Cormedix Inc. — FY 2011 Form 10-K
Reporting period: Fiscal year ended December 31, 2011. Although the request labels the period “2011 Q4,” this is an annual report covering the full fiscal year, with comparative FY 2010 results.
Business context
CorMedix was a development-stage pharmaceutical and medical-device company with no product-sales revenue. Its principal focus was CRMD003 (Neutrolin), a catheter-lock solution intended to prevent catheter-related bloodstream infections and maintain catheter patency, initially in hemodialysis patients. The company shifted most resources toward European CE Mark approval after the FDA assigned Neutrolin to its Center for Drug Evaluation and Research. CRMD004 remained preclinical.
Financial results and liquidity
| Metric | FY 2011 | FY 2010 |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $4.10 million | $5.49 million |
| General and administrative expense | $3.15 million | $3.01 million |
| Operating loss | $7.25 million | $8.51 million |
| Net loss | $6.71 million | $10.91 million |
| Net loss per share | $0.59 | $1.15 |
| Net cash used in operating activities | $6.30 million | $3.67 million |
Margins are not meaningful because the company had no product revenue. FY 2011 net loss improved chiefly because FY 2010 included $3.09 million of interest expense associated with the conversion of convertible notes at the IPO; FY 2011 interest expense was zero. R&D expense declined, partly reflecting the absence of prior-year license-related stock issuance charges, while G&A rose modestly.
Cash and cash equivalents fell to $1.99 million at year-end from $8.28 million a year earlier. Current assets were $2.53 million versus current liabilities of $1.31 million; total liabilities were $1.32 million, mainly accounts payable and accrued expenses. Convertible notes had converted to equity in 2010. Stockholders’ equity was $1.24 million, and accumulated deficit was $42.95 million. There was no financing cash inflow in 2011. The company reported no off-balance-sheet arrangements.
Material developments and outlook
- Neutrolin’s design dossier was submitted to the European notified body in the first half of 2011; the company completed its Stage 1 audit in Q4. Stage 2 audit, quality-system approval, and design-dossier approval remained outstanding.
- Management anticipated CE Mark approval in the first half of 2012 and a possible European launch during 2012, subject to approvals and commercialization arrangements. It was exploring distribution or partnership options. These were expectations, not assured outcomes.
- The company planned to seek FDA authorization to begin clinical studies; Neutrolin was not approved for commercial sale in the U.S. or Europe.
- A 61-patient Phase II biomarker study of CRMD001 (deferiprone) was completed. Biomarkers suggested reduced acute elevations in some kidney-injury markers, but renal-function measures trended less favorably in the treatment group; the filing reported no safety signal. CorMedix discontinued further development and terminated the Shiva license in December 2011.
- Management said year-end cash was expected to fund operations into Q4 2012, but significant additional financing would be needed thereafter and could be unavailable or dilutive. The company did not expect significant product-sales revenue in 2012.
Risks, contingencies, and unusual items
- The independent auditor and management cited substantial doubt about the company’s ability to continue as a going concern. Without financing, CorMedix could curtail or terminate operations or relinquish rights to technologies or markets.
- In March 2012, after year-end, the company reported cost cuts: as of March 12 it had two full-time employees and two part-time employees, plus consultants. The Chief Medical Officer’s services and compensation were reduced by 50%, effective March 1, 2012.
- Geistlich’s appeal concerning a patent relevant to Neutrolin remained pending before the European Patent Office; the company expected oral proceedings during 2012 and could not predict the outcome.
- Development, regulatory approval, outsourced manufacturing, reimbursement, market acceptance, intellectual-property protection, and access to capital were significant risks. The company also disclosed potential dilution from outstanding warrants and options.
- Common stock traded between $0.21 and $0.90 in FY 2011’s fourth quarter. The company warned of limited trading liquidity and possible NYSE Amex listing-compliance issues.
Important facts for investors to verify
- Whether the Stage 2 audit, quality-management-system requirements, and CE Mark approval were completed, and on what timeline.
- Actual cash runway, subsequent financing, and the basis for any updated going-concern assessment.
- Neutrolin’s regulatory pathway and required U.S. studies, as well as any partnership, distribution, reimbursement, or launch arrangements.
- The outcome of the European patent appeal and the status of key licensed intellectual property.
- Updated employee and operating-cost levels, and the potential dilution from warrants, options, and future fundraising.