CorMedix Inc. — Q2 2011 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2011. The unaudited statements identify CorMedix as a development-stage pharmaceutical company focused on cardiac and renal disease. It had no product revenue.
Financial results and liquidity
- Q2 2011: Operating expenses were $2.48 million, including $1.58 million in R&D and $898,024 in G&A. Net loss was $2.48 million, or $0.22 per basic and diluted share, versus a $1.17 million loss, or $0.10 per share, in Q2 2010.
- First six months: Operating expenses were $4.49 million, including $2.76 million in R&D and $1.73 million in G&A. Net loss was $4.45 million, or $0.39 per share, compared with a $7.64 million loss, or $1.14 per share, in the first half of 2010.
- Cash flow: Operating activities used $3.54 million in the first half of 2011, versus $1.37 million in the comparable 2010 period. Investing activities used $1,625; there were no financing cash flows in the 2011 period.
- Balance sheet at June 30: Cash and cash equivalents were $4.74 million, down from $8.28 million at December 31, 2010. Current assets were $4.92 million and current liabilities $1.70 million; total liabilities were $1.72 million. The balance sheet reports no debt. Accumulated development-stage deficit was $40.69 million.
- The company reported no product gross margin or profitability measure because it had no product revenue. Interest expense was zero in the first half of 2011; 2010 included convertible-note-related interest and financing charges.
Changes versus prior periods
- Q2 R&D expense increased $1.02 million year over year, mainly due to CRMD001 patient recruitment and clinical costs, plus CRMD003 development and manufacturing costs. Q2 G&A increased $280,249, reflecting stock compensation and higher public-company, legal, investor-relations, and consulting costs.
- First-half R&D expense declined $529,809 year over year, primarily because 2010 included a $2.22 million non-cash charge for licensor shares; the decline was partly offset by higher clinical and development costs. First-half G&A increased $467,888.
- First-half net loss was lower than in 2010 principally because 2010 included $3.09 million of interest expense and the licensor-share charge. Cash fell by $3.55 million during the first half of 2011.
Outlook, risks, and unusual items
- Management said existing capital was expected to fund operations into the first quarter of 2012. The company anticipated no product revenue in 2011 and planned to seek additional equity or debt, strategic relationships, or product out-licensing; availability and acceptable terms were not assured. Failure to obtain funding could delay, reduce, or end development programs.
- For CRMD003 (Neutrolin), the company had submitted an amendment to its U.S. Investigational Device Exemption application and said approval could enable a pivotal U.S. trial to start in 2011. Its European CE-mark application was in progress; management anticipated possible approval and launch in the first half of 2012, subject to audits and regulatory approval, with no assurance of that timing or approval.
- For CRMD001, phase II biomarker-study enrollment for contrast-induced nephropathy was completed in June 2011, with results expected in the second half of 2011. Further development, including a possible chronic kidney disease indication, remained subject to study results, financing, regulatory and intellectual-property considerations.
- The company corrected an immaterial prior-period error: 2010 first-half R&D expense had included $369,652 for licensor escrowed shares that had not been earned, overstating loss per share by $0.06. The filing presents corrected comparative statements.
- No legal proceedings or material changes to previously disclosed risk factors were reported. Management stated that disclosure controls were effective and that there were no material changes in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Whether additional financing can be secured before the stated cash runway expires, and on what terms.
- Regulatory progress and trial timing for CRMD003, including U.S. IDE review, European audits, and any CE-mark decision.
- CRMD001 phase II results, and how those results affect subsequent clinical plans and funding needs.
- Quarterly cash burn and development spending, particularly given higher Q2 R&D costs and the lack of product revenue.