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CorMedix(CRMD) - 2024 Q2 - Earnings Call Transcript
CRMDCorMedix(CRMD)2024-08-14 18:08
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Financial Data and Key Metrics - Net revenue for Q2 2024 was 0.8million,markingthefirsttimethecompanyreportedrevenuefromtheU.S.distributionofDefenCath[15]−NetlossforQ22024wasapproximately0.8 million, marking the first time the company reported revenue from the U.S. distribution of DefenCath [15] - Net loss for Q2 2024 was approximately 14.2 million, compared to a net loss of 11.3 million in Q2 2023, driven by increased SG&A expenses [15] - Operating expenses increased by 32% to 15.6 million in Q2 2024, compared to 11.8 million in Q2 2023 [16] - R&D expenses decreased by 86% to 0.7 million due to the approval of DefenCath [16] - SG&A expenses increased by 113% to 14.9millioninQ22024,drivenbymarketingeffortsandpersonnelcostsrelatedtothecommerciallaunch[17]−Cashandcashequivalentsstoodat14.9 million in Q2 2024, driven by marketing efforts and personnel costs related to the commercial launch [17] - Cash and cash equivalents stood at 45.6 million as of June 30, 2024 [18] Business Line Data and Key Metrics - DefenCath's inpatient launch began on April 15, 2024, with outpatient launch starting in early July 2024 [4] - Q2 sales were modest, primarily due to trade stocking for inpatient facilities, with sales expected to ramp up in Q4 as more hospitals adopt DefenCath [5][6] - Unaudited quarter-to-date sales as of August 13 were 5.2million,with955.2 million, with 95% pull-through to the clinic level [6] - The company is in late-stage negotiations with a top dialysis provider and multiple smaller providers for DefenCath implementation [7] Market Data and Key Metrics - Outpatient reimbursement under TDAPA commenced on July 1, covering 45% of ESRD patients under Medicare fee-for-service [8] - UnitedHealthcare, covering 30% of Medicare Advantage enrollment, confirmed TDAPA reimbursement for DefenCath starting September 1 [9] - Humana, covering 20% of Medicare Advantage enrollment, also confirmed TDAPA reimbursement, though it may vary by provider contracts [9] Company Strategy and Industry Competition - The company aims to expand DefenCath's use to adult Total Parenteral Nutrition (TPN) patients, with FDA approval targeted for 2027-2028 and peak sales potential estimated at 150-200millionannually[11]−Additionalclinicalinitiativesincludepediatrichemodialysisstudiesandexpandedaccessprogramsforhigh−riskpopulations[12][13]−Areal−worldevidencestudyisplannedtogeneratedataonDefenCath′simpactonpatientcarecosts,infectionrates,andhospitalizations,aimingtosupportfuturereimbursementnegotiations[14]ManagementCommentaryonOperatingEnvironmentandFutureOutlook−ManagementisoptimisticaboutthesalestrajectoryofDefenCath,particularlyintheoutpatientsegment,andexpectsgrowthtocontinuethroughout2024[4][7]−ThecompanyanticipatesbreakevenEBITDAonarun−ratebasisbytheendof2024,assumingcurrentsalesgrowthandnewaccountonboarding[19]−Long−term,thecompanyexpectsESRDMedicarepatientstomigratefromfee−for−servicetoMedicareAdvantageplans,whichwillbeakeyfocusforreimbursementstrategies[10]OtherImportantInformation−ThecompanysubmittedafinalprotocolforadultTPNstudiestotheFDA,withpatientenrollmentexpectedtobegininQ12025[10]−ClinicalbudgetfortheTPNstudyisestimatedat200 million annually [11] - Additional clinical initiatives include pediatric hemodialysis studies and expanded access programs for high-risk populations [12][13] - A real-world evidence study is planned to generate data on DefenCath's impact on patient care costs, infection rates, and hospitalizations, aiming to support future reimbursement negotiations [14] Management Commentary on Operating Environment and Future Outlook - Management is optimistic about the sales trajectory of DefenCath, particularly in the outpatient segment, and expects growth to continue throughout 2024 [4][7] - The company anticipates breakeven EBITDA on a run-rate basis by the end of 2024, assuming current sales growth and new account onboarding [19] - Long-term, the company expects ESRD Medicare patients to migrate from fee-for-service to Medicare Advantage plans, which will be a key focus for reimbursement strategies [10] Other Important Information - The company submitted a final protocol for adult TPN studies to the FDA, with patient enrollment expected to begin in Q1 2025 [10] - Clinical budget for the TPN study is estimated at 10-12million,withmostexpensesoccurringin2025and2026[12]−Pediatrichemodialysisstudycostsareestimatedat12 million, with most expenses occurring in 2025 and 2026 [12] - Pediatric hemodialysis study costs are estimated at 4-6 million over four to five years [12] Q&A Session Summary Question: CLABSI vs. CRBSI and DefenCath's marketing strategy - CLABSI is a broader term, while CRBSI is a subset requiring clinical correlation [21][22] - Pass-through status allows providers to bill for DefenCath on a buy-and-bill basis, similar to other Medicare B products [23] Question: Q3 sales run rate and clinic pull-through - The company has seen consistent orders over the first four weeks of Q3, with shipments to several hundred clinics [25][26] - Management expects breakeven EBITDA by the end of 2024, driven by current sales growth and new account onboarding [27][29] Question: Progress with large dialysis operators and market penetration - The company is in advanced discussions with a top dialysis provider, though the process has taken longer than expected [31] - The sales team has engaged with the top 20 accounts representing 99% of the dialysis market [32] Question: Weekly progression of 5.2 million sales and utilization rates - Sales have been consistent, with repeat orders indicating product utilization at the clinic level [34][36] Question: Funding for clinical studies and TPN enrollment timeline - The company does not anticipate needing large dilutive financing, with cash on hand and operating cash flow expected to cover clinical study costs [38][39] - TPN study enrollment is expected to begin in Q1 2025, with interim data expected before 2028 [40] Question: Inpatient vs. outpatient adoption process and TDAPA reimbursement - Inpatient adoption involves a longer process due to hospital bureaucracy, while outpatient adoption is faster but still requires significant operational effort [44][45] - TDAPA reimbursement is relatively new, and some operators require education on the process [42][43] Question: Contract with a top-tier midsized dialysis provider - The company is pleased with the relationship and product uptake but will not disclose customer-specific sales breakdowns [48][49] Question: Medicare Advantage vs. traditional Medicare and TDAPA reimbursement - Medicare Advantage plans assume risk for all costs associated with Medicare patients, and UnitedHealthcare has confirmed TDAPA reimbursement for DefenCath starting September 1 [51][52]