments. Our preeclampsia program is also making tremendous strides. We are pleased to have quickly secured regulatory approval from the South African Health Products Regulatory Authority and just yesterday, the first pregnant participant with preeclampsia was enrolled.

We believe DM199 has the potential to be disease-modifying in preeclampsia and hope to demonstrate this in the Part 1a of the study which will be announced in the first half of 2025. We believe DM199 has both first and best-in-class potential for preeclampsia. And unfortunately, there are no currently approved therapies in the U.S. today. Now let me turn you over to Lorianne.

Lorianne Masuoka: Thanks, Rick. Today, I would like to start off by covering the recent updates to the ReMEDy2 protocol and statistical analysis plan. I will be referencing slides displayed on your screen for our web-based listeners. These slides were also filed with the SEC in a Form 8-K last night. I joined DiaMedica in late January of this year and I couldn’t be more excited about the opportunity. It quickly became clear that we needed to transform the medical organization and bring clinical site-facing activities back to DiaMedica because we were not getting acceptable results from our contract research organization. I am very pleased with our progress and we’ll share more details about this momentarily. With that transition underway, the next area of attention that we brought to focus was the trial design and statistical analysis plan.

If you reference Slide 2 of the presentation, we’ve implemented a series of updates and further clarifications to the ReMEDy2 protocol which we believe are very positive for our trial. These updates were submitted to the FDA at the end of August. And as we have received no comments as of yesterday, we are implementing the new protocol modifications. The 2 primary updates to discuss are the inclusion of patients who did not respond to thrombolytic therapy that is treatment with thrombolytics that is activator or tenecteplase and the increase of the interim analysis sample size from 144 to 200 participants which dramatically enhances the power of the Bayesian simulation used to forecast the total required sample size and therefore improves the precision of and confidence in the final sample size determination for the trial.

I’ll discuss each in detail but know that these changes will help us achieve the following outcomes. Number one, accelerate per site enrollment rates. In previewing these changes with the clinical sites, their reaction is that with the inclusion of thrombolytic non-responders, they can potentially increase their enrollment significantly, some sites indicated as much as 50% to 100%. Number two, adding thrombolytic non-responders is expected to improve our overall response rate compared to placebo. This patient group exhibited the highest response rate of any subgroup in our ReMEDy1 Phase II study. I’ll discuss further but as we reanalyzed our data, we wanted to include these potentially great patients to increase the probability of success for the ReMEDy2 trial; and number three, with trials using an adaptive design structure, the interim analysis needs to be based upon a number of participants that is large enough to optimize the precision of the estimated final sample size in order to avoid unnecessarily enrolling excess participants.

Collectively, we believe the protocol updates are expected to be very positive for our study sites should increase the probability of success for the ReMEDy2 trial and accelerate our time line to completion. This change may take an additional 4 to 6 months to get to the interim enrollment but it’s important that the increased sample size has the potential to reduce the final sample size which can lead to a shorter overall study time line and substantial cost savings. I want to be emphatically clear that we would not have made these changes if there was any belief or concern that they would cause even the slightest degradation in quality or efficacy of the trial. I emphasize this as I’ve been developing drugs for 30 years and watched numerous trials fail due to expanding inclusion criteria to boost enrollment.

Turning to Slide 3. Let me go into more detail. When examining our data from the ReMEDy1 Phase II trial, we found that the majority of participants pretreated with tPA received DM199 late in the 24-hour treatment window. Surprisingly, although these patients could have been enrolled as soon as 1 hour after tPA was administered, on average, they were enrolled 13.5 hours after tPA was administered. This is important as it is well established that thrombolytics have a very short half-life, approximately 24 minutes and are therefore cleared from the body rapidly. These agents undergo 7 half-lives in less than 3 hours and are effectively cleared from the patient’s system 3 hours after dosing. So if a patient is presenting with persistent moderate to severe stroke severity, several hours after tPA is cleared from the patient system, it indicates that thrombolytics didn’t meaningfully correct the neurological deficit.

We colloquially refer to this type of patient as a tPA or thrombolytic non-responder, we want to capture this type of patient because we anticipate they will have a low placebo response rate and there is potential for a significant treatment effect when compared with DM199 therapy. On the right side of the slide, you can see the data from our ReMEDy1 study in participants treated with tPA prior to enrollment. As you can see in the placebo group, the response rate was 0 which we believe affirms that these participants were tPA non-responders. Conversely, in the DM199 arm, the response rate was 25%, this 25% improvement versus placebo was actually the highest performance improvement among all subgroups studied in the ReMEDy1 trial. I also want to note that the primary reason we didn’t initially include tPA non-responders in the ReMEDy2 study initially was to the significant difference in outcomes based upon how soon after a stroke the patient receives tPA.

Those receiving tPA at 1 hour post stroke have been shown to do much better than those receiving tPA 4 hours post stroke. At the time, DiaMedica didn’t want to introduce this potential variability into the study and the clinical risk of an imbalance of tPA patients in favor of the placebo arm. However, upon considering the ReMEDy1 results, if we properly define the thrombolytic non-responder, I believe that we can eliminate this variability risk. Turning to Slide 4; here are the details of the inclusion criteria related to tPA non-responders. We spent countless hours with our scientific advisory board and leading vascular neurologists who consult for DiaMedica to properly define the inclusion criteria which are listed on this slide. After discussions with our Scientific Advisory Board and stroke neurologists in our trial, we believe the best time to assess when a patient is a non-responder is 6 hours after thrombolytics have been administered.

If you intervene earlier, for example, at 4 hours, there is a greater risk that the patient is a delayed responder. If you wait until hour 12, there is a risk of more brain tissue dying from the impaired blood flow. We think 6 hours strikes the right balance and recall in our prior ReMEDy1 study, DM199 was administered on average, 13.5 hours after tPA. If we can actually get to patients more quickly, we have the potential to improve upon the treatment effects we already saw in the ReMEDy1 trial. The second point that I want to emphasize is that at or after that 6-hour mark, the patient must be re-evaluated. The neurological deficit must be persistent and fall within the same stroke severity range as non-tPA patients meaning an NIHSS score between 5 and 15.

And when we say persistent neurological deficit, we mean that the patient cannot have experienced a 4-point or better improvement in their NIHSS score following thrombolytic treatment. We do not want patients to still fall within the NIHSS range but are on a trajectory to recover. And finally, the patient must be rescanned to rule out worsening as a result of any hemorrhagic transformation that may have been caused by the tPA and the patient must meet all other criteria as non-tPA patients for example, being treated within the same 24-hour window from stroke symptom onset. With this new criterion, we think we’ve struck the right balance to include a patient population with a significant unmet need and that we anticipate will respond favorably to DM199.

Turning to Slide 5. The other key update relates to the size of the interim analysis. Over the past 20 years, I’ve worked extensively with several leaders in statistical analysis for my studies, whom I’ve had review our statistical analysis plan. Based upon the feedback and the potential reduction in the overall trial sample size, we made the decision to perform the interim analysis after enrolling 200 patients, an increase from the previously planned 144 participants. Here on Slide 6 is a very potent demonstration of why we don’t want to be undersized at the interim analysis. This is an actual simulation from the model comparing final sample size estimates based upon enrolling 144 and 200 patients at interim. For trial integrity purposes, we can’t disclose the actual treatment response and placebo response.

But in the example provided, the values are identical and the only difference is the interim sample size. As you can see in this scenario at 144 participants, the sample size re-estimate is 485 participants, whereas at 200 is 339 participants. I want to reiterate this is an actual simulation in the model driving our statistical analysis plan. From a cost standpoint, this kind of difference could translate into a savings for DiaMedica of $10 million or more. We believe this change has the potential to accelerate completion of the overall study even though it will delay receipt of our interim analysis results. The effects on timing of our interim analysis will hopefully be partially offset by expanding our inclusion criteria and including thrombolytic non-responder patients.

Previously, we were anticipating our interim analysis would be available in the summer of 2025. And now we expect it quarter 4 2025. We believe that we are adequately financed through the interim analysis. Turning to Slide 6. I would reiterate that we firmly believe that the protocol updates will accelerate enrollment rates with the addition of a subgroup of stroke patients that have the potential to be high responders to DM199 therapy as well as improving the potential commercial value of DM199, further that with the new statistical analysis plan, we have the best potential for clinical success with the smallest possible study. I will now turn the call back over to Rick.

Rick Pauls: Thank you, Lorianne. Our focus with respect to the ReMEDy2 trial remain centered on continuing to build momentum with high-quality research institutions. By way of update, as of today, we have the majority of our 15 priority study sites have been activated. Now, I’d like to hand the call over to Scott Kellen to review this quarter’s financial results.

Scott Kellen: Thanks, Rick and good morning, everyone and thank you for joining us on today’s call. Starting with our financial position, our September 30, 2024, combined cash, cash equivalents and investments balance is $50.2 million, down from $52.9 million as of December 31, 2023. Net cash used in operating activities for the 9 months ended September 30, 2024, was $15.6 million compared to $14.9 million in the same period of the prior year. The increase in cash used in operating activities resulted primarily from the combination of our increased net loss and the advance of deposit funds to vendors supporting the ReMEDy2 clinical trial during the current year period. These increases were partially offset by changes in operating assets and liabilities during the current year period and we believe that our current cash and investments provides us a runway to Q3 of 2026.

Our research and development expenses increased to $5 million for the 3 months ended September 30, 2024, up from $3.3 million in the prior year period. R&D expenses increased to $12.6 million for the 9 months ended September 30, 2024, compared to $9.4 million for the 9 months ended September 30, 2023. These increases are due primarily to cost increases resulting from the continuation of our ReMEDy2 clinical trial, the expansion of our clinical team and increased manufacturing development activity. These increases were partially offset by cost reductions related to clinical trial work completed in 2023, including our Phase Ic and REDUX trials and the completion in 2023 of the in-use study work performed to address the prior clinical hold on the ReMEDy2 trial.

We expect R&D expenses to increase moderately relative to recent prior periods, as we globally expand the ReMEDy2 trial site activations and participant enrollments continue. Our general and administrative expenses were $1.9 million for each of the 3 months ended September 30, 2024 and 2023. G&A expenses were $5.7 million for the 9 months ended September 30, 2024, down from $6 million for the 9 months ended September 30, 2023. The decrease for the 9-month comparison resulted from the combination of reductions in the cost of directors and officers liability insurance premiums and decreased legal fees incurred in connection with our lawsuit against PRA Netherlands. These decreases were partially offset by increased personnel costs incurred in conjunction with expanding our team and increased noncash share-based compensation costs.

We expect G&A expenses to remain steady as compared to recent prior periods. Other income net was $616,000 and $1.7 million for the 3 and 9 months ended September 30, 2024, respectively, compared to $693,000 and $1.2 million for the 3- and 9-month periods ended September 30, 2023, respectively. The increase for the 9-month comparison was driven by increased interest income recognized during the current year period, related to higher marketable securities balances during the current year period as compared to the same period in the prior year. With that, let me ask the operator to open the lines for questions.

Operator: [Operator Instructions] Your first question comes from Thomas Flaten with Lake Street.

Thomas Flaten: Lorianne, just sticking with ReMEDy2, what was the original prompt for re-evaluating the protocol and statistical analysis plan? Was it just to see higher enrollment rates? Or was there some other prompt to that entire discussion that led to these changes?

Lorianne Masuoka: It was really a combination of wanting to simulate enrollment but also extensive discussions that we had with our SAB and our KOL experts that we’ve been working with. They really were very excited to see what would happen with the patients who had received thrombolytic therapy but were non-responders. We work with statistical experts who said that they thought that it would be important to have at least half of the patients enroll before doing a high-quality Bayesian sample size adjustment. So we made the adjustment there based on a lot of statistical input.

Thomas Flaten: Got it. And then just, I guess, a somewhat technical question. At what point will patients now be randomized, particularly those that are tPA failures because you want to balance those patients across the 2 arms and you won’t really know if there are failures if you randomize them prior to getting tPA. So could you walk us through kind of the nitty-gritty on that?

Lorianne Masuoka: Yes. So if patients are randomized, they won’t receive tPA. They’ll be randomized into our study. If they receive tPA prior to randomizing into our study, then we’ll have to wait 6 hours before we know if they’re a non-responder and can come into our study.

Thomas Flaten: Got it. And then 1 final one, if I may. In the original plan that you guys laid out, the 144 patients was intended to be the interim cohort for 364 patient study. And I know you just showed us an example of the simulation you did but that was, I think, 350 patients at 200 the interim analysis. So was the — is the 364 still a viable number? Or how should we think about that? Because those seem to be at odds with one another?

Rick Pauls: Yes, Thomas. So based on 200 patients at the interim analysis and if we had the same drug effect as previous at 144, we would anticipate a lower total number of patients so below the 364.

Operator: Your next question comes from Chase Knickerbocker at Craig-Hallum.

Chase Knickerbocker: So just to start off a little bit to make sure I understand it. So can you help me a bit more color around kind of the assumptions to get to a quicker final readout with these changes from, again, a higher patient number at the interim? I think you might have just answered part of it but it’s just with kind of greater certainty around that effect you’re seeing and that allows you to resample smaller? Or is it kind of around the increased enrollment rate that you would expect for allowing tPA non-responders?

Lorianne Masuoka: Yes. So basically, the way the Bayesian analysis works is that the more patients that you have in the interim analysis, the more precision that you can make around the sample size assessment. So as an example, if we have a 14% excellent outcome rate which is what we originally had calculated when we have the 364 patients, we could potentially bring that down to 300 with an interim analysis of 200. And obviously, that would save us a lot of money and would save us a lot of time and enrollment. So basically, by going to 200, it gives us the opportunity to significantly shave off time of the trial and to be much more efficient in terms of how much money we spend on the trial.

Chase Knickerbocker: Got it. And you may have answered this, I’m jumping around to a couple of calls, apologies. But was there anything that you kind of saw on enrollment rates or kind of overall patient care, baseline characteristics that kind of drove these changes? Or was it mainly just around the latter point that you just made.

Lorianne Masuoka: Yes. It’s not that what we saw in the actual ongoing study was really in consultation with our statistical experts that we made these changes as we were finalizing the report for the Bayesian analysis that’s going along with the SAB for submission to the FDA. So it was really based on expert opinion.

Rick Pauls: And Chase, I can add. So part of the — of our analysis we conducted with these tPA patients that did not respond from our Phase II trial. There was a very low placebo response rate. So 0, whereas with a 25% improvement with our drug and so if we carry that into our current trial, that should greatly help the statistical analysis plan. So if we have a large number of patients that have a very low placebo but a strong drug effect, it should be very beneficial for our statistical analysis plan.

Chase Knickerbocker: What was the end [ph] on the tPA non-responders in your previous study? How many patients was there.

Rick Pauls: A total of 20 and then I’ll also add, part of our analysis included a pretty deep analysis of the human urinary form use in China today. So there’s been about half a dozen clinical studies showing an incremental effect of urinary KLK1 on top of tPA and that’s also consistent with the discussions we’ve had with a number of different groups in China with people that are treating patients there today.

Chase Knickerbocker: Got it. And just last one for me. Does this have a — should we think of this as having a material impact to DM199’s commercial opportunity? Kind of what does it kind of expand the — would you expect — I guess would you expect a potential label to also include those that wouldn’t respond to tPA and what could that mean kind of for the overall patient opportunity?

Rick Pauls: Yes, we do. I mean we think it will be of greater interest as well for potential partners. So as we see about half of patients who get tPA do not respond and so if we’re looking at about 10% of patients that have a stroke get tPA. So 80,000 patients and I mean if we were able to expand our label and having another 40,000 patients a year, I mean there’s greater than $1 billion in additional revenue in the U.S. just for that expansion alone.

Operator: Your next question comes from Francois Brisebois with Oppenheimer.

Unidentified Analyst: This is Dan [ph] on for Franc. Just a quick one with regards to time line here previously with the interim enrollment of 144 you had targeted for first quarter ’25. Now with the 200, any guidance in terms of when we should be expecting the enrollment to complete?

Rick Pauls: Yes. So with the intended plan to have the interim analysis in Q4, we would be looking at some time next summer.

Operator: Your next question comes from Matthew Caufield with H.C. Wainwright.

Matthew Caufield: So for preeclampsia, there was mention of the frozen versus refrigerated vials. With the dosing now commenced, will there be any patients that would have received one versus the other? And are there any complicating factors to consider there?

Lorianne Masuoka: So initially, the patients will receive the frozen product but it’s really not an issue with this particular site. Primarily, they’re going to be using the refrigerated products.

Matthew Caufield: Understood. And obviously, there’s no anticipation of any distinction between one versus the other?

Lorianne Masuoka: No, they’re absolutely identical.

Matthew Caufield: Okay. Got it. And then also for ReMEDy2, there was mention of the no FDA comments received to date and obviously proceeding. Do you feel there’s any risk the agency provides subsequent feedback at this point, necessitating trial modification once the changes are up and running.

Lorianne Masuoka: Yes. So traditionally, the FDA responds within 30 days after submission of any protocol amendment or supplemental information. We’re well past the 30-day mark. So the chances of additional FDA feedback becomes less and less over time. So right now, I would say our chances of receiving substantive FDA feedback is relatively low.

Matthew Caufield: Great. I guess no answer is a good answer in that case. So I appreciate it.

Lorianne Masuoka: That’s right.

Matthew Caufield: From the FDA that is?

Lorianne Masuoka: That’s right.

Operator: There are no further questions at this time. I will now turn the call back to Mr. Rick Pauls.

Rick Pauls: Great. So we’d like to thank everyone for joining us this morning and for your continued support. We look forward to a very exciting 2025 and to our next update. This concludes our call today. Thank you.

Operator: Ladies and gentlemen, this concludes today’s conference call. Thank you for your participation. You may now disconnect.