CorMedix Inc. — Form 10-Q Summary
Reporting period: Quarter and nine months ended September 30, 2022. Financial statements are unaudited. CorMedix is a development-stage biopharmaceutical company focused primarily on DefenCath, a catheter lock solution intended to prevent catheter-related infections and thrombosis. Its European product, Neutrolin, was being wound down.
Financial performance
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Revenue | $6,817 | $38,088 | $35,706 | $134,539 |
| Gross profit | $5,348 | $12,922 | $32,378 | $33,608 |
| Research and development | $2.34 million | $4.74 million | $7.84 million | $9.90 million |
| Selling, general and administrative | $4.63 million | $3.84 million | $14.43 million | $11.79 million |
| Operating loss | $6.96 million | $8.56 million | $22.23 million | $21.66 million |
| Net loss | $6.85 million | $8.57 million | $21.49 million | $20.42 million |
| Basic and diluted loss per share | $0.17 | $0.22 | $0.54 | $0.54 |
Revenue declined 82% in Q3 and 73% for the nine-month period, primarily because the company was winding down European operations and discontinuing Neutrolin sales in Europe and the Middle East. Revenue remained immaterial. R&D expense fell as DefenCath manufacturing-development costs decreased; SG&A rose with pre-launch and market research activity, legal fees, and personnel costs. Q3 net loss narrowed, while nine-month net loss increased 5%.
Cash, liquidity and capital
- At September 30, 2022, cash and cash equivalents were $43.25 million and short-term investments were $15.75 million, totaling approximately $59.0 million. Restricted cash was $216,000.
- For the first nine months, operating cash use was $18.20 million, investing cash use was $3.71 million, and financing cash provided was $11.85 million. Cash, cash equivalents and restricted cash decreased $10.08 million.
- Equity sales through the ATM program generated $11.72 million net during the nine months, compared with $41.46 million in the prior-year period. The company reported approximately $37.9 million remaining under its ATM program and $150 million available under its shelf registration.
- Management expects existing cash and short-term investments to fund operations at least through 2023, but says additional capital will be needed to continue operations and may be required for commercial infrastructure. Further financing could dilute shareholders or impose debt obligations or other restrictions.
- No conventional borrowings are reported on the balance sheet; operating lease liabilities totaled approximately $834,000. The company also reported preferred shares with aggregate liquidation preference of approximately $21.3 million.
Material developments, outlook and risks
- DefenCath regulatory status: The FDA issued a second Complete Response Letter on August 8, 2022. The filing says approval cannot occur until deficiencies at the contract manufacturer and heparin API supplier are resolved to FDA satisfaction; it reports no other requirements before resubmission. The company was validating manufacturing with an alternative heparin supplier.
- Manufacturing plans: CorMedix finalized an agreement with Alcami as a U.S. manufacturing site and expected to submit an NDA supplement around the end of Q1 2023 to seek FDA approval of that site. The timeline and approval are not assured.
- Clinical evidence: The filing reports that the completed LOCK-IT-100 study showed a 71% reduction in catheter-related bloodstream infections versus heparin, statistically significant at p=0.0006, with a good safety profile. The FDA’s outstanding concerns described in this filing are manufacturing-related.
- European business and intellectual property: The company expected to discontinue Neutrolin sales in the EU and Middle East by the end of 2022. In October 2022, the European Patent Office Board of Appeals found the relevant Prosl patent claims not inventive; CorMedix withdrew its appeal, making invalidation final. Related infringement proceedings were expected to close. A separate German unfair-competition action had already been closed after the company withdrew its appeal.
- Litigation: A securities class action alleges misleading statements and omissions concerning DefenCath regulatory submissions and manufacturing communications. The company said it would contest the claims; no loss amount or outcome is specified. A related derivative action was stayed pending the class-action dismissal motion.
- Other risks and commentary: CorMedix has a history of losses, an accumulated deficit of $267.2 million, and limited product revenue. Key risks include FDA and manufacturing delays, supplier compliance, financing needs, possible dilution, commercialization and reimbursement, competition, and potential COVID-19-related program disruptions. The company stated that inflation had not materially affected results and that it was not materially exposed to interest-rate changes.
Key facts for investors to verify
- Progress and timing of corrective actions at the contract manufacturer and heparin supplier, and the status of FDA review or resubmission.
- Whether Alcami and the alternate heparin source are qualified and whether the anticipated Q1 2023 NDA supplement was submitted and accepted.
- Actual cash burn and runway relative to management’s estimate through 2023, and the amount and terms of any subsequent financing.
- Whether the planned EU and Middle East Neutrolin wind-down was completed and its effect on costs and revenue.
- Developments in the securities class action and derivative litigation, including any financial exposure not quantified in this filing.