dmtp20260630

dmtp20260630_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2026

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934‐‐

For the transition period from ________________ to __________________

Commission File Number: 001-36291

DIAMEDICA THERAPEUTICS INC.

(Exact name of registrant as specified in its charter)

British Columbia, Canada

(State or other jurisdiction of incorporation or organization)

Not Applicable

(I.R.S. Employer Identification No.)

301 Carlson Parkway, Suite 210

Minneapolis, Minnesota 55305

(Address of principal executive offices) (Zip Code)

(763) 496-5454

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Voting common shares, no par value per share	DMAC	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ☒ NO ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES ☒ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐

Accelerated filer ☐

Non-accelerated filer ☒

Smaller reporting company ☒

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 3, 2026, there were 53,925,697 voting common shares of the registrant outstanding.

DiaMedica Therapeutics Inc.

FORM 10-Q

June 30, 2026

TABLE OF CONTENTS

Description		Page

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		1

PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	22
Item 4.	Controls and Procedures	22

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	23
Item 1A.	Risk Factors	23
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23
Item 3.	Defaults Upon Senior Securities	23
Item 4.	Mine Safety Disclosures	23
Item 5.	Other Information	23
Item 6.	Exhibits	23

SIGNATURE PAGE		25

This quarterly report on Form 10-Q contains certain forward-looking statements that are within the meaning of Section 27A of the United States Securities Act of 1933, as amended, and Section 21E of the United States Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created by those sections. For more information, see “Cautionary Note Regarding Forward-Looking Statements.”

As used in this report, references to “DiaMedica,” the “Company,” “we,” “our” or “us,” unless the context otherwise requires, refer to DiaMedica Therapeutics Inc. and its subsidiaries, all of which are consolidated in DiaMedica’s condensed consolidated financial statements. References in this report to “common shares” mean our voting common shares, no par value per share.

We own various unregistered trademarks and service marks, including our corporate logo. Solely for convenience, the trademarks and trade names in this report are referred to without the ® and ™ symbols, but such references should not be construed as any indicator that the owner of such trademarks and trade names will not assert, to the fullest extent under applicable law, their rights thereto. We do not intend the use or display of other companies’ trademarks and trade names to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Statements in this report that are not descriptions of historical facts are forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 that are based on management’s current expectations and are subject to risks and uncertainties that could negatively affect our business, operating results, financial condition, prospects and share price. We have attempted to identify forward-looking statements by terminology including “anticipates,” “believes,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “should,” “will,” “would,” the negative of these terms or other comparable terminology and the use of future dates.

The forward-looking statements in this report are subject to risks and uncertainties and include, among other things:

●

our plans to obtain U.S. Food and Drug Administration approval for the clinical study of DM199 for preeclampsia (PE) and fetal growth restriction (FGR) and ultimately to obtain regulatory approval for and commercialize our DM199 product candidate for the treatment of PE, FGR and acute ischemic stroke (AIS);

●

our ability to conduct successful clinical testing of our DM199 product candidate for PE, FGR and AIS and meet certain anticipated or target milestones and dates thereof with respect to our clinical studies;

●

the ability of our physician collaborators to successfully complete the current Phase 2, proof-of-concept investigator-sponsored clinical trial of DM199 for the treatment of PE and FGR, our reliance on these physician collaborators to conduct the study, and our expectations related to the timing of Part 1b and Parts 2 and 3 of this study;

●

our ability to meet anticipated site activations, enrollment and interim analysis timing with respect to our Phase 2/3 ReMEDy2 clinical trial of DM199 for the treatment of AIS, especially in the light of slower than expected site activations and enrollment which we believe are 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 clinical trials;

●

the success of the actions we are taking to mitigate the impact of the factors adversely affecting our ReMEDy2 trial site activations and enrollment rate, including significantly expanding our internal clinical team and bringing in-house certain trial activities, such as study site identification, qualification and activation, clinical site monitoring, supporting vendor management and overall program management; globally expanding the trial; and making certain changes to the study protocol; and risks associated with these mitigation actions;

●

uncertainties relating to regulatory applications and related filing and approval timelines, especially in light of recent changes in funding and staffing levels for the U.S. Food and Drug Administration (FDA) and other government agencies;

●

pending and future government agency requests for additional studies and uncertainty and potential delays in obtaining results from the same;

●

the possible occurrence of future adverse events associated with or unfavorable results from current trials and their potential to adversely affect other current or future trials;

●

the adaptive design of our ReMEDy2 trial, which is intended to enroll approximately 300 patients at up to 100 sites globally, and the possibility that the final sample size, which will be determined based upon the results of an interim analysis of 200 participants, may be up to 728 patients, according to a pre-determined statistical plan, other possible changes in the trial, including as a result of input from the FDA, and the results of the interim analysis as determined by our independent data safety monitoring board;

●

our expectations regarding the perceived benefits of our DM199 product candidate over existing treatment options for PE, FGR and AIS;

●

our ability to partner with and generate revenue from biopharmaceutical or pharmaceutical partners to develop, obtain regulatory approval for, and commercialize our DM199 product candidate for PE, FGR and AIS;

●

the potential size of the markets for our DM199 product candidate for PE, FGR and AIS and our or any future partner’s ability to serve those markets, the rate and degree of market acceptance of and ability to obtain coverage and adequate reimbursement for, our DM199 product candidate for PE, FGR and AIS both in the United States and internationally;

●

the success, cost and timing of our clinical trials, as well as our reliance on our key executives, clinical personnel, advisors and third parties in connection with our trials;

●

our or any future partner’s ability to commercialize, market and manufacture DM199;

●

expectations regarding U.S. federal, state and foreign regulatory requirements and developments affecting our pending and future clinical trials and regulatory approvals of our DM199 product candidate for PE, FGR and AIS and future commercialization and manufacturing of such products if required regulatory approvals are obtained;

●

our expectations regarding our ability to obtain and maintain intellectual property protection for our DM199 product candidate;

●

expectations regarding competition and our ability to obtain data exclusivity for our DM199 product candidate for PE, FGR and AIS; and

●

our estimates regarding expenses, market opportunity for our product candidates, future revenue, and capital requirements; our anticipated use of the net proceeds from our prior private placements; how long our current cash resources will last; and our need for and ability to obtain additional financing to fund our operations, including funding necessary to complete our current clinical trials and obtain regulatory approvals for our DM199 product candidate for PE, FGR and/or AIS.

These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described under “Part I. Item 1A. Risk Factors” in our annual report on Form 10-K for the fiscal year ended December 31, 2025 and those described above and that may appear elsewhere in this report, including under “Part II. Item 1A. Risk Factors.” Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Forward-looking statements should not be relied upon as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Except as required by law, including the securities laws of the United States, we do not intend to update any forward-looking statements to conform these statements to actual results or to changes in our expectations.

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

DiaMedica Therapeutics Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share amounts)

	June 30, 2026			December 31, 2025
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	5,129		$	15,647
Marketable securities		38,375			44,243
Prepaid expenses and other assets		567			481
Amounts receivable		244			258
Total current assets		44,315			60,629

Non-current assets:
Deferred offering costs		400			400
Operating lease right-of-use asset, net		153			197
Property and equipment, net		133			145
Total non-current assets		686			742

Total assets	$	45,001		$	61,371

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	2,812		$	1,475
Accrued liabilities		3,666			3,545
Operating lease obligation		107			101
Finance lease obligation		9			11
Total current liabilities		6,594			5,132

Non-current liabilities:
Operating lease obligation		69			124
Finance lease obligation		—			4
Total non-current liabilities		69			128

Shareholders’ equity:
Common shares, no par value; unlimited authorized; 53,925,697 and 53,742,370 shares issued and outstanding, as of June 30, 2026 and December 31, 2025, respectively		—			—
Paid-in capital		231,324			228,829
Accumulated other comprehensive income (loss)		(37	)		50
Accumulated deficit		(192,949	)		(172,768	)
Total shareholders’ equity		38,338			56,111
Total liabilities and shareholders’ equity	$	45,001		$	61,371

See accompanying notes to the condensed consolidated financial statements.

DiaMedica Therapeutics Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except share and per share amounts)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2026			2025			2026			2025
Operating expenses:
Research and development	$	8,153		$	5,822		$	16,140		$	11,478
General and administrative		2,345			2,185			4,840			4,673
Operating loss		(10,498	)		(8,007	)		(20,980	)		(16,151	)

Other income, net		366			314			813			757

Loss before income tax expense		(10,132	)		(7,693	)		(20,167	)		(15,394	)

Income tax expense		(7	)		(6	)		(14	)		(12	)

Net loss		(10,139	)		(7,699	)		(20,181	)		(15,406	)

Other comprehensive loss
Unrealized loss on marketable securities		(11	)		(19	)		(87	)		(37	)

Net loss and comprehensive loss	$	(10,150	)	$	(7,718	)	$	(20,268	)	$	(15,443	)

Basic and diluted net loss per share	$	(0.19	)	$	(0.18	)	$	(0.38	)	$	(0.36	)
Weighted average shares outstanding – basic and diluted		53,894,295			42,957,619			53,844,171			42,901,093

See accompanying notes to the condensed consolidated financial statements.

DiaMedica Therapeutics Inc.

Condensed Consolidated Statements of Shareholders’ Equity

For the Three and Six Months Ended June 30, 2026 and 2025

(In thousands, except share amounts)

(Unaudited)

	Common Shares		Paid-In Capital		Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Total Shareholders’ Equity

Balances at December 31, 2025		53,742,370	$	228,829	$	50		$	(172,768	)	$	56,111
Issuance of common shares upon the exercise of stock options		140,136		420		—			—			420
Issuance of common shares upon the vesting and settlement of restricted stock units		839		—		—			—			—
Share-based compensation expense		—		822		—			—			822
Unrealized loss on marketable securities		—		—		(76	)		—			(76	)
Net loss		—		—		—			(10,042	)		(10,042	)
Balances at March 31, 2026		53,883,345	$	230,071	$	(26	)	$	(182,810	)	$	47,235
Issuance of common shares upon the exercise of stock options		41,513		135		—			—			135
Issuance of common shares upon the vesting and settlement of restricted stock units		839		—		—			—			—
Share-based compensation expense		—		1,118		—			—			1,118
Unrealized loss on marketable securities		—		—		(11	)		—			(11	)
Net loss		—		—		—			(10,139	)		(10,139	)
Balances at June 30, 2026		53,925,697	$	231,324	$	(37	)	$	(192,949	)	$	38,338

	Common Shares		Paid-In Capital		Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Total Shareholders’ Equity

Balances at December 31, 2024		42,818,660	$	180,697	$	23		$	(140,002	)	$	40,718
Issuance of common shares upon the vesting and settlement of restricted stock units		3,805		—		—			—			—
Issuance of common shares upon the exercise of stock options		37,000		94		—			—			94
Share-based compensation expense		—		867		—			—			867
Unrealized loss on marketable securities		—		—		(18	)		—			(18	)
Net loss		—		—		—			(7,707	)		(7,707	)
Balances at March 31, 2025		42,859,465	$	181,658	$	5		$	(147,709	)	$	33,954
Issuance of common shares in settlement of deferred stock units		142,345		—		—			—			—
Issuance of common shares upon the vesting and settlement of restricted stock units		3,803		—		—			—			—
Issuance of common shares upon the exercise of stock options		66,875		163		—			—			163
Share-based compensation expense		—		771		—			—			771
Unrealized loss on marketable securities		—		—		(19	)		—			(19	)
Net loss		—		—		—			(7,699	)		(7,699	)
Balances at June 30, 2025		43,072,488	$	182,592	$	(14	)	$	(155,408	)	$	27,170

See accompanying notes to the condensed consolidated financial statements.

DiaMedica Therapeutics Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Six Months Ended June 30,
	2026			2025
Cash flows from operating activities:
Net loss	$	(20,181	)	$	(15,406	)
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation		1,940			1,638
Amortization of discounts on marketable securities		(359	)		(441	)
Non-cash lease expense		44			40
Depreciation		23			14
Changes in operating assets and liabilities:
Amounts receivable		14			75
Prepaid expenses and other assets		(86	)		(453	)
Deposits		—			1,108
Accounts payable		1,337			321
Accrued liabilities and operating lease liabilities		72			(1,643	)
Net cash used in operating activities		(17,196	)		(14,747	)

Cash flows from investing activities:
Purchase of marketable securities		(23,650	)		(16,370	)
Maturities and sales of marketable securities		29,790			31,967
Purchases of property and equipment		(11	)		(18	)
Net cash provided by investing activities		6,129			15,579

Cash flows from financing activities:
Proceeds from the exercise of common stock options		555			257
Principal payments on finance lease obligation		(6	)		(5	)
Net cash provided by financing activities		549			252

Net increase (decrease) in cash and cash equivalents		(10,518	)		1,084
Cash and cash equivalents at beginning of period		15,647			3,025
Cash and cash equivalents at end of period	$	5,129		$	4,109

Supplemental disclosure of non-cash transactions:
Cash paid for income taxes	$	13		$	12

See accompanying notes to the condensed consolidated financial statements.

DiaMedica Therapeutics Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

1.	Business

DiaMedica Therapeutics Inc. and its wholly owned subsidiaries, DiaMedica USA Inc. and DiaMedica Australia Pty Ltd. (collectively, we, us, our, DiaMedica and the Company), is a clinical stage biopharmaceutical company focused on developing novel treatments for preeclampsia (PE), fetal growth restriction (FGR) and acute ischemic stroke (AIS). DiaMedica’s lead product candidate, DM199, is the first pharmaceutically active, and clinically studied, recombinant (synthetic) form of the human tissue kallikrein-1 (KLK1) protein, an established therapeutic modality in Asia for the treatment of preeclampsia, acute ischemic stroke and other vascular diseases. Our common shares are publicly traded on The Nasdaq Capital Market under the symbol “DMAC.”

2.	Risks and Uncertainties

DiaMedica operates in a highly regulated and competitive environment. The development, manufacturing and marketing of pharmaceutical products require approval from, and are subject to ongoing oversight by, the United States Food and Drug Administration (FDA) in the United States, the European Medicines Agency (EMA) in the European Union, and comparable agencies in other countries. We are in the clinical stage of development of our lead product candidate, DM199, for the treatment of PE, FGR and AIS. We have not completed the development of any product candidate and do not generate any revenues from the commercial sale of any product candidate. Our lead product candidate, DM199, requires significant additional clinical testing and investment prior to seeking marketing approval and is not expected to be commercially available for at least three to four years, if at all.

With respect to our PE clinical program, a Phase 2 open-label, single center, single-arm, safety and pharmacodynamic, proof-of-concept, investigator-sponsored trial (IST) of DM199 for the treatment of PE is currently being conducted at the Tygerberg Hospital in Cape Town, South Africa. This Phase 2 trial consists of three studies (Parts 1a, 1b and 2) in PE and a single study (Part 3) in FGR as follows:

Preeclampsia (PE)

●

Part 1a: dose-escalation study evaluating single intravenous (IV) / single subcutaneous (SC) DM199 doses in late-onset PE subjects enrolled within 72 hours of delivery, including a confirmatory extension cohort of up to 12 participants at the cohort 10 dose level, which was completed in June 2026.

●

Part 1b: dose-expansion study evaluating continuous IV infusion in up to 30 late-onset PE subjects enrolled within 72 hours of delivery, using a dosing level identified in Part 1a; initial enrollment expected in September or October 2026.

●

Part 2: evaluation of repeated SC dosing of DM199 in early-onset PE subjects until delivery (expectant management), using three dose levels identified in Part 1a; initial enrollment expected in September or October 2026.

Fetal Growth Restriction (FGR)

●

Part 3: evaluation of a single IV and SC loading dose of DM199, followed by repeated SC dosing in FGR subjects until delivery (expectant management), using three dose levels identified in Part 1a; enrollment commenced in June 2026 and the first cohort of six participants has been enrolled.

Up to 90 women with PE and potentially an additional 30 subjects with FGR may be evaluated. Interim results from cohorts 1 through 9 (N=28) of Part 1a of the study were released in July 2025 and additional data from the extension cohort was released in August 2026. The interim results demonstrated that DM199 appears safe and well-tolerated with clinically-relevant pharmacodynamic activity with no evidence of placental transfer of DM199. In the combined final, highest-dose cohorts, which consisted of 15 PE subjects, three from the initial dose escalation phase and 12 additional subjects enrolled in the extension cohort, DM199 produced clinically meaningful and statistically significant, sustained reductions in maternal blood pressure at the pre-specified time point of five minutes after completion of the IV infusion. Systolic blood pressure (SBP) was maintained below 160 mmHg at all measured time points over 24 hours. Detailed Part 1a results, including pharmacokinetic and pharmacodynamic analyses, are expected to be presented at an upcoming medical conference and submitted for publication. The acceptance by the FDA of study data from clinical trials conducted outside the United States, including this IST, may be subject to certain conditions or may not be accepted at all. If the FDA does not accept such data, it would result in the need for additional participants or trials, which would be costly and time-consuming and delay regulatory approval and commercialization of our DM199 product candidate.

With respect to our AIS clinical program, we are currently conducting a Phase 2/3, adaptive design, randomized, double-blind, placebo-controlled trial of DM199 for the treatment of AIS, (the ReMEDy2 trial). Our ReMEDy2 trial is intended to enroll approximately 300 participants at up to 100 sites globally. The adaptive design component includes an interim analysis by our independent data safety monitoring board to be conducted after the first 200 participants have completed the trial. Based on the results of the interim analysis, the study may then be stopped for futility or the final sample size will be determined, ranging between 300 and 728 patients, according to a pre-determined statistical plan. We are currently conducting the trial in the United States, Canada, the United Kingdom and the European Union. Earlier this year, we commenced site initiations and enrollments in six European countries. We have experienced and continue to experience slower than expected site activations and enrollment in our ReMEDy2 trial. We believe these conditions may be due 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 prior clinically significant hypotension events; 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. We continue to reach out to our study sites to understand the specific issues at each study site. To mitigate the impact of these factors, we have significantly expanded our internal clinical team and have brought in-house certain trial activities, including site identification, qualification and activation, clinical site monitoring, supporting vendor management and overall program management. We continue to work closely with our contract research organizations and other supporting vendors to develop procedures to support both U.S. and global study sites and potential participants as needed. We intend to continue to monitor the results of these efforts and, if necessary, implement additional actions to enhance site activations and enrollment in our ReMEDy2 trial; however, no assurances can be provided as to the success of these actions and if or when these issues will resolve. Failure to resolve these issues may result in further delays in our ReMEDy2 trial and increase the difficulty in forecasting enrollment. As we approach enrollment of the 200^th participant, we estimate that the interim analysis will be completed in the first quarter of 2027.

Our future success is dependent upon the success of our development efforts, our ability to demonstrate clinical progress for our DM199 product candidate in the United States or other markets, our ability, or the ability of any future partner, to obtain required governmental approvals of our product candidate, our ability to license or market and sell our DM199 product candidate and our ability to obtain additional financing to fund these efforts.

As of June 30, 2026, we have incurred losses of $192.9 million since our inception in 2000. For the six months ended June 30, 2026, we incurred a net loss of $20.2 million and negative cash flows from operating activities of $17.2 million. We expect to continue to incur substantial operating losses until such time as any future product sales, licensing fees, milestone payments and/or royalty payments generate revenue sufficient to fund our continuing operations. For the foreseeable future, we expect to incur significant operating losses as we continue the development and clinical study of, and to seek regulatory approval for, our DM199 product candidate. As of June 30, 2026, we had combined cash, cash equivalents and marketable securities of $43.5 million, working capital of $37.7 million and shareholders’ equity of $38.3 million.

Our principal source of cash has been net proceeds from the issuance of equity securities. Although we have previously been successful in obtaining financing through equity securities offerings, there is no assurance that we will be able to do so in the future. This is particularly true if our clinical data are not positive or if economic and market conditions deteriorate.

We expect that we will need substantial additional capital to further our research and development activities and complete the required clinical studies, regulatory activities and manufacturing development for our product candidate, DM199, or any future product candidates, to a point where they may be licensed or commercially sold. We expect our current cash, cash equivalents and marketable securities to be sufficient to fund our planned operations for at least the next 12 months from the date of issuance of these condensed consolidated financial statements. The amount and timing of our future funding requirements will depend on many factors, including, but not limited to, timing and results of our ongoing development efforts; our current ReMEDy2 trial and the rate of site activation and participant enrollment in the study; the Phase 2 PE trial; the potential expansion of our current development programs; and other factors on our clinical trials and our operating expenses. We may require significant additional funds earlier than we currently expect and there is no assurance that we will not need or seek additional funding prior to such time, especially if market conditions for raising capital are favorable.

3.	Summary of Significant Accounting Policies

Interim financial statements

We have prepared the accompanying condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States (US GAAP) for interim financial information and with the instructions to Form 10-Q and Regulation S-X of the Securities and Exchange Commission (SEC). Accordingly, the condensed consolidated financial statements do not include all of the information and footnotes required by US GAAP for complete financial statements. These condensed consolidated financial statements reflect all adjustments consisting of normal recurring accruals which, in the opinion of management, are necessary to present fairly our condensed consolidated financial position, condensed consolidated results of operations and comprehensive loss, condensed consolidated statement of shareholders’ equity and condensed consolidated cash flows for the periods and as of the dates presented. Our fiscal year ends on December 31. The condensed consolidated balance sheet as of December 31, 2025 was derived from our audited consolidated financial statements. These condensed consolidated financial statements should be read in conjunction with our annual consolidated financial statements and the notes thereto. The nature of our business is such that the results of any interim period may not be indicative of the results to be expected for the entire year.

Segments

We operate in a single segment focusing on developing potentially transformative treatments for severe ischemic diseases. Consistent with our operational structure, our chief operating decision maker manages and allocates resources for the Company at a consolidated level. Therefore, results of our operations are reported on a consolidated basis for purposes of segment reporting. Substantially all of our tangible assets are held in the United States.

Cash and cash equivalents

We consider all bank deposits, including money market funds and other investments, purchased with an original maturity to the Company of three months or less, to be cash and cash equivalents. The carrying amount of our cash equivalents approximates fair value due to the short maturity of the investments.

Marketable securities

Our marketable securities may consist of obligations of the United States government and its agencies, bank certificates of deposit and investment grade corporate obligations, which are classified as available-for-sale. Marketable securities which mature within 12 months from their purchase date are included in current assets. Securities are generally valued based on market prices for similar assets using third-party certified pricing sources and are carried at fair value. The amortized cost of marketable securities is adjusted for amortization of premiums or accretion of discounts to maturity. Such amortization or accretion is included in interest income. Realized gains and losses, if any, are calculated on the specific identification method. Interest income is included in other income in the condensed consolidated statements of operations.

We conduct periodic reviews to identify and evaluate each available-for-sale debt security that is in an unrealized loss position in order to determine whether an other-than-temporary impairment exists. An unrealized loss exists when the current fair value of an individual security is less than its amortized cost basis. Declines in fair value considered to be temporary and caused by noncredit-related factors of the issuer, are recorded in accumulated other comprehensive income or loss, which is a separate component of shareholders’ equity. Declines in fair value that are other than temporary or caused by credit-related factors of the issuer, are recorded within earnings as an impairment loss. There were no material other-than-temporary unrealized losses as of June 30, 2026.

Fair value measurements

Under the authoritative guidance for fair value measurements, fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The authoritative guidance also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability developed based upon the best information available in the circumstances. The categorization of financial assets and financial liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The hierarchy is broken down into three levels defined as follows:

Level 1 Inputs — quoted prices in active markets for identical assets and liabilities

Level 2 Inputs — observable inputs other than quoted prices in active markets for identical assets and liabilities

Level 3 Inputs — unobservable inputs

As of June 30, 2026, we believe that the carrying amounts of our other financial instruments, including amounts receivable, accounts payable and accrued liabilities, approximate their fair value due to the short-term maturities of these instruments. See Note 4 titled “Marketable Securities” for additional information.

Deferred offering costs

Deferred offering costs represent legal, accounting and other direct costs related to the Company’s efforts to raise capital through a public sale of the Company’s common shares under the 2025 Sales Agreement, see Note 10. Costs related to the public sale of the Company’s common shares are deferred until the completion of the applicable offering, at which time such costs are reclassified to additional paid-in-capital as a reduction of the proceeds. See Note 10 titled “Shareholders’ Equity” for additional information.

Recently issued accounting pronouncements

In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (ASU 2024-03), which is intended to improve disclosures about a public business entity’s expenses by requiring disaggregated disclosure, in the notes to the consolidated financial statements, of certain categories of expenses included in the financial statements. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. ASU 2024-03 may be applied either on a prospective or retrospective basis, and early adoption is permitted. The Company is currently evaluating the potential impact of the adoption of ASU 2024-03 on its consolidated financial statement disclosures.

4.	Marketable Securities

The available-for-sale marketable securities are primarily comprised of investments in commercial paper, corporate bonds and government securities and consist of the following, measured at fair value on a recurring basis (in thousands):

	Fair Value Measurements Using Inputs Considered as of:
	June 30, 2026								December 31, 2025
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Government securities	$	32,063	$	—	$	32,063	$	—	$	39,421	$	—	$	39,421	$	—
Commercial paper and corporate bonds		6,312		—		6,312		—		4,822		—		4,822		—
Total	$	38,375	$	—	$	38,375	$	—	$	44,243	$	—	$	44,243	$	—

Maturities of individual securities are less than 12 months and the amortized cost of all securities approximated fair value as of June 30, 2026 and December 31, 2025. Accrued interest receivable on marketable securities is included in amounts receivable and was $236,000 and $250,000 as of June 30, 2026 and December 31, 2025, respectively.

There were no transfers of assets between Level 1 and Level 2 of the fair value measurement hierarchy during the six months ended June 30, 2026.

5.	Prepaid Expenses and Other Assets

Prepaid expenses and other assets consist primarily of insurance premiums, yearly subscriptions for services and deposits expected to be recovered during the next twelve months.

6.	Amounts Receivable

Amounts receivable consisted primarily of accrued interest receivable on marketable securities of $236,000 and $250,000 as of June 30, 2026 and December 31, 2025, respectively.

7.	Property and Equipment

Property and equipment, net, consisted of the following (in thousands):

	June 30, 2026			December 31, 2025
Computer equipment	$	153		$	151
Furniture and equipment		128			128
Leasehold improvements		16			16
		297			295
Less accumulated depreciation		(164	)		(150	)
Property and equipment, net	$	133		$	145

8.	Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):

	June 30, 2026		December 31, 2025
Clinical trial costs	$	1,823	$	1,291
Compensation		1,205		1,380
Research and development services		467		749
Professional services fees		165		120
Other		6		5
Total accrued liabilities	$	3,666	$	3,545

9.	Operating Lease

Office lease

Our operating lease costs were $52,000 for each of the six-month periods ended June 30, 2026 and 2025. Our variable lease costs were $47,000 and $43,000 for the six months ended June 30, 2026 and 2025, respectively. Variable lease costs consist primarily of common area maintenance costs, insurance and taxes which are paid based upon actual costs incurred by the lessor.

Future minimum operating lease obligations as of June 30, 2026 are (in thousands):

2026	$	59
2027		119
2028		10
Total lease payments		188
Less interest portion		(12	)
Present value of operating lease obligation		176
Less current portion of operating lease		(107	)
Operating lease obligation, non-current	$	69

10.

Shareholders’ Equity

Authorized capital stock

DiaMedica has authorized share capital of an unlimited number of common voting shares, and the shares do not have a stated par value. Common shareholders are entitled to receive dividends as declared by the Company, if any, and are entitled to one vote per share at the Company’s annual general meeting and any extraordinary or special general meeting.

Equity issued during the six months ended June 30, 2026

During the six months ended June 30, 2026, 181,649 common shares were issued upon the exercise of stock options for gross proceeds of $555,000 and 1,678 common shares were issued upon the vesting and settlement of restricted stock units.

Equity issued during the six months ended June 30, 2025

During the six months ended June 30, 2025, 103,875 common shares were issued upon the exercise of stock options for gross proceeds of $257,000, 142,345 shares were issued upon the settlement of deferred share units and 7,608 common shares were issued upon the vesting and settlement of restricted stock units.

At-the-Market Offering Program

We are party to a Sales Agreement under which we may, from time to time, sell voting common shares having an aggregate offering price of up to $100 million, through an “at-the-market” (ATM) offering. The sales agent receives a customary commission from the Company for any common shares sold under the ATM offering. The offer and sale of any shares sold in the ATM offering is pursuant to an effective registration statement on Form S-3 and an accompanying prospectus. As of June 3, 2026, $86.2 million remained available for issuance pursuant to the ATM offering.

Shares reserved

Common shares reserved for future issuance are as follows:

	June 30, 2026
Issuable upon exercise of employee and non-employee stock options		8,180,495
Issuable upon settlement of deferred stock units		190,785
Issuable upon vesting and settlement of restricted stock units		1,677
Available for grant under the Amended and Restated 2019 Omnibus Incentive Plan		2,989,251
Available for grant under the 2021 Employment Inducement Incentive Plan		528,125
Total		11,890,333

11.

Net Loss Per Share

We compute net loss per share by dividing our net loss (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period. Shares issued during the period and shares reacquired during the period, if any, are weighted for the portion of the period that they were outstanding. The computation of diluted earnings per share, or EPS, is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued. Our diluted EPS is the same as basic EPS due to common equivalent shares being excluded from the calculation, as their effect is anti-dilutive.

The following table summarizes our calculation of net loss per common share for the periods presented (in thousands, except share and per share data):

	Three Months Ended June 30,						Six Months Ended June 30,
	2026			2025			2026			2025
Net loss	$	(10,139	)	$	(7,699	)	$	(20,181	)	$	(15,406	)
Weighted average shares outstanding—basic and diluted		53,894,295			42,957,619			53,844,171			42,901,093
Basic and diluted net loss per share	$	(0.19	)	$	(0.18	)	$	(0.38	)	$	(0.36	)

The following outstanding potential common shares were not included in the diluted net loss per share calculations as their effects were not dilutive:

	For the Three- and Six-Month Periods Ended June 30,
	2026		2025
Common shares issuable upon exercise of employee and non-employee stock options		8,180,495		6,685,604
Common shares issuable upon settlement of deferred stock units		190,785		174,515
Common shares issuable upon vesting and settlement of restricted stock units		1,677		7,607

12.

Share-Based Compensation

Amended and Restated 2019 Omnibus Incentive Plan (2019 Plan)

The 2019 Plan permits the Board, or a committee or subcommittee thereof, to grant to the Company’s eligible employees, non-employee directors and certain consultants non-statutory and incentive stock options, stock appreciation rights, restricted stock awards, restricted stock units (RSUs), deferred stock units (DSUs), performance awards, non-employee director awards and other share-based awards. We grant options to purchase common shares under the 2019 Plan at no less than the fair market value of the underlying common shares as of the date of grant. Options granted to employees and non-employee directors have a maximum term of ten years and generally vest over one to four years. Options granted to non-employees have a maximum term of five years and generally vest over one year. Subject to adjustment as provided in the 2019 Plan, the maximum number of the Company’s common shares authorized for issuance under the 2019 Plan is 10,500,000 shares. As of June 30, 2026, options to purchase an aggregate of 6,660,585 common shares were outstanding, 181,040 common shares were reserved for issuance upon settlement of DSUs and 1,677 shares were reserved for issuance upon the vesting and settlement of RSUs and 2,989,251 shares remained available for issuance.

2021 Employment Inducement Incentive Plan (2021 Inducement Plan)

The 2021 Inducement Plan permits the Board, or a committee or subcommittee thereof, to grant non-statutory options, stock appreciation rights, restricted stock awards, restricted stock units, performance awards and other share-based awards, to new employees who satisfy the standards for inducement grants under Nasdaq Listing Rule 5635(c)(4) or 5635(c)(3), as applicable. The Inducement Plan has a term of 10 years. The share reserve under the Inducement Plan may be increased at the discretion of and approval by the Board and on July 31, 2025, the Board increased the number of common shares reserved for issuance under the plan to 2,000,000. As of June 30, 2026, options to purchase an aggregate of 1,225,000 common shares were outstanding under the Inducement Plan and 528,125 shares remained available for issuance.

Prior stock option plan

The Company ceased granting awards under its Amended and Restated Stock Option Plan in conjunction with shareholder approval of the 2019 Plan. Awards outstanding under the prior plan remain outstanding in accordance with and pursuant to the terms thereof. Options granted under the prior plan have terms similar to those used under the 2019 Plan. As of June 30, 2026, options to purchase an aggregate of 294,910 common shares were outstanding.

Prior deferred stock unit plan

The Company ceased granting awards under its Deferred Share Unit Plan in conjunction with shareholder approval of the 2019 Plan. Awards outstanding under that plan remain outstanding in accordance with and pursuant to the terms thereof. As of June 30, 2026, there were 9,745 common shares reserved for issuance upon settlement of DSUs outstanding.

Share-based compensation expense for each of the periods presented is as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
General and administrative	$	606	$	538	$	1,125	$	1,216
Research and development		512		233		815		422
Total share-based compensation	$	1,118	$	771	$	1,940	$	1,638

We recognize share-based compensation for options awards based on the fair value of each award as estimated using the Black-Scholes option valuation model. Ultimately, the actual expense recognized over the vesting period will only be for those options that actually vest.

A summary of option activity is as follows (in thousands except share and per share amounts):

	Shares Underlying Options			Weighted Average Exercise Price Per Share		Aggregate Intrinsic Value
Balances at December 31, 2025		6,864,854		$	4.11	$	26,479
Granted		2,029,249			6.03
Forfeitures		(464,459	)		4.25
Exercised		(181,649	)		3.06
Expired		(67,500	)		2.11
Balances at June 30, 2026		8,180,495		$	4.61	$	20,260

Information about stock options outstanding, vested and expected to vest as of June 30, 2026, is as follows:

			Outstanding, Vested and Expected to Vest						Options Vested and Exercisable
Per Share Exercise Price			Shares		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Options Exercisable		Weighted Average Remaining Contractual Life (Years)
$1.00	-	$1.99		51,443		6.6	$	1.64		48,318		6.6
$2.00	-	$2.99		2,016,923		6.4		2.75		1,537,218		6.4
$3.00	-	$3.99		223,107		3.5		3.67		206,233		3.1
$4.00	-	$4.99		2,764,219		7.1		4.33		1,229,019		5.4
$5.00	-	$5.99		2,168,536		8.3		5.72		272,101		5.5
$6.00	-	$10.00		956,267		8.4		7.24		143,792		3.1
				8,180,495		7.3	$	4.61		3,436,681		5.6

13.

Segment Information

An operating segment is identified as a component of an enterprise that engages in business activities about which separate discrete financial information and operating results is regularly reviewed by the chief operating decision-maker (CODM) in making decisions regarding resource allocation and assessing performance. The Company's CODM is the Chief Executive Officer. The Company operates in a single operating segment focused on the development of its drug product candidate DM199 for the treatment of severe ischemic disease. The CODM manages and allocates resources to the operations of the Company on a total company basis. Further, the CODM reviews and utilizes functional expenses (i.e., research, development and general and administrative) at the consolidated level to manage the Company's operations. Other segment items included in consolidated net loss are share-based compensation, interest income, other expense, net, and income tax expense, which are reflected in the condensed consolidated statements of operations and comprehensive loss. The measure of segment assets is reported on the condensed consolidated balance sheet as total consolidated assets.

The following table presents financial information, including significant segment expenses, which are regularly provided to the CODM and included within segment and consolidated net loss:

	Three Months Ended June 30,						Six Months Ended June 30,
	2026			2025			2026			2025
Operating expenses, excluding share-based compensation
Research and development	$	7,641		$	5,589		$	15,325		$	11,056
General and administrative		1,739			1,647			3,715			3,457
Total operating expenses, excluding share-based compensation		9,380			7,236			19,040			14,513
Share-based compensation
Research and development		512			233			815			422
General and administrative		606			538			1,125			1,216
Total share-based compensation		1,118			771			1,940			1,638
Operating loss		(10,498	)		(8,007	)		(20,980	)		(16,151	)
Interest income		385			313			855			757
Other income (expense), net		(19	)		1			(42	)		—