Good morning, ladies and gentlemen, and welcome to the DiaMedica Therapeutics Full Year 2023 Conference Call. An audio recording of the webcast will be available shortly after the call 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, 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 DiaMedica's most recent annual report on Form 10-K. DiaMedica'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 20, 2024, and may no longer be accurate at the time of any replay or transcript rereading. DiaMedica 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, DiaMedica's President and Chief Executive Officer. Mr. Pauls, you may begin, sir.

Thank you, Paul. Hello, everyone, and welcome to our full year 2023 conference call. I am joined this morning by Lorianne Masuoka, our Chief Medical Officer; and Scott Kellen, our CFO. To start off the call this morning, I would like to welcome Lorianne Masuoka as our new Chief Medical Officer. Dr. Masuoka has only been with us for a few short months, but is already making an enormous impact with clinical sites and building strong momentum with current and potential physician investigators. Dr. Masuoka is a board-certified neurologist with more than 25 years of experience building and expanding high-value pipelines in the biopharmaceutical industry. She has a history of building and leading high-performing teams in clinical development through all stages and the ultimate approval of new medicines. Her experience also includes playing a key role in developing strategic partners and acquisitions of multiple biotechnology companies. She has served as the Chief Medical Officer for Epygenix Therapeutics, Marinus Pharmaceuticals, Cubist Pharmaceuticals, now part of Merck, and Nektar Therapeutics. She was also an independent board member of Opiant Pharmaceuticals, which was acquired last year for an upfront premium of over 100% and the potential for an approximately 200% premium if the contingent value rights are achieved. The breadth of her experience includes managing teams in the areas of clinical research, pharmacovigilance, biostatistics and data management, regulatory affairs and clinical operations. We welcome Lorianne on the call today, and I'm thrilled to have her as a key member of our team.

Thank you, Rick. I'm excited to join the management team at DiaMedica for several reasons: first, DM199 represents a potential breakthrough in the treatment of acute ischemic stroke, a serious and life-threatening condition for which no new approved medical therapy has emerged in over 25 years. On the basis of the subgroup analyses of the ReMEDy1 study, DM199 shows great promise in returning stroke patients back to baseline neurologic function and preventing recurrent stroke and death. DiaMedica hosted a booth at the International Stroke Conference last month with follow-up requests to our ReMEDy2 trial from over 80 stroke centers, 11 of those have already requested participation in our trial. They were enthusiastic about DM199's mechanism of action to increase collateral circulation in the area of ischemic damage after a stroke without increased risk of hemorrhage. They see DM199 as more akin to revascularization strategies such as tPA and mechanical thrombectomy and considerably more promising than the many failed neuroprotective agents. Also at this year's International Stroke Conference, Dr. Scott Kasner, DiaMedica's Global Principal Investigator for ReMEDy2, presented a poster in the main hall discussing the ReMEDy2 trial design. Second, the management team and the clinical functions, which I now lead, are among the savviest, hardest working, and most collaborative with which I have worked. We've also made some strategic additions to the clinical team that have enhanced activity and effectiveness. Finally, the ReMEDy2 trial is a thoughtfully conceived, well-designed study that is well-managed, and I believe will provide definitive evidence of whether DM199 can become an important addition to the treatment options for patients who have suffered an ischemic stroke. Now let me provide an update on the ReMEDy2 progress. As a reminder, our final clinical protocol went into effect in mid-November and the first U.S. sites were activated in December 2023. The sites activated in December were our fast-track centers who were open prior to our clinical hold, and we are now in the process of expanding to a total of 40 to 50 sites in the United States. Once the site expresses interest and we select them, it takes approximately 3 to 6 months for contracting and IRB approval. New site commitment was slow over the holidays. But beginning in mid-January and continuing through the ISC conference in February, we've had a surge of new site commitments. As of today, we have 6 sites activated with an additional 18 sites in the start-up phase and a deep pipeline of 40 additional sites selected for prequalification visits in the U.S. It is also important to point out that some of the largest and most reputable stroke research hospitals in the country have decided to join our trial. These new centers have substantial patient volumes, clinical research infrastructure, and consistently rank among the top enrolling stroke centers in AIS studies. As we move into Q2 and early summer, we expect a substantial ramp-up in opening U.S. sites. Consistent with my past experience in recruiting sites for other studies, we don't expect linear growth in adding new sites and patient volumes and envision more of a hockey stick-like ramp-up in the U.S. during the second half of 2024 and continuing into 2025. With respect to additional countries, in Canada, the Canadian Stroke Consortium has endorsed our protocol and made recommendations regarding qualified study sites. We have identified 6 Canadian hospitals to date to participate in ReMEDy2 and can now make our application to Health Canada for approval of our trial. We expect Canadian sites to commence activation in Q3 of this year. In Australia, the Australian Stroke Trials Network has provisionally endorsed our protocol last week, and we are moving now to select study sites and initiate regulatory filing activities. We plan to work with many of the same highly engaged centers that we worked with in ReMEDy1, as well as new sites recommended by the network. We expect Australian study sites to commence activating by the end of the year as well. In Europe, including the U.K., we have to comply with new rules and requirements related to drug manufacturing quality audits. We have nearly completed the additional procedures and documentation required. This work needs to be completed prior to seeking European regulatory approval for the study. We plan to pursue sites in select European countries with experienced research teams and potential for significantly higher enrollment rates. We expect to commence site activations late this year. In summary, we expect to have 25 to 30 sites active and recruiting by the end of Q2 and most of approximately 75-plus sites at the end of 2024. We have been in close contact with our first open sites, and we know they are prescreening patients as we're getting questions on eligibility and participant consenting processes. We anticipate the first post hoc participant will be enrolled soon, and it can happen any day now. Then it's an issue of numbers. As we get more sites up and running, we expect to begin to see enrollment resume and then surge as the bulk of the sites are activated towards the end of the year. I would also point out that some competing trials are concluding in the near future, freeing up critical study center staff bandwidth and likely increasing the number of patients that can be approached. Given all of this, we are comfortable in now saying barring any unexpected issues that we anticipate the 144th participant for our interim analysis will be enrolled in Q1 2025.

Thank you, Lorianne. I would also remind everyone that as we discussed last quarter, the reason we submitted a protocol revision in October of 2023 was to increase our probability of clinical success. Those changes, including narrowing the focus to patients experiencing moderate strokes as indicated by the National Institutes of Health Stroke Scale score between 5 and 15. In our Phase II ReMEDy1 trial, these were the patients who demonstrated a greater level of full recovery as measured by the modified Rankin score of 0 to 1 on a 6-point scale where there was an 18% improvement of DM199 versus placebo. This compared to the moderate to moderately severe participants, which showed a 15% improvement versus placebo. Importantly, we don't believe that this will dramatically reduce the number of eligible stroke patients. We also took measures aimed at reducing the alpha penalty in the interim analysis. We are confident that these enhancements will provide a greater likelihood of clinical success and place DM199 on the fastest path to FDA approval and importantly, bring DM199 to stroke patients who have no treatment options today. Our clinical team has been working diligently to identify, qualify and engage physician investigators and clinical sites and ensure that sites feel well supported to conduct this trial. We also recently expanded our clinical operations with the addition of Rebekah de Vitry Fries as our Vice President of Clinical Operations in February to further expand and strengthen our clinical operations team leadership. Rebekah was previously Head of Clinical Operations at Epygenix Therapeutics. I would like to now turn the call to Scott Kellen to review this quarter's financial results.

Thanks, Rick, and good morning, everyone, and thank you for being part of today's call. As Rick mentioned, we announced our full year 2023 financial results and filed our annual report on Form 10-K yesterday. These documents are both available at either the DiaMedica or the SEC websites. As of December 31, 2023, we reported a total combined cash and investments of $52.9 million, current liabilities of $2.8 million and working capital of $50.9 million. This compares with the total combined cash and investments of $33.5 million, $2.2 million in current liabilities and $31.7 million in working capital as of December 31, 2022. The increases in cash and investments and in working capital were due primarily to the $36.8 million of net proceeds from our private placements in April and June of last year, partially offset by cash used to fund operating activities during fiscal '23. Net cash used in operating activities for the year ended December 31, 2023, was $18.7 million compared to $11.5 million in the prior year. The increase in cash used in operating activities was driven primarily by the company's higher net loss and increased amortization of discounts on purchased marketable securities, partially offset by noncash share-based compensation and the effects of changes in operating assets and liabilities during '23. We believe that our current cash and investments provide us a runway that will get us to 2026. Our research and development expenses increased to $13.1 million for the year ended December 31, 2023, up from $7.8 million for the year ended December 31, 2022. This increase was driven principally by costs incurred for the in-use studies performed to address the previous clinical hold on our ReMEDy2 trial, costs incurred for the Phase Ic study and increased manufacturing and process development costs for DM199. Also contributing to the increase were higher personnel costs, including noncash share-based compensation associated with expanding the clinical team. General and administrative expenses were $8.2 million for the year ended December 31, 2023, up from $6.2 million in the prior year. This increase was primarily driven by increased legal fees incurred in connection with the company's lawsuit against PRA and increased personnel costs incurred in conjunction with expanding the company's team. Increased costs for patent prosecution and noncash share-based compensation also contributed to the increase. Other income was $1.9 million for the year ended December 31, 2023, compared to $0.4 million for 2022. This increase was driven by both higher interest rates and increased marketable securities balances in 2023 following our April and June '23 private placements. Now before I turn you back over to Rick, let me provide an update on the latest developments with the PRA lawsuit. The 3-judge panel recently informed us that they did not find a sufficient causal link between PRA's breach of our study agreement and the damages we claimed. We find ourselves in an odd position of having a court finding PRA in breach of the study agreement and that we are entitled to the full results of the study, a judgment which PRA is currently appealing. But not being entitled to at least a return of fees paid under that agreement. So we have until May 6 to notify PRA and the court of a decision to appeal. We are currently evaluating our options. With that, we would like to open the call for questions. Operator, if you could please open the lines now.

Our first question comes from Thomas Flaten of Lake Street Capital.

With respect to patient enrollment, so if the initial sites were activated in December of last year and we're looking for the first patient soon. Is that something we should expect that from activation to actual patient enrollment? We're looking at a 3- to 4-month lag. Is that reasonable? Or is that unique to the fact that the whole study is starting up?

Lorianne, do you mind taking that one?

Sure. So as mentioned earlier, many of our study sites are academic institutions, and they have multiple layers of IRB approvals and often won't review study contracts until after the IRB approval has been obtained. So we made great progress in opening them shortly after the clinical hold was lifted and the final protocol was finalized in November. But it does take them some time to get up and running. We have to program their pharmacies to be able to do the intravenous infusion, and that takes a little bit of time. And mostly, it's a waiting game. It's an issue of numbers. We need to have a lot more critical mass of clinical sites up and ready to enroll because we never know when the right patient is going to come to the emergency room doors.

And another question, given the lag in getting Canada and Australia up and running, it seems that the interim analysis will be heavily weighted towards U.S. patients. Is there any reason to suspect that, that would not be representative of the full patient enrollment, which will be more represented by Australia, Canada and the EU?

Well, we anticipate that there will be a mix of patients because remember, as we said, we have anticipated that EU and U.K. and Canada, Australia will be up and running by the end of the year. So we anticipate a full enrollment of the interim analysis of 144 patients to be completed by the end of Q1 of 2025. So there will be a mix of patients. There will be a number of U.S. patients, obviously, but we do believe it will be representative.

Our next question comes from François Brisebois of Oppenheimer.

Can you hear me okay?

Yes. Yes, Frank.

Okay. Perfect. So I was just wondering, so first quarter '25 is what we think enrollment will be complete for the interim read. Can you remind us expectations around the interim read and from enrollment just in terms of the study design, what would make sense from full enrollment to data timeline? Anything you can share there would be helpful.

Sure. So after the 144th patient has been dosed, there will be a 90-day follow-up. And then after that, there will be 6 to 7 weeks for database lock and DSMB review and then notice of the resampling size.

Okay. Great. And in terms of expectations of data, can you remind us of possible outcomes? Is it similar to what it used to be? Or any changes there?

Sure. So at the interim analysis, if we are not seeing a drug effect, so we're seeing a drug effect of less than approximately 4% versus placebo, the study will be terminated. Otherwise, there will be a resampling size, and the resampling size will be between 240 and 728 patients. And so we've had the study powered for a 14% as the base case, which would be approximately 350. So we're seeing a greater effect; then we would anticipate seeing a reduction in the size. If we're seeing less of an effect, we'd see an increase.

And then the last question is just in terms of the lawsuit. Those fees, do you disclose what those fees were that you were hoping to get reimbursed?

No, Frank. We haven't disclosed any of those details thus far.

Our next question comes from Alex Nowak of Craig-Hallum.

Just in the timelines here. Timelines did shift to the right by about a quarter here. So I'm just curious what changed versus the prior targets given on the Q3 call?

Sure. So on the Q3 call, what we had disclosed is that our CRO had thought that we could complete the interim enrollment by the end of this year. And since then, we've had more time to better understand the projections for site enrollment in particular. And by that, we are now comfortable putting out formal guidance of Q1 2025.

Are you finding that it's harder to, whether it be activate a site, enroll the first patient at a site versus your prior expectation?

No. No change in terms of that.

Okay. And then maybe to ask Frank's question a different way, is just how much overall has been spent on the PRA lawsuit? And how much of a risk is it? I guess, if you need to appeal it or you don't appeal it, is it a material risk of the cash?

Yes. Again, we haven't disclosed those numbers specifically other than noted that it's obviously a significant driver of the increase, Alex. And principally, what we got to get our arms around relative to the appeal is, can we put any kind of bands or caps on these fees, so that we don't put our current cash runway at risk. So in other words, if it costs too much, that could be a determining factor in moving forward.

So if you decide not to move forward with an appeal, I'm sure you must know what the damage amount is generally. So I assume it's not material enough to disclose. Is that right?

I'm not sure I understand. The court found no sufficient causal link. So at this point, if we don't appeal, I don't think they'll change that conclusion.

Okay. Well, I guess the reading of the court document, it looked like the court wanted you to pay PRA's legal fees. I'm just trying to understand what their legal fees ultimately are.

No. No, we don't have exposure for that. The Dutch Courts operate a little differently. They have an assigned amount that they charged us, and we had to pay that. But it wasn't determined based upon their costs. It was around USD 40,000.

And seeing no further questions, I'll turn the call back over to our host.

Great. We would like to thank everyone for joining us this morning and for your continued support. We're building momentum in our ReMEDy2 trial and look forward to the next update. This concludes our call today. Thank you.

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