Sun and sand must be more alluring than buying company stock heading into the 4th of July Holiday. For the second week in a row, insider buying was on the slow side. One company, however, had multiple executives rushing to the window to buy stock.
Seven insiders acquired more than 1.6 million shares of DiaMedica Therapeutics Inc. (DMAC) for a total investment bordering on $5.7 million. (1) We call this action a cluster buy.
DiaMedica Therapeutics is a clinical stage biopharmaceutical company that develops treatments for neurological and kidney diseases. The company’s lead drug candidate is DM199, a recombinant human tissue kallikrein-1 protein, which is in Phase 2 REDUX trial for the treatment of patients with moderate or severe chronic kidney disease caused by Type I or Type II diabetes; and Phase 2/3 REMEDY2 trials for the treatment of patients with acute ischemic stroke. It is also developing DM300 that is in pre-clinical stage for the treatment of inflammatory diseases.
Interestingly, the run to the window comes close to the 52-week high and after some good news for the small cap biotech. The company just finished a private placement raising $37.5 million (2) and the FDA removed a clinical hold on DM199, a potential treatment for Ischemic Stroke. (3)
Rick Pauls, DiaMedica’s President and CEO, said, “We are pleased that the FDA has fully lifted the clinical hold. DM199, a synthetic formulation of the human tissue-1 kallikrein protein (KLK1), represents a novel approach to treating AIS patients, principally aimed at enhancing collateral blood flow in the brain tissues affected by the stroke.”
Strokes are the number one cause of long-term disability in the US, second leading cause in Europe. The World Health Organization reports 15 million people a year have a stroke with a third of them dying and another third permanently disabled.
According to iHealthcareAnalyst.com, “The global market for acute ischemic stroke (diagnosis and treatment) to reach $2.7 billion by 2029, at a CAGR of 5.4% over the forecast period, driven by increasing incidence and prevalence of stroke, and technological developments in diagnostic and surgical products.” (4) The primary driver is an aging population in developed nations.
Although treatment for strokes is expected to grow steadily through the end of the decade, analysts don’t expect DiaMedica to turn a profit for the foreseeable future and haven’t made any revenue forecasts. (5) However, Wall Street does have a one-year price target of $8.33. The stock last traded at $4.32.
OVERALL: DiaMedica Therapeutics Inc. (DMAC) is a highly speculative, emerging biotech. Their lead product is well into the FDA regulatory process but is subject to sputters and stops along the road to possible approval. While it is positive that insiders acquired stock, DMAC’s price will be news driven; good news could send the stock soaring and bad news sliding.
DMAC is only appropriate for hyper-aggressive investors who can afford to lose money and have a time horizon of at least two-three years.
1 – https://www.secform4.com/insider-trading/1401040.htm
2 – https://www.diamedica.com/investors/press-releases/detail/1666/diamedica-therapeutics-announces-closing-of-37-5-million
3 – https://www.diamedica.com/investors/press-releases/detail/1664/diamedica-therapeutics-announces-that-the-fda-has-removed
4 – https://www.ihealthcareanalyst.com/global-acute-ischemic-stroke-diagnosis-treatment-market/
5 – https://finance.yahoo.com/quote/DMAC/analysis?p=DMAC
6 – https://finance.yahoo.com/quote/DMAC?p=DMAC