On March 28, 2023 Mereo BioPharma Group plc (NASDAQ: MREO) ("Mereo" or the "Company"), a clinical-stage biopharmaceutical company focused on rare diseases, reported its financial results for the year ended December 31, 2022 and provided an update on recent corporate highlights (Press release, Mereo BioPharma, MAR 28, 2023, View Source [SID1234629444]).

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"In 2022, we made important progress in the ongoing advancement of our core rare disease programs. The data from our Phase 2 ASTRAEUS study of alvelestat in severe alpha-1-antitrypsin deficiency-associated lung disease (AATD-LD) were highly encouraging, and formed the basis for productive discussions with the regulatory agencies in both the U.S. and EU, culminating in our recent announcement of the details of our potential pivotal study design," said Dr. Denise Scots-Knight, Chief Executive Officer of Mereo. "We believe our discussions with the regulatory agencies reflect the major unmet need for improved therapeutic options for these patients, and we expect that having this clear path to potential full U.S. and EU approvals based on guidance from both the FDA and EMA will support our ongoing partnering efforts. For our lead rare disease program, our partner Ultragenyx has continued to advance the development of setrusumab (UX143) for the treatment of osteogenesis imperfecta (OI), with completion of enrollment in the Phase 2 portion of the Phase 2/3 Orbit study in pediatric and adult patients and data is expected in mid-2023. Further, a study in younger pediatric patients is expected to initiate during the first half of 2023. We concluded 2022 with cash and short-term deposits of $68.2 million (£56.3 million) and maintain our expectation that we have sufficient runway to fund operations into 2026."

Highlights from 2022, Recent Developments and Anticipated Milestones

Alvelestat (MPH-966)

Received Fast Track Designation from the U.S. Food and Drug Administration (FDA).

Reported positive top-line biomarker data and a post-hoc analysis demonstrating an association between biomarker reductions and clinical outcomes in the Phase 2 ASTRAEUS study.

Received clear guidance from the FDA and European Medicines Agency (EMA) that a single 12-18 month placebo-controlled Phase 3 study in approximately 200 patients would be sufficient to support full marketing approvals in both the United States (U.S) and European Union (EU).

The independent primary endpoints of the proposed Phase 3 study are change in the St. George’s Respiratory Questionnaire (SGRQ) Activity domain, as guided by the FDA and change in lung density measured by CT scan, as guided by the EMA.

The Company is exploring potential partnerships to fund further development of alvelestat in AATD-LD.

Two abstracts were accepted to the American Thoracic Society (ATS) 2023 annual meeting, being held May 19-24.

Professor Robert Stockley, Chief Investigator on the ASTRAEUS study, will deliver an oral presentation on the ASTRAEUS study data.

A poster will be presented on the post-hoc analysis and association between biomarker reductions and improvement in SGRQ.

Data from the ongoing Phase 2 investigator-led study in AATD-LD (ATALANTA), including in patients who may be on augmentation therapy, is expected in Q3 2023.

Setrusumab (UX143)

Mereo’s partner Ultragenyx has completed enrollment in the Phase 2 portion of the Phase 2/3 Orbit study of setrusumab in OI patients aged five to 25. Data from the Phase 2 portion of this study is expected in mid-2023.

A study in younger patients comparing setrusumab to bisphosphonates is expected to be initiated by Ultragenyx in 1H 2023.

Etigilimab (MPH-313)

Enrollment in the Phase 1b/2 ACTIVATE trial has completed the Phase 1b part of the study, with a total of 76 patients enrolled. The totality of emerging data from ACTIVATE and key Phase 3 trials of other therapies targeting the TIGIT axis, particularly in NSCLC, will inform next steps for the etigilimab program, which is focused on gynecological malignancies and rare cancers. The Company expects to report additional data from the ACTIVATE study later in 2023.

Etigilimab, in combination with nivolumab, is also being studied in an ongoing investigator-led single-arm, open-label Phase 1b/2 trial in a subtype of platinum-resistant recurrent ovarian cancer (clear cell ovarian cancer) at The University of Texas MD Anderson Cancer Center (MD Anderson), financed by the Cancer Focus Fund. MD Anderson are planning to follow per protocol procedure to expand the study from an initial 10 patients to 20 patients.

Navicixizumab (OMP305B83)

Following regulatory interactions, Mereo’s partner, OncXerna, has stated its intention to initiate a Phase 3 trial of navicixizumab in late line ovarian cancer.

OncXerna is also dosing patients in a Phase 2 basket study evaluating navicixizumab, alone or in combination with chemotherapy, in patients with select advanced solid tumors.

Full Year 2022 Financial Results

Full year 2022 research and development expenses were £25.0 million, compared to £23.6 million, in 2021, an increase of £1.4 million, or 6%. R&D expenses relating to etigilimab increased by £2.3 million. The increase was due to the costs associated with additional patients and the duration of treatment for patients responding to therapy in 2022 compared to 2021 in the open label Phase 1b/2 basket study in combination with an anti-PD-1 in a range of tumor types. R&D expenses relating to alvelestat increased £0.1 million, or 2%, primarily reflecting the end of study related costs for the Phase 2 proof-of-concept study in AATD. Partially offsetting the increases, R&D expenses relating to setrusumab decreased by £0.2 million, or 7%. Setrusumab R&D expenditure in 2022 comprised activities associated with laying the groundwork for reimbursement discussions in Europe, and input into development, regulatory and manufacturing plans with our partner, Ultragenyx, as the global development of the program is funded by Ultragenyx pursuant to our licensing and collaboration agreement.

Administrative expenses increased by £3.6 million, or 23%, from £15.9 million in 2021 to £19.5 million in 2022. The increase was primarily driven by additional costs incurred in connection with the Schedule 13D filings and subsequent Cooperation Agreement with Rubric Capital, and increased share-based payment expenses, partially offset by a reduction in other professional fees.

Net loss attributable to equity holders for the year ended December 31, 2022 was £34.2 million, compared to a net profit of £12.7 million in 2021, primarily reflecting an operating loss of £43.6 million and a gain of £7.8 million due to changes in the fair value of financial instruments resulting from an unrealized gain on warrants.

As of December 31, 2022, the Company had cash and short-term deposits of £56.3 million ($68.2 million). Net cash burn during the fourth quarter of 2022 amounted to £11.2 million ($13.5 million). The Company expects its existing cash and short-term deposits will enable it to fund its currently committed clinical trials, operating expenses and capital expenditure requirements into 2026.

Total ordinary shares outstanding at December 31, 2022 were approximately 625 million. Total ADSs outstanding at December 31, 2022 were approximately 119 million, with each ADS representing five ordinary shares of the Company.

On March 28, 2023 Infinity Pharmaceuticals, Inc. (NASDAQ: INFI) ("Infinity" or the "Company"), a clinical-stage biotechnology company developing eganelisib, a potential first-in-class, oral, immuno-oncology macrophage reprogramming therapeutic, reported its full year 2022 financial results (Press release, Infinity Pharmaceuticals, MAR 28, 2023, View Source [SID1234629442]). The Company previously announced on February 23, 2023 its execution of a definitive merger agreement with MEI Pharma for a strategic combination of Infinity and MEI, which is expected to close in mid-2023, subject to approvals by MEI Pharma and Infinity shareholders and other customary closing conditions.

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Infinity’s Full Year 2022 Financial Results:

At December 31, 2022, Infinity had total cash and cash equivalents of $38.3 million, compared to $80.7 million at December 31, 2021.
Research and development expenses for 2022 were $32.4 million, compared to $31.6 million in 2021. The increase is primarily related to an increase in compensation expenses due primarily to additional staff for the development of eganelisib and an increase in consulting, partially offset by a decrease in clinical development expenses.
General and administrative expenses were $13.5 million for 2022, compared to $14.2 million for 2021. The decrease in G&A expense is primarily due to a decrease in consulting and compensation expenses, partially offset by an increase in information technology support expenses.
Net loss for 2022 was $44.4 million, or a basic and diluted loss per common share of $0.50, compared to a net loss of $45.3 million, or a basic and diluted loss per common share of $0.53 in 2021.
Proposed Merger of Infinity Pharmaceuticals with MEI Pharma:

As previously announced (press release here) and as approved by the respective Boards of Directors of both companies, on February 23, 2023 MEI and Infinity entered into a merger agreement for an all-stock transaction with the intent to form a company combining the expertise and resources of MEI and Infinity to advance a robust pipeline of three clinical-stage oncology drug candidates. All three clinical-stage development programs have the potential, in combination with current therapies, to overcome known resistance mechanisms and meaningfully improve patient outcomes.

If the merger is consummated, the combined company is projected to have a ~$100M cash balance at closing which is expected to fund operations through mid-2025. Importantly, clinical data expected over the next 12 to 24 months from the combined company’s clinical-stage oncology development pipeline consists of three differentiated programs:

Eganelisib, an oral immuno-oncology macrophage reprogramming product candidate, which, subject to U.S. Food and Drug Administration review, is planned to be evaluated in combination with the PD-1 targeted checkpoint inhibitor pembrolizumab (KEYTRUDA) as first line therapy in patients with relapsed/metastatic head and neck squamous cell carcinoma (HNSCC). The primary endpoint of the Phase 2 study will be overall survival. In the second half of 2024 we plan to have initial data on safety and progression free survival.
Voruciclib, an oral CDK9 inhibitor, currently being studied in combination with venetoclax (VENCLEXTA) in patients with hematologic malignancies. MEI has provided guidance that the ongoing Phase 1b trial is expected to report initial results from the combination regimen around the end of 2023.
ME-344, a novel tumor selective mitochondrial inhibitor targeting the OXPHOS pathway, to be evaluated in combination with bevacizumab (AVASTIN) in patients with relapsed colorectal cancer. MEI has provided guidance that data from the Phase 1b trial to support opening enrollment in an expansion cohort are expected to be reported around the end of 2023.
In anticipation of the merger, Infinity is investing in merger-related activities, including transaction costs, in preparation for the potential initiation of a Phase 2 study of eganelisib in HNSCC, subject to FDA review, and corporate restructuring costs including severance and retention payments.

If the merger is not consummated, Infinity expects to have a cash runway on a stand-alone basis into the second half of 2023, compared to its most recent guidance of cash runway into 2024. This shorter cash runway is a result of expenditures related to merger activities and the advancement of eganelisib. If Infinity does not successfully consummate the merger, Infinity expects to evaluate strategic alternatives and if Infinity is unable to enter into another strategic transaction, the Company’s board of directors may conclude that it is in the best interest of stockholders to cease normal operations and wind down the Company through bankruptcy or dissolution proceedings.

Focus of Eganelisib Development Following the Proposed Merger as Announced on Feb 23, 2023:

Global Phase 2 Study of Eganelisib in Front Line Head and Neck Cancer Patients

The lead and most advanced program for the combined company is planned to be eganelisib. With data supporting multiple paths forward for eganelisib, a study in head and neck squamous cell carcinoma (HNSCC) was prioritized based on the ability to leverage encouraging progression-free survival data generated in head and neck cancer patients in Infinity’s MARIO-1 clinical trial. In addition to the encouraging data from MARIO-1, the planned initiation of a randomized, controlled Phase 2 clinical study combining eganelisib with pembrolizumab or pembrolizumab in front line recurrent metastatic HNSCC patients was prioritized because:

Pembrolizumab is an approved standard of care in the study population and an appropriate control arm for the study.
Patients with recurrent or metastatic HNSCC with a PD-L1 combined positive score of 1 or greater have relatively short median progression free survival (3.2 months) and median overall survival (12.3 months) when treated with pembrolizumab monotherapy (Burtness et al Lancet 2019).
We believe that the combination regimen of eganelisib plus pembrolizumab has the potential to demonstrate progression free survival and overall survival benefits for front line recurrent metastatic HNSCC patients in a reasonably short period of time.
There are a significant number of patients in need.
Eganelisib data in HNSCC Patients from MARIO-1 Study:

The prioritized HNSCC Phase 2 study follows an encouraging signal from our MAcrophage Reprogramming in Immuno-Oncology-1, or MARIO-1, study, a Phase 1/1b clinical study designed to evaluate the safety, tolerability, pharmacokinetics, pharmacodynamics, and activity for eganelisib — both as a monotherapy and in combination with nivolumab — in 224 patients with advanced solid tumors. As of the study’s December 13, 2021 database lock, the median progression free survival, or mPFS, rate of 3.7 months (1.9, 5.5) was observed in the HNSCC cohort in patients with immediate prior progression on CPI therapy. The mPFS for all patients receiving pembrolizumab monotherapy was 2.3 months in KEYNOTE-048, the benchmark study investigating pembrolizumab monotherapy, pembrolizumab plus chemotherapy, or cetuximab plus chemotherapy as a first-line therapy in recurrent or metastatic HNSCC patients. However, we caution you that the risks in cross-trial comparisons limit our ability to reach definitive conclusions without a prospective, adequately powered, randomized controlled trial. Further, in MARIO-1, a disease control rate, or DCR, of 36.4% (4 of 11 patients), an overall response rate, or ORR, of 18.2% (2 of 11 patients), and an mPFS rate of 5.3 months (1.9, 11.1) were observed in the HNSCC cohort in patients with immediate prior progression on CPI therapy and two or fewer prior lines of therapy. Reversible hepatic and skin adverse events were the most common toxicities observed when eganelisib was combined with nivolumab in patients across all combination cohorts of the MARIO-1 study in patients with advanced solid tumors.

Encouraging data with eganelisib has been generated in other patient populations including in patients with front-line metastatic triple negative breast cancer, or mTNBC, from the MARIO-3 TNBC study, and in CPI-naïve platinum refractory second line urothelial cancer patients in the MARIO-275 study, as summarized in the Company’s Annual Report on Form 10-K for 2022 filed on March 28, 2023.

On March 28, 2023 HCW Biologics Inc. (the "Company" or "HCW Biologics") (NASDAQ: HCWB), a clinical-stage biopharmaceutical company focused on discovering and developing novel immunotherapies to lengthen healthspan by disrupting the link between chronic, low-grade inflammation and age-related diseases, reported financial results and recent business highlights for its fourth quarter ended December 31, 2022 (Press release, HCW Biologics, MAR 28, 2023, View Source [SID1234629441]).

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Hing C. Wong, Ph.D., Founder and CEO of HCW Biologics, stated, "We had a productive year in 2022, and our cancer program met or exceeded key milestones. In the fall, a preliminary first-in-human clinical data readout was presented at the SITC (Free SITC Whitepaper) annual conference by Dr. Melissa Geller, the principal investigator for the University of Minnesota ("UMN") sponsored Phase 1 clinical trial to evaluate HCW9218 in solid tumors. We are encouraged by data gathered in this study and believe that it shows the potential of HCW9218 in the treatment of solid tumors, especially ovarian cancer. Our data indicates that HCW9218 is functioning as it was intended – activating the immune system and capturing TGF-β 1, 2 and 3 with no evidence of mucosal bleeding."

Dr. Wong continued, "UMN has been a terrific sponsor and partner for the Phase 1 solid tumor clinical study. With Dr. Geller’s expertise and focus, along with the support of the co-principal investigator, Dr. Jeff Miller, the Phase 1 portion of this trial is on track to be completed within a year of its initiation, which is fortunate in the times of prolonged COVID-related delays. Because of this, we are poised to complete the Phase 1 study in 2023 and, if our studies are successful, potentially advance into Phase 2 clinical trials in 2023."

In the fourth quarter of 2022, the Company also initiated a Company-sponsored Phase 1b/2 clinical trial to evaluate HCW9218 in advanced pancreatic cancer. Dr. Wong stated, "With respect to HCW9218, we believe cancer is our gateway indication to other age-related diseases. As and to the extent we advance the clinical development to evaluate HCW9218 in cancer indications, we intend to focus on two of the most difficult-to-treat cancers that have no therapeutic remedy today: ovarian cancer and pancreatic cancer." He added, "If we can establish safety and dosage of HCW9218 in cancer indications, we plan to expand to other age-related diseases promoted by inflammaging."

One of the pillars of the Company’s strategy is its commitment to documenting its work in high-impact scientific journals. Two scientific papers were submitted in 2022, one has been published, and the other has been accepted for publication. Dr. Wong stated, "We devote significant resources to publishing scientific papers, because we believe in the value of sharing our discoveries and inventions with the broader scientific community."

Dr. Wong continued, "Our most recent paper published in Frontiers in Immunology illustrates the potential for HCW9302 as a therapeutic agent to expand and activate Treg cells indicating it might be effective in treating inflammatory and autoimmune diseases. HCW9302 is a unique fusion protein with two IL-2 domains linked by an extracellular tissue factor domain that has been shown in preclinical research to exhibit a more favorable pharmacokinetic profile than recombinant IL-2, with longer half-life, greater affinity to IL-2 receptor α and no toxicity. The results of our research included in this publication show the potential of HCW9302 in the treatment of age-related inflammatory diseases, such as atherosclerosis."

Fourth Quarter and Other Recent Business Highlights:

On November 11, 2022, there was a preliminary human data readout at the 37th Annual Meeting of the Society for Immunotherapy of Cancer (SITC) (Free SITC Whitepaper) from an ongoing Phase 1 clinical trial to evaluate HCW9218 in patients with chemo-refractory/chemo-resistant solid tumors, sponsored by the Masonic Cancer Center, University of Minnesota. The poster was presented by Melissa A. Geller, M.D., M.S., Principal Investigator, who is a Professor and Division Director of Gynecologic Oncology in the Department of Obstetrics, Gynecology and Women’s Health at the University of Minnesota.
•
On December 3, 2022, under a Cooperative Research and Development Agreement ("CRADA"), the National Cancer Institute and HCW Biologics agreed to collaborate to perform a Phase 1b/2 clinical study to evaluate the safety and tolerability of HCW Biologics’ lead product candidate, HCW9218, in patients with advanced/metastatic pancreatic cancer. The CRADA is entitled, "A Phase 1b/2 Study of HCW9218, a Bifunctional TGF-β Antagonist/IL-15 Protein Complex, for Advanced Pancreatic Cancer."
•
HCW Biologics initiated a Company-sponsored Phase 1b/2 clinical study to evaluate HCW9218 in patients with advanced pancreatic cancer. With four clinical sites up and running, if patient enrollment continues at the current pace, the Company expects to complete the Phase 1b portion of this study in 2023.
•
In January 2023, a pivotal scientific paper authored by members of the Company’s scientific research team was published in the high-impact, peer-reviewed journal, Frontiers in Immunology, entitled, "A Novel Interleukin-2-Based Fusion Molecule, HCW9302, Differentially Promotes Regulatory T Cell Expansion to Treat Atherosclerosis in Mice."
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The Company has been invited to present a poster at the American Association of Cancer Research to be held from April 14-19, 2023. Dr. Varghese George, one of the Company’s scientists, will be presenting a poster entitled, "Bifunctional Immunotherapeutic HCW9218 Facilitates Recruitment of Immune Cells from Tumor Draining Lymph Nodes to Promote Antitumor Activity and Enhance Checkpoint Blockade Efficacy in Solid Tumors." This research is intended to support the understanding of the mechanism of action for HCW9218 for solid tumors.

Fourth Quarter and Full Year 2022 Financial Results:

Cash and cash equivalents: As of December 31, 2022, the Company held $22.3 million in cash and cash equivalents, including money market investments, and $9.7 million in U.S. government backed securities presented as short-term investments. Money market investments are held in a federal money market fund with an investment focus on liquidity and stability.

Revenues: Revenues for the fourth quarter ended December 31, 2021 and 2022 were nil and $1.3 million, respectively. Revenues for the year ended December 31, 2021 and 2022 were nil and $6.7 million, respectively. Revenues were derived exclusively from the sale of licensed molecules to the Company’s licensee, Wugen.

Research and development (R&D) expenses: R&D expenses for the fourth quarter ended December 31, 2021 and 2022 were $1.5 million and $2.9 million, respectively. The $1.4 million increase, or 98%, resulted from increased clinical trial expenses and manufacturing costs. R&D expenses for the year ended December 31, 2021 and 2022 were $8.2 million and $9.3 million, respectively. The $1.1 million increase, or 14%, resulted from increases in salaries, performance-based bonuses, and clinical trial expenses.

General and administrative (G&A) expenses: G&A expenses for the fourth quarter ended December 31, 2021 and 2022 were $1.6 million and $3.0 million, respectively. The $1.4 million increase, or 84%, was attributable to increases in salaries and stock-based compensation and professional fees related primarily to legal fees. G&A expenses for the year ended December 31, 2021 and 2022 were $5.2 million and $8.3 million, respectively. The $3.1 million increase, or 60%, resulted from increases in stock-based compensation expense for officers and directors, legal fees, and additional costs of operating as a public company.

Net loss: Net loss for the fourth quarter ended December 31, 2021 and 2022 was $3.2 million and $5.4 million, respectively. Net loss for the year ended December 31, 2021 and 2022 was $12.9 million and $14.9 million, respectively.

Financial Guidance

HCW Biologics believes its cash and cash equivalents and investments will be sufficient to fund its operations through at least the next 12 months. This cash runway guidance is based on the Company’s current operational plans and buildout of its new headquarters building, and it excludes any additional capital infusion resulting from bank loans, joint ventures, out-licenses, or other business development transactions. Relocation to the new headquarters is anticipated during 2024, although the Company may choose to delay the completion date to extend its cash runway. In the year ended December 31, 2022, the Company incurred significant legal expenses on its own behalf and on behalf of Dr. Wong, as required by the indemnification agreement between the Company and Dr. Wong. In the year ahead, the Company expect to continue to incur legal expenses on its own behalf in connection with the legal proceedings brought against it by Altor/NantCell. However, now that the arbitration against Dr. Wong was initiated by Altor/NantCell, Dr. Wong’s legal expenses will be covered by the provisions of his advancement agreement with Altor/NantCell in connection with the arbitration.

On March 28, 2023 Evaxion Biotech A/S (NASDAQ: EVAX) ("Evaxion" or the "Company"), a clinical-stage biotechnology company specializing in the discovery and development of AI-powered immunotherapies, reported an increased focus on its strategy around its core AI capabilities allowing fast and de-risked development of its pipeline (Press release, Evaxion Biotech, MAR 28, 2023, View Source [SID1234629440]).

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Recently, Evaxion announced that the Company has used its proprietary AI technology to discover a new treatment opportunity that may broaden cancer immunotherapy. Through new cancer targets, so-called ERVs (endogenous retroviruses), it may become possible to treat cancer patients who have until now been considered unresponsive to immunotherapy.

This opens a wide range of opportunities. Notably, it may increase the likelihood of a positive clinical outcome, paving the way for smaller and faster clinical trials. Evaxion’s next clinical program, EVX-03, will target such personalized ERVs and is scheduled to start clinical development in Q4, 2023, subject to additional funding.

CEO, Per Norlén, comments: "Having been at Evaxion for six months, I continue to be excited by the rich potential of our proprietary AI technology, which I believe is world-leading. A natural next step is to maximize the value of our unique AI capabilities by focusing on target discovery and validation and early out-licensing opportunities. We aim to build a pipeline of multiple assets with superior efficacy and diverse partnering opportunities. This is an area where we experience a lot of interest from big pharma."

The immediate benefits of the new focus are that:

Personalized ERVs are fast-tracked to the clinic with EVX-03, using Evaxion’s novel DNA vaccine technology
Early-stage pipeline can be expanded through multiple partnerships
Cash runway is extended significantly through the new focus, clinical trial optimization, and staff reductions
CEO, Per Norlén, explains:

"By optimizing the strategy around EVX 01, we can deliver the Phase 2b interim data in Q4 2023 as planned while deploying important clinical resources to EVX-03, where we are likely to be first in the world bringing a personalized ERV-immunotherapy to cancer patients. In addition, the focus on our core will extend our cash runway towards the end of the year.

On March 28, 2023 DiaMedica Therapeutics Inc. (Nasdaq: DMAC), a clinical-stage biopharmaceutical company focused on developing novel treatments for neurological disorders and kidney diseases, reported a business update and financial results for the year ended December 31, 2022 (Press release, DiaMedica, MAR 28, 2023, View Source [SID1234629438]). Management will host a conference call Wednesday, March 29, 2023, at 7:00AM Central Daylight Time/8:00AM Eastern Daylight Time to discuss its business update and full year 2022 financial results.

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Clinical Developments

ReMEDy2 Phase 2/3 Trial – Clinical Hold Update

In July 2022, the U.S. Food and Drug Administration (FDA) placed a clinical hold on the Company’s Phase 2/3 ReMEDy2 trial following the Company voluntarily pausing patient enrollment in the trial to investigate three unexpected instances of clinically significant hypotension (low blood pressure) occurring shortly after initiation of intravenous (IV) dose of DM199. The hypotension was transient and blood pressure levels of all three patients recovered back to baseline within minutes of stopping the infusion and the patients suffered no ongoing adverse effects.

In October 2022, the Company announced that the FDA continued the clinical hold and requested that the Company perform an additional in-use in vitro stability study of the IV administration of DM199 to fully identify all potential factors causing or contributing to the three unexpected instances of clinically significant hypotension occurring shortly after initiation of the IV dose of DM199. An in-use study includes testing the combination of the IV bag, IV tubing and any materials used during the infusion that come in contact with DM199 and the mechanical infusion pump in a manner that simulates the actual usage in a hospital. In December 2022, DiaMedica received written comments from the FDA clarifying its expectations for the design of the in-use study. These comments were incorporated into the study protocol and submitted to the FDA. In response, the FDA recently indicated that the protocol appeared to be reasonable. The requested in-use study has been initiated and is being performed at an independent laboratory. The study is being conducted in two parts. Part 1 simulates actual use in the hospital and part 2 tests worst-case scenarios such as varying storage durations, temperature(s) and light. Part 1 is complete. DiaMedica believes data from part 1 confirms its conclusions from prior testing that the IV dose administered in the ReMEDy2 study was higher than planned due to the change in IV bag materials and was the cause of the hypotension, and that a dose revision in ReMEDy2 should avoid the clinically significant hypotension. DiaMedica has submitted these results and conclusions to the FDA for feedback and to confirm that all issues of the clinical hold will have been addressed after submission of data from part 2 of the in-use testing anticipated in April 2023.

The FDA also requested information on a potential trypsin impurity contributing to hypotension and methods assays to be used to measure results in the in-use study. The Company provided responses confirming that trypsin was not a measurable impurity and provided updated validated methods assays to the FDA for review. The Company received FDA feedback that the assays developed for the in-use study appear appropriate and its approaches and assessment to the potential trypsin impurity are also acceptable.

"With the completion of the in-use study at hand, we look forward to continuing to work with the FDA to confirm that we have addressed all issues of the clinical hold and then prepare our complete response requesting a lifting of the clinical hold," commented Rick Pauls, DiaMedica’s Chief Executive Officer. "We believe that we’ve addressed the issues raised by the FDA and are optimistic that the results of the in-use study will fully and finally confirm the cause of the hypotensive events."

DiaMedica also announced that it has proactively initiated a Phase 1C open label, single ascending dose (SAD) study of DM199 administered with the Polyvinylchloride (PVC) IV bags used in the ReMEDy2 trial. The purpose of the study is to confirm, with human data, the DM199 serum concentration level achieved with the IV dose and further evaluate safety and tolerability. In the event that the FDA does not agree that the results of the in-use study support the proposed dose revision, the data from this Phase 1C study can be used to support the rationale for the IV dose selected for the ReMEDy2 trial. The Phase 1C study is being conducted in Australia and is intended to enroll up to 15 healthy, adult participants. Enrollment in the study has commenced and preliminary data is expected to be available in May 2023.

"Patient safety is paramount for DiaMedica and we’re pleased to go above and beyond to achieve that end," stated Kirsten Gruis, DiaMedica’s Chief Medical Officer. "Data developed in our Phase 1C study will ensure that we have the correct IV dose level and give confidence to physician investigators once we are able to resume ReMEDy2."

Balance Sheet and Cash Flow

DiaMedica reported total cash, cash equivalents and investments of $33.5 million, current liabilities of $2.2 million and working capital of $31.7 million as of December 31, 2022, compared to total cash, cash equivalents and investments of $45.1 million, $1.5 million in current liabilities and $43.9 million in working capital as of December 31, 2021. The decreases in cash, cash equivalents and investments and in working capital were due to cash used to fund operating activities during the year ended December 31, 2022.

Net cash used in operating activities was $11.5 million and $12.3 million for the years ended December 31, 2022 and December 31, 2021, respectively. Cash used in operating activities is driven primarily by the Company’s net loss, partially offset by a reduction in non-cash share-based compensation and the effects of the changes in operating assets and liabilities.

Financial Results

Research and development (R&D) expenses decreased to $7.8 million for the year ended December 31, 2022, down $1.0 million from $8.8 million for the year ended December 31, 2021. The decrease was driven primarily by reduced costs incurred during 2022 for the wrap-up of the REDUX Phase 2 CKD trial and decreased non-clinical testing costs which were incurred during 2021 in preparation for initiating the Phase 2/3 ReMEDy2 trial. These decreases were partially offset by increased personnel costs associated with expanding the Company’s R&D operations and increased manufacturing process development activities.

General and administrative (G&A) expenses were $6.2 million for the year ended December 31, 2022, up from $4.9 million for the year ended December 31, 2021. The increase was primarily driven by increased directors’ and officers’ liability insurance, increased personnel and professional services costs to support its expanding clinical programs, and increased legal fees for its lawsuit against Pharmaceutical Research Associates Group B.V. These increases were partially offset by a reduction in non-cash, share-based compensation.

Note for U.S. Shareholders

DiaMedica concluded that it should be considered a passive foreign investment corporation (PFIC) for fiscal 2022. Accordingly, DiaMedica has included the required PFIC Information Statement on its website (www.diamedica.com/investors/financial-reports /tax-information) to allow U.S. investors, if desired after consultation with their tax advisors, to make the qualified electing fund (QEF) election on IRS Form 8621 in order to mitigate the potential adverse tax consequences associated with the Company being a PFIC. Each investor will need to review the PFIC tax consequences and available alternative elections with their tax advisor to determine the best course of action in their particular situation.

Conference Call and Webcast Information

DiaMedica Management will host a conference call and webcast to discuss its business update and full year 2022 financial results on Wednesday, March 29, 2023, at 7:00AM Central Time:

Date:

Wednesday, March 29, 2023

Time:

7:00 AM CDT / 8:00 AM EDT

Web access:

View Source

Dial In:

(877) 550-1858

Conference ID:

1754341

Interested parties may access the conference call by dialing in or listening to the simultaneous webcast. Listeners should log on to the website or dial in 15 minutes prior to the call. The webcast will remain available for play back on the Company’s website, under investor relations – events and presentations, following the earnings call and for 12 months thereafter. A telephonic replay of the conference call will be available until April 5, 2023, by dialing (800) 645-7964 (US Toll Free) and entering the replay passcode: 2125#.

About ReMEDy2 Trial

The ReMEDy2 trial is an adaptive design, randomized, double-blind, placebo-controlled trial studying the use of the Company’s product candidate, DM199, to treat acute ischemic stroke (AIS) patients. The trial is intended to enroll approximately 350 patients at 75 sites in the United States. Patients enrolled in the trial will be treated for three weeks with either DM199 or placebo, beginning within 24 hours of the onset of AIS symptoms, with the final follow-up at 90 days. The trial excludes patients treated with tissue plasminogen activator (tPA) and/or mechanical thrombectomy. The study population is representative of the approximately 80% of AIS patients who do not have treatment options today, primarily due to the limitations on treatment with tPA or mechanical thrombectomy. DiaMedica believes that the proposed trial has the potential to serve as a pivotal registration study of DM199 in this patient population.

About DM199

DM199 is a recombinant (synthetic) form of human tissue kallikrein-1 (KLK1). KLK1 is a serine protease (protein) that plays an important role in the regulation of diverse physiological processes including blood flow, inflammation, fibrosis, oxidative stress and neurogenesis via a molecular mechanism that increases production of nitric oxide and prostaglandin. KLK1 deficiency may play a role in multiple vascular and fibrotic diseases such as stroke, chronic kidney disease, retinopathy, vascular dementia, and resistant hypertension where current treatment options are limited or ineffective. DiaMedica is the first company to have developed and clinically studied a recombinant form of the KLK1 protein. The KLK1 protein, produced from the pancreas of pigs and human urine, has been used to treat patients in Japan, China and South Korea for decades. DM199 is currently being studied in patients with acute ischemic stroke (AIS) and patients with chronic kidney disease. In September 2021, the FDA granted Fast Track Designation to DM199 for the treatment of AIS.