CorMedix(CRMD) - 2023 Q2 - Quarterly Report

PART I Item 1. Unaudited Condensed Consolidated Financial Statements CorMedix Inc.'s H1 2023 unaudited financials show decreased assets, zero revenue, and a widened net loss, reflecting pre-revenue DefenCath focus Condensed Consolidated Balance Sheets Total assets decreased to $57.0 million by June 30, 2023, from $62.0 million at year-end 2022, primarily due to reduced cash Condensed Consolidated Balance Sheet Data (in thousands) | Metric | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $19,700 | $43,148 | | Short-term investments | $32,701 | $15,644 | | Total current assets | $54,625 | $59,551 | | Total Assets | $57,033 | $62,038 | | Liabilities & Equity | | | | Total current liabilities | $7,387 | $6,311 | | Total Liabilities | $7,982 | $6,979 | | Total Stockholders' Equity | $49,051 | $55,060 | Condensed Consolidated Statements of Operations and Comprehensive Loss Zero revenue for Q2 and H1 2023, with operating expenses rising significantly, led to a 48-49% increase in net losses year-over-year Statement of Operations Highlights (in thousands) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $0 | $21 | $0 | $29 | | Total Operating Expenses | ($11,805) | ($8,261) | ($22,822) | ($15,300) | | Loss From Operations | ($11,805) | ($8,240) | ($22,822) | ($15,273) | | Net Loss | ($11,274) | ($7,605) | ($21,841) | ($14,639) | | Net Loss Per Share | ($0.25) | ($0.19) | ($0.49) | ($0.38) | Condensed Consolidated Statements of Cash Flows Net cash used in operations increased to $19.0 million for H1 2023, with a $23.5 million net decrease in cash despite $12.6 million from financing activities Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($18,966) | ($12,206) | | Net cash used in investing activities | ($17,073) | ($3,593) | | Net cash provided by financing activities | $12,551 | $11,415 | | Net Decrease in Cash | ($23,486) | ($4,398) | Notes to Unaudited Condensed Consolidated Financial Statements Notes detail DefenCath focus, sufficient liquidity for twelve months including July 2023 offering proceeds, and ongoing legal proceedings related to NDA submissions - The company believes existing cash, short-term investments, and July 2023 public offering proceeds are sufficient to fund operations for at least twelve months from the filing date[81] - A consolidated class action lawsuit alleges securities law violations related to allegedly false statements about DefenCath NDA submissions[147] - In July 2023, a public offering and underwriters' option exercise raised approximately $43.2 million in net proceeds[171] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses DefenCath's regulatory progress, including NDA resubmission, and financial performance, noting zero revenue, increased losses, and sufficient liquidity for future operations Overview The company focuses on DefenCath development, resubmitting its NDA in May 2023 with an FDA target review date of November 15, 2023, and securing a conditional NTAP from CMS - CorMedix resubmitted the NDA for DefenCath on May 15, 2023, addressing prior manufacturing deficiencies[212] - The FDA accepted the NDA resubmission as a Class 2 response, setting a target action date of November 15, 2023[212] - CMS included a New Technology Add-On Payment (NTAP) of up to $17,111 per hospital stay for DefenCath in its 2024 proposed rule, conditional on FDA approval before July 1, 2024[243] Results of Operations Zero revenue for Q2 and H1 2023 due to discontinued Neutrolin sales, while R&D and SG&A expenses significantly increased by 49% and 49% respectively, widening the net loss Comparison of Operating Results (in thousands) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $0 | $21 | $0 | $29 | | R&D Expense | ($4,795) | ($3,209) | ($8,202) | ($5,497) | | SG&A Expense | ($7,010) | ($5,052) | ($14,620) | ($9,803) | | Net Loss | ($11,274) | ($7,605) | ($21,841) | ($14,639) | - The 49% increase in R&D expense for the six months ended June 30, 2023 was driven by higher costs for DefenCath manufacturing ($915k), personnel expenses ($1.06M), and medical affairs activities ($542k)[11] - The 49% increase in SG&A expense for the six months ended June 30, 2023 was primarily due to market research and pre-launch activities for DefenCath ($3.65M) and increased personnel costs ($937k)[12] Liquidity and Capital Resources As of June 30, 2023, the company held $52.4 million in cash and investments, with $19.0 million net cash used in operations, but believes current resources and July 2023 offering proceeds are sufficient for twelve months - Total cash on hand and short-term investments was $52.4 million as of June 30, 2023, compared to $58.8 million at December 31, 2022[18] - Net cash used in operating activities increased by $6.8 million to $19.0 million for the six months ended June 30, 2023, compared to the same period in 2022, primarily due to a higher net loss[17] - Management estimates that current cash resources, plus net proceeds from the July 2023 public offering, will fund operations for at least twelve months from the filing date and support the DefenCath launch to anticipated profitability[231] Item 3. Quantitative and Qualitative Disclosure About Market Risk The company's market risk is primarily limited to interest rate fluctuations on its $52.4 million cash and investment portfolio, with no material impact expected from interest rate changes - The company's primary market risk exposure is from interest rate fluctuations on its portfolio of cash, cash equivalents, and short-term investments[234] - As of June 30, 2023, the company held $52.4 million in cash, cash equivalents, and short-term investments[21] - Management does not believe the company is materially exposed to changes in interest rates and estimates a 1% unfavorable change would not have a material effect on interest expense[21] Item 4. Controls and Procedures As of June 30, 2023, the CEO and CFO concluded that disclosure controls and procedures are effective, with no material changes to internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that as of June 30, 2023, the company's disclosure controls and procedures were effective[29] - No changes were made to the company's internal control over financial reporting during the quarter ended June 30, 2023, that materially affected or are likely to materially affect internal controls[271] PART II OTHER INFORMATION Item 1. Legal Proceedings Details on the company's legal proceedings are incorporated by reference from Note 4, 'Commitments and Contingencies,' within the financial statements - Details on legal proceedings are incorporated by reference from Note 4 of the financial statements in Part I, Item 1 of this report[237] Item 1A. Risk Factors This report updates risk factors from the Annual Report on Form 10-K for the year ended December 31, 2022, covering financial position, product development, industry, intellectual property, and third-party dependence - The report updates risk factors from the Annual Report on Form 10-K for the year ended December 31, 2022, and should be read in conjunction with it[24] Item 5. Other Information No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2023 - No director or officer adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the three months ended June 30, 2023[26] Item 6. Exhibits The report includes an exhibit index listing all filed documents, including Pre-Funded Warrant forms, Sarbanes-Oxley certifications, and Inline XBRL documents - The exhibit index is incorporated by reference, listing certifications and XBRL data files as exhibits[33]