CorMedix Inc. — Form 10-Q Summary
Reporting period: Three and nine months ended September 30, 2023; filed November 14, 2023. CorMedix is a biopharmaceutical company focused primarily on developing and preparing to commercialize DefenCath, a catheter-lock solution. The company had not generated substantial revenue and remained unprofitable.
Financial performance and position
| Metric | Q3 2023 | Nine months 2023 | Comparable 2022 period |
|---|---|---|---|
| Revenue | $0 | $0 | $6,817 and $35,706, respectively |
| Research and development expense | $2.66 million | $10.87 million | $2.34 million and $7.84 million |
| Selling, general and administrative expense | $7.80 million | $22.42 million | $4.63 million and $14.43 million |
| Net loss | $9.74 million | $31.59 million | $6.85 million and $21.49 million |
| Net loss per share, basic and diluted | $0.17 | $0.65 | $0.17 and $0.54 |
| Net cash used in operating activities | Not provided for the quarter | $27.66 million | $18.20 million for nine months |
Gross profit and operating margins were not meaningful because sales were nil in 2023. Nine-month operating expenses rose 50%; management attributed the increase mainly to DefenCath pre-launch work and personnel. Higher interest income partly offset operating losses.
At September 30, 2023, cash and cash equivalents were $53.31 million and short-term investments were $33.27 million, or $86.59 million combined; restricted cash was $0.19 million. Total current assets were $89.06 million and current liabilities were $7.67 million. Total liabilities were $8.23 million, including operating lease liabilities; the filing reports no material borrowing balance. Stockholders’ equity was $83.20 million and accumulated deficit was $306.95 million.
Net cash from financing activities was $55.45 million for the first nine months, primarily from a July public offering of common shares and pre-funded warrants (net proceeds of approximately $42.88 million) and ATM share sales (net proceeds of approximately $12.52 million). The company had 54.81 million common shares outstanding at September 30, versus 42.82 million at year-end 2022; 2.50 million pre-funded warrant shares were included in weighted-average shares for loss-per-share calculations.
Material changes and business developments
- Revenue fell to zero after the company wound down EU operations and discontinued Neutrolin sales in the EU and Middle East.
- For the first nine months, R&D expense increased 39%, including higher personnel, medical affairs and manufacturing-readiness costs. SG&A increased 55%, driven mainly by market research and DefenCath pre-launch activity, as well as added staff.
- Operating cash use increased by $9.46 million year over year. Cash and short-term investments increased from $58.79 million at December 31, 2022, mainly reflecting equity financing; investing cash outflow largely reflected purchases of short-term investments.
- The FDA accepted the DefenCath NDA resubmission filed May 15, 2023, as a Class 2 resubmission, with a November 15, 2023 target review date. The FDA’s pre-approval inspection at the current contract manufacturer was completed by the end of September; the company said it was unaware of outstanding review items.
- CMS’s final 2024 inpatient payment rule confirmed a potential New Technology Add-On Payment of up to $17,111 per hospital stay, conditional on FDA approval before July 1, 2024. The company also reported an allowed U.S. patent application that could provide protection through 2042, subject to issuance and applicable scope.
Outlook, risks and contingencies
Management estimated that cash, cash equivalents, short-term investments and available resources at September 30 would fund operations for at least 12 months from the filing date and support a DefenCath launch through anticipated profitability. That estimate assumes NDA approval in November 2023, a first-quarter 2024 commercial launch and other base-case assumptions. The company cautioned that additional financing may be needed, may not be available on acceptable terms, and could dilute shareholders or require the company to relinquish rights. It reported approximately $18.7 million remaining under its ATM program and $104.4 million available under its shelf registration.
Key risks include FDA review or approval delays, manufacturing and supplier compliance, commercial launch execution, reimbursement and market adoption, continued losses and financing needs, and dependence on third parties. The filing describes securities class-action litigation concerning alleged statements about the DefenCath NDA and related manufacturing matters, as well as consolidated derivative litigation stayed pending resolution of the class-action dismissal motion. The company intends to contest the claims. German patent and unfair-competition proceedings against TauroPharm were withdrawn or closed; approximately €38,000 plus interest in costs was ordered reimbursed in one matter, with the amount accrued.
Disclosure controls and procedures were assessed as effective as of September 30, 2023; the company reported no material change in internal control over financial reporting during the quarter. Management said it did not believe the SEC settlement involving its audit firm would affect CorMedix or its financial statements.
Investor verification points
- Check the subsequent FDA decision on the November 15, 2023 target date, and any conditions or timing affecting approval and launch.
- Verify whether the manufacturing inspection and any supplier-related issues were resolved to the FDA’s satisfaction.
- Track actual cash burn, launch spending and financing activity against management’s runway assumptions; assess potential dilution from the ATM, shelf capacity and pre-funded warrants.
- Confirm final reimbursement terms and whether the conditional CMS payment applies following any FDA approval.
- Monitor the securities and derivative litigation, including any decisions, settlements or financial exposure.