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DiaMedica (DMA.V): New Financing Boosts Balance Sheet

By Grant Zeng, CFA


On Apr 18, 2017, DiaMedica Therapeutics (TSX:DMA.V) announce that it completed a non-brokered private placement with a prominent U.S. investor. 

DiaMedica issued 10,526,315 units to the investor at an issue price of USD$0.19 (CAD$0.25) per unit. Gross proceeds from the financing were approximately USD$2 million. In the news release, the company indicated that the proceeds will be used by the Company to advance its research and development program, including DM199 for the treatment of neurological and kidney diseases, and for general corporate purposes.

Each Unit consisted of one common share and one-half of one common share purchase warrant, with each whole warrant entitling the holder thereof to acquire one additional common share at an exercise price of USD$0.23 (CAD$0.31) per share until 5:00 p.m. (Central Time) on the date that is: (i) twenty-four months after the date of issuance, or (ii) if on any date (the "Accelerated Exercised Date") (a) the volume-weighted average closing trading price of the common shares on any recognized Canadian stock exchange equals or exceeds USD$0.30 for a period of 10 consecutive trading days, then, at the Company's sole discretion and upon the Company sending the holder written notice of such Accelerated Exercise Date and issuing a news release announcing such Accelerated Exercise Date, the day that is 21 days following the later of: (i) the date on which such Notice is sent to the holder; and (ii) the date on which the News Release is issued.

The common shares and warrants are subject to restrictions on resale in accordance with applicable securities laws and the policies of the TSX Venture Exchange. These restrictions will expire four months and a day following the issuance of the Units. 

We welcome this financing. It not only boosts the company’s balance sheet, but also validates the company’s technology and clinical programs. Per the news release, the U.S. based life science investor has numerous academic, national, and international awards for leadership and contributions to the biopharmaceutical industry. Also, the investor has a deep understanding of recombinant proteins, and has rich experience and understanding of the biopharmaceutical industry in the U.S., Europe, and Asia. We think the investment in DiaMedica is an excellent strategic fit for the company and will help accelerate the company’s clinical programs, especially for DM199.

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