CorMedix Inc. — Form 10-Q Summary
Reporting period: Three and nine months ended September 30, 2021. The filing is unaudited. CorMedix is a biopharmaceutical company focused primarily on DefenCath, a catheter-lock solution intended to reduce catheter-related infections and thrombosis; existing sales are limited mainly to Neutrolin outside the U.S.
Financial performance and liquidity
Amounts below are in U.S. dollars; income-statement figures are shown in millions except per-share data.
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Revenue | $0.038 | $0.093 | $0.135 | $0.184 |
| Gross profit | $0.013 | $0.013 | $0.034 | $0.036 |
| Research and development expense | $4.741 | $2.925 | $9.898 | $11.083 |
| Selling, general and administrative expense | $3.837 | $3.692 | $11.794 | $10.089 |
| Net loss | $8.569 | $6.601 | $20.419 | $15.941 |
| Net loss per share | $0.22 | $0.22 | $0.54 | $0.58 |
- Gross margin was approximately 34% in Q3 and 25% for the nine-month period, but gross profit remained very small relative to operating expenses.
- At September 30, cash and cash equivalents were $66.3 million and short-term investments were $5.7 million, totaling $72.0 million; restricted cash was $0.2 million. Current assets were $73.0 million and current liabilities $5.2 million. Total liabilities were $6.0 million, primarily accounts payable, accrued expenses and lease obligations; no material interest-bearing debt balance is presented on the balance sheet.
- For the first nine months, operating cash use was $15.3 million, investing cash use $2.0 million and financing cash provided $41.8 million. Financing included $41.5 million net proceeds from ATM share sales. Cash, cash equivalents and restricted cash increased to $66.6 million from $42.1 million at year-end 2020.
- Common shares outstanding rose to 38.1 million from 33.6 million at December 31, 2020. The company issued 3.74 million shares through its ATM program during the nine-month period.
Material changes versus prior periods
- Q3 revenue declined 59% year over year, and nine-month revenue declined 27%, reflecting lower sales in the Middle East and Europe.
- Q3 R&D expense rose 62%, principally due to increased pre-approval DefenCath manufacturing costs; nine-month R&D expense fell 11%, primarily because manufacturing costs were lower than in the comparable 2020 period.
- Nine-month SG&A expense increased 17%, including higher personnel and stock-based compensation costs. Nine-month net loss increased 28%; the 2020 comparison included a larger tax benefit from sales of New Jersey tax-loss benefits.
- The company raised substantially more through ATM sales in 2021 than in the comparable 2020 period, increasing cash resources but also common shares outstanding.
Outlook, risks and unusual items
- The FDA issued a Complete Response Letter in March 2021 and said it could not approve the DefenCath NDA in its current form. The cited issues concerned the contract manufacturer’s facility and manufacturing qualification, plus a manual vial-extraction study. The manual extraction study was completed, but additional process qualification and validation remained necessary. The resubmission timeline was uncertain, and satisfactory resolution of the issues is required for approval. The FDA did not request additional clinical data or identify efficacy or safety deficiencies in LOCK-IT-100.
- Management estimated that cash, cash equivalents and short-term investments would fund operations at least through 2022, including NDA resubmission costs and initial commercial-launch preparation. The company expects continued cash use and may need additional capital; financing may be dilutive or unavailable on acceptable terms.
- DefenCath’s pivotal LOCK-IT-100 study reported a 71% reduction in catheter-related bloodstream infections versus heparin across 41 cases, with statistical significance (p=0.0006). The filing describes intended initial U.S. use in chronic hemodialysis patients with central venous catheters; approval and timing remain uncertain.
- COVID-19, manufacturing delays, possible FDA inspection backlogs, and supply-chain or vendor disruption could delay development and approval. Neutrolin sales are not expected to provide significant revenue in the near term; Saudi Arabia sales remain unavailable pending renewal of an expired registration.
- Two securities class actions were consolidated after alleging misstatements related to the DefenCath NDA; a shareholder derivative action was also filed. CorMedix said it intends to contest the claims. Separately, the EPO had revoked the company’s Prosl European Patent as invalid and an appeal was pending; the company withdrew its German utility-model complaint, and its German unfair-competition appeal was withdrawn, with related cost proceedings unresolved.
- After quarter-end, CEO Khoso Baluch and EVP Technical Operations John Armstrong retired effective October 4, 2021. CFO Matthew David became interim CEO. The filing reports effective disclosure controls and no material change in internal control during the period.
- No formal revenue or earnings guidance was provided. Management’s principal forward-looking estimate was the stated cash runway through at least 2022.
Key facts for investors to verify
- Progress, timing and cost of resolving manufacturing deficiencies and resubmitting the DefenCath NDA, including whether an FDA facility inspection is required.
- Cash burn, cash runway assumptions, commercial-launch spending needs and any additional financing or share issuance.
- Whether Neutrolin sales and any potential DefenCath approval can support the company’s operating costs, given minimal reported revenue.
- Developments and potential financial exposure in the securities and derivative lawsuits, patent appeal and remaining German legal-cost proceedings.
- Impact of leadership changes, contract-manufacturer delays and pandemic-related disruptions on execution and timelines.