According to the latest CDC data, over 795,000 people in the US suffer a stroke each year, of which 610,000 people experience a stroke for the first time. About 140,000 deaths annually in the US are attributable to stroke. 2012 data from the World Health Organization places worldwide stroke-related deaths at 6.7 million, with an additional 5 million people left permanently disabled. 87% of all stroke incidences are known as ischemic strokes, in which arteries feeding blood to the brain become narrow or blocked. The CDC estimates the total health care burden of stroke to be $34 billion annually in the US, including services, medicines and missed work.
30 million adults in the US suffer from the gradual loss of essential kidney functions over time, or chronic kidney disease, according to the CDC. More disturbingly, the CDC estimates that 96% of people with mildly reduced kidney function are not aware of it at all. Each year, Medicare costs amount to $87,000 per dialysis patient and $32,500 per kidney transplant patient. The National Kidney Foundation calls CKD the most under-recognized public health crisis in the country, responsible for over $100 billion in annual Medicare costs.
Minneapolis based DiaMedica Therapeutics
Uplist and equity raise
DiaMedica announced this morning that, in conjunction with an uplist to Nasdaq, it has raised $16.1 million in gross proceeds, offering 4.1 million shares at $4 via Craig-Hallum Capital. The media is reporting this is an “initial public offering,” but that stretches the definition a bit. The company’s stock has been trading
DM199—recombinant KLK1
Source: DiaMedica Therapeutics
DiaMedica believes DM199 has the potential to treat a variety of diseases where healthy functioning requires sufficient activity of KLK1 and the kallikrein-kinin system. Acute ischemic stroke and chronic kidney disease are characterized by a lack of blood flow to the brain and kidneys, respectively. According to DiaMedica, these patients also tend to exhibit lower than normal levels of natural KLK1. The company believes that treatment with DM199 could replenish low levels of KLK1 and improve blood flow to the damaged organs.
According to DiaMedica’s Form S-1, KLK1 derived from human urine and porcine pancreas are sold in Japan, China and Korea to treat a variety of diseases, including acute ischemic stroke, chronic kidney disease, retinopathy, hypertension and related vascular diseases.
Millions of patients have been treated with these KLK1 therapies, and the data from more than 100 published papers and studies support their clinical benefit… There are numerous regulatory, commercial, and clinical drawbacks associated with KLK1 derived from human urine and porcine pancreas that can be overcome by developing a synthetic version of KLK1 such as DM199.
-DiaMedica Therapeutics Form S-1, amendment no. 3, Nov. 28, 2018.
Principal shareholders
DiaMedica’s principal shareholders include Hermed Capital, a Hong Kong-based private equity fund (8.4% post-offering), CentreStone Ventures of Canada (6.0%) and Nancy Chang, PhD (5.6%), CEO of Apex Enterprise, an investment management company, and co-founder of Tanox, which was acquired by Genentech in 2007. Dr. Chang is also part of DiaMedica’s strategic advisory board. There is limited information available on Hermed Capital, but we note that the fund is also affiliated with Ahon Pharmaceutical (Ahon Pharma), a subsidiary of Shanghai Fosun Pharmaceutical (Fosun Pharma). Fosun Pharma, which trades in Shanghai (600196), Hong Kong (2196) and OTC in the US
License agreement with Ahon Pharma
In September 2018, DiaMedica entered into a license and collaboration agreement with Ahon Pharma, which grants Ahon Pharma the exclusive rights to develop and commercialize DM199 for acute ischemic stroke in mainland China, Taiwan, Hong Kong and Macau. DiaMedica received a US$500,000 upfront from Ahon and is entitled to receive $4.5 million upon regulatory clearance to initiate a clinical trial in China, up to US$27.5 million in development and sales related milestones and up to about 10% royalties in the licensed territories.
Pipeline
Source: DiaMedica Therapeutics
Outlook
DiaMedica effected a 1-for-20 reverse stock split in November 2018 as part of its process to uplist. The new Nasdaq stock is trading at about a 15% discount to the offering price in mid-afternoon trading today, giving it a market capitalization of only $40 million. Though the company is only in Phase 2 with its lead compound, the stroke and kidney disease markets that DiaMedica is targeting are objectively very large. At current levels, the stock may almost be viewed as a low-priced call option on the ability to treat these diseases which are desperately in need of more effective therapies. DiaMedica has highlighted six strategic efforts in its Form S-1 of which we will be keeping track, and we encourage investors to do the same:
- Complete Phase II clinical development for DM199 in acute ischemic stroke
- Advance Phase Ib and Phase II studies for DM199 in chronic kidney disease
- Initiate a Phase II study for DM199 in patients with vascular dementia
- Explore potential new indications for DM199
- Develop new recombinant therapies and programs
- License DM199 into new territories and prepare for commercialization
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DISCLOSURE: The author has no positions or any beneficial interest in, and has received no compensation from, the companies mentioned in this article.
