DiaMedica Therapeutics Announces $11.8 Million Private Placement

Rhea-AI Summary

DiaMedica Therapeutics (Nasdaq: DMAC) announced a private placement of common shares to accredited investors, aiming to raise $11.8 million. The company will issue 4,720,000 shares at $2.50 each, with the transaction expected to close around June 28, 2024. The proceeds will fund ongoing clinical trials for DM199, including Phase 2/3 ReMEDy2 for acute ischemic stroke and expansion into preeclampsia. This financing will extend DiaMedica's cash runway into Q3 2026. The common shares offered are not registered under the Securities Act of 1933 and will require a registration statement for resale. Related parties have committed $6.0 million, making this a 'related party transaction' under Canadian regulations, but exempt from certain requirements due to the transaction's size relative to the company's market capitalization.

Positive

• DiaMedica Therapeutics raises $11.8 million through a private placement.
• Proceeds will fund ongoing clinical trials for DM199 and expansion into preeclampsia.
• The financing extends DiaMedica's cash runway into Q3 2026.

Negative

• The common shares issued in the private placement are not registered under the Securities Act, restricting their resale.

Insights

Financial Analyst

DiaMedica Therapeutics securing $11.8 million through a private placement without using a placement agent shows a calculated move to maximize proceeds. This infusion of capital is significant, extending the company's cash runway into the third quarter of 2026. For a clinical-stage biopharmaceutical company, this financial cushion is important as it allows them to continue their development activities without immediate financial pressure.

The stock issuance of 4,720,000 common shares at $2.50 per share might dilute current shareholders' equity, but the potential upside from advancing their clinical trials could offset this. The funds will support ongoing trials, including the pivotal Phase 2/3 ReMEDy2 trial for acute ischemic stroke and expansion into preeclampsia research, which indicates a focused use of the capital on high-impact areas with significant unmet medical needs.

Investors should note that extending the cash runway into 2026 could provide stability, reducing the immediate need for further dilution. However, the success of these clinical trials is still a substantial risk factor that needs to be managed closely.

Medical Research Analyst

DiaMedica's announcement of expanding its clinical trials into preeclampsia is particularly noteworthy. Preeclampsia is a serious hypertensive disorder of pregnancy and currently lacks FDA-approved therapeutics, presenting a significant unmet medical need. By targeting this niche, DiaMedica could potentially capture a substantial market if their trials are successful.

The ongoing development of DM199 (rinvecalinase alfa) for the treatment of acute ischemic stroke is another high-impact area. If these trials prove successful, DM199 could provide a breakthrough in treating severe ischemic diseases. For retail investors, understanding the high-risk, high-reward nature of biotech investments is essential. While the potential for significant returns exists, it is contingent on successful clinical outcomes and eventual FDA approval.

MINNEAPOLIS--(BUSINESS WIRE)-- DiaMedica Therapeutics Inc. (Nasdaq: DMAC), a clinical-stage biopharmaceutical company focused on developing novel treatments for severe ischemic diseases, today announced that it has entered into definitive agreements to sell its common shares in a private placement with accredited investors. The transaction is expected to result in gross proceeds of $11.8 million. A placement agent was not used in connection with this private placement.

Pursuant to the terms of the securities purchase agreements, the Company will issue a total of 4,720,000 common shares at a purchase price of $2.50 per share. The private placement is expected to close on or about June 28, 2024, subject to the satisfaction of customary closing conditions.

The Company expects to use the net proceeds from the private placement to continue its clinical and product development activities for DM199 (rinvecalinase alfa), including its pivotal Phase 2/3 ReMEDy2 trial for the treatment of acute ischemic stroke and its clinical expansion into preeclampsia, and for other working capital and general corporate purposes. The financing is expected to extend DiaMedica’s cash runway into the third quarter of 2026.

Earlier today, DiaMedica also announced its plans to expand its clinical trials into preeclampsia, a hypertensive disorder of pregnancy with a significant unmet medical need and no U.S. Food and Drug Administration (FDA) approved therapeutics.

The offer and sale of the common shares in the private placement have not been registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), or any state or other applicable jurisdiction’s securities laws, and such common shares may not be offered or sold in the United States except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Securities Act and applicable state and other securities laws. The Company has agreed to file a registration statement with the U.S. Securities and Exchange Commission registering the resale of the common shares issued in the private placement.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy the foregoing securities, nor shall there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or other jurisdiction.

Required Canadian Related Party Transaction Disclosure

DiaMedica has received binding commitments for participation in the private placement from certain non-management, related parties, in the aggregate amount of $6.0 million or 2,400,000 common shares. Accordingly, the private placement constitutes a “related party transaction” as such term is defined in Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”) of the Canadian Securities Administrators. The private placement will be exempt from the valuation and the minority shareholder approval requirements of MI 61-101 under the exemptions contained in section 5.5(a) and 5.7(1)(a), respectively, as neither the fair market value of the common shares nor the fair market value of the consideration paid for the common shares insofar as it involves the related parties is more than 25% of the Company’s market capitalization.

About DM199 (rinvecalinase alfa)

DM199 is a recombinant (synthetic) form of human tissue kallikrein-1 (rhKLK1) in clinical development for acute ischemic stroke (AIS) and preeclampsia. KLK1 is a serine protease enzyme that plays an important role in the regulation of diverse physiological processes via a molecular mechanism that increases production of nitric oxide, prostacyclin and endothelium-derived hyperpolarizing factor. In the case of AIS, DM199 is intended to enhance blood flow and boost neuronal survival in the ischemic penumbra by dilating arterioles surrounding the site of the vascular occlusion and inhibition of apoptosis (neuronal cell death) while also facilitating neuronal remodeling through the promotion of angiogenesis. In preeclampsia, DM199 is intended to lower blood pressure, enhance endothelial health and improve perfusion to maternal organs and the placenta.

About DiaMedica Therapeutics Inc.

DiaMedica Therapeutics Inc. is a clinical stage biopharmaceutical company committed to improving the lives of people suffering from serious ischemic diseases with a focus on acute ischemic stroke and preeclampsia. DiaMedica’s lead candidate DM199 is the first pharmaceutically active recombinant (synthetic) form of the KLK1 protein, an established therapeutic modality in Asia for the treatment of acute ischemic stroke and other vascular diseases. For more information visit the Company’s website at www.diamedica.com.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and forward-looking information that are based on the beliefs of management and reflect management’s current expectations. When used in this press release, the words “anticipates,” “believes,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “should,” “can,” or “will,” the negative of these words or such variations thereon or comparable terminology, and the use of future dates are intended to identify forward-looking statements and information. The forward-looking statements and information in this press release include statements regarding the Company’s planned clinical expansion into preeclampsia, expectations regarding the private placement, the timing for closing, the anticipated gross proceeds and use of net proceeds from the private placement, including its belief that the cash resources will extend DiaMedica’s cash runway into the third quarter of 2026, and anticipated clinical benefits and success of DM199. Such statements and information reflect management’s current view and DiaMedica undertakes no obligation to update or revise any of these statements or information. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Applicable risks and uncertainties include, among others, risks and uncertainties surrounding the private placement; risks and uncertainties relating to the planned clinical expansion into preeclampsia; uncertainties relating to the timing of site activations and enrollment, regulatory applications and related filing and approval timelines; the possibility of additional future adverse events associated with or unfavorable results from the ReMEDy2 trial; the possibility of unfavorable results from DiaMedica’s ongoing or future clinical trials of DM199; the risk that existing preclinical and clinical data may not be predictive of the results of ongoing or later clinical trials; DiaMedica’s plans to develop, obtain regulatory approval for and commercialize its DM199 product candidate for the treatment of acute ischemic stroke and preeclampsia and its expectations regarding the benefits of DM199; DiaMedica’s ability to conduct successful clinical testing of DM199 and within its anticipated parameters, enrollment numbers, costs and timeframes; the adaptive design of the ReMEDy2 trial and the possibility that the targeted enrollment and other aspects of the trial could change depending upon certain factors, including additional input from the FDA and the blinded interim analysis; the perceived benefits of DM199 over existing treatment options; the potential direct or indirect impact of COVID-19, hospital and medical facility staffing shortages, and worldwide global supply chain shortages on DiaMedica’s business and clinical trials, including its ability to meet its site activation and enrollment goals; DiaMedica’s reliance on collaboration with third parties to conduct clinical trials; DiaMedica’s ability to continue to obtain funding for its operations, including funding necessary to complete current and planned clinical trials and obtain regulatory approvals for DM199 for acute ischemic stroke and preeclampsia, and the risks identified under the heading “Risk Factors” in DiaMedica’s annual report on Form 10-K for the fiscal year ended December 31, 2023 and subsequent reports filed with the U.S. Securities and Exchange Commission including its most recent report on Form 10-Q for the quarter ended March 31, 2024. The forward-looking information contained in this press release represents the expectations of DiaMedica as of the date of this press release and, accordingly, is subject to change after such date. Readers should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While DiaMedica may elect to, it does not undertake to update this information at any particular time except as required in accordance with applicable laws.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240626102206/en/

Scott Kellen

Chief Financial Officer

Phone: (763) 496-5118

skellen@diamedica.com

Paul Papi

Corporate Communications

Phone: (508) 444-6790

ppapi@diamedica.com

Source: DiaMedica Therapeutics Inc.

FAQ

What is the amount raised in DiaMedica Therapeutics' (DMAC) private placement?

DiaMedica Therapeutics raised $11.8 million through its private placement of common shares.

How many shares did DiaMedica Therapeutics issue in the private placement?

DiaMedica issued 4,720,000 common shares at a price of $2.50 per share.

When is DiaMedica Therapeutics' private placement expected to close?

The private placement is expected to close on or about June 28, 2024.

What are the expected uses of the proceeds from DiaMedica Therapeutics' private placement?

The proceeds will fund clinical and product development activities for DM199, including trials for acute ischemic stroke and preeclampsia, and for general corporate purposes.

How will the private placement extend DiaMedica Therapeutics' cash runway?

The financing is expected to extend DiaMedica's cash runway into the third quarter of 2026.

What regulatory considerations are associated with DiaMedica Therapeutics' private placement?

The common shares are not registered under the Securities Act of 1933 and require a registration statement for resale.

Why is DiaMedica Therapeutics' private placement considered a 'related party transaction'?

Certain related parties have committed $6.0 million, making it a 'related party transaction' under Canadian regulations.