Cormedix Inc. — Q1 2022 Form 10-Q Summary
Reporting period: Three months ended March 31, 2022. CorMedix is a development-stage biopharmaceutical company focused primarily on DefenCath, a catheter-lock solution intended to prevent catheter-related infections and thrombosis. The financial statements are unaudited.
Financial results and position
| Metric | Q1 2022 | Q1 2021 |
|---|---|---|
| Revenue | $7,636 | $88,261 |
| Gross profit | $6,109 | $26,922 |
| Research and development expense | $2.29 million | $2.64 million |
| Selling, general and administrative expense | $4.75 million | $4.60 million |
| Operating loss | $7.03 million | $7.21 million |
| Net loss | $7.03 million | $7.22 million |
| Net loss per share, basic and diluted | $0.18 | $0.20 |
| Net cash used in operating activities | $6.74 million | $6.69 million |
- At March 31, cash and cash equivalents were $45.39 million and short-term investments were $16.30 million; combined, $61.69 million, excluding $0.23 million of restricted cash. Combined cash and short-term investments were $65.47 million at year-end 2021.
- Total assets were $64.93 million and total liabilities were $5.06 million. Liabilities primarily comprise operating leases; the filing reports no material conventional borrowing balance. Lease liabilities totaled $0.89 million.
- Accumulated deficit was $252.7 million. Management estimated existing cash and short-term investments would fund operations at least through the first half of 2023.
Changes versus the prior-year quarter
- Revenue fell 91%, mainly because of lower Neutrolin sales in Europe and the Middle East. Gross profit declined with lower sales, though cost of sales also decreased sharply.
- R&D expense decreased 13%, reflecting lower personnel and stock-based compensation costs, partly offset by increased DefenCath manufacturing work.
- SG&A increased 3%. Higher litigation, personnel, CEO-recruitment and office costs were partly offset by lower stock-based compensation and marketing research costs.
- Net loss narrowed modestly, by about 3%. Operating cash use was broadly similar to Q1 2021.
- ATM equity proceeds fell to $3.00 million from $41.46 million in Q1 2021. Common shares outstanding increased from 38.09 million at December 31, 2021 to 38.73 million at March 31, 2022.
Outlook, material developments and risks
- On February 28, 2022, CorMedix resubmitted the DefenCath NDA after the FDA’s 2021 Complete Response Letter, which cited manufacturing-facility concerns and required a manual vial-extraction study. The extraction study was completed; the FDA did not request additional clinical data or identify deficiencies in the submitted efficacy or safety data.
- The FDA accepted the resubmission on March 28 as a complete Class 2 response with a six-month review cycle. An FDA onsite inspection of the contract manufacturer is expected during review. Inspection findings, manufacturing corrections, or COVID-related travel restrictions could delay or prevent approval. Any initial approval would be for chronic hemodialysis patients with kidney failure using a central venous catheter.
- Management expects continued operating cash deficits and says additional capital will be needed. At March 31, approximately $46.9 million remained under the ATM program and $150 million under the 2021 shelf registration. Additional financing may dilute shareholders or impose debt obligations; availability and terms are uncertain.
- Subsequent events: In April, the company raised approximately $2.22 million net through ATM sales and received approximately $586,000 net from a sale of New Jersey tax-loss benefits. In May, it announced plans to wind down EU operations and discontinue Neutrolin sales in the EU and Middle East.
- CorMedix faces securities class-action litigation alleging misstatements concerning the DefenCath NDA; a related derivative case is stayed pending the class-action dismissal proceedings. The company intends to contest the claims. German intellectual-property disputes include an appeal concerning revocation of a European patent; outcomes are uncertain.
- Other risks include the company’s dependence on DefenCath approval and a third-party manufacturer, lack of substantial product revenue, ongoing financing needs, possible dilution, and potential delays to regulatory and commercial plans.
- Management reported disclosure controls and procedures were effective as of March 31, 2022. The filing states there were no material changes to previously disclosed risk factors.
Important facts for investors to verify
- Whether the FDA inspection and manufacturing remediation satisfy review requirements, and whether the NDA is approved, delayed, or receives further agency action.
- Actual cash burn and financing needs relative to management’s stated runway through at least the first half of 2023; monitor ATM and shelf usage and resulting dilution.
- Whether DefenCath can be launched and commercialized successfully if approved, including manufacturing capacity, reimbursement, sales infrastructure, and launch costs.
- Financial and operational effects of winding down Neutrolin sales in Europe and the Middle East.
- Developments and potential financial exposure in securities litigation and the European patent appeal.