Business Context and Reporting Period
Company: CorMedix Inc.
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: June 30, 2012
Business Stage: Development stage pharmaceutical and medical device company.
Primary Focus: In-licensing, developing, and commercializing therapeutic products for cardiac and renal dysfunction. The company has shifted strategy to focus primarily on obtaining CE Mark approval and commercializing its lead product candidate, Neutrolin® (CRMD003), in Europe. The company has generated no revenue from product sales since inception.
Key Financial Metrics
| Metric | Six Months Ended June 30, 2012 | Three Months Ended June 30, 2012 | As of June 30, 2012 |
|---|---|---|---|
| Revenue | $0 | $0 | N/A |
| Net Loss | $(1,534,376) | $(624,215) | N/A |
| Loss Per Share (Basic & Diluted) | $(0.13) | $(0.05) | N/A |
| Cash and Cash Equivalents | N/A | N/A | $893,936 |
| Total Assets | N/A | N/A | $1,036,333 |
| Total Liabilities | N/A | N/A | $1,179,816 |
| Stockholders' Equity (Deficiency) | N/A | N/A | $(143,483) |
| Accumulated Deficit | N/A | N/A | $(44,481,928) |
| Net Cash Used in Operating Activities | $(1,076,398) | N/A | N/A |
Material Changes vs. Prior Period
- Operating Expenses: Total operating expenses decreased significantly compared to the prior year periods.
- Research & Development (R&D): Decreased to $623,046 for the six months ended June 30, 2012, from $2,757,890 in the same period in 2011. This reduction is attributed to the strategic shift to focus on Neutrolin® in Europe and the discontinuation of the CRMD001 product candidate.
- General & Administrative (G&A): Decreased to $912,871 for the six months ended June 30, 2012, from $1,732,506 in the same period in 2011. Reductions were driven by lower compensation costs following the separation of the former CEO and the resignation of the former CFO, as well as reduced investor relations expenses.
- Liquidity: Cash and cash equivalents declined from $1,985,334 at December 31, 2011, to $893,936 at June 30, 2012, reflecting a net cash burn of approximately $1.1 million for the six-month period.
- Equity Position: The company moved from a positive stockholders' equity of $1,236,528 at year-end 2011 to a deficit of $(143,483) by June 30, 2012, due to the net loss incurred during the period.
Outlook, Risks, and Management Commentary
- Going Concern: The filing explicitly states that the company's financial position raises substantial doubt about its ability to continue as a going concern. Management believes current capital resources are sufficient to fund operations only into the fourth quarter of 2012.
- Capital Needs: The company intends to raise additional funds through equity or debt financings, strategic relationships, or out-licensing. There is no assurance that such financing will be available on acceptable terms.
- Regulatory Milestone: The primary business objective is obtaining CE Mark approval for Neutrolin® in Europe, anticipated by the end of the fourth quarter of 2012. Success is contingent on completing a Stage 2 audit and quality management system approval.
- Listing Compliance: The company received notice from the NYSE AMEX regarding non-compliance with continued listing standards due to sustained losses. A plan to regain compliance was submitted and accepted, with a review date of August 22, 2012. Failure to comply could result in delisting.
- Management Changes: The company experienced significant turnover, including the resignation of the former CFO/COO in April 2012. Richard Cohen serves as Interim CEO and Interim CFO.
- Legal Proceedings: A lawsuit regarding non-payment to a vendor (Xerimis) was settled in May 2012 for approximately $81,000.
Investor Verification Checklist
- Cash Runway: Verify if the company has secured additional financing to extend operations beyond the projected fourth quarter of 2012.
- CE Mark Status: Confirm the status of the Stage 2 audit and the likelihood of receiving CE Mark approval for Neutrolin® by the end of 2012.
- Listing Status: Monitor the company's progress toward regaining compliance with NYSE AMEX listing standards by the August 22, 2012 deadline to avoid delisting.
- Management Stability: Assess the impact of recent executive departures and the effectiveness of the interim management team.
- Dilution Risk: Review the number of outstanding warrants (approx. 4.3 million) and options (approx. 1.35 million) which could significantly dilute existing shareholders upon exercise.