DiaMedica Therapeutics Inc.

Ladies and gentlemen, this is the operator. Today's conference is scheduled to begin momentarily. Until that time, your lines will again be placed on music hold. Thank you for your patience. THE END Oh, my God. Oh, my God. THE END Good morning, ladies and gentlemen, and welcome to the Diametica Therapeutics first quarter 2021 conference call. An audio recording of the webcast will be available shortly after the call today on Diametica's website at www.diametica.com in the investor relations section. Before the company 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 note regarding forward-looking statements in the company's press release issued yesterday and under the heading Risk Factors in Diametica's most recent annual report on Form 10-K. Diametica's SEC filings are available at www.sec.gov and on its website at Please also note that any comments made on today's call speak only as of today, May 6, 2021, and may no longer be accurate at the time of any replay or transcript rereading. Diametica disclaims any duty to update its forward-looking statements. Following the prepared remarks, we will open the phone lines for questions. To ask a question, you need to press star 1 on your telephone. I would now like to introduce your host for today's call, Rick Pauls, Diomedica's President and Chief Executive Officer. Mr. Pauls, you may begin.

Thank you, Erica. Good morning, everyone, and thank you for joining us today. Welcome to our first quarter earnings and business update call. Yesterday, after the markets closed, we issued a press release summarizing our Q1 2021 financial results and providing a general update. At that time, we also filed our quarterly reports on Form 10-Q. Both documents can be found in the Investor Relations section of our website at diametica.com. I am joined this morning by our Chief Financial Officer, Scott Kellan, and our Chief Medical Officer, Dr. Harry Alcorn. Since our last call was just a month and a half ago, we'll provide a brief update today before taking your questions. Let's begin with our Acute Ischemic Stroke Program. We're pleased to be moving forward with a phase two slash three study of DM-109 in acute ischemic stroke patients. We submitted the IMD for the study on April 16th, a bit behind our end of March goal, but we used the additional time to ensure that we have the right study plan and the proper statistical analysis to support our proposed adaptive design. The IMD submission is not the pacing item for initiating this study, and we have confidence in our current timelines. The FDA 30-day review period concludes the end of next week. As of yesterday, we have not received any communication from the FDA other than that they're acknowledging receipts of the IND. Based upon the feedback we received from the FDA last December, we don't anticipate any significant additional questions on the study protocol. As proposed, this Phase 2-3 trial will be a double-blinded, placebo-controlled, randomized study of approximately 350 participants. based upon a 90% powering for statistical significance on the primary endpoints of the modified Rankin scale at day 90. Secondary endpoints will include stroke recurrence, MRS shift, NIHSS, and the Barthol index, along with deaths, safety, and tolerability measures and biomarkers related to KLK1. In addition to preparing for the Phase 2-3 study, We also expect to engage the FDA in the discussion regarding stroke reoccurrence as a clinically significant endpoint. Recall that in our Remedy Phase 2 study, we observed a statistically significant reduction in recurrent severe strokes. Specifically, we saw an 86% reduction in the overall study. One patient in the DM-109 group compared with seven in the control group, four of which were actually fatal. We believe this provides a strong signal of the potential for DM-19 to improve the physical recoveries for stroke victims and additionally reduce stroke recurrence and associated with the mechanism which we believe stabilizes the plaque. Recurrent strokes tend to be more costly, disabling, and also fatal. Anything that can be done to reduce the level of recurrence would greatly benefit patients and their healthcare system. We also intend to submit an application for fast track designation for DMA9 as part of initiating this discussion. Dr. Elkhorn led a comprehensive process to finalize the study protocol, bringing together a number of key opinion leaders, our scientific advisory board, as well as clinical and regulatory experts. We have engaged a contract research organization to provide us with the resources to identify, qualify, and engage up to 75 clinical sites. Concurrently, our team is focused on getting key operational procedures and services for the study. They are prioritizing time-sensitive needs to assure a timely, accurate, and efficient study in anticipation for initiating the trial this summer, subject to FDA authorization. Turning to our chronic kidney disease program and our REDUX trial, the key item that we've been waiting for is the preliminary top-line data from the diabetic kidney disease cohorts. The data is currently being compiled. We remain on track to provide this data readout during this quarter and look forward to sharing these results for you in the near term. Overall, enrollment in the REDUX study has reached 70 participants. This includes the full enrollment of the diabetic kidney disease cohorts, or 32 participants. The IgA nephropathy cohort has reached 70% completion, or 21 participants. and enrollment in the African American cohorts has reached approximately 60% or 17 participants. Enrollment in the IG nephropathy and the African American cohorts has continued at a slower pace, still being impacted with COVID. We also have two additional sites identified and qualified that will be activated very shortly. With the significant declines in new COVID cases and recent availability of vaccines, and these new study sites, we still anticipate completion of both of these cohorts in the second half of 2021. Now, I'll ask Scott Kellin to take us through the financial results for the first quarter.

Scott Kellin Thank you, Rick. Good morning, everyone. And as Rick mentioned, we announced the first quarter financials and filed a quarterly report on Form 10-Q yesterday afternoon. If you haven't had a chance to review these documents, they're both available on either the Diametica or the SEC websites. Our net loss for the first quarter of 2021 was $3.6 million, or 19 cents per share. This compares to a net loss of $2.4 million, or 19 cents per share, for the same period in the prior year. Our research and development expenses were $2.4 million for the three months ended March 31, 2021, an increase of $1 million from $1.4 million for the three months ended March 31, 2020. The increase was due to a number of factors, including year-over-year increases in costs incurred for the Redux Phase 2 CKD study and costs associated with an increase in staff levels, consulting services, and non-clinical testing required to support our preparation for the Remedy 2 Phase 2-3 Stroke Study. Now, these increases were partially offset by year-over-year decrease in costs incurred for the remedy phase two stroke study, which completed during 2020. Our general and administrative expenses were $1.2 million for the three months ended March 31, 2021, up slightly from $1.1 million for the prior year period. The increase in G&A expenses resulted primarily from increased director and officer liability insurance premiums, increased personnel, and non-cash share-based compensation costs. On the balance sheet, we finished the first quarter of 21 with cash, cash equivalents and marketable securities of $23.4 million. Current liabilities were $1.2 million and working capital was $23 million. This compares to $27.5 million in cash, cash equivalents and marketable securities, $2 million in current liabilities and $25.9 million in working capital as of the end of 2020. The decreases in combined cash resources and in working capital are due primarily to clinical study costs related to the Redux Phase 2 CKD study and costs associated with preparing for our Remedy 2 Phase 2-3 stroke study. Our current capital position should allow us to complete all three cohorts of the Redux Phase 2 clinical study, initiate the Phase 2-3 study in acute ischemic stroke,