
PART I FINANCIAL INFORMATION This part presents the company's unaudited financial statements and management's analysis of its financial condition Item 1. Unaudited Condensed Consolidated Financial Statements This section presents the company's unaudited condensed consolidated financial statements, including balance sheets, statements of operations and comprehensive loss, statements of changes in stockholders' equity, statements of cash flows, and accompanying notes, providing a detailed financial overview for the reported periods Condensed Consolidated Balance Sheets This chapter presents the company's financial position, detailing assets, liabilities, and equity at specific points in time | Metric | March 31, 2021 ($) | December 31, 2020 ($) | Change ($) | Change (%) | | :------------- | :------------- | :---------------- | :--------- | :--------- | | Total Assets | $84,258,811 | $49,308,303 | $34,950,508 | 70.88% | | Cash & Cash Equivalents | $76,214,620 | $41,905,469 | $34,309,151 | 81.87% | | Metric | March 31, 2021 ($) | December 31, 2020 ($) | Change ($) | Change (%) | | :---------------- | :------------- | :---------------- | :--------- | :--------- | | Total Liabilities | $3,943,744 | $5,085,291 | $(1,141,547) | -22.45% | | Metric | March 31, 2021 ($) | December 31, 2020 ($) | Change ($) | Change (%) | | :---------------------- | :------------- | :---------------- | :--------- | :--------- | | Total Stockholders' Equity | $80,315,067 | $44,223,012 | $36,092,055 | 81.61% | Condensed Consolidated Statements of Operations and Comprehensive Loss This chapter outlines the company's financial performance, including revenues, expenses, and net loss, over specific reporting periods | Metric | 2021 ($) | 2020 ($) | Change ($) | Change (%) | | :------------------------- | :------------ | :------------ | :------------ | :--------- | | Revenue (Net Sales) | 88,261 | 74,054 | 14,207 | 19.18% | | Cost of Sales | (61,339) | (48,517) | (12,822) | 26.43% | | Gross Profit | 26,922 | 25,537 | 1,385 | 5.42% | | Research and Development | (2,636,332) | (2,472,117) | (164,215) | 6.64% | | Selling, General and Administrative | (4,601,108) | (3,165,168) | (1,435,940) | 45.37% | | Total Operating Expenses | (7,237,440) | (5,637,285) | (1,600,155) | 28.39% | | Loss From Operations | (7,210,518) | (5,611,748) | (1,598,770) | 28.49% | | Net Loss | (7,216,938) | (5,557,567) | (1,659,371) | 29.86% | | Comprehensive Loss | (7,220,118) | (5,564,088) | (1,656,030) | 29.76% | | Net Loss Per Common Share – Basic and Diluted | (0.20) | (0.21) | 0.01 | -4.76% | Condensed Consolidated Statements of Changes in Stockholders' Equity This chapter details the changes in the company's equity accounts, reflecting stock transactions, compensation, and net loss over the period | Item | Amount ($) | | :---------------------------------------- | :------------ | | Balance at December 31, 2020 | 44,223,012 | | Stock issued in connection with ATM sale | 41,455,630 | | Stock issued in connection with warrants exercised, cash | 124,929 | | Stock-based compensation | 1,731,614 | | Net loss | (7,216,938) | | Balance at March 31, 2021 | 80,315,067 | - Net proceeds from ATM common stock sales: - Q1 2021: $41,456,000 from 3,737,862 shares - Q1 2020: $2,470,000 from 368,144 shares94 Condensed Consolidated Statements of Cash Flows This chapter summarizes the cash inflows and outflows from operating, investing, and financing activities, showing changes in liquidity | Activity | 2021 ($) | 2020 ($) | Change ($) | Change (%) | | :---------------------------------------- | :------------ | :------------ | :------------ | :--------- | | Net cash used in operating activities | (6,690,812) | (7,966,926) | 1,276,114 | -16.02% | | Net cash (used in) provided by investing activities | (526,018) | 985,418 | (1,511,436) | -153.38% | | Net cash provided by financing activities | 41,580,559 | 2,834,664 | 38,745,895 | 1366.89% | | Net increase (decrease) in cash and cash equivalents | 34,356,166 | (4,149,025) | 38,505,191 | -927.93% | | Cash, cash equivalents and restricted cash – End of Period | 76,452,949 | 12,376,162 | 64,076,787 | 517.75% | - Financing Activities Breakdown (Three Months Ended March 31, 2021): - Proceeds from ATM program: $41,455,630 (vs. $2,469,937 in 2020) - Proceeds from warrant exercise: $124,929 (vs. $411,751 in 2020)22 Notes to Unaudited Condensed Consolidated Financial Statements This chapter provides detailed explanations and additional information supporting the condensed consolidated financial statements Note 1 — Organization, Business and Basis of Presentation This note describes the company's business, primary product focus, regulatory status, and the basis for financial statement presentation - Primary product focus is DefenCath™/Neutrolin®, an anti-infective solution for preventing catheter-related infections and thrombosis in CVC patients (hemodialysis, TPN, oncology)25139 - FDA issued a Complete Response Letter (CRL) for DefenCath's NDA in March 2021, citing manufacturing facility concerns and requiring a manual extraction study. The study has been successfully completed, and the company is addressing manufacturing qualification issues for NDA resubmission3233145146 - FDA did not request additional clinical data on efficacy or safety. Initial approval will be for a limited population (kidney failure patients receiving chronic hemodialysis via CVC) under the LPAD pathway, with potential for 10.5 years of marketing exclusivity3738149164 - Neutrolin is commercially launched in Germany (Dec 2013) and registered in certain EU and Middle Eastern countries. Label expansion includes oncology, intensive/critical care, and total parenteral nutrition patients. Saudi Arabia registration expired in Sept 2019, renewal pending414445154155156 - Company is pursuing additional DefenCath indications and pre-clinical research for taurolidine in rare orphan pediatric tumors (neuroblastoma, Orphan Drug Designation in Feb 2018) and medical devices (wound closure, surgical meshes, hydrogels)3940150151165 - COVID-19 pandemic may negatively affect program timelines, business, financial conditions, and results of operations due to disruptions in supply chains, clinical trials, and regulatory processes46157 Note 2 — Summary of Significant Accounting Policies This note outlines the key accounting principles, estimates, and judgments used in preparing the financial statements - Accumulated deficit of $224.7 million as of March 31, 2021. Sufficient cash, cash equivalents, and short-term investments to fund operations into the second half of 2022. Continued operations depend on raising additional capital5152 | Metric | March 31, 2021 ($) | December 31, 2020 ($) | | :----------------------------------- | :------------- | :---------------- | | Cash and cash equivalents | $76,214,620 | $41,905,469 | | Restricted cash | 238,329 | 191,314 | | Total cash, cash equivalents and restricted cash | $76,452,949 | $42,096,783 | | Category | March 31, 2021 ($) | December 31, 2020 ($) | | :------------------- | :------------- | :---------------- | | Money Market Funds | $17,661,060 | $3,182,689 | | Corporate Securities | $3,657,835 | $3,564,499 | | Commercial Paper | $1,299,522 | $879,573 | | Total | $22,618,417 | $7,626,761 | | Category | March 31, 2021 ($) | December 31, 2020 ($) | | :---------------- | :------------- | :---------------- | | Finished goods | $259,240 | $317,733 | | Inventory reserve | (174,169) | (174,169) | | Total | $85,071 | $143,564 | | Category | March 31, 2021 ($) | December 31, 2020 ($) | | :---------------------------- | :------------- | :---------------- | | Professional and consulting fees | $175,075 | $146,129 | | Accrued payroll and payroll taxes | 1,048,359 | 2,490,441 | | Clinical trial related | 1,000 | 2,187 | | Manufacturing development related | 97,970 | 143,780 | | Other | 114,306 | 141,814 | | Total | $1,436,710 | $2,924,351 | - Potentially dilutive shares (preferred stock, RSUs, warrants, stock options) were excluded from diluted EPS calculation as their effect would be anti-dilutive8889 Note 3 — Stockholders' Equity This note details changes in common stock, warrants, and stock-based compensation, impacting the company's equity structure - Common Stock Sales (ATM Program): - Q1 2021: 3,737,862 shares sold, net proceeds of $41,456,000 - Q1 2020: 368,144 shares sold, net proceeds of $2,470,000 - As of March 31, 2021, no available balance under ATM program; $50.0 million available under shelf registration94 - Warrant Exercises: - Q1 2021: 23,796 shares issued for cash ($125,000 net proceeds); 70,269 shares issued for cashless exercise of 95,286 warrants - Q1 2020: 91,500 shares issued for cash ($412,000 net proceeds) - Outstanding warrants (March 31, 2021): 64,066 with weighted average exercise price of $5.25 and 1.36 years remaining contractual life9596107108 - Stock-Based Compensation: - Q1 2021: $1,732,000 expense - Q1 2020: $670,000 expense - Unrecognized compensation expense: $8,080,000, to be recognized over 1.6 years - Stock options granted in Q1 2021: 1,122,200 shares, weighted average exercise price $8.70100101 | Metric | Shares | Weighted Average Exercise Price ($/share) | Aggregate Intrinsic Value ($) | | :---------------------------------------- | :---------- | :------------------------------ | :------------------------ | | Outstanding at beginning of period | 2,447,687 | $7.22 | $3,872,092 | | Granted | 1,122,200 | $8.70 | $1,757,174 | | Forfeited | (21,876) | $4.71 | - | | Expired | (6,000) | $10.50 | - | | Outstanding at end of period | 3,542,011 | $7.70 | $10,048,396 | | Exercisable at end of period | 1,671,558 | $8.34 | $4,378,889 | Note 4 — Commitments and Contingencies This note discloses the company's legal proceedings, security deposits, and in-licensing agreements, outlining potential future obligations - Patent Infringement (Prosl European Patent EP 1 814 562 B1): Filed against TauroPharm in Germany (Sept 2014). EPO revoked the patent as invalid; company has appealed109116 - Utility Model Infringement (DE 20 2005 022 124 U1): German PTO affirmed invalidity. Company withdrew complaint in April 2020112115 - Unfair Competition Proceedings: Filed against TauroPharm (Jan 2015) for unauthorized use of proprietary information. District Court dismissed complaint (Dec 2018); company appealed (Jan 2019). Expert opinion not in company's favor; oral hearing postponed to June 18, 2021, due to COVID-19119 - Security Deposits: Approximately $136,000 in restricted cash as of March 31, 2021, for legal fees in these proceedings120 - In-Licensing (NDP License Agreement): Exclusive worldwide licenses for antimicrobial catheter lock solutions. Max aggregate cash payments remaining: $2,500,000123124 Note 5 — Leases This note provides information on the company's operating lease liabilities, right-of-use assets, and future lease payment obligations | Metric | March 31, 2021 ($) | December 31, 2020 ($) | | :----------------------------------- | :------------- | :---------------- | | Total operating lease liability | $1,007,000 | $1,033,000 | | Operating lease liabilities, short-term | $113,000 | $109,000 | | Operating lease liabilities, net of current portion | $894,000 | $924,000 | | Metric | March 31, 2021 ($) | December 31, 2020 ($) | | :----------------- | :------------- | :---------------- | | Operating ROU assets | $987,000 | $1,015,000 | - Cash Paid for Leases: - Q1 2021: $52,000 - Q1 2020: $2,000132 - Weighted Average Remaining Lease Term: 6.5 years (March 31, 2021). Weighted Average Discount Rate: 9% (March 31, 2021)132 | Year | Amount ($) | | :-------------------- | :---------- | | 2021 (remaining) | 149,000 | | 2022 | 200,000 | | 2023 | 202,000 | | 2024 | 205,000 | | 2025 | 208,000 | | 2026 and thereafter | 380,000 | | Total future minimum lease payments | 1,344,000 | | Less imputed interest | (337,000) | | Total | 1,007,000 | Note 6 — Concentrations This note identifies significant concentrations in accounts receivable and revenue, highlighting customer dependency - Accounts Receivable Concentration (March 31, 2021): Two customers accounted for 65% and 34% of net accounts receivable134 - Revenue Concentration (Three Months Ended March 31, 2021): Three customers accounted for 47%, 28%, and 15% of total sales134 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial performance, liquidity, and future outlook, emphasizing the development of DefenCath, ongoing regulatory challenges, and the need for additional capital to fund operations and commercialization efforts Overview This overview introduces CorMedix as a biopharmaceutical company, its primary product DefenCath, and key operational challenges including regulatory hurdles and the impact of COVID-19 - CorMedix is a biopharmaceutical company focused on DefenCath™/Neutrolin® for the prevention and treatment of infectious and inflammatory diseases, primarily catheter-related infections138139 - FDA issued a Complete Response Letter (CRL) in March 2021 for DefenCath NDA, citing concerns at the third-party manufacturing facility and requiring a manual extraction study. The company is addressing these issues for resubmission145146 - Initial FDA approval for DefenCath is expected for a limited population (kidney failure patients on chronic hemodialysis via CVC) under the LPAD pathway. The company is also exploring other taurolidine applications and faces ongoing legal disputes and COVID-19 related operational risks149150151165 - Neutrolin is commercially launched in Germany and registered in certain EU and Middle Eastern countries. Saudi Arabia registration expired in September 2019, renewal pending154155156 - The COVID-19 pandemic has caused and may continue to cause disruptions to clinical trials, supply chains, regulatory timelines, and overall business operations157 - Accumulated deficit of approximately $224.7 million as of March 31, 2021; operations funded primarily through debt and equity financings158159 Financial Operations Overview This section outlines the company's revenue generation, expense categories, and financial policies related to foreign currency and interest - Revenue has not been substantial since inception; operations funded primarily through debt and equity financings159 - Research and Development (R&D) expense includes internal costs, payments to CROs, CMOs, investigative sites, consultants, technology/IP license costs, manufacturing development, personnel expenses, regulatory filings, preclinical/clinical trials, and allocated facilities expenses. All R&D is expensed as incurred160 - Selling, General and Administrative (SG&A) expense includes commercial personnel, medical education, marketing, advertising, salaries, stock-based compensation, facility costs, promotional expenses, and professional fees167 - Foreign currency exchange transaction gain (loss) results from re-measuring transactions in non-functional currencies; unrealized movements on long-term intercompany loans are recorded in other comprehensive income (loss)168 - Interest income is earned on cash, cash equivalents, and short-term investments. Interest expense is incurred on convertible debt, amortization of debt discount, and financing expenditures170171 Results of Operations This section analyzes the company's financial performance for the period, detailing changes in revenue, cost of sales, operating expenses, and interest income - Revenue for Q1 2021 was $88,000, an increase of 19% from $74,000 in Q1 2020, primarily due to increased sales in the Middle East169173 - Cost of sales increased by 24% to $61,000 in Q1 2021 from $49,000 in Q1 2020, mainly due to higher material costs from increased Middle East sales169174 - Research and Development expense increased by 7% to $2,636,000 in Q1 2021, driven by higher personnel expenses and non-cash stock-based compensation, partially offset by decreases in DefenCath manufacturing costs and clinical trial expenses due to the LOCK-IT-100 trial closing169175 - Selling, General and Administrative expense increased by 45% to $4,601,000 in Q1 2021, primarily due to non-cash stock-based compensation, marketing research for DefenCath, and personnel expenses, partially offset by lower recruitment and legal fees169176 - Interest income decreased by 95% to $3,000 in Q1 2021 from $64,000 in Q1 2020, attributable to lower average interest-bearing cash equivalents and short-term investments169178 Liquidity and Capital Resources This section discusses the company's sources and uses of cash, its current liquidity position, and future capital requirements for operations and commercialization - Sources of Liquidity: Primarily debt and equity financings. Q1 2021 saw net proceeds of $41,456,000 from ATM common stock sales and $125,000 from warrant exercises181185 - Net Cash Used in Operating Activities: Decreased by $1,276,000 to $6,691,000 in Q1 2021, mainly due to higher non-cash stock-based compensation and lower increase in prepaid expenses, offset by increased net loss and higher decrease in accrued expenses183 - Net Cash Provided by (Used in) Investing Activities: $526,000 used in Q1 2021 (vs. $985,000 provided in Q1 2020), driven by lower investment in short-term investments184 - Total cash and short-term investments: $81.2 million as of March 31, 2021 (vs. $46.3 million at Dec 31, 2020). $50.0 million available under current shelf registration; no ATM program balance186 - Estimates sufficient cash to fund operations into the second half of 2022, considering initial DefenCath commercial launch preparations. Additional capital will be required for pre-commercial launch, R&D, and general operations; no assurance of availability on acceptable terms187191 Contractual Obligations This section details the company's significant contractual obligations, specifically its operating lease agreement for office space - The company has a seven-year operating lease agreement for office space in New Jersey, which commenced in September 2020, with a monthly average cost of approximately $17,000192 Critical Accounting Policies This section confirms that there have been no significant changes to the company's critical accounting policies during the reported quarter - No significant changes to critical accounting policies for Q1 2021 compared to the 2020 Annual Report on Form 10-K194 Recently Adopted Accounting Pronouncements This section reports on the adoption of new accounting standards and their impact on the company's financial statements - Adopted ASU 2019-12 (income taxes) on January 1, 2021, with no material impact on condensed consolidated financial statements196 Off-Balance Sheet Arrangements This section confirms the absence of any off-balance sheet arrangements that could materially affect the company's financial position - The company has no off-balance sheet arrangements197 Item 3. Quantitative and Qualitative Disclosure About Market Risk The company reported no material market risk disclosures for the period - No material market risk disclosures199 Item 4. Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2021, and there were no material changes in internal control over financial reporting during the quarter Evaluation of Disclosure Controls and Procedures This section confirms the effectiveness of the company's disclosure controls and procedures as assessed by management - Disclosure controls and procedures were evaluated and deemed effective as of March 31, 2021, ensuring timely and accurate reporting of information201 Changes in Internal Control Over Financial Reporting This section reports on any material changes in the company's internal control over financial reporting during the quarter - No material changes in internal control over financial reporting during Q1 2021202 PART II OTHER INFORMATION This part includes legal proceedings, risk factors, and exhibits, providing additional non-financial and forward-looking information Item 1. Legal Proceedings This section provides an update on the ongoing patent infringement and unfair competition lawsuits in Germany against TauroPharm. The Prosl European Patent was revoked by the EPO but is under appeal, while the Utility Model was affirmed invalid. The unfair competition case, alleging unauthorized use of proprietary information, is still pending, with an expert opinion not favoring the company and a hearing postponed due to COVID-19 - Patent Infringement (Prosl European Patent EP 1 814 562 B1): Filed against TauroPharm in Germany (Sept 2014). EPO revoked the patent as invalid in Nov 2017; company has appealed204209 - Utility Model Infringement (DE 20 2005 022 124 U1): German PTO affirmed invalidity in Sept 2019. Company withdrew complaint in April 2020 as the Utility Model expired in Nov 2015208 - Unfair Competition Proceedings: Filed against TauroPharm (Jan 2015) for unauthorized use of proprietary information. District Court dismissed complaint (Dec 2018); company appealed (Jan 2019). Expert opinion did not favor the company; oral hearing postponed to June 18, 2021, due to COVID-19211 Item 1A. Risk Factors This section highlights the significant and ongoing risks posed by the COVID-19 pandemic, including potential disruptions to preclinical studies, clinical trials, manufacturing, regulatory review, and overall business operations, as well as volatility in stock trading prices and difficulties in raising capital - COVID-19 Pandemic Impact: May materially and adversely impact business, preclinical studies, and clinical trials, leading to delays at vendors, difficulties in patient enrollment, clinical site initiation, and staff recruitment212213214216 - Potential disruptions include increased patient withdrawals, diversion of healthcare resources, interruption of key clinical trial activities, and delays in FDA/regulatory authority operations. Supply chain disruptions, staffing shortages, and production slowdowns at CMOs are also risks216 - The pandemic's future impact is highly uncertain, affecting business, preclinical studies, and clinical trials. High volatility in common stock trading prices may lead to difficulties in raising capital or unfavorable terms217218 Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications, employment agreements, and XBRL financial data - Includes Executive Employment Agreement, Certifications of Principal Executive and Financial Officers (Sections 302 and 906 of Sarbanes-Oxley Act), and XBRL financial data221 SIGNATURES This section confirms the official signing and submission of the report by the authorized executive - The report was signed by Khoso Baluch, Chief Executive Officer, on May 13, 2021226