Good morning, ladies and gentlemen, and welcome to the DiaMedica Therapeutics first quarter 2026 earnings conference call. An audio recording of this webcast will be made available shortly after the call today on DiaMedica's website at www.diamedica.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, appear in the sections entitled Cautionary Statement Notes regarding forward-looking statements in the company's press release issued yesterday under the heading Risk Factors in DiaMedica's most recent annual report on Form 10-K and most recent quarterly report on Form 10-Q.
DiaMedica's SEC filings are available at www.sec.gov on its website. Please note that any comments made on today's call speak only as of today, May 7th, 2026, and may no longer be accurate at the time of any replay or transcript rereading. Following management's remarks, we will open the phone lines for questions. I would now like to introduce your host for today's call, Rick Pauls, DiaMedica's President and Chief Executive Officer. Mr. Pauls, you may begin.
Thank you, operator, and thank you all for joining us today. With me this morning are Dr. Julie Krop, our Chief Medical Officer, and Scott Kellen, our Chief Financial Officer. Given that our last call was only five weeks ago, we'll try to keep our remarks short. We are pleased with the progress we've made so far in 2026 as we continue to advance DM199 across both our preeclampsia and acute ischemic stroke programs. Most importantly for our shareholders, we're poised to deliver multiple clinical milestones between now and the end of 2027, all of which could provide significant validation of the value of DM199. We'll also weigh the risks and advantages of providing interim updates as clinically meaningful data emerges ahead of formal readouts. We're particularly interested in completing the interim analysis for our stroke program.
We've been working diligently on the ReMEDy2 stroke trial for a long time, battling through some significant challenges emanating from the COVID pandemic. With enrollments having surpassed 70%, we expect that the interim analysis will validate all of the hard work that has gone into the program. I now turn the call over to Julie to provide additional detail on our preeclampsia and stroke programs.
Thank you, Rick. In the phase II investigator-sponsored trial, enrollment is near completion in the extension cohort for the Part 1a dose escalation study in late-onset preeclampsia patients. Late-onset patients are planned to deliver within 72 hours. This cohort will allow us to detect the dose or doses we plan to use for the upcoming cohorts of the IST. We expect to complete this cohort and provide a data update later this quarter. As you may recall, the interim results from this study demonstrated DM199's potential to reduce blood pressure and improve placental perfusion without crossing the placental barrier. While we only have data in a relatively small number of patients, the results we observed were highly consistent and encouraging. We look forward to sharing the data from the extension cohort to further support the interim results.
Additionally, learnings from Part 1a are guiding protocol amendments for the two remaining preeclampsia study groups. The first group, referred to as Part 1b, is an expansion study with up to 30 additional late-onset preeclampsia patients who will receive DM199 as a continuous IV infusion until delivery. In this cohort, we hope to learn more about the ability of doctors to use DM199 to effectively support blood pressure control management at this late stage of the disease. The second part, referred to as Part 2, will study up to 30 early-onset preeclampsia patients. Three doses will be evaluated to support dosing for a phase III trial and an optimal dose level to extend the time mom is able to carry the baby, increasing the gestational age at delivery.
As you've seen in our investor presentations, the medical complications for the baby are expected to decrease significantly the longer mom carries the baby. With the potential for DM199 to help manage blood pressure and improve blood flow to the placenta, we believe DM199 has a chance to be a transformative therapy for preeclampsia. Initiation of these two preeclampsia cohorts, which we'll recruit concurrently, is expected to begin after the completion of the ongoing Part 1a extension cohort. The IST also includes a study in women experiencing fetal growth restriction. In this group, we will be evaluating the effects of DM199 on fetal growth restriction in patients without preeclampsia. FGR is a condition with diminished fetal growth due to a poorly functioning placenta, the life support system of the unborn child.
FGR is the leading cause of stillbirth, and for infants that survive the FGR pregnancy, it is associated with enduring adverse health effects over the child's lifespan. In this cohort, we will evaluate the potential for DM199 to increase placental perfusion and improve fetal development. Enrollment of the first patient for this study is expected in this current quarter. In parallel with the IST, we are advancing our global phase II study in early-onset preeclampsia. We intend to conduct this study in North America, both the United States and Canada, and the United Kingdom. In March 2026, we received approval from Health Canada to initiate this study, and study sites have been selected. We are working to initiate enrollment in Canada by the end of this year. We expect to file a clinical trial application in the U.K. in the current quarter.
With respect to the status of the IND submission in the United States, as we discussed previously, the FDA requested an additional non-clinical 10-day modified embryo-fetal development and pre and postnatal development study in a rabbit model. Results of a non-GLP dose-ranging study in rabbits suggest that the animals developed an adverse immune response to DM199, preventing us from completing the requested modified pre and postnatal development study in a rabbit model. We have proposed to the FDA performing this study in a second rodent model and are awaiting their response. That said, I would highlight for everyone that we are moving forward in parallel with the study in Canada and are planning to add U.K. sites while we complete any additional preclinical work requested by the FDA.
This study will evaluate three dose groups of DM199 in patients with early-onset preeclampsia to further establish safety, pharmacokinetics, and pharmacodynamics in a more ethnically diverse patient group prior to initiating a registration study. Turning now to our stroke program. We are encouraged by the continued progress on the ReMEDy2 trial. Enrollment has now surpassed 70% of the target required for the interim analysis. Site activations and enrollments have recently commenced in Europe as well. In addition to the United States, Canada, and the U.K., we've added six additional European countries and now have approximately 70 sites activated. In April, we sponsored an investigator meeting for our European study teams that was well-attended and had many productive sessions and discussions, which we believe are the key to getting the study teams excited about and focused on patient enrollment.
We are reiterating our intention to complete the interim analysis by the end of 2026. As a reminder, in the phase II ReMEDy1 stroke study, treatment with DM199 was associated with clinically meaningful improvements in functional outcomes for the patient group that most closely resembles the patients enrolling in our ReMEDy2 trial. In the subset of patients that did not undergo a thrombectomy, we observed a 15% absolute increase over placebo in the proportion of patients achieving favorable recovery, as measured by a score of zero or one on the modified Rankin Scale. Furthermore, ReMEDy2 is enrolling patients presenting with moderate stroke severity, defined as an NIHSS score between five and 15. Looking at that subgroup in the ReMEDy1 study, there was a 19% absolute improvement over placebo in functional outcomes.
There was also a 50% reduction in the number of patient deaths and a 13.3% reduction in recurrent strokes compared to placebo. These data inform the design and powering assumptions for the ongoing ReMEDy2 trial. I think you can understand why we are eagerly awaiting the results of the interim analysis. Let me now turn the call back to Rick.
Thanks, Julie. I'd like to now ask Scott to review the financial results for the quarter.
Thank you, Rick, good morning, everyone. We announced our first quarter 2026 financial results and filed our quarterly report on Form 10-Q yesterday after the markets closed. As of March 31, 2026, our cash equivalents, and short-term investments were $51.3 million. Current liabilities were $5.7 million, and working capital was $46.6 million, compared to cash and investments of $59.9 million, current liabilities of $5.1 million, and working capital of $55.5 million as of December 31, 2025. We anticipate that our current cash and investments will be sufficient to fund our planned clinical studies and operations through 2027. Net cash used in operating activities for the first quarter of 2026 was $9.1 million, compared to $7.1 million for the first quarter of 2025.
The increase in cash used in operating activities resulted primarily from the increased net loss for the current year period, partially offset by changes in operating assets and liabilities during the current year quarter. Turning to the income statement, our research and development expenses increased to $8 million for the three months ended March 31, 2026.
Up from $5.7 million for the same period in the prior year. The increase is due primarily to the increased costs resulting from the continuation of our ReMEDy2 clinical trial and its global expansion, the expansion of our clinical team, and costs related to additional reproductive toxicity testing being performed in support of our PE program in the United States. These increases were partially offset by net cost reductions in manufacturing development activity related to work performed and completed in the prior year period. We expect that our R&D expenses will moderately increase in future periods relative to recent prior periods as we continue our ReMEDy2 trial and continue to advance our DM199 clinical development program into PE. Our general and administrative expenses were $2.5 million for the three months ended March 31, 2026 and 2025.
While small changes occurred within a number of expense categories, the differences were not material individually or in the aggregate, and the overall net changes offset each other. We expect G&A expenses to remain relatively consistent in future periods as compared to recent prior periods. With that, let me ask the operator to open the lines for questions.
At this time, if you would like to ask a question, press star followed by the number one on your telephone keypad. If you would like to withdraw your self from the queue, you may press star followed by the number one. We'll pause for just a moment to compile the Q&A roster. Your first question is from the line of Josh Schimmer with Cantor.
Great. Thanks for taking this question. For the preeclampsia data updates that we'll get this quarter, for the late-onset cohort, what incremental observations should we be looking for beyond blood pressure control? Obviously, preeclampsia can affect urine output, kidney function, liver function, platelets. There are biomarkers like sFlt. At what point will you have data to share on those parameters?
Yeah. Thanks, Josh. The expansion cohort that we're running is gonna be 12 additional patients. We're almost completing that right now. It's gonna be at the cohort 10 from the Part 1a. It's really just gonna give us just additional clarification here, particularly on blood pressure, dilation of the uterine arteries. At this point, we're really not expecting any changes in some of the biomarkers like sFlt because these patients really only got two doses. It's really, we believe, is that having the drug on board for, you know, ideally a week, two weeks, that we really would see some of those biomarkers improve.
Okay. Got it. I think at one point, the lead investigator suggested that there was an improvement in edema. At the very least, maybe urine output might be something that can improve within a short period of time. Is that something you're looking for?
That's something that if there is an improvement in the endothelial health, and it is something that Dr. Cathy Cluver has very clearly seen in some of these patients that the edema did resolve, you know, even within, you know, 12 to 24 hours of getting DM199, which is encouraging. You know, it's a small number of patients, but we'll be looking to see maybe there's some additional insight there as well.
Just a couple of other quick questions, if I may. What are the gating steps to start initiating enrollment in the early-onset preeclampsia study? Why is that not going to occur until later this year?
Yeah. Julie, do you want to take that one?
Yes. Are you referring to the IST cohort? Or are you referring to our sponsor trial?
To your sponsor trial.
Yeah. We are in the midst of getting our dosing data from, again, from the IST study before we select our final doses for that protocol, as well as getting sites contracted, up and running and all of, you know, our CRO selection process, all of that completed, and then we'll be initiating. It's a combination of factors, but we should be, again, in Canada later this year.
Last question, I guess.
Yeah, Josh.
Yeah, sorry. Go ahead.
Oh, sorry. Yeah, if I can add. Importantly, we know as Julie mentioned, we have selected the two sites in Canada, and one site in particular is already in our stroke trial. You know, we're looking forward to leveraging the relationships, the existing contract that we have to basically do what we can here to expedite and get those sites activated as soon as we can.
Got it. Last question, timelines for completing the second animal toxicology study and then ultimately reengaging with the FDA for an IND.
Yeah. It really depends on the feedback that we get from the FDA. If it is a rat study that, you know, we propose and if they agree to that, I mean, that's a matter of a few months. It's probably three to four months to complete. Again, while that's all happening, you know, we'll be running the, you know, the phase II in Canada and then expanding into the U.K.
Great. Thanks so much. Appreciate it.
Your next question is from the line of Stacy Ku with TD Cowen.
Hey. Good morning, everyone. We have a couple of questions. I guess first, two follow-ups. When could you expect to hear from the FDA on the mouse study? Is there a possibility the FDA could ask for another animal model? How are you looking to prepare for all these different scenarios? Sounds like the rat study is pretty straightforward, but just help us understand how you view the next few necessary steps. Again, just to clarify, sounds like you are expecting a potential study initiation of the global phase II by year-end. Just wanna make sure you're reiterating that timeline. We're looking forward to the updated preeclampsia results in Q2.
As we think about the early onset preeclampsia or fetal growth restriction subgroups of the IST, could we think about any potential for low dose updates by year-end for either of these groups? Julie, just a clarification again, what is the timing of potentially starting the early onset preeclampsia IST? Last, just a reminder, what's the go and no-go decisions on the interim results for stroke? I can repeat some of these questions. Thanks so much.
Okay, great. We'll try to take those. I'll start off here. Maybe Julie you can help me out here. We did our submission to the FDA over a month ago and we're just waiting to hear their feedback. As soon as we get clarity from the FDA we'll provide an update. We have looked at alternative you know kind of backup plans in case they want something different. We think we've got a very you know strong rationale for the proposed rat study. I think it's encouraged that you know Health Canada's already approved us to start the trial in Canada.
With the PE trial in terms of, yeah, it's potential that we could get some data, as soon as we have a cohort that's completed and if we see some compelling data, we would look at potentially press releasing or getting that at a late-breaking conference. The last question there you had with regards to the outcomes at the interim analysis for the stroke program. First we'll do a futility analysis, so if there's not a drug effect, we'll terminate. Otherwise, there'll be a resample size, and the resample size will be between three and 700 patients.
We believe if we see a drug effect comparable to what we see from our phase II, which is comparable to the data we've seen with the data with the human urinary form in China, and there's about 1 million patients a year being treated with that form, we would look at completing the enrollment the following quarter.
Helpful. Thank you so much.
Your next question is from the line of Thomas Flaten with Lake Street.
Hey, Rick. Just to clarify, given that you've got 70+ sites and 70% enrolled, when you said we're gonna complete enrollment the following quarter, do you mean the first quarter of 2027 or which quarter were you referring to on the full enrollment?
Yeah. Assuming that we have the interim analysis at the end of this year, we would anticipate completing the enrollment the following quarter. The Q1 of next year.
Does that assume an upsize in the total population? 'Cause it seems to me it's only May, and by year end when the interim analysis reads out, you should be pretty close to full enrollment on the original study size, right?
We will be. That after patient 200 is dosed, there'll be a 30, sorry, a 90-day window here for the primary endpoint and then another approximately four weeks for the interim analysis to occur. During that approximately four months, we'll be continuing to enroll. We'll be getting closer to the 300 patient number during that period of time.
Got it. Just to clarify a prior response. Once you get the Part 1a expansion data out this quarter, is it reasonable to assume that you would start Part 1b and Part 2 in the third quarter or should we expect a maybe a fourth quarter start on that?
Nope, those should be starting here this summer. We're just, we've finalized the dosing that will be going into those cohorts. We'll be doing three doses at 5 mcg/kg, 10 mcg/kg, and 15 mcg/kg, a subcutaneous every three days until delivery. Those cohorts should be starting very soon. You know, we had some, we've now got our site, Cape Town, South Africa, has had some challenges with some staffing, and they've added some new staff. They've been very active recently in the Part 1a extension study. We feel very good that, you know, that study will be enrolling soon.
Got it. Thank you.
Your next question is from the line of Chase Knickerbocker with Craig-Hallum Capital Group.
Good morning. Thanks for taking the questions. One for Scott. Appreciate your comments on forward R&D, maybe just a little bit more color there. You know, you'd said kind of modest increase. I would imagine kind of enrollment is still ticking up on an absolute number for stroke. Can you just give us an idea, you know, kind of what the magnitude of that increase you expect sequentially in stroke and then kind of the incremental cost you expect for PE through the year? Thanks.
Sure. Thanks, Chase. With respect to the stroke, modest increases. I mean, and you're correct, it's all gonna be driven by the enrollment rates. To some extent, it depends on whether those patients are enrolled in the U.S. or Europe. U.S. is probably the most expensive, followed by U.K., Canada, and Europe. With respect to the incremental cost for PE, they'll be, well, we're still working on the estimates for the phase II trial. The financial support we provide for the IST is very modest. It's an incredible bargain. Again, moderate, modest to moderate increases, nothing, order of magnitude change-wise.
Could you just define modest or moderate for us, if you don't mind? Just one for Rick. Just as we think about the resample, you know, should we kind of just expect to receive, you know, the number on the resample or anything else at that point that we'll be able to provide? Thanks.
Sure. For the interim analysis, we'll be providing an update on the expected timelines to complete the enrollment.
Chase, it's hard to give a specific number, because there's movement inside all the different expense categories. I mean, I wouldn't expect it to go up more than, you know, 10%, a quarter.
Helpful. Thank you.
I will now hand today's call over to Rick Pauls for any closing remarks.
All right. Well, thank you all for joining us today. We greatly appreciate your interest in DiaMedica and hope that you enjoy the rest of the day. This concludes our call today. Thank you.
Thank you for joining. You may now disconnect your lines.