CorMedix Inc. — Form 10-Q Summary
Reporting period: Three and six months ended June 30, 2023; filed August 8, 2023. CorMedix is a development-stage biopharmaceutical company focused primarily on DefenCath, a catheter-lock solution awaiting U.S. FDA approval. The statements are unaudited.
Financial performance and position
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Revenue | $0 | $21,253 | $0 | $28,889 |
| Research and development | $4.79 million | $3.21 million | $8.20 million | $5.50 million |
| Selling, general and administrative | $7.01 million | $5.05 million | $14.62 million | $9.80 million |
| Net loss | $11.27 million | $7.60 million | $21.84 million | $14.64 million |
| Loss per share, basic and diluted | $0.25 | $0.19 | $0.49 | $0.38 |
- Gross margin is not meaningful for the period because the company reported no revenue in 2023.
- Six-month operating cash use was $18.97 million, versus $12.21 million a year earlier. Investing activities used $17.07 million, principally reflecting purchases of short-term investments; financing activities provided $12.55 million, mainly from ATM stock sales.
- At June 30, cash and cash equivalents were $19.70 million and short-term investments were $32.70 million, totaling $52.40 million, excluding $189,000 of restricted cash. Current liabilities were $7.39 million. Total liabilities were $7.98 million, including $737,000 of operating lease liabilities; the filing reports no material conventional borrowing balance.
- Stockholders’ equity was $49.05 million, down from $55.06 million at December 31, 2022. The accumulated deficit was $297.20 million.
Changes versus the prior comparable period
- Revenue fell to zero as CorMedix wound down EU operations and discontinued Neutrolin sales in the EU and Middle East.
- Operating expenses increased 43% in Q2 and 49% for the first six months. R&D increases reflected DefenCath manufacturing development, hiring and medical affairs; SG&A increases primarily reflected market research, pre-launch activity, personnel and stock compensation.
- Net loss widened 48% in Q2 and 49% for the six-month period. Higher interest income partly offset operating losses; the prior-year period also included a $586,000 tax benefit that did not recur.
- Common shares outstanding increased to 45.81 million at June 30 from 42.82 million at year-end, reflecting ATM sales and other share issuances.
Outlook, risks and notable items
- The FDA accepted CorMedix’s May 15, 2023 DefenCath NDA resubmission as a Class 2 resubmission, with a November 15, 2023 target review date. The FDA is expected to conduct a pre-approval inspection at the contract manufacturer. Approval is not assured.
- Prior FDA complete response letters cited manufacturing-facility and heparin-supplier deficiencies. CorMedix says corrective actions are underway and has qualified an alternative heparin source and additional potential manufacturing sites.
- Management estimates that available resources at June 30, plus subsequent offering proceeds, will fund operations for at least 12 months from the filing date and support launch through anticipated profitability. This forecast assumes NDA approval in November 2023, launch in Q1 2024, and other commercial and cost assumptions. Management cautions that additional financing may be needed and may not be available on acceptable terms.
- After quarter-end, the company received approximately $43.2 million net from a July public offering and full exercise of the underwriters’ option. The transactions involved common shares and pre-funded warrants and are dilutive to existing holders. As of August 8, approximately $18.7 million remained available under the ATM program and $104 million under the shelf registration.
- CMS’s final 2024 inpatient payment rule included a potential NTAP of up to $17,111 per hospital stay for DefenCath, contingent on FDA approval before July 1, 2024. The filing’s reference price and utilization assumptions are not guaranteed realized pricing or demand.
- CorMedix reports securities class-action litigation and consolidated shareholder derivative litigation related to alleged statements about the DefenCath NDA and manufacturing matters. The company says it intends to contest the claims; the derivative action is stayed pending resolution of the class-action dismissal motion.
- The company withdrew a German patent infringement action after the related patent was invalidated, and the court ordered CorMedix to bear proceeding costs. Approximately $28,000 was accrued for a requested cost amount under review. The company also disclosed other closed German proceedings and remaining restricted security deposits.
- Key risks include regulatory or inspection delays, manufacturing and supplier execution, commercialization and reimbursement, ongoing cash burn and potential dilution, competition, and litigation. Disclosure controls were assessed as effective, with no material change in internal control over financial reporting reported for the quarter.
Important facts for investors to verify
- FDA review status, the November 15, 2023 target date, inspection outcome, and whether manufacturing and supplier issues are resolved.
- Actual launch timing, product pricing, uptake and reimbursement, including the conditions and applicability of the CMS NTAP.
- Cash burn and runway relative to management’s approval, launch and profitability assumptions; actual proceeds and remaining capacity under financing programs.
- Fully diluted share count and potential dilution from the July offering, pre-funded warrants, ATM issuance, options and other equity awards.
- Developments in the securities and derivative litigation and the final amount of German litigation costs or refundable security deposits.