DiaMedica Therapeutics Inc.

Ladies and gentlemen, and welcome to the Diametica Therapeutics Remedy 2 update 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 Diomedica's most recent annual report on form 10 K. Diomedica'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, March 29th, 2023, 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. I would now like to introduce your host for today's call, Mr. Rick Pauls, Diametica's President and Chief Executive Officer. Mr. Pauls, you may begin, sir. Thanks, Paul.

Hello, everyone, and welcome to our fourth quarter conference call. I'm joined this morning by Kirsten Gruss, our chief medical officer, and Scott Kellen, our chief financial officer. I'd like to start off today's call by updating everyone on the status of our work to remove the clinical hold on a remedy to phase 2-3 pivotal trial and our communications with the FDA as we approach what we believe will be the final resolution of the clinical hold. Recall that the hold was not caused by any issue with our drug product candidate DM-199, but was caused by the effects of switching to a new IV bag formulation in our Remedy 2 trial. In our prior Remedy 1 Phase 2 trial, the IV bag made from polyolefin retained up to half of the DM-199 drug. In our pivotal Phase 2-3 Remedy 2 trial, we switched to the new PVC IV bag formulation. which does not retain any of the DM-199, effectively delivering up to twice as much DM-199 to study participants. We believe that this is what caused the transient clinically significant blood pressure drops or hypertension in those three participants. In our initial safety studies, we identified hypotension as a dose-limiting tolerability for DM-199. As a result, drops in blood pressure are consistent with the mechanism of action for DM-19, and we believe that the hypotensive events at least indicate that DM-19 is clearly active in patients. In the FDA's October continue full clinical hold letter, their most significant request was to expand our IV bag compatibility study to stimulate real-world usage, which is referred to as an in-use study. We had originally expected that we would need to request a Type A meeting with the FDA to discuss the requirements for the study. However, in December, we received written communication from the FDA, which provided their expectations for our in-use study. Since we're only entitled to one Type A meeting, we are pleased that this written communication saved us from having to use our Type I meeting for a discussion on the in-use study requirements. We incorporated the FDA's feedback into the study protocol and submitted the updated protocol to the FDA with a request for confirmation that the protocol would satisfy the requirements. Last month, we received a follow-up notification indicating that the FDA believed that our in-use study protocol was reasonable. The in-use study is being conducted in two parts. Part one simulates actual use in the hospital with IV bag and the tubing using a pump to administer DM-109. Part two tests worst case scenarios, such as varying storage, duration, temperatures, and light. The first part of the in-use study is complete, and we believe that the data from this part confirms the conclusion we reached in our prior testing. Specifically, it confirmed that up to approximately 50% of the DM-109 was retained in the IV bags used in the Remedy 1 as compared to the IV bags used in the Remedy 2 and supports our earlier proposed revision to the IV dose from Remedy 2 from 1 to 0.5 micrograms per kg. These results have been submitted to the FDA along with a request for feedback and confirmation that we now have addressed all issues of the clinical hold once the Part 2 of the in-use study is submitted. We are currently conducting Part 2 of the in-use study, and the results, once complete, will be submitted to the FDA, which we anticipate occurring in April. Note that Part 2 of the in-use study, what we learned, will likely only affect handling procedures for the IV dosing and not the dose rates. Late last year and early this year, while we were awaiting feedback from the FDA on the in-use study protocol, and preparing to run the in-use study, we developed a more sensitive assay for measuring KLK1 levels and enhanced the consistency in our assay that measures the activity levels of KLK1. We chose to do this as the FDA had posed a question about our existing assay methods. While we believe our existing assays were reasonable, we decided to be prudent and ultimately less time consuming to complete this work and eliminate a risk that the FDA might have additional questions and further delay the resumption of a Remedy 2 trial. The FDA had also asked whether trypsin could be a potential cause or contributor to the hypertensive events in Remedy 2. This question likely stems from the use of trypsin in the manufacturing of the DM-199 substance. And trypsin by itself can cause drops in blood pressure. Early in 2022, as part of our ongoing manufacturing development program, we had initiated testing to that trypsin was fully removed from the DM-199 during the manufacturing process. This testing confirmed that there is no or at least not detectable residue trypsin in DM-199. In February, we submitted reports to the FDA confirming that trypsin was not measurable in DM-199 and provided the update validated methods assays to the FDA for review. We recently received their feedback that the assays developed appear appropriate and our assessment of trypsin levels is also acceptable. At this point, I'm pleased to say that we believe we have a good ongoing dialogue with the FDA. We appreciate their engagement and we are confident that an end is in sight to our clinical hold. Note that the FDA has up to 30 days to review and respond to our complete response letter requesting the lifting of the clinical hold. Once we receive the response, we will provide an update on expected timing for getting Remedy 2 restarted. Yesterday, we also announced that we have initiated a Phase 1c open-label single ascending dose study of the IV dosing of DM-19 in the IV bags made from PVC used in the Remedy 2 trial. This was not requested by the FDA, but as a proactive measure on our part, decided before starting the in-use study. We chose to do so for two primary reasons. First, if for some reason the FDA is not satisfied that the results of the in-use study provided sufficient basis for adjusting the IV dose levels going forward in Remedy 2, then the results of the Phase 1c study will conclusively demonstrate the serum concentration levels of D-109 achieved with our proposed IV dose. The second reason has to do with driving confidence in the physician investigators. This study demonstrates our commitment to the patient safety and we hope that will help us start strong when we resume enrollment in Remedy 2. Enrollment in Phase 1c study began last week and the first three cohorts, which gets us to 0.5 micrograms per kg dose level we propose to use going forward, should be complete in April with preliminary data available in May. I would like to also recognize and give a special thank you to our clinical team for getting this study designed, planned, and initiated in a remarkably short period of time. We've learned a lot through this process, and as a result, DiMedica will come out stronger and better prepared to resume trial activities once cleared by the FDA to do so. This is also due in no small part to some key additions to our management team in 2022. Dr. Kirsten Gruss, our chief medical officer, is a board-certified neurologist with extensive experience in medical practice and drug development in bringing several drugs through FDA approval. Kirsten has also been instrumental in leading the response to the FDA and managing our FDA communications. Dominic Condari, our chief commercial officer, you will recall he managed the TPA franchise at Genentech for 30 years. and came out of retirement to join Diametica because of his passion for the stroke community and the potential benefits of DM-199. We also added significant late-phase clinical operation expertise with Julie Daves, our Senior Vice President of Clinical Development Operations, bringing vast experience in clinical trial planning and execution and has a reputation for completing trials on time and under budget. In addition, at the board level, we recently announced that Tanya Lewis has joined us. Tonya has extensive global regulatory expertise. This includes positions as Chief Development Officer, Chief Regulatory Officer, and Chief Quality Officer. She has been involved with other clinical hold situations and has been responsible for several products, making their way through the regulatory approval process with the FDA. It's a privilege to work with these individuals and the entire Diametico team. As you can tell here this morning, we look forward to getting out from under this clinical hold and resuming the development of DM-189 to bring this important treatment to stroke patients. We see a bright horizon with the team we have built, and we will continue to grow as we move forward. One additional point that I'd like to make this morning, an important rationale for developing DM-189, a synthetic form of the KLK1 protein, is the current usage of the KLK1 protein in China. As many of you know, in China, a form of the KOK1 protein is isolated from human urine. That product is called Calicang and has been treating patients for over a decade now. In 2019, Calicang was added to the National Reimbursement Medicines List. This spurred a dramatic increase in usage in China. There were more than 600,000 patients treated for stroke in 2021 alone. To put this into perspective, that's approximately 15% of the estimated four million annual strokes per year in China. This gives us extensive knowledge of the KLK1's clinical use and even more confidence that our recombinant form of the KLK1 therapy can bring this much needed treatment to the US and the rest of the world for patients who today do not have a treatment option. I would like to now turn over the call to Scott Kellan to review the financial highlights.

thanks rick and good morning everyone as rick mentioned we announced our full year 2022 financial results and filed our annual report on form 10k yesterday afternoon these documents are both available on either the diametica or the sec websites starting with our balance sheet as of december 31 2022 our combined cash and investments totaled 33.5 million down 2.6 million from 36.1 million as of the end of Q3 2022, and down 11.6 million from 45.1 million as of our prior year end. Our 2022 cash usage was 11.6 million compared to 12.3 million in the prior year, and our cash usage was lower than planned due primarily to the halting of the enrollment in our Remedy 2 trial. This should scale back up as we complete our response to the FTA and prepare for resuming enrollment. As Rick mentioned, we intend to provide an update on the timing for the resumption of the trial in the near future. We also reiterate that we believe our current cash will support the clinical development of DM-199 and our operations into the fourth quarter of 2024. Our research and development expenses decreased to $7.8 million for the year ended December 31, 2022, down from $8.8 million for the full year of 2021. This decrease was driven primarily by reduced costs incurred during 2022 for the wrap-up of our Redux Phase 2 CKD trial and decreased nonclinical testing costs, a significant amount of which were incurred during 2021 in preparation for initiating the Phase 2 slash 3 Remedy 2 trial in 2022. These decreases were partially offset by increased personnel costs associated with expanding our R&D operations and increased manufacturing process development activities. Our general and administrative expenses were $6.2 million and $4.9 million for the years ended December 31, 2022 and 2021 respectively. This increase was primarily driven by increased directors and officers liability insurance, increased personnel and professional services costs to support our expanding clinical programs, and increased legal fees for our lawsuit against PRA. These increases were partially offset by reduced non-cash share-based compensation costs. With that, let me turn the call back over to Rick. Thanks, Scott.