DiaMedica Therapeutics Inc.

Good morning, ladies and gentlemen, and welcome to the Diametica Therapeutics third quarter 2024 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 Diametica 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 Diomedica's most recent annual report on Form 10-K, and the third quarter report on Form 10Q. 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, November 14, 2024, and may no longer be accurate at the time of any replay or transcript rereading. Diomedica 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, Diomedica's President and Chief Executive Officer. Mr. Pauls, you may begin.

Thank you, Operator. Hello, everyone, and welcome to our third quarter conference call. I'm joined this morning by Dr. Lorien Masioka, our Chief Medical Officer, and Scott Kellan, 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 US 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 five, will enroll a disproportionately large number of patients. Houston Methodist, the first of our top five sites to be activated, went live in September. Chattanooga, Tennessee and Oregon Health are two more of our anticipated top five priority sites. We have signed contracts with them and their site initiation visits have been scheduled. We anticipate all of our top five U.S. sites to be activated in recruiting by the end of the year. Canada will also add five to seven 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 site feedback into account and made several small yet impactful changes. Most notably, we're now using a newly manufactured drug lot that allows for 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 DM-109 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 DM-109 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 Lorraine.

Thanks, Rick. Today I would like to start off by covering the recent updates to the Remedy 2 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 8K last night. I joined Diomedica 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 Diomedica because we were not getting acceptable results from our contract research organization. I am very pleased with our progress and will 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 two of the presentation, we've implemented a series of updates and further clarifications to the Remedy 2 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 comment as of yesterday, we are implementing the new protocol modifications. The two primary updates to discuss are the inclusion of patients who did not respond to thrombolytic therapy, that is treatment with thrombolytics that is activated 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 percent. 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 Remedy 1 Phase 2 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 Remedy 2 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 Remedy 2 trial, and accelerate our timeline to completion. This change may take an additional four to six 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 timeline 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 three, let me go into more detail. When examining our data from the Remedy 1 Phase 2 trial, we found that the majority of participants pre-treated with TPA received DM-199 late in the 24-hour treatment window. Surprisingly, although these patients could have been enrolled as soon as one hour after TPA was administered, on average, they were enrolled 13 1⁄2 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 seven half-lives in less than three hours and are effectively cleared from the patient's system three 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's 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 DM-199 therapy. On the right side of the slide, you can see the data from our Remedy 1 study in participants treated with TPA prior to enrollment. As you can see in the placebo group, the response rate was zero. which we believe affirms that these participants were TPA non-responders. Conversely, in the DM-199 arm, the response rate was 25%. This 25% improvement versus placebo was actually the highest performance improvement among all subgroups studied in the Remedy 1 trial. I also want to note that the primary reason we didn't initially include TPA non-responders in the Remedy 2 study initially was to the significant difference in outcomes based upon how soon after a stroke the patient receives TPA. Those receiving TPA at one hour post-stroke have been shown to do much better than those receiving TPA four hours post-stroke. At the time, Diomedica 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 Remedy 1 results, if we properly define the thrombolytic non-responder, I believe that we can eliminate this variability risk. Turning to slide four, here are the details of the inclusion criteria related to TPA non-responders. We've spent countless hours with our scientific advisory board and leading vascular neurologists who consult for Diametica to properly define the inclusion criteria, which are listed on this slide. After discussions with our scientific advisory board and stroke neurologists in our trials, We believe the best time to assess when a patient is a non-responder is six hours after thrombolytics have been administered. If you intervene earlier, for example at four 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 six hours strikes the right balance and recall in our prior RemedyOne study, DM-199 was administered on average 13 1⁄2 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 Remedy 1 trial. The second point that I want to emphasize is that at or after that six-hour mark, the patient must be reevaluated. 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 four-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 re-scanned 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 DM-199. Turning to slide five, 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 six 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 it 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 Diametica 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 four 2025. we believe that we are adequately financed through the interim analysis. Turning to slide six, 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 DM-199 therapy, as well as improving the potential commercial value of DM-199. 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.