Diamedica Therapeutics (DMAC) Risk Analysis

The initial investigator-sponsored PE trial is currently being conducted in South Africa, we are commencing a PE trial in Canada and we are currently expanding our ReMEDy2 trial to certain non-U.S. countries, including Canada, Australia, Georgia, United Kingdom and certain countries in the European Union. In addition, we plan to seek regulatory approval of DM199, or any future product candidates, outside of the United States. Accordingly, we are subject to risks related to operating in foreign countries including, among others: - different standards of care or ethnic composition of patient populations in various countries that could complicate the design of our clinical trials and/or the evaluation of our product candidates;- compliance with differing regulatory requirements for drug approvals;- availability of different competitive drugs or therapies indicated to treat the indications for which our product candidates are or will be developed;- compliance with different United States and foreign drug import and export rules;- the imposition of U.S. or international sanctions against a country, company, person or entity where or with whom we are conducting clinical studies that would restrict or prohibit continued development in that country or with that company, person or entity;- compliance with the Foreign Corrupt Practices Act and other anti-corruption and anti-bribery laws;- foreign taxes, including withholding of payroll taxes;- foreign currency exchange rate fluctuations, which could result in increased operating expenses and other obligations incident to performing clinical trials in another country;- difficulties in managing and staffing international operations and increases in infrastructure costs, including legal, tax, accounting, and information technology;- workforce uncertainty in countries where labor unrest is more common than in the United States;- potential liability resulting from development work conducted by foreign partners or collaborators;- delays and interruptions in delivering study drug and related supplies to clinical trial sites;- interruptions in our development resulting from natural disasters or geopolitical actions, including war, such as the current war between Russia and Ukraine and the conflict between Israel and Hamas and in the Middle East, and terrorism or systems failure, including cybersecurity breaches; and - compliance with evolving and expansive international data privacy laws, such as the European Union General Data Protection Regulation.

As with most pharmaceutical products, DM199 and any future product candidates could be associated with side effects or adverse events, which can vary in severity and frequency. Although the most common DM199 related adverse events that have occurred to date in our clinical trials have been constipation, injection site reaction, nausea, headache and flushing. A less common but important adverse event has been clinically significant, transient, hypotension (low blood pressure) during IV infusion of DM199 that was observed in a number of subjects. These hypotensive episodes were rapidly reversed upon cessation of the IV infusion with complete recovery; hypotensive episodes have not been observed with subcutaneous administration of DM199. Side effects or adverse events associated with the use of DM199, or any future product candidates, may be observed at any time during clinical development. If unacceptable side effects arise in the development of our product candidates, we, the FDA or comparable foreign regulatory authorities, the Institutional Review Boards, or independent ethics committees at the institutions in which our studies are conducted, or the data safety monitoring board, could suspend or terminate our clinical trials, similar to when the FDA imposed a clinical hold on our current ReMEDY2 trial in 2022, or the FDA or comparable foreign regulatory authorities could order us to cease clinical trials or deny approval of our product candidates for any or all targeted indications. Treatment-related side effects could also affect patient recruitment or the ability of enrolled subjects to complete the trial or result in potential product liability claims. In addition, these side effects may not be appropriately recognized or managed by the treating medical staff. We may be required to train medical personnel using our product candidates to understand the side effect profiles for our clinical trials. Inadequate training in recognizing or managing the potential side effects of our product candidates could result in patient injury or death. The safety profile of DM199 observed in one disease indication could affect the labeling, dosing, route of administration, and/or commercial value of DM199 in another disease indication. Any of these occurrences may prevent us, or any future partner from achieving or maintaining market acceptance of the affected product candidate and may harm our business, prospects, operating results and financial condition. Results of our trials could reveal a high and unacceptable severity and prevalence of side effects, toxicity or other safety issues, and could require us to perform additional studies, including preclinical studies, or halt development of DM199 or any future product candidates, or expose us to product liability lawsuits that would likely harm our business. There can be no assurance that we will resolve any issues related to any product-related adverse events to the satisfaction of the FDA or any other regulatory authority in a timely manner, if ever, which could harm our business, prospects, operating results and financial condition. We are required by the FDA and other comparable foreign regulatory authorities to report certain information about adverse medical events if those products may have caused or contributed to those adverse events. The timing of our obligation to report would be triggered by the date we become aware of the adverse event as well as the nature of the event. We may fail to report adverse events we become aware of within the prescribed timeframe. We may also fail to appreciate that we have become aware of a reportable adverse event, especially if it is not reported to us as an adverse event or if it is an adverse event that is unexpected or removed in time from the use of our products. If we fail to comply with our reporting obligations, the FDA other comparable foreign regulatory authorities could take action including but not limited to criminal prosecution, the imposition of civil monetary penalties, seizure of our products, halting our clinical trials or delay in approval or clearance of future product candidates.

We are currently financially supporting the conduct of a Phase 2 open-label, single center, single-arm, safety and pharmacodynamic, proof-of-concept, investigator-sponsored trial of DM199 for the treatment of PE at the Tygerberg Hospital, Cape Town, South Africa. This study may enroll up to approximately 100 women with PE and potentially an additional 30 women with fetal growth restriction may be evaluated. Part 1a top line study results were released in July 2025 which we believe demonstrated the potential for DM199 to lower maternal blood pressure and improve uterine artery dilation. We have received approval to commence an additional Phase 2 study of PE in early-onset preeclampsia in Canada which we anticipate initiating in the second half of 2026. The expansion of our DM199 clinical development program into PE and the progress of that program may not occur on the anticipated timeline or at all. In addition, these Phase 2 PE trials may cost us more than we anticipate. Additionally, the first trial is investigator-sponsored and the conduct of the second trial is expected to rely on a contract research organization (CRO), we have less control over the timing and costs of these studies and the ability to recruit trial participants than if we conducted the study with our own personnel. There is no guarantee that our physician collaborators or CRO will devote adequate time and resources to perform these studies and/or maintain adequate clinical trial information regarding our product candidate. If these third parties fail to meet expected deadlines, fail to transfer to us any regulatory information in a timely manner, fail to adhere to the study protocol, or fail to act in accordance with regulatory requirements or our agreement with them, or if they otherwise perform in a substandard manner or in a way that compromises the quality or accuracy of their activities or the data they obtain, then the current PE trial or future clinical trials may be extended or delayed with additional costs incurred, or our data may be rejected by applicable regulatory agencies. Data collected from the current on-going investigator-sponsored PE program in South Africa will serve as the basis for the design of Phase 2 clinical studies to be conducted in North America and other parts of the world. There is risk that the safety and pharmacodynamic results, differing standards of care, dose and dosing regimens used in a South African population may not translate or generalize to a typical PE population in North America or other parts of the world and could affect the safety/efficacy profile of DM199, the need for additional clinical studies, leading to additional development delays and expenses. Any of these risks could adversely impact our business, prospects, operating results and financial position, including our ability to raise additional financing, if and when needed.

Our ReMEDy2 trial is an adaptive design trial intended to enroll approximately 300 patients. The adaptive design component includes an interim analysis by our independent data safety monitoring board after the first 200 participants have completed the trial. Based on the results of the interim analysis, the study may be stopped for futility or a new total sample size may be determined, ranging between 300 and 728 participants, according to a pre-determined statistical analysis plan. Because of the ReMEDy2 trial's adaptive design, it is possible that the number of participants required to complete the trial may increase significantly from the 300 patients we are currently targeting. If we are required to enroll more participants than currently anticipated, it will increase the time and costs to complete the trial, which may result in a need for additional funding that may not be available to us on acceptable terms, or at all.

Our ReMEDy2 trial is a Phase 2/3, adaptive design, randomized, double-blind, placebo-controlled trial that is intended to enroll approximately 300 patients at up to 100 sites globally. We have had and may continue to have difficulty enrolling patients in our ReMEDy2 trial, which could delay further completion of the trial or even jeopardize the viability of the trial. We believe these enrollment difficulties may be due, in part, to hospital and medical facility staffing shortages; inclusion/exclusion criteria in the study protocol; concerns managing logistics and protocol compliance for participants discharged from the hospital to an intermediate care facility; concerns regarding the prior clinically significant hypotension events and circumstances surrounding the clinical hold which was lifted in June 2023; use of artificial intelligence and telemedicine which have enabled smaller hospitals to retain AIS patients not eligible for mechanical thrombectomy instead of sending these patients to the larger stroke centers which are more likely to be sites in our trial; and competition for research staff and trial subjects due to other pending stroke and neurological trials. In addition, it is possible that we may experience other clinical testing delays or setbacks, which would further delay completion of the ReMEDy2 trial. Product development costs typically increase with delays in clinical testing. Significant clinical trial delays could not only extend the time period for obtaining regulatory approval of DM199 to treat AIS and increase our costs, but also shorten any periods during which we or a future partner may have the exclusive right to commercialize DM199 to treat AIS or allow our competitors to bring competitive products to market before us, which would adversely affect the ability to successfully commercialize DM199 and may harm our business, prospects, operating results and financial condition. The ReMEDy2 trial may be delayed for a number of reasons, including without limitation those described above as well as the following: - sites waiting for internal approvals of the most recently revised protocol for the trial;- patients choosing to participate in competing clinical trials or not at all;- scheduling conflicts with participating clinicians and clinical sites;- complexities in setting up and coordinating with sites that are located outside the United States and additional risks involved in a trial that is being conducted, in part, outside the United States;- suspension or termination of the ReMEDy2 trial by regulators for any reason, 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 of DM199 from contract manufacturers necessary to conduct clinical trials;- our DM199 product candidate demonstrating a lack of safety or efficacy at the planned interim analysis of the ReMEDy2 trial;- patients failing to enroll or complete the ReMEDy2 trial at the rates and within the timelines we expect due to dissatisfaction with the treatment, side effects or other reasons;- clinical investigators not performing the ReMEDy2 trial on their anticipated schedule, dropping out of a trial or employing methods not consistent with the clinical trial protocol and regulatory requirements or other third parties not performing data collection and analysis in a timely or accurate manner;- inspections of our 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 another clinical hold on the IND for our ReMEDy2 trial; or - public health crises, epidemics or pandemics, such as COVID-19, which may adversely impact our ability to continue to engage and activate clinical trial sites, recruit or enroll subjects for our ReMEDy2 trial or any future trial and obtain the requisite staffing for our ReMEDy2 trial or any future trial. Our product development costs may increase if we need to perform a larger or more clinical trials than planned. Additionally, changes in regulatory requirements and policies may occur, and we may need to amend trial protocols or alter our manufacturing processes to reflect these changes. Amendments typically require us to resubmit our trial protocols to the FDA and other regulatory authorities and IRBs or ethics committees, for re-examination, which may impact the cost, timing or successful completion of our ReMEDy2 trial. Delays or increased product development costs or any of these events would likely have a material adverse effect on our business, prospects, operating results and financial condition.

We are highly dependent on the success of DM199 and we, or a future partner, may not be able to successfully obtain regulatory or marketing approval for, or successfully commercialize, this product candidate. To date, we have expended significant time, resources, and effort on the development of DM199, including conducting preclinical and clinical trials, for the treatment of AIS and cardio renal disease. DM199 requires significant additional clinical testing and investment prior to seeking marketing approval. A commitment of substantial resources by us and any potential partner or collaborator to continue to conduct the clinical trials for DM199 will be required to obtain required regulatory approvals and successfully commercialize this product candidate. Although we intend to study the use of DM199 to treat multiple diseases, we have no other product candidates in our current clinical development pipeline, with the exception of our new second candidate, DM300, which is in the early, preclinical stage of development and is intended to treat other inflammatory diseases, such as acute pancreatitis. The ability of us or a future partner to generate revenue from product sales and to achieve commercial success with DM199 will depend almost entirely on our ability to demonstrate sufficient safety and efficacy to obtain regulatory approval for DM199. We may fail to complete required clinical trials successfully and not be able to obtain regulatory approvals or commercialize DM199. Competitors may develop alternative products and methodologies to treat the diseases or indications that we are pursuing, thus reducing or eliminating the anticipated competitive advantages of DM199. We do not know whether any of our product development efforts will prove to be effective, meet applicable regulatory standards required to obtain marketing approval, be capable of being manufactured at a reasonable cost, or be successfully marketed. DM199 is not expected to be commercially viable for at least two to three years. In addition, although the most common DM199 related adverse events that have occurred to date in our clinical trials have been constipation, injection site reaction, nausea and headache, it is possible that DM199 may be observed to cause undesirable side effects. If regulatory authorities do not approve DM199 for the treatment of AIS, PE or any other indications, or if we fail to maintain regulatory compliance, we, or a future partner, would be unable to commercialize DM199 and our business, prospects, operating results and financial condition would be harmed. If we do succeed in developing viable products from DM199, we will face many potential future obstacles, such as the need to develop or obtain manufacturing, sales and marketing, and distribution capabilities, if we do not partner with a third party to provide these functions.

Clinical trials must be conducted in accordance with the FDA's current Good Clinical Practice (cGCP) requirements, or comparable requirements of applicable foreign regulatory authorities, and provide statistically significant evidence predictive of patient benefit. Clinical trials are subject to oversight by the FDA and other foreign governmental agencies, and IRBs or ethics committees at the trial sites where the clinical trials are conducted. In addition, clinical trials must be conducted with product candidates produced in accordance with applicable cGMP requirements. Clinical trials may be suspended by us or by the FDA, other foreign regulatory authorities, or by an IRB or ethics committee with respect to a particular clinical trial site, for various reasons, including: - 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;- in the case of interim analyses, 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. The design and implementation of clinical trials is a complex process. As a Company, we have limited experience designing and implementing clinical trials. We may not successfully or cost-effectively design and implement clinical trials that achieve our desired clinical endpoints. A clinical trial that is not well designed or that yields unforeseen adverse side effects or undue risks to trial subjects may delay or even prevent initiation of the trial, can lead to increased difficulty in site activations and enrolling patients, may make it more difficult to obtain regulatory approval for the product candidate on the basis of the trial results or, even if a product candidate is approved, could make it more difficult to commercialize the product successfully or obtain reimbursement from third-party payers. Additionally, a trial that is not well designed or that yields unforeseen adverse side effects or undue risks to trial subjects could be delayed and more expensive than it otherwise would have been, or we may incorrectly estimate the costs to complete the clinical trial, which could lead to a shortfall in funding. We can provide no assurance that our ReMEDy2 trial, the PE trials or any other clinical trial conducted or sponsored by us has been or will be designed and implemented successfully or achieve its desired clinical endpoints.

Before obtaining marketing approval from the FDA and other comparable foreign regulatory authorities for the sale of DM199 to treat AIS or the approval to continue testing DM199 as a treatment for PE, we must demonstrate the safety and efficacy of DM199 to treat AIS or PE to a level acceptable to the FDA or similar regulatory bodies in other jurisdictions. Clinical testing is expensive, difficult to design and implement, can take many years to complete, and has uncertain outcomes. The outcome of early clinical trials may not predict the success of later clinical trials, and the interim results of ReMEDy2 and the interim topline results from Part 1a of the investigator-sponsored PE trial may not necessarily predict final results. A number of companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in advanced clinical trials due to lack of efficacy or unacceptable safety profiles, including the emergence of undesirable side effects, notwithstanding promising results in earlier trials. We do not know whether our ReMEDy2 trial by itself will demonstrate adequate efficacy and safety to support regulatory approvals to market DM199 to treat AIS in the United States, or in any other jurisdiction, or that a second confirmatory trial will be required. A product candidate may fail for safety or efficacy reasons at any stage of the testing process. In addition, the patient population in our ReMEDy2 trial often have co-morbidities that may cause severe illness or death, which may be attributed to DM199 in a manner that negatively affects the safety profile of our DM199 product candidate. If the results of our ReMEDy2 trial are inconclusive with respect to efficacy, if we do not meet our clinical endpoints with statistical significance or if there are unanticipated safety concerns or adverse events that emerge during the ReMEDy2 trial, the PE trial or other clinical trials, such as the events that caused the FDA to place the prior clinical hold on the IND for our ReMEDy2 trial, we may be prevented from or delayed in obtaining marketing approval, and even if we obtain marketing approval, any sales of DM199 for the treatment of AIS may be limited.

From time to time, we may publish interim, topline or preliminary results from our clinical trials. We announced Part 1a topline study results for the Phase 2 PE clinical trial in July 2025. Interim results from clinical trials are subject to the risk that one or more of the reported clinical outcomes may materially change as participant enrollment continues and more participant data become available. Preliminary or topline results also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. As a result, interim and preliminary data should be viewed with caution until the final data are available. Differences between preliminary, topline or interim data and final data could significantly harm our business and prospects and may cause the trading price of our common shares to fluctuate significantly. We also make estimations, calculations and conclusions as part of our analyses of data, and we may not have received or had the opportunity to fully and carefully evaluate all data. As a result, the topline results that we report may differ from future results of the same studies, or different conclusions or considerations may qualify such results, once additional data have been received and fully evaluated. Further, others, including regulatory authorities, may not accept or agree with our estimates, calculations, conclusions or analyses or may interpret or weigh the importance of data differently, which could impact the value of the particular development program, the approvability or commercialization of the particular product candidate or our Company in general. In addition, the information we choose to publicly disclose regarding a particular study or clinical trial is based on what is typically extensive information, and others may not agree with what we determine is the material or otherwise appropriate information to include in our disclosure. Any information we determine not to disclose may ultimately be deemed meaningful by others with respect to future decisions, conclusions, views, activities or otherwise regarding a particular product candidate or our business. If the interim, topline or preliminary data that we report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain approval for, and commercialize, product candidates may be harmed, which could significantly harm our business and prospects.

Our drug candidate, DM199, is currently in clinical development in two areas, PE/FGR and AIS. We announced interim data from Part 1a of the investigator-sponsored Phase 2 PE clinical trial in July of 2025. Part 1a topline study results demonstrated improvements in blood pressure and the pulsatility index. However, future data from the Phase 2 PE trial may materially change from the reported Part 1a topline study results. Should this occur, we may be required to repeat clinical or non-clinical studies, our clinical development plans may be significantly delayed, and we may incur additional costs, which could adversely impact our business, prospects, operating results and financial position. Adverse results from any future Phase 2 PE trial could adversely affect our ability to raise additional financing, if and when needed.