On Monday, DiaMedica Therapeutics Inc. (NASDAQ:DMAC) was given a Buy rating by H.C. Wainwright, with a price target set at $7.00. The clinical-stage biopharmaceutical company is currently focusing on the development of treatments for acute ischemic stroke (AIS) and preeclampsia (PE) through its lead candidate DM199 (rinvecalinase alfa).
DM199 is a recombinant form of human tissue kallikrein-1 (rhKLK1), a serine protease enzyme that aims to improve blood flow and neuronal survival in AIS by facilitating the production of nitric oxide and other beneficial compounds. For patients with preeclampsia, DM199 is designed to lower blood pressure and support endothelial health, which could improve maternal organ and placental perfusion.
The company's current Phase 2/3 ReMEDy2 trial is targeting AIS patients who present within 24 hours of onset and for whom standard therapies like thrombolytic therapy or mechanical thrombectomy are not suitable due to factors such as clot location or comorbidities. This patient group represents a significant portion of the annual AIS cases in the United States, with over 500,000 patients lacking current treatment options.
The decision to initiate coverage with a Buy rating and a $7 price target is based on the potential of DM199 to meet the substantial unmet need for stroke treatments. The analyst pointed to the use of human urinary-derived KLK1 for AIS treatment in China as a precedent for the adoption of DM199. Expectations are set for the drug to show validation for stroke recovery outcomes and its use during pregnancy.
The price target reflects a conservative stance, taking into account the opportunity within the stroke treatment market and the anticipated de-risking from the upcoming trial outcomes for AIS and PE, which are expected in the second half of 2025 and the first half of 2025, respectively.
In other recent news, DiaMedica Therapeutics has shown positive strides in its second quarter. The company reported significant progress in its ReMEDy2 trial, aiming for full enrollment by the first quarter of 2025. DiaMedica also announced plans to explore DM-199 as a possible treatment for preeclampsia, with patient enrollment commencing in the fourth quarter of this year.
Financially, the company is in a robust state with $54.1 million in cash and investments as of June 30, 2024. General and administrative expenses have decreased compared to the previous year, with expectations to remain steady, despite an anticipated moderate increase in research and development expenses. Other income has seen a rise due to higher interest from marketable securities.
These recent developments indicate DiaMedica Therapeutics' commitment to advancing in clinical trials and maintaining a solid financial standing. However, it is important to note that the company expects a rise in personnel costs and noncash share-based compensation costs.
InvestingPro Insights
DiaMedica Therapeutics Inc. (NASDAQ:DMAC) presents an intriguing investment opportunity, as highlighted by recent InvestingPro data and tips. The company's market capitalization stands at $186.38 million, reflecting investor interest in its potential.
InvestingPro Tips reveal that DMAC holds more cash than debt on its balance sheet, which is crucial for a clinical-stage biopharmaceutical company investing heavily in research and development. This financial stability aligns with the company's focus on developing DM199 for acute ischemic stroke and preeclampsia treatments.
The stock has shown remarkable performance, with a strong 92.92% return over the past year and a 50.34% return in the last three months. This positive momentum could be attributed to investor optimism surrounding the ongoing Phase 2/3 ReMEDy2 trial and the potential market opportunity for DM199.
However, it's important to note that DMAC is not currently profitable, with an adjusted operating income of -$22.38 million over the last twelve months. This is typical for companies in the clinical stage of drug development, as they invest heavily in research before generating revenue from product sales.
The analyst's price target of $7.00 is supported by InvestingPro data, which shows a fair value based on analyst targets at $7.00. This suggests potential upside from the previous closing price of $4.36.
For investors seeking more comprehensive analysis, InvestingPro offers additional tips and insights, with 10 total tips available for DMAC on the platform.
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