Ever since DiaMedica Therapeutics Inc( OTCMKTS:DMCAF) management reiterated that the company is well positioned to make significant progress on the clinical development of DM199, the stock has been climbing higher. A 90% plus spike, in share price, affirms growing investor’s confidence in the company’s candidate treatment for acute ischemic stroke.
The big question now is where the stock is headed, after the gigantic rally. All indication is that the stock could continue powering high, given the strength of the upward momentum. However, there is also the possibility of the stock pulling back, given the steep rise, before continuing on the long-term uptrend.
Given that, the stock is currently trading at the $0.44 handle, immediate support on any pullbacks is seen at the $0.39 handle, below which the stock could drop to the $0.33 mark. A rally followed by a close above the $0.44 handle could see the stock push higher on its way to recording a new 52 week high.
DiaMedica Therapeutics has every reason to continue powering high backed by a string positive developments that continue to strengthen investor confidence. Before carrying out a detailed analysis of the catalysts behind the recent upswing, let’s look at what the company’s core business entails.
DiaMedica Therapeutics bills itself as a clinical-stage biopharmaceutical company focused on the development of novel treatments for neurological and kidney diseases. Its lead product under development is DM1999, a recombinant human tissue protein, being developed for the treatment of acute vascular diseases.
Why is the stock trading High?
DiaMedica Therapeutics has been trading higher for the better part of the past year, with investors taking note of what is at stake with the development of DM199. A Phase 1B clinical trial conducted last year turned out positive, resulting in the identification of a therapeutic dose that matches a crude form of Kailikang, which is approved in Asia for the treatment of stroke in patients.
DM199 is currently undergoing Phase 2 Clinical development as DiaMedica Therapeutics novels it to treat stroke and kidney diseases by restoring KLK1 levels.
DiaMedica Therapeutics is currently exploring commercialization partnerships as it seeks to accelerate the development of its core asset. The company has already received several licensing term sheets offers from Asia pharmaceutical companies as it also continues to explore joint venture opportunities.
In addition, the company has entered not a non-binding term sheet with a large Chinese pharmaceutical company for licensing rights in the country. DiaMedica Therapeutics stands to gain access to additional non-dilutive funding on executing the definitive agreement.
“We believe a partnership in China/Asia offers a great opportunity for DM199 to potentially replace the current KLK1 therapy with an improved recombinant form. A partnership will also help the approval of DM199 in the Asian market. Such a partnership will also boost the company’s balance sheet and reduce the capital requirements to conduct Phase III trials,” DiaMedica Therapeutics in a statement.
Financing needed to accelerate the development of DM199 won’t be a problem given that the company recently raised $2.5 million on the closing of a private placement. So far, the company has raised a total of $6.3 million on the issuance of stock. Insiders participated in the recently concluded offering, further affirming their confidence about the company’s long-term growth prospects.
Funds from the offering should allow the company to complete an initiated DM199 REMEDY Phase 2 study, in patients with ischemic stroke. The clinical stage biopharmaceutical company also intends to carry out a clinical research in patients with chronic kidney disease
“We look forward to continuing to maximizing the value of our science and in advancing our clinical programs, and we are grateful for the support and commitment from our investors,” commented Rick Paul’s, DiaMedica President and Chief Executive Officer.
DiaMedica Therapeutics has appointed Mr. Scott Kellen as the Chief Financial Officer and Corporate Secretary. He joins the company with strong background in financial strategy and reporting, having worked in various roles in several publicly traded healthcare biotech’s. Mr. Scott experience should prove valuable as the clinical stage company moves to execute in its clinical development plans and other phases of growth.
What to Expect Of DiaMedica Therapeutics in 2018
If DiaMedica Therapeutics performance in the first quarter is anything to go by, then 2018 could turn out to be a pivotal year for the small-cap clinical stage biopharmaceutical. The company appears to be firing on all cylinders, right from clinical tests and raising of funds that affirms growing investor confidence.
Positive results on clinical trials of DM199 should strengthen investor confidence in the stock, consequently pushing it even higher in the charts. After the blockbuster run over the past 12 months, the company cannot afford any mishaps on the development of DM199.
There is no doubt that DiaMedica Therapeutics is headed in the right direction as it continues to execute on its clinical trial programs. Given that the stock is currently trading at all-time highs, it may be wise to wait for pullbacks before joining the rally on further movements on the upside.
Disclosure: We have no position in DMCAF and have not been compensated for this article.