Good morning, ladies and gentlemen, and welcome to the DiaMedica Therapeutics First Quarter 2024 Conference Call. An audio recording of the webcast will be 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 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 and current year quarterly reports on Form 10-Q. DiaMedica's SEC filings are available at www.sec.gov and its website. Please also note that any comments made on today's call speak only as of today, May 9, 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.

Thank you, operator. Hello, everyone, and welcome to our first quarter conference call. I'm joined this morning by Dr. Lorianne Masuoka, our Chief Medical Officer; and Scott Kellen, our Chief Financial Officer. While it has been only six weeks since our last discussion, we have been diligently working to ramp up site activation and participant enrollment. We've also strengthened our clinical team with the addition of three experienced clinical operations personnel to further support the significant number of new site activations we expect over the next six months and the global expansion of the trial. We are also encouraged to recently learn that the momentum of Kailikang usage in China continues to build. We now understand that upwards of one million patients were treated with Kailikang, the human urine-derived form of KLK1 in China in 2023. For perspective, this is more than all the stroke events in the United States in 2023. Sites considering participation in our trial can be reassured of the safety of KLK1 therapy by the large usage of human-derived KLK1. I would like to now invite Lorianne to provide an update on our ReMEDy2 trial. Lorianne?

Good morning, everyone. I'm pleased with our recent announcement that we have dosed the first participant since the restart of our ReMEDy2 trial. Enrolling the first participant is particularly challenging and a crucial milestone when coming off the clinical hold for a safety event. Although the hypotension we previously observed with the inadvertent higher dose was transient and resolved quickly, and despite the results of our Phase Ic trial clearly demonstrating that the appropriate IV dose of DM199 does not cause hypotension, we recognize there is often some reluctance to be the first to enroll on restart. The feedback from the investigator who dosed this participant was very positive with no observed hypotension. However, we do not know whether the participant received drug or placebo. Success begets success, and we are optimistic that other investigators will have a similar positive safety experience dosing their first participant with DM199, encouraging them to enroll more participants. I want to emphasize that these stroke patients have no treatment alternative and are not eligible to receive any standard of care treatment, either TPA or mechanical thrombectomy. Investigators want to see a future where every patient has a treatment option. So as we accrue more safety data, we expect momentum to build quickly. From discussions with sites, we believe a key inflection point will be enrolling the first ten participants, to them, this represents a meaningful sample size. We will keep our active sites abreast of our participant enrollment, and in the future, we will also send out a monthly newsletter in an attempt to facilitate some friendly competition between study sites. Now let me discuss some specifics of site activation. We currently have eight sites activated. Two of these sites are large sites, the University of Pennsylvania associated with our National Principal Investigator, Dr. Scott Kasner, and Tampa General Hospital, a major stroke center. In activating these two sites, we learned of a common software coordination issue, which we had to work through to enable the processing of pharmacy orders through the individual sites' investigational drug management platform. We worked closely with these two sites to resolve the issue, and both are now positioned to screen for potential participants. We are actively working closely with all other sites in the queue for site activation to avoid similar delays and ensure that their internal systems like their pharmacy investigational drug management platform are fully operational prior to site activation, so they can immediately begin screening participants without interruption. This is just one example of how we apply best practices learned from experience to enhance operations at all sites going forward. While we are slightly behind our short-term activation targets, we still anticipate that the majority of sites will be activated this year with a major bolus of U.S. sites in Q2 and Q3. With the current level of interest from high-quality stroke sites, we are considering increasing the target number of U.S. sites beyond the 40 initially planned. The key is now focusing only on quality sites that are considered high enrollers. Importantly, many of the largest U.S. stroke enrolling hospitals are now in the start-up stage and are working to join our trial in the coming months. These sites have been major contributors to recent stroke trials, which is encouraging for our study. We anticipate that their involvement could also drive competition among study sites and also contribute to a higher per site enrollment rate. We also believe their endorsement speaks to the potential of DM199 and in particular, our differentiated mechanism of action of selectively increasing cerebral blood flow. Outside of the U.S., things are progressing well. In Canada, with official support from the Canadian Stroke Consortium, we have identified six quality sites and are finalizing our regulatory submissions for Health Canada. We expect a response around the end of June. The Australian Stroke Alliance has recently provided its formal endorsement of our protocol, and we are in the process of selecting study sites and initiating regulatory filing activities. We plan to work with many of the same highly engaged centers we work with in our ReMEDy1 trial as well as new sites recommended by the network. I am also excited to report that we continue to strengthen our clinical operations team. Earlier this year, we announced the addition of Rebekah Fries as our VP of Clinical Operations. This is the third company at which Rebekah has joined me to execute on clinical trials. Rebekah initially joined DiaMedica as a consultant in January and has already made substantial progress in streamlining our operations, both internally and externally with our multiple vendors, which we believe will lead to momentum building and site activation. The additional experienced clinical operations personnel mentioned earlier also previously worked with both Rebekah and I at two prior companies. These are important additions to support our global expansion of the trial.

Thank you, Lorianne. As Lorianne just discussed, our clinical operations have been working tirelessly to support the physician investigators and the clinical study sites. We remain confident that these activities will result in strong momentum, both in site activation and enrollment, including many high-enrolling top-tier stroke sites joining our trial. The new top-tier stroke centers who are coming into our trial all have a significant number of sponsors approaching them. The reason why they have selected our DM199 stroke trial is that they have made it clear that they are very interested in the promising DM199 mechanism of action, specifically the potential to selectively increase blood flow in collateral circulation through vasodilation in ischemic Penumbra following a stroke. They also appreciate the mechanistic support provided by our Phase II stroke results. Since our last call, we have also been visiting the recruiting hospitals to gain first-hand knowledge of investigator needs seeking to understand how we can work with the hospitals to best support them, particularly in participant enrollments. We view this as an important part of building a strong relationship with the clinical sites. Our focus remains centered on continuing to build the momentum and continue conducting extensive site selection and contracting and relationship activity with medical institutions. We remain comfortable in seeing that barring any unexpected issues we anticipate the 144th participant for our interim analysis to be enrolled in Q1 2025. We will continue to provide updates on our next conference call.

Thanks, Rick, and good morning, everyone, and thank you for being part of today's call. As Rick mentioned, yesterday, we announced our financial results and filed our Form 10-Q for our first quarter ended March 31, 2024. These documents are both available on either the DiaMedica or SEC websites. As of March 31, 2024, we reported total combined cash and investments of $46.5 million, current liabilities of $2.6 million, and working capital of $44.9 million. This compares with the total combined cash and investments of $52.9 million, current liabilities of $2.8 million, and working capital of $50.9 million as of December 31, 2023. The decreases in total cash and investments in working capital were due to the combination of our net cash used to fund operations and the advance of deposit funds to vendors supporting our ReMEDy2 clinical trial in the current quarter. Net cash used in operating activities for the three months ended March 31, 2024, was $6.7 million compared to $5.1 million in the same period of the prior year. The increase in net cash used was due primarily to the advance of deposit funds to vendors supporting the ReMEDy2 clinical trial. We believe that our current cash and investments provide us a cash runway that will get us to 2026. Our research and development expenses increased to $3.7 million for the three months ended March 31, 2024, compared to $3.6 million in the first quarter of 2023. This increase was impacted by a number of offsetting factors. Increased costs related to the continuation of our ReMEDy2 clinical trial were partially offset by cost reductions related to clinical trial work completed in 2023. Specifically the company's Phase Ic and REDUX trials as well as the completion in 2023 of in-use study work performed to address the previous clinical hold on our ReMEDy2 trial. We expect R&D expenses to increase moderately relative to recent prior periods as the global expansion of the ReMEDy2 trial proceeds, in site activations and participant enrollments resume. The company expects G&A expenses to remain steady as compared to prior periods. Other income net was $597,000 for the three months ended March 31, 2024, compared to $256,000 for the three months ended March 31, 2023. This increase was driven by increased interest income recognized during the first quarter of 2024 related to increased marketable securities balances during the current year period as compared to the prior year period. Before we open the line for questions, I wanted to point out that we will be pursuing an appeal of the recent judgment in our lawsuit against PRA. We have secured capped and contingent fee arrangements with our councils to limit the potential cost of this appeal to a manageable amount.

Your first question comes from Chase Knickerbocker from Craig-Hallum.

I just want to dig in a bit more into some of the assumptions around kind of enrollment and site activations here. So if we look, I think previously before you had said kind of 20 to 25 sites potentially in the U.S. kind of activated by the end of Q2 or kind of just parsing through the commentary previously on kind of what you expected through Q3. Do you still expect this pace kind of in Q2 still? Or just kind of what would you expect to remain in June here from further site activations in the U.S.

Lorianne, do you want to take that one?

Sure, thanks. The good news is that it's a timing issue and not a problem with site interest. We've experienced increased time related to contract negotiations and site setup activities that's pushing out activations by a month or so. We still expect to have a significant number of sites activated during Q2 and the majority of U.S. sites will be activated by the end of Q3. We still expect interim enrollment by the end of Q1 2025. So we expect that the enrollment of the interim analysis will be finished by the end of Q1 2025. We are watching the pace of site activation very closely, and we'll keep you updated on our progress.

Got it. You mentioned that more than 40 U.S. sites is the current expectation. If we consider this and the interim readout in Q1 that you reiterated, does that still assume one patient every four months for that interim readout?

Yes. So we're looking at sites that are high enrolling at this point that can enroll six subjects per year. So slightly higher than what you just mentioned. We anticipate enrollment rate to improve with the addition of high enrolling sites. I just want to make it very clear that when we talked about the interim analysis, being fully enrolled by the end of Q1 of 2025, that's not when the readout will come, that's when the enrollment of that last patient will occur.

Have you noticed any increase in activity at the sites since the first patient was dosed, such as starting to enroll patients at activated sites or a greater urgency for sites that are in the pipeline to be activated?

Yes, we're definitely seeing an increase.

Go ahead, Lorianne.

We're definitely seeing an increase in momentum in activities going forward as we move to activating more sites, there's a lot of enthusiasm, apologies, investigators are becoming very interested in enrolling into this trial. So we anticipate that there will be a significant pickup in site activations at the end of Q2, beginning of Q3.

Got it. Lastly, could you share your thoughts on the expected proportion of the interim readout from U.S. patients versus those outside the U.S.? Given the timeline for activating overseas sites and the pace at which patients have enrolled in the U.S., do you anticipate a quicker enrollment in overseas sites, resulting in a substantial contribution to the interim data? Please walk us through your expectations.

Well, the majority of patients in the interim analysis will come from the U.S. because that's who's enrolling right now between now and Q1 of 2025. We anticipate the ex-U.S. sites to be enrolling by Q4 of 2024. And so they will not be contributing quite as many patients into the interim analysis as the U.S. sites.

Your next question comes from the line of Thomas Flaten from Lake Street.

Lorianne, just on that, on the completion of enrollment in the first quarter with the 90-day evaluation period, so that takes you to the end of Q2. Is it reasonable that the data readout would be in the third quarter? Or is that aggressive should we think more fourth quarter of '25.

Our guidance for the interim analysis readout is at the end of Q2 or the beginning of Q3.

Thomas we anticipate after the patient 144 has completed the 90-day follow-up, we're looking at about six weeks for the analysis and announcement of the results.

Got it. Okay. That's super helpful. With the single patient enrolled, I'm curious if you've received any feedback from the sites that are actively enrolling, how many patients they've screened, if there have been any failures in that screening, and for what reasons. I'm just trying to understand the activity in the funnel that will ultimately lead to enrolling the second patient.

Yes, Tom, so that's something we're still working through, and we're getting feedback on the sites, and we'll provide more feedback after we've got a larger number of sites up and running. It's really, we think, after we kind of got 20 sites up and running that we really should have more clarity and more color on your question.

Got it. And then just one final one. The one-quarter lag in Canada from prior guidance, is that just a paperwork logistics issue? Or is there something else that we should be aware of?

Just a paperwork timing issue. In Canada, so before we can go a request for regulatory clearance to start, we need to have the sites identified, and so the first process is to get support from the Canadian Stroke Alliance, and then they work specifically to go out and reach out to the sites. And so it's a process that we need to follow their lead to be able to bring in some of the key sites up in Canada.

We've identified the six vendors that we want to participate in the trial. We're just going through pre-study qualification visits with them right now to get them ready for regulatory filings.

Your next question comes from the line of François Brisebois from Oppenheimer.

Can you just give us a little more color in terms of contract negotiations delay? Is there anything surprising here that we didn't see coming? Sorry, if you already touched on, I jumped on a little late here.

Sorry, go ahead Scott.

It still seems like we're feeling a COVID effect, reduced staff, slower response times. And so it's just dealing with getting through the bureaucracy and the channels inside the sites, not seeing anything in terms of contract terms that are particularly concerning or all that much different, so yes, it's just the process.

There are no further questions at this time. I will turn the call back to Mr. Rick Pauls.

Right. Well, we'd like to thank everyone for joining us this morning and for your continued support, and we look forward to the next update. This concludes our call.

Ladies and gentlemen, thank you for participating. You may now disconnect.