CorMedix(CRMD) - 2023 Q1 - Quarterly Report

PART I FINANCIAL INFORMATION Unaudited Condensed Consolidated Financial Statements This section presents the unaudited financial statements for the quarter ended March 31, 2023, including balance sheets, statements of operations, cash flows, and detailed notes Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets (Unaudited, in thousands) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $25,268 | $43,148 | | Short-term investments | $30,332 | $15,644 | | Total current assets | $56,781 | $59,551 | | Total Assets | $59,234 | $62,038 | | Liabilities & Equity | | | | Total current liabilities | $4,675 | $6,311 | | Total Liabilities | $5,306 | $6,979 | | Total Stockholders' Equity | $53,928 | $55,060 | Condensed Consolidated Statements of Operations and Comprehensive Loss Statements of Operations (Unaudited, in millions, for the three months ended March 31) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Net sales | $0.00 | $0.01 | | Gross profit | $0.00 | $0.01 | | Research and development | ($3.41) | ($2.29) | | Selling, general and administrative | ($7.61) | ($4.75) | | Loss From Operations | ($11.02) | ($7.03) | | Net Loss | ($10.57) | ($7.03) | | Net Loss Per Share (Basic & Diluted) | ($0.24) | ($0.18) | Condensed Consolidated Statements of Cash Flows Statements of Cash Flows (Unaudited, in millions, for the three months ended March 31) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($10.39) | ($6.74) | | Net cash used in investing activities | ($14.69) | ($4.19) | | Net cash provided by financing activities | $7.20 | $3.00 | | Net Decrease in Cash | ($17.88) | ($7.93) | Notes to Unaudited Condensed Consolidated Financial Statements - The company's existing cash, cash equivalents, and short-term investments of $55.6 million as of March 31, 2023, are expected to fund operations at least through the first half of 2024. Continued operations depend on raising additional capital[205][141][151] - The company is involved in multiple shareholder derivative lawsuits, which have been consolidated, alleging breaches of fiduciary duties related to the DefenCath NDA submissions, with the case currently stayed pending resolution of a related class action lawsuit[211][45][35] - Patent infringement litigation against TauroPharm in Germany has been largely concluded, with the company withdrawing its infringement action regarding the Prosl European Patent after an unfavorable view from the EPO Board of Appeals and bearing the costs of the proceedings[49][217] - During Q1 2023, the company sold 1,684,592 shares of common stock under its At-The-Market (ATM) program, realizing net proceeds of $7.2 million, with approximately $24.2 million remaining available under the ATM program as of March 31, 2023[228][59] - Subsequent to the quarter end, through May 5, 2023, the company sold an additional 849,476 shares under the ATM program for net proceeds of approximately $3.7 million[234] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's focus on developing and commercializing DefenCath, including its complex regulatory history with the FDA, and details increased operating expenses and net loss for Q1 2023 Overview - The company's lead product candidate is DefenCath™, a novel anti-infective catheter lock solution for preventing catheter-related infections and thrombosis in patients requiring central venous catheters[86] - The FDA issued a second Complete Response Letter (CRL) in August 2022 for the DefenCath NDA, citing deficiencies at the contract manufacturing organization (CMO) and the heparin API supplier, with no additional clinical data requested from CorMedix[82] - Following an April 2023 meeting with the FDA, the company plans to resubmit the NDA by mid-May 2023, with the resubmission expected to have a six-month Class 2 review cycle and include data from both existing and alternative heparin API suppliers[84] - CMS issued a proposed rule for a New Technology Add-On Payment (NTAP) for DefenCath of up to $17,111 per hospital stay, contingent on FDA approval before July 1, 2024[94] - The company was granted a new U.S. patent (No. 17/721,699) for DefenCath's formulation, potentially providing patent protection through 2042[107] Results of Operations Comparison of Results for the Three Months Ended March 31, 2023 and 2022 (in thousands) | Item | Q1 2023 | Q1 2022 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | $0 thousand | $8 thousand | ($8 thousand) | (100)% | | R&D Expense | $3,407 thousand | $2,288 thousand | $1,119 thousand | 49% | | SG&A Expense | $7,610 thousand | $4,751 thousand | $2,859 thousand | 60% | | Loss from Operations | ($11,017 thousand) | ($7,033 thousand) | ($3,984 thousand) | 57% | | Net Loss | ($10,568 thousand) | ($7,034 thousand) | ($3,534 thousand) | 50% | - R&D expenses increased by 49% YoY, primarily due to higher personnel expenses ($588 thousand), medical affairs activities ($300 thousand), and pre-approval manufacturing costs ($192 thousand)[130] - SG&A expenses increased by 60% YoY, mainly driven by increased costs for market research and pre-launch activities ($1.9 million), higher personnel expenses ($511 thousand), and increased non-cash stock-based compensation ($892 thousand)[131] Liquidity and Capital Resources - Total cash, cash equivalents, and short-term investments were $55.6 million at March 31, 2023, down from $58.8 million at December 31, 2022[151] - Net cash used in operating activities increased to $10.4 million in Q1 2023 from $6.7 million in Q1 2022, driven by a higher net loss and increased operating expenses[119] - The company raised $7.2 million in net proceeds from its ATM program in Q1 2023, compared to $3.0 million in Q1 2022[138][118] - Management estimates current cash is sufficient to fund operations at least through the first half of 2024, with additional financing needed to build out commercial infrastructure if DefenCath is approved[141] Quantitative and Qualitative Disclosure About Market Risk This section addresses the company's exposure to market risks, specifically interest rate and inflation risk, noting no material effect on financial results - The company's primary market risk is from interest rate fluctuations, but due to the short-term nature of its investment portfolio, a 10% change in interest rates is not expected to have a material effect[144][145] - Inflation is not believed to have had a material effect on the company's business, financial condition, or results of operations during Q1 2023[147] Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2023, with no material changes in internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2023[153] - There were no changes in internal control over financial reporting during the first quarter of 2023 that materially affected, or are reasonably likely to materially affect, internal controls[154] PART II OTHER INFORMATION Legal Proceedings This section refers to Note 4 of the financial statements for details on legal proceedings, primarily involving shareholder derivative lawsuits and patent litigation - For information regarding legal proceedings, the report refers to Note 4, "Commitments and Contingencies," in Part I, Item 1[148] Risk Factors The company states there have been no material changes from the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2022 - There were no material changes from the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2022[166] Exhibits This section provides an index of the exhibits filed with the Form 10-Q, including indemnification agreements and Sarbanes-Oxley Act certifications List of Exhibits | Exhibit No. | Description | | :--- | :--- | | 10.1*+ | Form of Indemnification Agreement between the Company and each of its directors and executive officers | | 31.1* | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | 31.2* | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | 32.1* | Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | | 32.2* | Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | | 101 Series | Inline XBRL Documents |