DiaMedica Therapeutics Inc. (DMAC) stock intrinsic value fair value estimate & owner earnings analysis

DiaMedica Therapeutics is a clinical-stage drug developer based in Minneapolis. It has no product sales, licensing income or partner payments. Its value today rests on its cash and its lead experimental drug, DM199 (rinvecalinase alfa), a lab-made (recombinant) version of the human enzyme KLK1. Versions of KLK1 taken from human urine or pig pancreas are sold in China, Japan and South Korea for stroke and blood-pressure conditions. No recombinant version is approved anywhere. DM199 is being tested in two diseases. The first is acute ischemic stroke, in the ReMEDy2 Phase 2/3 trial: more than 85% of the first 200 patients were enrolled by August 2026, and an independent board will review the results once those 200 patients finish. The second is preeclampsia, where a small Phase 2 study at Tygerberg Hospital in Cape Town, South Africa, showed large blood-pressure reductions at the higher doses (about 29 mmHg systolic across 15 patients). Patents on the DM199 molecule run to 2033, with method-of-use patents to 2038-2039 and pending applications going further. An earlier-stage candidate, DM300 (a recombinant form of the protein ulinastatin), is still preclinical and is given no value here. How we measured the business. We take cash from operations, remove short-term swings in working capital, subtract stock-based pay as a real cost, and subtract equipment spending. On that basis the company has consumed cash every year on record: about $0.72 per share in 2017, $0.52 to $0.64 a year from 2021 to 2024, and $0.72 in 2025. In dollars, that was $33.6 million in 2025, up 31% from $25.7 million in 2024, and the first half of 2026 ran faster still (operating cash outflow of $17.2 million). Because there is no revenue, there is no earnings level to project forward. The value question is how much of the company's cash will ever come back to shareholders, plus whatever DM199 turns out to be worth. What we credit and what we do not. We only credit value we can point to evidence for: a contract, revenue, or a proven repeatable process. DM199 has none of these yet. The earlier Phase 2 stroke trial (ReMEDy1, reported May 2020) did not show a benefit across all patients; the encouraging signal came from the subgroup that had not received a mechanical clot-removal procedure, and the preeclampsia data come from 15 patients. The Asian KLK1 products show the biology can work, but they are not DiaMedica's product. So in the base and bear cases the drug programs are given no value, and in the bull case they are valued only at what will have been spent on them up to the interim review. That is a deliberate choice, not a forecast that the drug will fail. It means our figures show what the shares are worth on the evidence available now. A positive trial result would be a new fact that changes the analysis. Starting point. At June 30, 2026 the company held $43.5 million of cash and short-term securities and had $6.7 million of liabilities, for net assets of $38.3 million, or about $0.71 per share on roughly 54 million shares. Management says this cash funds its plans through 2027. That is the plan to spend nearly all of it, not to keep it. Base case ($0.17 per share). Spending continues at the first-half 2026 pace of about $8.6 million a quarter until the ReMEDy2 interim review, now expected in early 2027. The 2025 annual report had said the second half of 2026, so this has already slipped. Money spent before that review cannot sensibly be stopped, because the trial is almost fully enrolled. After the review, the case assumes about $12.5 million of net assets is left, less about $3 million to either scale back or wind down. That leaves roughly $9 million, or $0.17 per share after discounting at 6%. No value is given to the trial result either way. Bear case ($0.02 per share). The review slips again and the company spends as planned through the end of 2027, as its own runway statement describes. Then the stroke program is stopped or needs a large new share sale on poor terms. Almost nothing is left for today's shareholders. The evidence for this path: the review date has already moved from the second half of 2026 (stated in March 2026) to early 2027 (stated in August 2026), and annual cash use has risen every year since 2021. Bull case ($0.58 per share). The interim review goes cleanly and the trial continues at the low end of its planned size. In that outcome, the research money spent up to the review has at least bought an asset worth its cost. Shareholders then keep net assets less about three quarters of corporate overhead: roughly $32 million, or $0.58 per share after discounting. We give no credit for approval, sales, royalties or a partnership, because none of these is signed or in hand. Upside beyond this figure is real but depends entirely on future trial data. Why the margin-of-safety price is so low. The main risk is not that the business earns less than expected. It is that the cash we are valuing is scheduled to be spent. A price below the base-case figure offers protection only if that cash is preserved, or if the trial produces results that justify spending it. So the margin-of-safety price applies only after the ReMEDy2 interim result is public and it is clear how the remaining cash will be used. At that point the margin-of-safety price is about $0.06 per share, a discount of roughly 65% to the base case, reflecting a very small, cash-burning company with one drug in clinical trials. What would make this wrong. A positive ReMEDy2 interim result, a licensing deal that brings in cash, or a partner funding the trial would each be a named, evidenced driver and could raise the value substantially above these figures. On the other side, a decision to keep spending on a failed or ambiguous program, funded by new share sales, would push value toward the bear case. Stock options on about 6.9 million shares at the end of 2025 would add dilution in the bull case if exercised; we have not deducted them.