CorMedix Inc. — Q2 2022 Form 10-Q
Reporting period: Three and six months ended June 30, 2022; unaudited. The filing was signed August 11, 2022. CorMedix is a biopharmaceutical company whose lead candidate, DefenCath, is intended to prevent catheter-related infections and thrombosis. The filing also reports subsequent events through August 8, 2022.
Financial results and liquidity
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Revenue | $21,000 | $8,000 | $29,000 | $96,000 |
| Operating expenses | $8.26 million | $5.88 million | $15.30 million | $13.11 million |
| Net loss | $7.60 million | $4.63 million | $14.64 million | $11.85 million |
| Net loss per share | $0.19 | $0.12 | $0.38 | $0.32 |
| Net cash used in operations | — | $12.21 million | $9.78 million |
- Q2 R&D expense rose 27% to $3.21 million, mainly due to pre-approval DefenCath manufacturing costs. Q2 SG&A increased 51% to $5.05 million, reflecting pre-launch and market research activity, personnel, and legal costs.
- At June 30, cash and cash equivalents were $48.93 million and short-term investments were $15.69 million, totaling $64.62 million; restricted cash was an additional $224,000. Management estimated available cash and investments would fund operations at least through Q3 2023.
- Current assets were $65.36 million and current liabilities $5.27 million. Total liabilities were $6.01 million, primarily accounts payable, accruals, and operating lease obligations; the balance sheet shows no material funded borrowing.
- Six-month financing included $11.42 million net proceeds from ATM stock sales, issuing 3.02 million shares. The company reported $38.2 million remaining under its ATM program and $150 million under its shelf registration. Further capital may be needed and could dilute shareholders.
- Gross profit was $21,000 for Q2 and $27,000 for the first half. Given the very small revenue base and prior-period inventory adjustments, gross margin is not a meaningful indicator of ongoing economics.
Material changes and unusual items
- First-half revenue fell 70% year over year, principally due to lower Neutrolin sales in the EU and Middle East; Q2 revenue increased from a very low base on higher EU sales. Sales remain immaterial relative to operating costs.
- Net losses increased 64% for Q2 and 24% for the first half, driven by higher operating expenses. First-half SG&A included increased legal costs, mainly related to securities litigation.
- The $586,000 tax benefit in 2022 reflects proceeds from selling New Jersey net operating losses through the state program; the comparable 2021 benefit was $1.25 million.
- CorMedix announced in May 2022 that it would wind down EU operations and discontinue Neutrolin sales in the EU and Middle East.
Outlook, regulatory status, and risks
- DefenCath approval remains uncertain. On August 8, 2022, after quarter-end, the FDA issued a second Complete Response Letter (CRL). The FDA said deficiencies at the contract manufacturer and heparin API supplier must be resolved before approval; it identified no other company requirements before another resubmission. The FDA also raised potential confusion with another product name, and CorMedix submitted an alternative name.
- CorMedix entered an agreement with Alcami as a prospective U.S. manufacturing site and expected to submit a manufacturing supplement around the end of Q1 2023. It also planned to qualify an alternate U.S. heparin supplier. These are company expectations, not FDA approval dates.
- The completed LOCK-IT-100 trial showed a 71% reduction in catheter-related bloodstream infections versus heparin across 41 cases (p=0.0006); the FDA’s stated outstanding issues were manufacturing and supplier deficiencies, not additional clinical data.
- CMS published conditional New Technology Add-on Payment reimbursement of $4,387.50 per average hospital stay, based on three vials and an assumed wholesale acquisition cost of $1,950 per vial. It is conditional on final FDA approval before July 1, 2023; the company planned a duplicate application in October to preserve the opportunity if that deadline is missed. WAC is a list price, not necessarily the net price received.
- Management expects continuing operating cash deficits and says additional capital may be required, including to build commercial infrastructure. Financing availability and terms are not assured; equity financing could dilute shareholders.
- Risks include FDA review and manufacturing remediation, supplier compliance, commercialization and reimbursement, continued financing needs, COVID-related disruption, and litigation. Securities class-action claims and a related derivative action remain pending; the company intends to contest them. An appeal concerning a European patent was scheduled for October 27, 2022. The filing says there were no material changes to the risk factors disclosed in the 2021 Form 10-K.
- Management reported disclosure controls and procedures were effective as of June 30, 2022. No material change in internal control over financial reporting was reported during the quarter, apart from the CEO’s May 2022 appointment.
Investor verification priorities
- Track whether the CMO and heparin supplier deficiencies are resolved to FDA satisfaction, and whether the Alcami site and alternate API source are qualified on the expected timeline.
- Reassess the cash runway against actual quarterly cash burn, financing activity, and potential commercial launch spending; monitor share issuance and dilution.
- Verify the status and conditions of the CMS reimbursement pathway, including the approval deadline, duplicate application, and realized net pricing versus assumed WAC.
- Monitor resolution of the securities and derivative litigation, as well as the European patent appeal and related intellectual-property exposure.
- Confirm the financial and operational effects of winding down EU and Middle East Neutrolin sales.