CorMedix Inc. (NASDAQ:CRMD) Q4 2023 Earnings Call Transcript
CorMedix Inc. (NASDAQ:CRMD) Q4 2023 Earnings Call Transcript March 12, 2024
CorMedix Inc. misses on earnings expectations. Reported EPS is $-0.26 EPS, expectations were $-0.21. CorMedix Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good morning ladies and gentlemen, and welcome to the CorMedix Inc. fourth quarter and full year 2023 earnings call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star, zero for the Operator. This call is being recorded on March 12, 2024. I would now like to turn the conference over to Dan Ferry from LifeSci Advisors. Please go ahead.
Dan Ferry: Good morning and welcome to the CorMedix full year 2023 earnings conference call. Leading the call today is Joe Todisco, Chief Executive Officer of CorMedix. He is joined by Dr. Matt David, Executive Vice President and CFO, Beth Zelnick Kaufman, EVP and Chief Legal Officer, Liz Hurlburt, EVP and Chief Clinical Strategy and Operations Officer, and Erin Mistry, EVP and Chief Commercial Officer. Before we begin, I would like to remind everyone that during the call, management may make what are known as forward-looking statements within the meaning set forth in the Private Securities Litigation Reform Act of 1995. These statements are subject to certain risks and uncertainties and include but are not limited to any of the following: any statements other than statements of historical fact regarding management’s expectations, beliefs, goals, and plans about the company’s prospects, including its commercial launch prospects for DefenCath, its clinical development programs for expanded uses of DefenCath, manufacturing activities and marketing approvals for other product candidates, future financial position, future revenues and projected costs, and reimbursement and potential market acceptance of DefenCath or other product candidates.
Actual results may differ materially from these projections or estimates due to a variety of important factors, including but not limited to uncertainties related to clinical development, regulatory approvals, and commercialization. These risks are described in greater detail in CorMedix’s filings with the SEC, including the latest quarterly report on Form 10-Q and annual report on Form 10-K, copies of which are available free of charge at the SEC’s website at www.sec.gov or upon request from CorMedix. CorMedix may not actually achieve the goals or plans described in these forward-looking statements and investors should not place undue reliance on these statements. Please note that CorMedix does not intend to update these forward-looking statements except as required by law.
At this time, it is now my pleasure to turn the call over to Joe Todisco, Chief Executive Officer of CorMedix. Joe, please go ahead.
Joe Todisco: Thanks Dan. Good morning everyone and thank you for joining us on this call. Since we last presented earnings in November, the company has achieved a number of key milestones, most notably the final NDA approval of DefenCath by the U.S. FDA, as well as confirmation from CMS that DefenCath will be eligible to receive a transition drug add-on payment, or TDAPA, for outpatient reimbursement as CMS has classified DefenCath for renal dialysis service under the end stage renal disease prospective payment system. As we previously announced, we submitted our HEPS J-code application to CMS in December and our TDAPA application in January following receipt of that reimbursement guidance from CMS. Those applications remain under review at CMS and CMS has confirmed in writing that they are actively reviewing our J-code and TDAPA applications and are working toward a July 1, 2024 effective implementation for a DefenCath TDAPA payment.
That said, CMS reserves the right to request additional information for any application, which may impact the review timing and/or probability of a J-code or TDAPA. Both a J-code and an approved and effective TDAPA application are gating items for the outpatient commercial launch of DefenCath, which is currently slated for July 1. The company remains on schedule to commence our commercial launch for the in-patient setting on April 15. We have staffed and trained our field sales and medical affairs organizations and held a successful internal team launch meeting during the last week of February. The team we have built is deeply experienced and specialized with backgrounds in both infectious disease and nephrology spanning both the in-patient and outpatient settings of care.
We are also ramping up inventory production in accordance with our internal plan, which is heavily weighted toward the back part of the year. As part of our supply chain strategy, the company is on track to submit a supplement to our NDA in April qualifying Siegfried’s site in Hameln, Germany as an alternative manufacturing site for DefenCath. Assuming a favorable FDA review of the supplement, additional production from that site would come online by the end of 2024. As we think about the in-patient launch trajectory in April, we do expect the ramp for our in-patient utilization to be fairly modest over the first two launch quarters as in-patient health systems and hospitals are working through their respective P&T formulary review processes.
On average, the P&T process for a particular system or hospital can range from three to nine months. That said, we have received significant interest over the last few months and are actively working through the P&T process with several large and midsized health systems. We expect this activity to intensify in the coming months as our field-based key account managers have just begun calling on hospitals and health systems to effectuate pre-launch contracting discussions. On the outpatient side, we continue to have productive discussions with large and midsized dialysis operators and we look forward to providing additional updates over the coming months as these discussions advance. Based upon our current base case forecast for 2024, we continue to believe that the company can achieve breakeven profitability on a run rate basis by the end of December 2024, assuming we are able to achieve our internal base case assumptions for DefenCath demand, uptake, net pricing and reimbursement.
We believe we have sufficient cash resources on hand to achieve this objective, however should the launch and uptake of DefenCath be slower than our internal projections, requiring more capital, we believe we have several financing alternatives available to the company, including non-dilutive sources of financing. CorMedix has grown in size with the addition of new hires in field sales and medical affairs, as well as other additions across the organization. I am thankful for all of those involved in the latest expansion, our new team members, and all the work that has gone into preparing the company for our anticipated commercial launch. I am proud of what we’ve accomplished over these recent months and excited to bring DefenCath to patients.
I would now like to turn over the call to Matt to discuss the company’s fourth quarter and year-end financial results and financial position. Matt?
Matt David: Thanks Joe, and good morning everyone. I am pleased to be here today to provide an overview of our fourth quarter and full year 2023 financial results, as well as an update on CorMedix’s cash position. The company has filed its annual report on Form 10-K for the year ended December 31, 2023. I urge you to read the information contained in the report for a more complete discussion of our financial results. With respect to our fourth quarter of 2023 financial results, our net loss was approximately $14.8 million or $0.26 per share compared with a loss of $8.2 million of $0.20 per share in the fourth quarter of 2022. The higher net loss recognized in 2023 compared with 2022 was primarily driven by increases in costs related to market research studies and pre-launch activities for DefenCath and increases in personnel expenses due to new hires in 2023 compared to the same period in 2022.
Operating expenses in the fourth quarter of 2023 increased approximately 86% to $15.7 million compared with $8.4 million in the fourth quarter of 2022. R&D expense decreased by approximately 19% to $2.3 million driven primarily by decreases in manufacturing costs related to DefenCath. SG&A expense increased approximately 140% to $13.4 million in the fourth quarter of 2023 compared with $5.6 million in the fourth quarter of 2022. This increase was primarily attributable to an increase in costs related to launch activities and higher personnel costs due to the additional hires in Q4. With respect to our full year 2023 financial results, total operating expenses during the full year 2023 amounted to $49 million compared with $30.7 million in 2022, an increase of 60%.
R&D expense increased 23% to $13.2 million, driven primarily by an increase in personnel expenses, an increase in costs related to medical affairs activities, and an increase in costs related to the technical and quality operations for the manufacturing of DefenCath prior to its marketing approval. SG&A expense increased approximately 79% to $35.8 million, primarily driven by an increase in costs related to market research studies and pre-launch activities in preparation for the commercial launch of DefenCath, and an increase in personnel expenses as a result of additional hires in 2023. These increases were partially offset, among others of lesser significance, by a decrease in legal fees for the period. We recorded net cash used in operations during 2023 of $38.4 million compared with net cash used in operations of $24.4 million in 2022.
The increase is primarily driven by an increase in net loss primarily attributable to an increase in operating expenses as compared with the same period in 2022. CorMedix remains in a good position from a balance sheet perspective as we prepare the company for commercial launch of DefenCath in April. The company had cash and cash equivalents of $76 million as of December 31, 2023. As we have discussed previously, we expect our operating expenses, especially SG&A to increase in 2024 given the growth of the company and the costs driven by the commercial launch of DefenCath. CorMedix anticipates 2024 quarterly operating expenses to range from around $15 million to $18 million to support commercial infrastructure and the launch of DefenCath. We believe our cash, cash equivalents, short term investments and projected future operating cash flow gives the company the ability to fund operations for at least 12 months and to fund the commercial launch of DefenCath through to anticipated profitability, which may occur on a run rate basis by the end of December 2024, assuming we are able to achieve our internal base case assumptions for DefenCath demand, uptake, net pricing and reimbursement.
I will now turn the call back over to Joe for closing remarks. Joe?
Joe Todisco: Thanks Matt. CorMedix is laser focused on our upcoming launch date in April. We’ve actively engaged in customer discussions on both the in-patient and outpatient settings of care and are optimistic about our launch potential for 2024 and beyond. With respect to any future potential indications for DefenCath, we are targeting the submission of a post-approval meeting request to FDA by the end of March and we expect to have a meaningful discussion with FDA around potential clinical pathways in midyear 2024. As I mentioned earlier, we do not intend to provide revenue or earnings guidance at this time; however, we may revisit guidance if and when appropriate. I appreciate everyone’s continued support in CorMedix, and I am happy to take questions.
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