Q4 2022 CorMedix Inc Earnings Call

Speaker 1: I.

Speaker 2: Greetings and welcome to the Core Medics Inc. fourth quarter and full year 2020 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation.

Speaker 2: If anyone should require operator assistance during the conference, please press star 0 on your telephone keypad.

Speaker 2: As a reminder, this conference is being recorded.

Speaker 2: It is now my pleasure to introduce to your host Dan Ferri. Thank you Dan, you may begin.

Speaker 3: Good morning and welcome to the Core Medics fourth quarter and full year 2022 earnings conference call.

Speaker 3: Leading the call today is Joe Taddisco, Chief Executive Officer of Core Medics, and he is joined by Dr. Matt David, Executive Vice President and CFO , Dr. Phoebe Mounts, EVP and General Counsel, and Erin Mystery, 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 states.

Speaker 3: about the company's prospects.

Speaker 3: including its clinical development program, manufacturing activities, and NDA approval for DefendCath in the U.S. or other product candidates.

Speaker 3: future financial position, future revenues and projected costs, and potential market acceptance of DefendCath or other product candidates.

Speaker 3: More specifically, forward-looking statements include any statements about our clinical development plans and the timing, cost, progress, results, estimates, and interpretations thereof.

Speaker 3: projections as to the company's future capital raising and spending and cash position, expectations as to the timing and nature of anticipated regulatory actions, possible product licensing, business development or other transactions, any commercial plans and expectations, market projections for our product candidates.

Speaker 3: and expectations as to manufacturing and product component costs.

Speaker 3: 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.

Speaker 3: These risks are described in greater detail in CoreMedix filings with the SEC, including the latest 10K filing, copies of which are available free of charge at the SEC's website at www.SEC.gov or upon request from CoreMedix.

Speaker 3: Core Medics may not actually achieve the goals or plans described in these forward-looking statements. Investors should not place undue reliance on these statements.

Speaker 3: Please note that Coromatics does not intend to update these forward-looking statements, except as required by law.

Speaker 3: At this time, it is now my pleasure to turn the call over to Joe Tedisco, Chief Executive Officer of Core Medics. Joe, please go ahead.

Speaker 4: Thanks, Dan.

Speaker 5: Good morning everyone and thank you for joining us on this call. Since our last earnings call in November , the company has continued to make excellent progress toward our goal of resubmitting the defend-caf NDA as well as preparing for commercialization following a potential approval. We have made a number of key hires on the commercial leadership team in the areas of marketing, market access and distribution. As well as on the medical affairs team, we are building out a knowledgeable team of medical science liaisons, or MSLs.

Speaker 5: to engage in disease state awareness and medical education.

Speaker 5: As the initial focus of our potential launch is targeted to the inpatient segment, we have begun engaging in discussions with key stakeholders at hospitals, health systems, and IDMs, and the feedback we have received has further validated our decision to pursue launch in this segment.

Speaker 5: Cathar related bloodstream infections, or CRBSIs, are a critical unmet medical need, both in the hospital inpatient as well as outpatient dialysis setting. And there is a vital need for a preventative therapy that can meaningfully reduce the incidence of CRBSI across multiple settings of care. A February report from the CDC has further emphasized the...

Speaker 5: a meaningful impact on reducing CRBSIs

Speaker 5: Earlier this month we announced our intention to submit a Type A meeting request to the FDA seeking guidance for resubmission using Pathway 1, which is our existing CMO and our existing Heparin API supplier, or Pathway 2, which is our existing Heparin API supplier.

Speaker 5: which is our existing CMO and a new Heparin APS plier.

Speaker 5: Both pathways number one and number two potentially allow for the fastest means to resubmission and hopefully final approval.

Speaker 5: I am pleased to announce that we submitted the request to FDA for the Type A meeting in mid-March and the FDA has granted our request, with the meeting scheduled for mid-April. TB will provide a more detailed update on our meeting with FDA, as well as potential timelines for Pathways No. 1 and No. 2 short.

Speaker 5: With respect to pathway number three, which we view as our backup manufacturing site,

Speaker 5: We announced in early March a delay in the availability of submission data until at least the third quarter of 2023.

Speaker 5: This shift was due to delays in our ability to complete our manufacturing validation and validation of analytical methods at Alkimic.

Speaker 5: While we continue to work through these hurdles with our partner Alkimi, in order to shore up our backup plan, we have also signed an agreement with Siegfried AG to utilize their site in Hamel, Germany as an additional backup CMO.

Speaker 5: This site previously manufactured the product for Europe as a medical device under the trade name NutriLink. To that extent, we have already completed the tech transfer of our manufacturing process and analytical methods to the Siegfried site.

Speaker 5: FNBA is the company's top priority and we will mobilize all resources required to do so.

Speaker 5: That availability for Pathway 3 is still targeted for the end of the third quarter of 2023.

At this point in time, it is our expectation to qualify a backup site as a post-approval supplement, and we are hopeful to pursue initial NDA approval using Pathway 1 or Pathway 2, depending on the outcome of April's meeting with the FDA. I will now turn the call over to Phoebe to discuss our Type A meeting with FDA and Pathways number 1 and number 2 in more detail.

our primary Heparin API supplier required satisfactory resolutions before the FENCAS NDA may be approved.

As we announced earlier this month, our primary CMO has advised Core Medics that all corrective actions for the inspectional observations issued by FDA in June of 2022 have been implemented, and a closed-out report has been submitted to FDA that includes data to demonstrate the effectiveness of the corrective actions.

Subsequent to our March 2nd announcement, the FDA has acknowledged receipt of that closeout report.

Additionally, our primary Heparin API supplier has informed Core Medics that they, too, have completed implementation of corrective actions arising from their June 2022 warning letter for a non-Heparin API.

Although the timing of formal resolution of the warning letter by FDA is unclear, we believe that the updates made by the API supplier to its Heparin Drug Master File, or DMS, filed with the FDA, and the absence of any deficiencies with Heparin or the Heparin manufacturing process.

should not continue to block resubmission of the Defend CAF MDA.

Given these developments, we felt it was prudent to seek FDA's guidance.

on these two critical pathway blocking issues prior to resubmission of the DEFEND CAF NDA. As Joe indicated, we requested a Type A meeting with FDA to discuss timing of resubmission of the DEFEND CAF NDA and these potential pathway blocking issues.

As you know, meetings are discretionary for FDA, and we are very pleased that FDA granted the meeting request and grateful that it has been deemed a Type A meeting, which means it is scheduled in mid-April, which is within 30 days of the submission date of our request. We are seeking FDA's concurrence on two questions.

The first question asks for FDA agreement on resubmission of the FENCATH NDA at this time now that our primary CMO has addressed the deficiencies and submitted the closure report for the inspectional observations from the pre-approval inspection.

The second question asks for FDA agreement that Core Medics can resubmit the DEFEND-CAS application utilizing our primary Heparin API supplier without a formal resolution of the Outstanding Warning Letter.

because the Heparin DMF has been updated and no deficiencies were cited in the warning letter for the manufacturing process or quality of Heparin.

Heparin sodium is manufactured to comply with the USP monograph for Heparin, which sets strict standards on impurities, contamination, and structural parameters, all of which are confirmed with 100% batch testing by the API manufacturer.

Furthermore, the CMO conducts testing to confirm compliance with the USP requirements as part of the receiving process. If FDA agrees on both questions, Core Medicine intends to resubmit the application quickly with no new manufacturing information.

and request designation as a Class 1 resubmission for a 60-day review.

An affirmative answer to only the first question on our primary CMO would clear Core Medics to resubmit to DefendCath NDA utilizing data generated with a new source of Heparin API at our primary CMO.

As this type of submission would require additional manufacturing information to be reviewed by the FDA,

We would expect it to be classified as a Class 2 submission with a six-month review period.

Core Medics has already completed the validation of manufacturing with this new source of Heparin API and expects to have data available for submission by the end of April . As I said, Core Medics intends to resubmit the application as soon as possible following FDA's guidance on these two pathway blocking issues.

I would now like to turn the call over to Matt who will provide the financial update.

Thanks, Phoebe. Good morning, everyone.

I'm pleased to be here today to provide an overview of our fourth quarter and full year 2022 financial results as well as an update on Coremedics' cash position.

The company has followed its report on Form 10-K for the year ended December 31, 2022. 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 2022 financial results.

The company has cash in equivalence and short-term investments of $58.8 million as of December 31, 2022. Our net loss was approximately $8.2 million, or $0.20 per share, compared with the net loss of $7.8 million, or $0.20 per share, in the fourth quarter of 2021.

The higher net loss recognized in the fourth quarter of 2022 compared with the same period in 2021 was driven by increases in spend related to market research and other prelaunch activities. We recorded an increase in SG&A and a decrease in R&D expenses. Operating expenses in the fourth quarter of 2022 increased approximately $2.5 million

costs related to the manufacturing of DefendCAS prior to its potential marketing approval.

SG&A expense increased approximately 22% to $5.6 million compared with $4.6 million in the fourth quarter of 2021. This increase was driven by an increase in costs related to market research and prelaunch activities.

partially offset by lower personnel costs, recruiting fees, and lower non-cash charges for stock-based compensation.

with respect to our full year 2022 financial results.

Our net loss for 2022 was approximately $29.7 million, or $0.74 per share, compared with a net loss of $28.2 million, or $0.75 per share, in 2021. The higher net loss recognized in 2022.

compared with 2021 was due to higher SG&A costs as well as a smaller tax benefit received in 2022.

Operating expenses in 2022 increased approximately 4% to $30.7 million compared with $29.5 million in 2021. R&D expense decreased by approximately 19% to $10.7 million compared with $13.1 million in 2021. R&D expense decreased by approximately 19% to $10.7 million in 2021. R&D expense decreased by approximately 19% to $10.7 million in 2021.

driven by a decrease in personnel costs, net decreases in costs related to the manufacturing of DEFEND CAF prior to its potential marketing approval, and a decrease in consulting fees.

SG&A expense increased approximately 22% to $20 million compared with $16.3 million in 2021. This increase was driven by an increase in costs related to market research and prelaunch activities in preparation for the potential marketing approval of the FENCAC.

and an increase in legal fees mainly due to securities litigation, partially offset by decreases in non-cash stock-based compensation and consulting fees.

We recorded net cash used in operations during 2022 of $24.4 million compared with net cash used in operations of $21.2 million in 2021.

The increase was primarily driven...

by an increase in net loss, lower net proceeds from the NLL sale versus the prior year, and a net decrease in accounts payable, partially offset by an increase in accrued expenses compared to the prior year.

This includes approximately $17.8 million raised during 2022 through our ATM program and approximately $.6 million from the sale of unused New Jersey NOLs. Including approximately $7.2 million in net proceeds from our ATM program in 1Q of 2023, Chromedics has December 31st pro forma cash-in equivalents of $66 million. We believe our cash-in-cash equivalents give the company flexibility to fund its operations for at least 12 months from filing after taking into consideration costs related to manufacturing activities.

costs related to the potential commercial launch for DefendCat. I will now turn the call back over to Joe for closing remarks. Joe. Thanks Matt. As I look toward our next few months I believe the company is in a strong position to execute on its key objective.

We are making great progress on our commercial strategy as well as shoring up our supply chain to hopefully secure final NDA approval during 2023. As Phoebe mentioned, we are anxious to resubmit the NDA and hopefully obtain FDA approval as soon as possible so that the FENCAS may be provided to patients to help in reducing the incidence of CRBSIs, which result in significant morbidity, increased rates of hospital emissions and readmissions, and mortality. The importance of addressing CRBSI grows even more critical given the increasing resistance in bacteria and fungi to antimicrobial agents. In the study published in February by the CDC, it is estimated that 34% of bloodstream infections in the dialysis population.

are attributed to methicillin-resistant staphylococcus aureus, commonly referred to as MRSA. And as I mentioned earlier, the dialysis population has a 10,000% increased risk of developing a bloodstream infection compared to the non-dialysis population.

Although the impact of blood sugar infections is felt broadly across the dialysis community, the morbidity and mortality of CRBSI is disproportionately felt in the Black and Hispanic population.

The FDA has recognized the potential of Defendcast to help combat the threat of CRVSI in its grant of Qualified Infectious Disease Product Status, or QIDP.

And Chromedics is working hard to avoid any further delay in making the 10-caf available to dialysis patients and eventually expand into other therapeutic segments such as oncology and total parental nutrition, where CoVSI's also pose an imminent health threat.

I remain confident in our ability to bring this product to market in order to address the significant unmet medical need.

Thank you for your continued support of and interest in chromatics.

Thank you for your continued support of and interest in CoreMedix.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad.

Confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

One moment please while we pause for questions.

Take our first question from the line of Jason Butler with JMP Securities. Please go ahead.

Hi, thanks for taking the question and congrats on the progress. I just have one on the second topic for the FDA meeting, the PEPFARIN supplier. Do you have a sense of how long it would generally be expected for FDA to fully resolve the warning letter now that they have the information? I guess what I'm asking here is...

Is there a scenario where even if FDA says you need to wait for full resolution, that it could come in a timeframe that makes it worthwhile waiting to resubmit the NDA if it gets you the 60-day review period? Seems to me that cigarettes help against slow walking Hilton mistake with really small amounts of eleven percent focus rate.

Thanks Jason. In terms of timing, I'm not sure that we can really speculate. You know, you can look back historically at other warning letters, but I don't think that that's really going to be indicative of each individual situation. You know, I can say that we don't currently expect them to re-inspect.

uh, you know, resubmitting with, with the new source of heparin or with the original and we'll, we'll make that decision after we hear from the agency.

Great, thanks. Thanks for taking the question and congrats on the progress. Thank you.

Thank you. We take the next question from the line-up June Lee with Truist Securities. Please go ahead.

Hi, thanks for the updates and congrats on all the progress. I have a couple of questions. You know, if SICFREED originally produced NutriLine, why could you have used SICFREED as a primary supplier for DefendCat to begin with? And what would be the advantage of your undisclosed primary CMO over SICFREED? And I have follow-ups. Yeah, thanks, Jun. Look, I'm not going to comment on decisions that were made probably multiple years ago but before I came on board. What I can say is...

would submit under class one resubmission. And that would happen even before the minutes are available because I would assume that it takes them about 30 days.

to get the minutes back. And if you do resubmit, the street will find out probably after you have already resubmitted the MVA. Is that a fair statement?

Well, I guess a couple of things there, June . I think as Phoebe said, it's in our intention to request a class one, right, if we get, you know, affirmative answers to the two questions. You know, whether or not we have to wait to resubmit until we get the minutes will really depend upon the meeting and how the meeting goes.

So if you do it under class one, you could see an approval as early as third quarter. And if you are resubmitting under class two and you have the Heparin supplier ready by April , late April as Peepee mentioned.

You will still have possibly an approval after six months review by the end of this year or early next year. That's not a fair statement.

Yeah, those are the timelines that we would expect if we resubmitted and had the six-month review. That's correct. Great. Thank you and all the best.

Thank you, Jim.

Thank you. We'll take the next question from the line of search manager with Needham and Nicole. Please go ahead.

Hi, good morning. A couple questions for us. First on the regulatory front, regarding the existing CMO, now that they've completed their corrective actions and the FDA has acknowledged receiving a closeout report, just curious what the next step is.

from an FDA standpoint. And coming out of your upcoming meeting with FDA.

assuming the first question is...

answered positively. curious if you'll get

clarity on whether you get a class one or class two recommission. Thanks. Thanks Serge. I'm going to let Phoebe comment on both parts of that question.

class one or class two recommission. Thanks. Thanks, Serge. I'm going to let Phoebe comment on both parts of that question. Phoebe?

Yes, thanks for the question, Serge. It's, as you know, difficult to predict how FDA will react. They obviously have received a lot of material from our CMO. They're in the process of reviewing that material. Best case scenario, they're satisfied with the corrective actions and the...

to know about the worst case scenario, the FDA can decide it wants to do an on-site inspection to evaluate the corrective actions and the effectiveness for itself. So I think those are the two extremes. Obviously we believe the company has put together an extremely robust.

set of corrective actions. The effectiveness data looks very good. So we're cautiously optimistic that FDA will agree with that assessment. And in the upcoming meeting, accept that we can come in with our primary CMO and the data that we have submitted previously with our primary heparinase. In the upcoming study, we have found that the

we think we have a strong case for a class one 60-day review.

Okay. And Joe, in the past you've talked about taking a two-pronged approach to

potential outpatient reversements to DAPA and the pass through via J-code. Any updates on any progress on which path you may take?

Yeah, look, we've talked about moving both pathways in parallel, but really we are working to obtain separate payment as our primary objective.

In terms of progress, right, I'd say there's a lot of work going on behind the scenes as we're, you know, we're preparing to make those arguments to CMS, but those discussions really can't take place until we have final approval in hand. Right, that's the point at which we can really engage with CMS. But I think it also kind of bellies our decision to move into the...

Thank you. We take the next question from the line-up. June Lee with Truist Securities. Please go ahead.

Thanks for taking the follow-up question. Based on the commentaries that you're making today, class one seems like a very reasonable possibility in which case you're looking at a potential approval in the third quarter of this year. How quickly would you be able to launch if it is approved in third quarter?

And in what form would you be looking to launch? We have some options there. Thank you. Thanks, June . Well, look, if we found ourselves with an approval earlier than what maybe had been expected previously, certainly it's still going to take a couple of months for us to ramp up with field force training.

I would say we do feel we're in a good position from an inventory standpoint, or we'll be in a good position from an inventory standpoint. But it's certainly going to have to be a soft launch into a rolling, more robust launch after a couple of months. On the inpatient side, Erin can maybe speak to it.

There's gonna be a process of getting the inpatient institutions through P&T, getting the product on formulary. And on the outpatient side, we're not gonna know our reimbursement for at least six months. So there's gonna have to be a little bit of slow ramp in the beginning while that outpatient reimbursement gets sorted out.

Thank you. Thank you. I will now turn the call over to Dan Ferri for written questions. Dan.

Thank you, operator Joe. I have a few written questions from the audience.

The first one, and I think we touched on this a little bit earlier.

is if and when the NDA is resubmitted...

will you announce at the time of read submission?

or once the NDA has been accepted. Thanks, Sam. It would be my intention to announce, once we resubmit, and then again likely communicate more, if and when the application is accepted for filing, and we know if it's a Class I or a Class II resubmission. That's my current intention.

Okay, thanks, Joe. And another one, this is a two-part question that you just touched on a little bit earlier, is, you know, are there any updates that can be shared on your commercial efforts in the inpatient segment?

and the outpatient segment. And then the follow-up there would be, as you think about the inpatient launch, what are the main challenges, as you see, that must be navigated during the lead-up to and through commercial introduction.

Okay, thanks Dan. You know, I'm going to give Aaron an opportunity to comment on the activities that have been going on on the outpatient side and kind of how we're navigating this right now. Aaron?

Sure. Thanks, Dan. So the progress from the inpatient perspective, I'll take it that one first, is we've been building relationships with key health systems.

working through what's required for the formulary package itself, budget impact models, cost offset models, those types of things. We've made some big hires recently internally within the organization to help make that progress, move that progress forward. And then we're also looking at potential strategic partnerships to manage the patient population. On the outpatient side, this that new consumerlan

But we are working with, continuing to work with dialysis organizations and with policymakers at both CMS and politically. And we are going to continue those efforts in hopes to gain separate reimbursement on the outpatient side. As Joe said, that timing is simultaneous.

as we're launching the inpatient segment. But I think that the biggest thing here as Joe mentioned earlier is the reimbursement on the inpatient segment is taken off the table, right? We were able because of our regulatory designation to go through an alternative NTAP pathway where we now have that reimbursement and makes those conversations much easier.

Excellent. Thanks, Aaron. So, Joe, I have a few more here. What is your current thinking on building the field force? Is CoreMedics going to wait?

until around the time of approval to avoid taking on overhead at risk.

Thanks, I think we've communicated consistently, we're going to be prudent about how we utilize our cash and how we build out our infrastructure ahead of launch. We've started to build out leadership roles on the commercial side, as well as probably deeper roles on the medical fair side where they can be out in the field now.

having a lot of the disease state medical education type discussions with KOL. As we look at building out the commercial field team, I think we'll make that decision around timing as we see how the FDA meeting goes, and how we can get our recent mission in.

We're not going to look to overburden the company in SG&A before we have a high level of confidence on final approval.

We're not going to look to overburden the company in SG&A before we have a high level of confidence on final approval. All right, great, Joe. Our final question is...

You know, can you comment on the activity in recent months at conferences or medical meeting attendance and and does the company have any upcoming presentations at scientific meetings or other activities worth noting? Yeah, look I think our attendance actually been pretty robust over over the last few months both in the commercial and the medical fair side at various meetings.

So, you know, we'll be out there and I think fairly aggressive in communicating.

and getting the message about CRBSIs and the medical needs kind of out into the marketplace. Excellent. Thanks, Joe. Operator, this concludes the written question portion of the Q&A session. Thank you.

Ladies and gentlemen, this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation. Val inside.

Part that that.