Cormedix Inc. — Q2 2021 Form 10-Q
Reporting period: Three and six months ended June 30, 2021. Unaudited consolidated results. CorMedix is a biopharmaceutical company focused on DefenCath, a catheter-lock solution; it had not achieved significant product revenue or profitability.
Financial results and liquidity
| Metric | Q2 2021 | Q2 2020 | First half 2021 | First half 2020 |
|---|---|---|---|---|
| Revenue | $8,000 | $16,000 | $96,000 | $90,000 |
| Gross profit (loss) | $(6,000) | $(3,000) | $21,000 | $23,000 |
| Operating expenses | $5.876 million | $8.918 million | $13.113 million | $14.555 million |
| Operating loss | $(5.882) million | $(8.921) million | $(13.093) million | $(14.532) million |
| Net loss | $(4.633) million | $(3.782) million | $(11.850) million | $(9.340) million |
| Basic and diluted loss per share | $(0.12) | $(0.14) | $(0.32) | $(0.36) |
- At June 30, cash and cash equivalents were $73.1 million, short-term investments $5.2 million, and restricted cash $0.2 million. Cash and short-term investments totaled $78.3 million, excluding restricted cash.
- First-half operating cash use was $9.8 million, versus $8.7 million a year earlier. Financing provided $41.8 million, principally from $41.5 million net proceeds under the at-the-market (ATM) equity program. Investing used $0.7 million.
- Total liabilities were $4.0 million, including $1.0 million of operating lease liabilities; the balance sheet reports no borrowings. The ATM program had no remaining availability at quarter-end; $50.0 million remained under the shelf registration.
- Management estimated cash and investments would fund operations at least through 2022, including NDA resubmission costs and initial launch preparations. The company noted that further capital may be needed, particularly to build commercial infrastructure.
Material changes versus prior periods
- Q2 revenue fell 50% year over year, attributed to lower German sales. First-half revenue rose 7%, reflecting higher Middle East sales partly offset by lower German sales. Revenue remains immaterial relative to operating costs.
- First-half R&D expense fell 37%, mainly because 2020 included $3.4 million of DefenCath raw-material purchases. SG&A rose 24%, with higher stock-based compensation, staffing, and marketing research partly offset by lower consulting and legal fees.
- Q2 operating loss narrowed, but net loss increased 22% year over year, primarily as the tax benefit from New Jersey net operating loss sales fell to $1.25 million from $5.17 million. First-half net loss increased 27%.
- Common shares outstanding increased to 38.1 million from 33.6 million at year-end 2020, including 3.74 million shares sold through the ATM for $41.5 million net. Series C-3 and Series G preferred shares were also converted into common stock.
Outlook, risks, and unusual items
- The FDA issued a Complete Response Letter in March 2021 and said it could not approve the DefenCath NDA in its current form. The stated concerns involved the contract manufacturer’s facility and manufacturing-process qualification, plus a manual vial-extraction study. The manual extraction study was completed successfully; additional process qualification and validation remained necessary before resubmission.
- The FDA did not request additional clinical data or identify efficacy or safety deficiencies in LOCK-IT-100. The trial reported a 71% reduction in catheter-related bloodstream infections versus heparin across 41 cases (p=0.0006). The company anticipated an initial label for chronic hemodialysis patients using central venous catheters. FDA review timing would be determined after resubmission; a facility inspection and COVID-related backlog could delay approval.
- COVID-19 may disrupt vendors, manufacturing, regulatory inspections, staffing, and commercial preparations. Approval, manufacturing remediation, access to capital, and the timing and cost of launch remain significant uncertainties.
- In June, the company received approximately $1.3 million net from selling eligible New Jersey tax-loss benefits. It reported an accumulated deficit of $229.3 million and stated it may need additional financing; further equity financing could dilute shareholders.
- A purported shareholder class action filed in July 2021 alleges securities-law violations related to statements about the DefenCath NDA and the FDA’s response. CorMedix said it intends to contest the claims. Separately, its German unfair-competition appeal against TauroPharm was withdrawn and closed; an appeal concerning the validity of a European patent remained pending.
Key facts for investors to verify
- Progress and timing of manufacturing corrective actions, NDA resubmission, and any FDA inspection or review.
- Whether the estimated runway through 2022 remains adequate as remediation, launch, and operating costs develop.
- Future capital needs, potential dilution, and the terms and availability of financing beyond the exhausted ATM program.
- DefenCath commercial prospects and the scale of Neutrolin sales: first-half revenue was only $96,000, and foreign sales are not expected to be significant in the near term.
- Developments in the shareholder litigation, European patent appeal, and COVID-related operational risks.