DiaMedica Therapeutics Inc. (NASDAQ:DMAC) Q3 2023 Earnings Call Transcript

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Rick Pauls: Yes. That’s right. And basically, what drove this change here as we went through our forecasting and realizing that even if we achieve overwhelming efficacy at the interim analysis, during that five month period from when patient 144 is dosed and the interim analysis is conducted, we should be pretty close to that 240 patient anyways, in particular with now expanding with our trial side of the U.S., so we felt that there’s no sense of taking that statistical penalty if effectively we’re going to be there anyways at that point in time.

Alexander Nowak: Yes, makes total sense. And then all these recommendations to the study change, did they come internal? Did they come by KOLs out in the field? Or were they from the CRO?

Rick Pauls: So really good question. It came really a combination. I mean, first off, Dave Wambeke, our Chief Business Officer was in China for a week in August. And speaking to the company that’s currently marketing the KAILIKANG, the urine form of KLK1, speaking to several other pharmaceutical firms and related. And based upon that, he got some pretty clear feedback on some of these changes we’ve made, like this posterior strokes, we’d be better targeting the moderates patients. So really leveraging the feedback really in China in terms of what patients that we believe will be better responders, and then also having Jordan Dubow, our Interim Chief Medical Officer joining, taking another close looking at the protocol, getting some additional feedback here from the initial sites that we reached out to.

So after coming up of clinical hold, we reached out to numerous sites, and there was a number of feedback to the protocol that we could be done just to simplify it and reducing some of the steps that were perceived as complicated. And the point here right now, it’s very important here that we make this protocol as simple as possible for the sites so that they don’t looking at this protocol and feel that it was over complicated. So although this is taking a small delay here, I’d call it, but really very minor in terms of the big picture. So we see this as — if we can increase the efficacy of the interim analysis by a few percentage than the previous protocol, that could really make the difference in not having to go to a larger total sample size.

So ultimately, we feel this should reduce the total number of patients and time and the cost for the trial.

Alexander Nowak: All right. That makes sense. Appreciate the update. Thank you.

Rick Pauls: Thanks, Alex.

Operator: We have a question from Francois Brisebois of Oppenheimer. Your line is open.

Francois Brisebois: Hi. Thanks for taking the questions. So just a couple here. In terms of the moderate severity, can you help us understand — I guess, you talked about the prevalence, but mechanistically is there a rationale for this to make more sense here? And how do we get to feel comfortable that this won’t — having patients that are only moderately severe, is it easy to gauge who’s moderate? And how do we feel comfortable that, that won’t make enrollment quite a bit higher — harder? Thank you.

Rick Pauls: Yes. So thanks, Frank. So the premise here is if you take a stroke patient that’s come in and — so first off, it’s very clear. So the severity is scored by the NIHSS. So if the score is five to 15, that is a clear moderate severity stroke patients. And so when we take a step back and we look at this, if the patient has a moderate to severe, so above 15, the likelihood of that patient getting to a full recovery and excellent outcome is not very high. And so as we take a step back and we look at this, and as I mentioned on the prepared remarks from our Phase 2 trial, we didn’t have a single patient on DM199 who came in with a baseline above 15 that got to an excellent outcome. So I think what this does is just biases the opportunity here for higher effect.

And as we’re looking at our Phase 2 data further, it’s really in those patients that are — frankly, that were in the six to the 10, that we saw the greatest impact in getting to a full recovery compared to placebo. So we think these changes will ultimately show a greater effect. And then furthermore, when we take a looking at the clinical use of the KAILIKANG in China, most of those trials are targeting a less severe, so targeting more of a moderate severity strokes scale.

Francois Brisebois: Okay. Thanks. And then lastly, can you help us understand the potential outcomes of this lawsuit that’s coming up here? Thank you.

Scott Kellen: Sure, Frank. Hopefully, the outcome is that we get access to our data. We get access to the study site. We’re able to finally audit that study and confirm what the actual results were. I mean, first and foremost, we really, really would like to get a final study report that’s accurate and fileable. Beyond that, we’re going to ask — we’re asking for damages, that last proof-of-concept study that we believe was messed up, would cost $6 million or $7 million to reperform today. So we’re asking for that. We’re asking for the — some damages related to a license that an opportunity that DiaMedica had at the time that was basically undermined by the error reporting from PRA. And we’re taking a chance on lost value of the company as well.

So all in, we’re asking for as much as $75 million in damages and we’ll see how much we can get through the court’s process, again, provided that they reaffirmed their judgment from April that the DiaMedica is the owner and that PRA has reached the agreement. Does that answer your question, Frank?

Francois Brisebois: Yes, all set. Thank you.

Rick Pauls: Thanks, Frank.

Operator: And I’m seeing no further questions. I’ll turn the call back over to our host.

Rick Pauls: All right. Thanks, Paul. So the requirements that we discussed today in the inclusion criteria and are intended to enhance ReMEDy2’s probability of success on the primary endpoint, which also has the potential to reduce the total number of participants required to be enrolled in ReMEDy2 trial without significantly impacting the estimate — estimated enrollment rates. We’d like to thank everyone for joining us this morning and for your continued support. We are thrilled to be reengaged with clinical study sites and hope to be enrolling participants soon. This concludes our call.

Operator: The meeting has now concluded. Thank you for joining, and have a pleasant day.

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