DMAC 10-K

DiaMedica Therapeutics Inc. (DMAC)

10-K 2022-03-14 For: 2021-12-31

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Added on April 05, 2026

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Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Voting Common Shares, no par value per share	DMAC	The Nasdaq Capital Market

Large accelerated filer ☐	Accelerated filer ☐	Non-accelerated filer ☒	Smaller reporting company ☒
Emerging growth company ☒

		Page

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		1

INDUSTRY AND MARKET DATA		2

PART I		3

Item 1.	Business	3
Item 1A.	Risk Factors	33
Item 1B.	Unresolved Staff Comments	65
Item 2.	Properties	65
Item 3.	Legal Proceedings	65
Item 4.	Mine Safety Disclosures	66

PART II		67

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	67
Item 6.	[Reserved]	77
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	78
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	87
Item 8.	Financial Statements and Supplementary Data	88
Item 9.	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure	109
Item 9A.	Controls and Procedures	109
Item 9B.	Other Information	109
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	110

PART III		111

Item 10.	Directors, Executive Officers and Corporate Governance	111
Item 11.	Executive Compensation	111
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	111
Item 13.	Certain Relationships and Related Transactions, and Director Independence	113
Item 14.	Principal Accountant Fees and Services	113

PART IV		114

Item 15.	Exhibits and Financial Statement Schedules	114
Item 16.	Form 10-K Summary	117

SIGNATURES		118

	●	our plans to develop, obtain regulatory approval for and commercialize our DM199 product candidate for the treatment of acute ischemic stroke (AIS) and chronic kidney disease (CKD) and our expectations regarding the benefits of our DM199 product candidate;
	●	our ability to conduct successful clinical testing of our DM199 product candidate for AIS and CKD and certain anticipated or target dates, site activations and enrollment numbers with respect to our clinical studies, especially in the light of the novel strain of coronavirus, or COVID-19 pandemic on site activations and enrollment, hospital and medical facility staffing shortages, and worldwide global supply chain shortages;
	●	the adaptive design of our ReMEDy2 trial, which is intended to enroll approximately 350 patients at 75 sites in the United States, and the possibility that these numbers and other aspects of the study could change depending upon certain factors, including additional input from the United States Food and Drug Administration (FDA) and the blinded interim analysis;
	●	our expectations regarding the final results of our REDUX trial and timing of the release thereof;
	●	the perceived benefits of our DM199 product candidate over existing treatment options for AIS and CKD;
	●	the potential size of the markets for our DM199 product candidate for AIS and CKD and our ability to serve those markets, and the rate and degree of market acceptance of our DM199 product candidate for AIS and CKD both in the United States and internationally;
	●	our ability to partner with and generate revenue from biopharmaceutical or pharmaceutical partners to develop, obtain regulatory approval for and commercialize our DM199 product candidate for AIS and CKD;
	●	the success, cost and timing of planned clinical studies, as well as our reliance on collaboration with third parties to conduct our clinical studies;
	●	our expectations regarding the impact of the COVID-19 pandemic on our business, including in particular our progress with site activation and patient enrollment in our clinical studies and our ability to hire additional personnel;
	●	our commercialization, marketing and manufacturing capabilities and strategy;
	●	expectations regarding federal, state, and foreign regulatory requirements and developments, such as potential FDA regulation of our DM199 product candidate for AIS and CKD;
	●	our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;
	●	our expectations regarding our ability to obtain and maintain intellectual property protection for our DM199 product candidate;
	●	expectations regarding competition and our ability to obtain data exclusivity for our DM199 product candidate for AIS and CKD;
	●	our ability to obtain funding for our operations, including funding necessary to complete planned clinical trials and obtain regulatory approvals for our DM199 product candidate for AIS and CKD; and
	●	our anticipated use of the net proceeds from our underwritten public offerings and recent private placement.

Indication	Delivery	Stage	Status	Endpoints
Neurological Diseases
Acute Ischemic Stroke	Intravenous IV/SC	Phase 2/3	Enrolling	Independent primary endpoints at day 90: ● Modified Rankin Scale score of 0-1 ● Stroke recurrence Secondary endpoints at day 90: ● NIHSS and Barthel index ● Deaths ● Modified Rankin Scale scores of 0-6 (shift analysis)
Kidney Diseases
IgA Nephropathy (IgAN)	SC	Phase 2	Enrollment complete	Primary endpoint at day 95: ● Safety & tolerability ● Albuminuria and estimated glomerular filtration rate (eGFR) Secondary endpoints at day 90: ● Change in IgG & IgA biomarkers
African Americans with CKD	SC	Phase 2	Enrollment complete	Primary endpoint at day 95: ● Safety & tolerability ● Albuminuria and eGFR Secondary endpoints at day 90: ● Change in blood pressure

	●	Every year in the United States, approximately 800,000 people experience a stroke (ischemic or hemorrhagic). Approximately 600,000 of these are first events and approximately 25%, or 200,000, are recurrent stroke events.
	●	Approximately one of every 20 deaths in the United States is caused by stroke and is the fifth leading cause of death. On average, someone in the United States has a stroke every 40 seconds and someone dies from a stroke every four minutes.
	●	Stroke is the leading cause of serious long-term disability and reduces mobility in more than half of stroke survivors aged 65 and over.
	●	Risk of having a first stroke is nearly twice as high for African Americans as for Caucasians, and African Americans have the highest rate of death due to stroke.

	●	According to the National Kidney Foundation, 37 million Americans have CKD and millions of others are at increased risk.
	●	The primary causes of CKD are diabetes (Type 2 and Type 1) and hypertension. The Medical Clinics of North America estimates that over 40% of those with Type 2 diabetes and 20% of those with Type 1 diabetes will eventually develop CKD, making it one of the more common risks for diabetics.
	●	Patients with CKD are at greater risk for hypertension and heart disease.

	●	Stem cells (Athersys, Inc.)
	●	tPA extended treatment window (Genentech)
	●	Cerebral edema (Biogen Inc.)
	●	Anti-inflammatory and clot dissolving (Biogen Inc.)
	●	Cell protection and anti-inflammation (ZZ Biotech LLC)
	●	Inhibiting platelet aggregation (Acticor Biotech SAS)
	●	Neuroprotector (Mitsubishi)

	●	Mineralcorticortisteroid receptor agonist (Bayer HealthCare Pharmaceuticals LLC)
	●	Chymase inhibitor (Bayer HealthCare Pharmaceuticals LLC)
	●	Transient receptor potential canonical channel 5 (Goldfinch Bio)
	●	CCR2 receptor antagonists (ChemoCentryx, Inc., Bristol-Myers Squibb Company)
	●	Oxidative stress, cyclo-oxygenase 2 inhibitors (Reata Pharmaceuticals, Inc.)
	●	Glycosylation inhibitors (Glycadia, Inc. aka Glycadia Pharmaceuticals)
	●	Endothelin A receptor antagonists (Chinook therapeutics, Inc.)
	●	Cyclin nucleotide phosphodiesterase inhibitor (Pfizer Inc.)
	●	Aldosterone receptor antagonists (Mitsubishi Tanabe Pharma Corporation)
	●	Nitric oxide enzyme inhibitor (GenKyoTex SA)

	●	Dual acting ARB and endothelin receptor antagonist (Travere Therapeutics, Inc.)
	●	Antibody MASP-2 inhibitor (Omeros Corporation)
	●	Small-molecule inhibitor of complement factor B (Novartis AG)
	●	Small-molecule inhibitor Nrf2 activator/NFkB inhibitor (Reata Pharmaceuticals, Inc.)
	●	APRIL inhibitor (Vera Therapeutics and Chinook Therapeutics)

	NIHSS Outcomes at 90 Days
	0-1	2-8	≥ 9	Death
Placebo (n=21)	14%	57%	5%	24%
DM199 (n=25)	36%	36%	16%	12%

	●	expenses incurred under contract research agreements and other agreements with third parties;
	●	expenses incurred under agreements with clinical trial sites that conduct research and development activities on our behalf;
	●	laboratory and vendor expenses related to the execution of clinical trials and non-clinical studies;
	●	the cost of acquiring, developing, manufacturing, and distributing clinical trial materials;
	●	employee and consultant-related expenses, which include salaries, benefits, travel and share-based compensation; and
	●	facilities and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, insurance, and other supply costs.

Patent/Application Number	Title	Geography	Predicted Expiration
*Issued patents*
US 9,364,521	Human Tissue Kallikrein 1 Glycosylation Isoforms	US	2033
US 9,839,678	Human Tissue Kallikrein 1 Glycosylation Isoforms	US	2033

EP 2 854 841	Human Tissue Kallikrein 1 Glycosylation Isoforms	Europe	2033

US 9,616,015	Formulations for Human Tissue Kallikrein-1 for Parenteral Delivery and Related Methods	US	2033

*Pending applications*
AU 2018230478	Dosage Forms of Tissue Kallikrein 1	Australia	2038
CA 3054962	Dosage Forms of Tissue Kallikrein 1	Canada	2038
CN 201880016380.4	Dosage Forms of Tissue Kallikrein 1	China	2038
EP 18763243.5	Dosage Forms of Tissue Kallikrein 1	Europe	2038
IN 201917037712	Dosage Forms of Tissue Kallikrein 1	India	2038
JP 2019-548655	Dosage Forms of Tissue Kallikrein 1	Japan	2038
KR 10-2019-7026369	Dosage Forms of Tissue Kallikrein 1	Korea	2038
US 16/492,059	Dosage Forms of Tissue Kallikrein 1	US	2038

Name	Age	Positions
Rick Pauls	50	President and Chief Executive Officer, Director
Scott Kellen	56	Chief Financial Officer and Secretary
Kirsten Gruis, M.D.	49	Chief Medical Officer
Harry Alcorn, Pharm.D.	65	Senior Vice President, Clinical Operations
Dominic Cundari	71	Chief Commercial Officer

	●	Our prospects depend on the clinical success and commercial potential of DM199, which is in the clinical stage of development.
	●	We are required to conduct clinical trials and if these trials fail to demonstrate the safety and efficacy of DM199, or any future product candidate, we will not obtain the approvals required to market and commercialize the product.
	●	The COVID-19 pandemic has resulted in delays in clinical trial site activations and patient enrollments and hospital and medical facility staffing shortages, which will likely continue to adversely affect our clinical trials during 2022.
	●	The adaptive design of our ReMEDy2 trial could result in the trial being required to enroll more patients than anticipated increasing the time and costs to complete the trial, which may require additional funding that may not be available to us on acceptable terms, or at all.
	●	We may be required to suspend, repeat or terminate our clinical trials if they are not conducted in accordance with regulatory requirements, the results are negative or inconclusive or the trials are not well designed.

	●	The regulatory approval process is expensive, time-consuming and uncertain and may prevent us or any future partner or collaborator from obtaining approvals for the commercialization of DM199 or any future product candidate.
	●	Any product candidate for which we, or any future partner or collaborator, obtain marketing approval could be subject to post-marketing restrictions or recall or withdrawal from the market and we may be subject to penalties if we fail to comply with regulatory requirements or if we experience unanticipated problems with the product candidate.

	●	We rely on contract manufacturers over whom we have limited control.
	●	We rely on third parties to plan, conduct and/or monitor our clinical trials, and their failure to perform could cause delays in completing our product development.
	●	Future development collaborations are expected to be important to us.

	●	The successful commercialization of DM199 or any future product candidate, if approved, will depend on market acceptance and coverage and adequate reimbursement for the product.
	●	We, or any future partner, will likely face competition from other biotechnology and pharmaceutical companies, many of which have substantially greater resources and our DM199 product candidate may face competition sooner than expected.

	●	We may be unable to adequately protect our technology and enforce our intellectual property rights.
	●	We, or a future partner, may require additional third-party licenses to effectively develop, manufacture and commercialize DM199 or any future product candidate, and such license might not be available on commercially-acceptable terms, or at all.
	●	Changes in patent law and its interpretation could diminish the value of our patents.
	●	Intellectual property litigation may be expensive, time consuming and cause delays in the development, manufacturing and commercialization of DM199 or any future product candidate.
	●	We could lose important intellectual property rights that we currently license from a third party if we fail to comply with our obligations under the license agreement or otherwise experience disruptions to our relationship with this third party.

	●	We have incurred and expect to continue to incur substantial losses and may never become profitable.
	●	Since we have no revenue from product sales and do not expect any revenue from product sales for at least three or four years, we will need additional funding to continue our R&D activities and other operations, which may not be available to us on acceptable terms, or at all.

	●	We heavily rely on the capabilities and experience of our key executives and scientists and the loss of any of them could affect our ability to develop DM199 or any future product candidate.
	●	We will likely need to expand our operations and increase the size of our company and we may experience difficulties in managing growth.

	●	Our common share price has been and may continue to be volatile and no assurance can be provided that an active trading market for our shares will continue.
	●	We may issue additional common shares resulting in share ownership dilution, and if there are substantial sales of our common shares or the perception that such sales may occur, the market price of our common shares could decline.

	●	We are governed by the corporate laws of British Columbia, which in some cases have a different effect on shareholders than the corporate laws in effect in the United States.
	●	We may be classified as a “passive foreign investment company” in future taxable years, which may have adverse U.S. federal income tax consequences for U.S. shareholders and adversely affect the level of interest in our common shares by U.S. investors.

	●	the timely initiation, continuation and completion of our currently ongoing Phase 2 and Phase 2/3 clinical trials and future clinical trials for DM199, which will depend substantially upon requirements for such trials imposed by the FDA and other regulatory agencies and bodies;
	●	our ability to demonstrate the safety and efficacy of DM199 to the satisfaction of the relevant regulatory authorities or third-party payers;
	●	whether we are required by the FDA or other regulatory authorities to conduct additional clinical trials, and the scope and nature of such clinical trials, prior to or after approval to market our DM199 product candidate;
	●	the timely receipt of necessary marketing approvals from the FDA and foreign regulatory authorities, as well as pricing and reimbursement determinations;
	●	the ability to successfully commercialize DM199, if approved by the FDA or foreign regulatory authorities, whether alone or in collaboration with others;
	●	our ability and the ability of third-party manufacturers to manufacture the quantities of DM199, with quality attributes necessary to meet regulatory requirements, sufficient to meet anticipated demand and at a cost that allows us or a future partner to achieve profitability;
	●	acceptance of DM199, if approved, as safe and effective by patients and the healthcare providers;
	●	the achievement and maintenance of compliance with all regulatory requirements applicable to DM199 by us and our third-party manufacturers and supporting vendors;
	●	the maintenance of an acceptable safety profile of DM199 following any approval;
	●	the availability, perceived advantages, relative cost, relative safety and relative efficacy of alternative and competitive treatments;
	●	our ability to provide approved product with a convenient and patient-friendly administration method;
	●	our ability or the ability of a future partner to successfully enforce our intellectual property rights for DM199 and against the products of potential competitors; and
	●	our ability to avoid or succeed in defending any third-party patent interference or patent infringement claims.

	●	competing clinical trials and scheduling conflicts with participating clinicians;
	●	suspension or termination of clinical trials by regulators for many reasons, including concerns about patient safety or failure of our contract manufacturers to comply with current Good Manufacturing Practices (cGMP) requirements;
	●	any changes to our manufacturing process that may be necessary or desired which affect our ability to produce adequate or timely clinical drug supply;
	●	delays or failure to obtain clinical drug supply from contract manufacturers of our product candidate necessary to conduct clinical trials;
	●	the product candidate demonstrating a lack of safety or efficacy during clinical trials;
	●	patients failing to enroll or complete clinical trials at the rates and within the timelines we expect due to dissatisfaction with the treatment, side effects, or other reasons;
	●	clinical investigators not performing our clinical trials on their anticipated schedule, dropping out of a trial or employing methods not consistent with the clinical trial protocol, regulatory requirements or other third parties not performing data collection and analysis in a timely or accurate manner;
	●	inspections of clinical trial sites by regulatory authorities, Institutional Review Boards (IRBs) or ethics committees finding regulatory violations that require us to undertake corrective action, resulting in suspension or termination of one or more sites or the imposition of a clinical hold on the entire trial; or
	●	public health crises, epidemics and pandemics, such as the COVID-19 pandemic, which adversely impact and may continue to adversely impact our ability to engage clinical trial sites, recruit or enroll subjects for our clinical trials and obtain the requisite staffing for our clinical trials.

	●	continued or additional delays or difficulties in enrolling or retaining participants in our clinical trials;
	●	delays or difficulties in the identification and initiation of a sufficient number of investigators and clinical sites to recruit sufficient participants at an acceptable rate due to pandemic related restrictions or inadequate clinical site staff;
	●	changes in local regulations as part of a response to the pandemic, which may require us to change the ways in which our clinical trials are conducted, which may result in unexpected costs, or require us to discontinue the clinical trials altogether;
	●	inability or unwillingness of participants to comply with clinical trial protocols;
	●	interruption of key clinical trial activities, such as clinical trial site monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers and others, or interruption of clinical trial subject visits and trial procedures, the occurrence of which could affect the integrity of clinical trial data;
	●	risk that participants enrolled in our clinical trials will contract COVID-19 while the clinical trial is ongoing, which could result in participants dropping out of the trial, missing scheduled doses or follow-up visits or failing to follow protocol or otherwise impact the results of the clinical trial, including by increasing the number of observed adverse events;
	●	delays in receiving authorizations from local regulatory authorities to initiate our planned clinical trials;
	●	delays in necessary interactions with local regulatory authorities, ethics committees and other important agencies and contractors due to limitations in employee resources or forced furlough of employees; and
	●	limitations in employee resources that would otherwise be focused on the conduct of our clinical trials, including because of sickness of employees or their families, required quarantines or the desire of employees to avoid contact with large groups of people.

	●	deficiencies in the conduct of the clinical trials, including failure to conduct the clinical trial in accordance with regulatory requirements or trial protocols;
	●	deficiencies in the clinical trial operations or trial sites;
	●	unforeseen adverse side effects or the emergence of undue risks to trial subjects;
	●	deficiencies in the trial design necessary to demonstrate efficacy;
	●	the product candidate may not appear to offer benefits over current therapies; or
	●	the quality or stability of the product candidate may fall below acceptable standards.

	●	foreign regulatory requirements that could burden or limit our ability to conduct our clinical trials;
	●	administrative burdens of conducting clinical trials under multiple foreign regulatory schemes;
	●	foreign currency exchange rate fluctuations;
	●	compliance with foreign manufacturing, customs, shipment, and storage requirements;
	●	cultural differences in medical practice and clinical research; and
	●	diminished protection of intellectual property in some countries.

	●	litigation involving patients using our products;
	●	restrictions on such products, manufacturers or manufacturing processes;
	●	restrictions on the labeling or marketing of a product;
	●	restrictions on product distribution or use;
	●	requirements to conduct post-marketing studies or clinical trials;
	●	warning or untitled letters;
	●	withdrawal of the products from the market;
	●	refusal to approve pending applications or supplements to approved applications that we submit;
	●	recall of products;

	●	fines, restitution or disgorgement of profits or revenues;
	●	suspension or withdrawal of marketing approvals;
	●	damage to relationships with any then current or potential partners;
	●	unfavorable press coverage and damage to our or any future partner’s reputation;
	●	refusal to permit the import or export of our products;
	●	product seizure; or
	●	injunctions or the imposition of civil or criminal penalties.

	●	costs and challenges associated with scale-up and attaining sufficient manufacturing yields;
	●	supply chain issues, including the timely availability and shelf life requirements of raw materials and supplies and the lack of redundant and backup suppliers;
	●	quality control and assurance;
	●	shortages of qualified personnel and capital required to manufacture large quantities of our product candidate;
	●	competing capacity needs at CMOs supporting product development as quantities for supply increase;
	●	establishment of commercial supply capacity through binding supply agreements;
	●	compliance with regulatory requirements that vary in each country where a product might be sold;
	●	capacity limitations and scheduling availability in contracted facilities; and
	●	natural disasters, cyberattacks or other force majeure events that affect facilities and possibly limit production or loss of product inventory maintained in third party storage facilities.

	●	collaborators may have significant discretion in determining the efforts and resources that they will apply to the collaboration;
	●	collaborators may not perform their obligations as expected;
	●	changes in the collaborators’ strategic focus or available funding, or external factors, such as an acquisition, may divert resources or create competing priorities;
	●	collaborators may delay nonclinical or clinical development, provide insufficient funding for product development of targets selected by us, stop or abandon nonclinical or clinical development for a product candidate, or repeat or conduct new nonclinical and clinical development for a product candidate;
	●	collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products or product candidates if the collaborators believe that competitive products are more likely to be successfully developed than our products;
	●	product candidates discovered in collaboration with us may be viewed by our future collaborators as competitive with their own product candidates or products, which may cause collaborators to cease to devote resources to the development of our product candidates;
	●	disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or the preferred course of development, might cause delays or termination of the preclinical or clinical development or commercialization of product candidates, might lead to additional responsibilities for us with respect to product candidates, or might result in litigation or arbitration, any of which would be time-consuming and expensive;
	●	collaborators may not properly maintain or defend our intellectual property rights or intellectual property rights licensed to us or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation;
	●	collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability; and
	●	collaborations may be terminated for the convenience of the collaborator and, if terminated, we could be required to raise additional capital to pursue further development or commercialization of the applicable product candidates.

	●	demonstration of sufficient clinical efficacy and safety;
	●	the prevalence and severity of any adverse side effects;
	●	limitations or warnings contained in the product’s approved labeling;

	●	cost-effectiveness and availability of acceptable pricing;
	●	the availability of alternative treatment methods and the superiority of alternative treatment methods;
	●	the effectiveness of marketing and distribution methods and support for the product; and
	●	coverage and reimbursement policies of government and third-party payers to the extent that the product could receive regulatory approval but not be approved for coverage by or receive adequate reimbursement from government and quasi-government agencies or other third-party payers.

	●	the scope of rights granted under the license agreement and other interpretation-related issues;
	●	the extent to which our product candidates, technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement;
	●	the sublicensing of patent and other rights under our collaborative development relationships;
	●	our diligence obligations under the license agreement and what activities satisfy those diligence obligations;
	●	the inventorship and ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners; and
	●	the priority of invention of patented technology.