Q2 2023 CorMedix Inc Earnings Call
Greetings and welcome to Automatics, Inc. Second quarter 2023 earnings call. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad. As a reminder, this conference is being out of contract. It is now my pleasure to introduce your host Dan Ferry from <unk> advisors. Thank you. Mr. <unk> you may begin.
Good morning, and welcome to the <unk> second quarter 2023 earnings Conference call.
During the call today is Joseph <unk>, Chief Executive Officer of core metrics and he is joined by Dr. Matt David Executive Vice President and CFO Dr.
Dr Phoebe mounts, EVP and general counsel.
Hurlbert EVP of clinical and medical Affairs, and Aaron 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 statements within the meaning set forth in the private Securities Litigation Reform Act of 1095.
These statements are subject to certain risks and uncertainties and include but are not limited to any of the following.
Any statements other than statements of historical fact regarding management's expectations beliefs goals and.
Plans about the Companys prospects.
Clothing, its clinical development program manufacturing activities and NDA approval for <unk> in the U S. Our other product candidates future financial position future.
Future revenues and projected costs can reimbursement and potential market acceptance of the second half for other product candidates.
More specifically forward looking statements include any statements about our clinical development plans and the timing cost progress results estimates and interpretations thereof.
Rejections as to the Companys future capital, raising and spending and cash position, including projections regarding the sufficiency of the Companys current cash resources to potentially bring the company through to breakeven profitability expectations.
As to the timing and nature of anticipated regulatory actions reimbursement decisions.
Possible product licensing business development or other transactions any commercial plans and expectations intellectual property protections for our product candidates market projections for our product candidates and expectations as to manufacturing and product component costs.
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.
These risks are described in greater detail in <unk> filings with the SEC.
Including the latest quarterly report on Form 10-Q, and the annual report on Form 10-K copies of which are available free of charge at the SEC's website at Www Dot FCC Dot Gov.
Or upon request from <unk>.
<unk> may not actually achieve the goals or plans described in these forward looking statements and investors should not place undue reliance on these statements.
Note that <unk> does not intend to update these forward looking statements except as required by law.
At this time, it's now my pleasure to turn the call over to Joseph <unk>, Chief Executive Officer of Carmax. Joe. Please go ahead.
Thanks, Dan.
Good morning, everyone and thank you for joining us on this call over the last three months. The company has announced a number of key milestone achievement.
Most importantly, the announcement that the NDA for defend cats had been resubmitted to the FDA. Following a type a meeting and was subsequently accepted for review with a target action date of November 15th 2023.
<unk> will provide a brief update today I'm regulatory affairs activities, leading up to our action date.
In addition to the Resubmission, we announced at the centre for center for Medicare and Medicaid services or CMS.
Issued its inpatient prospective payment system proposed 2024 rule that included an end cap of up to $17111 per hospital stay for reimbursement of defend cat.
We're happy to now announce that this past week CMS published its final rule on this regard providing for final approval of the <unk> of up to $17111 per hospital stay for deferred Catherine amberson conditioned upon the defend cap NDA obtaining FDA approval prior to July 1st of 2024.
The company also announced that the U S patent and trademark office issued a notice of allowance of a patent claims directed to the composition of the catheter lock solution for preventing infection and reduced blood flow in central venous catheters.
<unk> has paid the issue and the application has now moved to issuance.
This newly allowed U S patent application.
Next the unique and proprietary nature of defend cast and will extend our current intellectual property protection to an anticipated exploration date in 2042, which is beyond the 10 and a half years of marketing exclusivity available upon an FDA approval of the defense NDA.
As a reminder, the 10 and a half years of marketing exclusivity anticipates five years of new chemical entity exclusivity plus five years of Q I D. P exclusivity for six months of additional exclusivity conducting a post approval pediatric study.
During that 10, and a half year exclusivity period, the FDA would be barred from approving any anda that references defend cat has its comparator drug.
More recently <unk>.
Company enough the pricing of an underwritten public offering of its common stock and pre funded warrants in which the total gross proceeds before fees and expenses were approximately $40 million.
In addition, we are pleased to announce today that the underwriters fully exercised the over allotment option of approximately one 5 million shares.
Yielding additional gross proceeds of rough roughly $6 million before fees and expenses.
The successful completion of this financing provides <unk> with considerable medium to long term financial resources.
Proceeds from the offering together with our existing cash cash equivalents and short term investments and available resources.
Will enable us to fund the launch of defend cast through two anticipated profitability.
Assuming we are able to obtain a timely approval of the defense calf NDA on our target action date and commence commercial launch in the first quarter of 2024 as well as achieve other internal base case assumption.
This financing also added new institutional investors to our shareholder base and broadened our relationships across wall Street.
I will now turn the call over to <unk> for a brief regulatory update and to discuss progress towards potential FDA approval.
<unk>.
Thanks, Joe Good morning, everyone.
As Joe mentioned following the Resubmission of the Japan Cat M D. A.
The FDA accepted the application for review and granted the target action date of November 15 2023.
Over the past few months, we have received standard communications and requests for information from the agency related to our application consistent with a normal NDA review process as well as notifications from various vendors.
Pre approval inspections being scheduled for the product yes.
That's part of the review process.
We anticipate an SBA pre approval inspection of our primary contract manufacturing organization site in the coming months, which will be critical to our proven ability of the product.
Core medics technical operations regulatory and quality teams as well as multiple external cgmp consultants with deep SBA experience are in regular communication with the primary CMO team working toward the goal of preparedness for an upcoming preapproval inspection.
Ahead of any API, we are heavily focused on verifying the effectiveness of past corrective actions and working with the CMO team to confirm the readiness of the site for FDA inspection.
Going forward the company will share additional regulatory updates when appropriate.
I would now like to turn the call over to Matt who will provide a financial update Matt.
Thanks, <unk> and good morning, everyone I.
I am pleased to be here today to provide an overview of our second quarter and first half of 2023 financial results as well as an update on <unk> cash position.
The company has filed its quarterly report on Form 10-Q for the quarter ended June 32023, I urge you to read the information contained in the report for a more complete discussion of our financial results.
With respect to our second quarter 2023 financial results.
Our net loss was approximately 11 3 million or <unk> 25 per share compared with a loss of seven $6 million or <unk> 19 per share in the second quarter of 2022.
The higher net loss recognized in 2023 compared with 2022 included in the increase in R&D expenses and SG&A expenses versus the second quarter of 2022.
Operating expenses in the second quarter of 2023 increased approximately 43% to $11 8 million compared with $8 3 million in the second quarter of 2022.
R&D expense increased by approximately 49% to $4 8 million driven primarily by an increase in costs related to the manufacturing of defend cap prior to its potential marketing approval an increase in personnel expenses and an increase in costs related to medical affairs activities.
SG&A expense increased approximately 39% to $7 million in the second quarter of 2023, compared with $5 1 million in the second quarter of 2022.
This increase was primarily attributable to an increase in costs related to market research studies and prelaunch activities in preparation for the potential marketing approval of deferred cost and an increase in personnel expenses due to additional hires partially offset by a decrease in legal fees for the period.
With respect to our first half of 2023 financial results total operating expenses for the first half of 'twenty three amounted to $22 8 million compared with $15 3 million in the first half of 2022, an increase of 49%.
R&D expense increased 49% to $8 2 million driven primarily by an increase in personnel expenses and increasing costs related to the manufacturing of defend cap prior to its potential marketing approval and an increase in costs related to medical affairs activities S.
SG&A expense increased approximately 49% to $14 6 million compared with the first half of 2022.
Primarily driven by an increase in costs related to market research studies and prelaunch activities in preparation for the potential marketing approval and cat and increase in personnel expenses and an increase in noncash charges for stock based compensation.
These increases were partially offset by a decrease in legal fees for the period.
We recorded net cash used in operations during the first half of 2023 of $19 million.
Bear with net cash used in operations of $12 2 million in the first half of 2022 the.
The increase is primarily driven by an increase in net loss primarily attributable to an increase in operating expenses as compared to the same period in 2022.
With the recent closing of our announced equity offering <unk> is in a strong position from a balance sheet perspective.
The company has cash and cash equivalents of $52 4 million as of June 32023. This includes approximately $5 3 million raised during the second quarter of 2023 through our ATM program.
Including approximately $43 2 million in net proceeds from our equity financing that closed during July cosmetics is June 32023, pro forma cash and equivalents of approximately $95 million.
We believe our cash cash equivalents short term investments and available resources gives the company flexibility to fund the potential commercial launch of defend cap through two anticipated profitability, assuming we are able to obtain a timely approval of the defend cap NDA on our target action date and commence commercial launch in the first.
Quarter of 2024, as well as achieve other internal base case assumptions I will now turn the call back over to Joe for closing remarks, Joe.
Yeah.
Thanks, Matt.
Certainly it's been a busy quarter for cosmetics pace, we expect to continue over the next few months.
While our technical and regulatory teams are working diligently to help prepare our CMO for an upcoming pre approval inspection or.
Our commercial and medical affairs teams are engaging with key stakeholders across settings of care in an effort to ensure <unk> is well positioned for a potential launch of deferred cash in early 2024.
Were happy to announced last quarter, our strategic partnership with Boston Medical Center, and we hope to announce similar arrangements with other health systems in the upcoming months.
We're also pleased to have secured in patient reimbursement via the conditional and tap published by CMS last week.
We are preparing for an expected discussion with CMS in late 2023 around outpatient reimbursement.
As we have discussed on prior calls we do not believe that deferred cash should be classified as a renal dialysis service.
It is an infection preventative, which is not currently captured by any functional categories inside the existing ESR D bundle.
Congress created the transitional drug add on payment or to DAP, a framework to incentivize innovation in treating ESR D.
We were pleased to see that CMS recently proposed expanding to DAP up from two years to five years as adequate reimbursement of innovative therapies is essential to improving health outcomes.
Though we do believe to depth is inadequate reimbursement structure for products that treat ESR D. We.
We feel strongly that as an infection preventative we intend to make our case to CMS that our products should always remain outside the bundle and should be reimbursed as an outpatient part D drug product with a unique J code.
A formal application for outpatient reimbursement cannot be submitted until after an NDA received FDA approval.
We do expect to engage in a dialogue with CMS ahead of that submission providing documentation supporting our reimbursement position.
Core medics is squarely focused on operational execution at this point in time and I look forward to updating shareholders as we approach our target action date in November .
Thank you for your continued support of an interest in <unk>.
Okay.
Should open the floor for questions.
Yes. Please.
Thank you.
We will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.
Pencil mentioned tone will indicate your line is the question queue.
Start to if you would like to remove your questions from the queue.
For participants using speaker equipment may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.
The first question comes from the line of Jason Butler with JMP Securities. Please go ahead.
Hi, Thanks for taking my questions and congrats on all the progress.
I think Steve you mentioned that there were multiple vendors that had been informed of our scheduled pretty preapproval inspections.
Can you just give us.
Any color as to whether any inspections have already occurred and if theres any update of the status of your primary API provider and then secondly, now you have the the final end cap approval is there anything that I didn't work that you can do preapproval and.
In preparation of those those reimbursement discussions with institutions and what.
Our other priorities.
Post approval thanks.
Alright. Thanks.
Thanks, Jason so on the <unk> tap will hold that question, a second well, let's start with with.
Okay.
The question around the primary API vector as of today, we don't have any update.
On the compliance status of that API vendor I think what we said on our last earnings call.
<unk> remains the case the feedback from our type a meeting.
Was that should the warning letter remain in place at the time of our action date, we have the ability to withdraw them as of end of term.
Until we learned otherwise on the compliance status of the facility. That's what we the discussion we would intend to have with the agency as we approach the action date.
Phebe do you want to comment on any of the the.
<unk> for.
Other vendors.
Yes sure. Thanks for the question Jason.
As you know when you submit the NDA and there are a number of <unk>.
Correct manufactures API suppliers testing labs that are listed.
And are inspected by FDA as part of the pre approval process.
It's working through contacting all of those entities to schedule Disney.
Timing for the inspections that does not go through core metrics. So we're not involved in the coordination of the timing.
We are aware of that testing lab has been inspected and the inspection went well with out any issues for defense cap. So we.
We do hope to get updates from all of the various vendors of the inspections occur.
But as I said, that's not something that we're directly involved with.
Alright.
Thanks, Savi, so Jason on the <unk> side Thats specific to inpatient reimbursement as we mentioned in the script, we've got a lot of.
Ongoing called them pre commercial activities, both on the commercial side and on the medical side.
Ahead of approval looking to put us in a stronger position as we would expect to ramp up for launch on the inpatient side. Each health system has its own P&C process right. So we're doing a lot of work now to <unk>.
Put us in a stronger position with each health system.
Liz Herbert on the line I'm going to ask her to comment a little bit about what's going on in the medical affair side specific to inpatient as we prepare for commercialization.
Thanks, Joe.
In the past quarter field medical team has had numerous interactions with clinical stakeholders in nephrology infectious disease patient safety and outcomes and infection prevention and we are diligently learning the current protocols for hospitals and health systems and what they have in place when it comes.
The catheter care. So we can best educate the clinical community based on their current practices.
And along with the commercial team.
Also engaged in several market TMT or pharmacy, and therapeutics meeting and these meetings have provided us the opportunity to learn firsthand.
What is valuable to decision makers and has really underscore the clinical unmet need that remains for these patients.
Yeah.
Great. Thank you for taking my questions and congrats on the progress.
Thanks, Louis Thanks, Jason.
Thank you next question comes from the line of John Lee Securities. Please go ahead.
Alright, thanks for the update for taking our questions.
Not to be initial approval and launch how should we be thinking about O'brien and SG&A.
<unk> argues to Onboarding.
<unk> of that.
You broke up a little bit why you're asking that question, but it was just less.
Alright.
So.
Sorry.
Couldn't hear you, but yes, it's about the ramp of SG&A and the cadence for hiring reps is that what I heard.
Okay. Okay.
I think we are thinking on this hasn't really changed much over the last.
<unk>.
Since we talk we're not going to give specific dollar ramp guidance at this point in time, but the way you should be thinking about it.
We've grown over the last couple of months from now.
30, some unemployed last year to $2 46 47 today.
We're adding employees at the management level right now and key functions, we built out our.
Our medical affairs team our field medical team, we're hiring leadership roles on the commercial side when it comes to field based personnel, we wouldn't expect to actually on board those personnel until we until we have an approval in hand.
The goal would be to identify kind of key candidates.
And have done with offer letters and then Judy Onboarding.
Shortly after approval and work towards a launch in the first quarter of 2024, assuming we get approval on the action date.
We've talked about in inpatient field team in the range of around 30, and I think that.
Assumptions still hold.
On the outpatient side, it's we think it's a leaner team get a much more consolidated customer base on that side of the business.
Yes.
I think publicly talked about 12 to 14 on on that side. It at around the time, we launch on the outpatient side and the outpatient is going to lag a little bit right winger enough to wait on that that outpatient reimbursement decision, where we can we can really rollout.
A more robust outpatient launch so as we get approval in hand or.
If we get approval in hand, we'll be able to provide a little bit more specific guidance around.
On timing and costs.
Perfect.
The follow up question.
Yes, your strategic initiative with Boston Medical.
Interesting.
Sort of a real world setting, so probably you'll be disclosing resort the best study.
Elaborate a little bit more on that.
Yes sure Thanks, Jim.
I'd like to ask Alan to talk a little bit about the Boston medical partnership.
Yeah. Thanks, Joe So for BMT, we do plan on publishing.
In collaboration with them.
And any additional future partnerships that we have.
At the current data initiative is focused on just the retrospective data related to hemodialysis patients and catheter related infections, and then will implement.
A second phase to.
This is post approval to evaluate the real world utilization of <unk>.
Fantastic and then compare that to what we booked at higher acuity approval. So.
This is very important for us and a commercial perspective, when we get into the institution, we learned about the patient population a bit more we learned how dialysis is provided by other organizations like <unk>.
Mike, let Lars dialysis organizations that are in there so.
That is.
Very important and then we actually will have the data that we need to further support the product and guidance.
Got it and then my final question and congrats on getting that and tap reimbursement in place or 17000.
Somewhat dollars for hospitals, but at that stage.
To confirm that's strictly in restricted admitted to the hospital fees related to this or any of our facilities.
Taking these two for that.
So the the end cap reimbursement is specific to utilization on label Aaron do you want to elaborate a little bit more.
Yeah.
Just to that point until it is her label that will be restricted to hemodialysis patients with bdcs on the inpatient side.
And.
Yeah, just on the inpatient side, but they've recognized the agency CMS.
It's not.
It's not easy to get in <unk>, and so we've met that criteria and so we're utilizing that for our benefit on the outpatient is I mean, as we look to separate payment as well. So that's that's very helpful.
On both sides.
T J standpoint.
But with the <unk> already secured.
Have the ability.
Their unique ability to go into these institutions earlier, right and have robust conversations about financial and procurement perspective, most companies have to wait until approval where you have.
You have your price at that point and an understanding of reimbursement a little bit better. So we are able to make that process more efficient and earlier.
Just a follow up on that is there a cap on how much comedy hospital space.
Chemical reimbursement for ore.
If you do meet the criteria.
Reimburse $17000 for all.
Legible dialysis hospital stays.
Yes go ahead.
Yes, so the untapped works its over and above the DRG. So one once the DRG is maximized so.
Let's just take a DRG, let's say, it's $10000 for an inpatient stay an end cap is over and above that amount and so the maximum amount that they can get her stay for hospital stay is 17111 and that maybe that patient goes in several times in the year.
If they knocked out their DRG and Theres every hospital has different calculations for that on how they do it but.
But they can hustle and receive up to that amount.
Okay.
Great. Thank you and looking forward to it.
Thanks, Jim.
Thank you next question comes from the line of Rohit, Boston with Needham and company. Please go ahead.
Hi, Thanks for taking our questions. This is rohit on for Serge can you talk about what the current treatment guidelines are at hospitals to reduce <unk> and do you expect to <unk> got to be a part of them.
And then second question are there any similar recent drug launches that could provide a proxy for our potential launch trajectory of defend cats. Thanks.
Thanks Robert.
In terms of the first question on kind of current treatment guidelines I'm going to ask Luis to comment.
Sure I think so.
So.
There are a variety of national guidelines that are available from CDC and say in a number of other national organizations and then on Houston.
They are coming up with their own protocols based on the needs of their patients and the way they take care of certain types of catheters.
Very currently what we've learned is in.
In addition to performing hand, hygiene and cleaning the skin with antiseptic and ensuring that.
Health care providers are gloved, and Theres not cross contamination and all of the regular precautions that are taken to keep the line space.
There are a number of different.
Unapproved catheter remarks that may be utilized at different times, they tend to be more reactive than proactive or preventive.
In most cases, but there are a variety of different things institutions are doing but unfortunately that is one of the gaps right. Now is there is not a clear consistent guideline on how to best reduce infections in this population.
Alright, Thanks Lou.
And in terms of your question on similar drug launches I think this is this is something that we struggled to find a pure pure play comparable.
And we think that's actually a good thing right.
We're looking to launch here is truly a first in class therapy. It is a it is a preventative right. We're not a product that they are treating infections were looking to prevent infection.
No.
No real similar product has launched either in the named patient space or in the outpatient space. So.
We think that Thats certainly a good thing we think is a lot of reasons why.
Our untapped and will be meaningful on the inpatient side, where perhaps some.
It wasn't as meaningful for some some next generation technical scoring and antibiotics that got approved that we're competing against.
<unk> six different products for the same therapy right. So we are.
Right now there are no currently FDA approved drug product for the prevention of.
CRB size in any population, including the hemodialysis population. So we're looking at this truly is a first in class.
Therapy.
Great. Thank you.
Okay.
Thank you.
I will now turn the call over to Dan <unk> for additional written questions from the audience.
Thank you operator shall we have a couple of questions here from the audience.
The first one is can you elaborate on the recent changes regarding to dapple and extending the program.
Sure and obviously I'm going to want to reiterate the comment that while we do think to depth.
Adequate for reimbursement innovative products that treat ESR D right a lot of our focus is.
Working with CMS force for separate reimbursement.
Now that said we were happy to see then extend to dapple.
Two years, they've added an additional.
Three years of reimbursement.
And I think that that recognizes that longer reimbursement is necessary to begin addressing a lack of innovation in that ESR space right. So.
Beyond that Erinn is there anything else you'd want to you'd want to add.
On the changes.
I think I think you covered it I mean I think the additional three years just helps create a better incentives for providers to utilize new there great. Thanks.
Good thing for US the agency has recognized that.
And the innovation posted around the innovation posted out there and we look forward to working with them.
On the payment specifics.
If we go that route.
Excellent all right. Thank you Joe Thank you Erinn.
Joe Another one here can you comment on future financing strategy, especially in light of the disclosure around this recent financing having the possibility to take the company to breakeven profitability.
Thanks, Dan.
Matt do you want to you want to comment on financing sure sure. Thanks, Joe.
As in the past, we can't really comment on plans for future financing.
Management, and our board regularly evaluates our needs market conditions and various strategies as we proceed.
I'll say that we completed the recent equity offering to really put the company in a strong financial position as we planned for and ramp up toward the potential commercial launch of thank you.
Excellent Thanks, Matt Thanks, Joe.
Operator. This concludes the question and answer session you may now close the call.
Thank you.
Includes todays teleconference. You may disconnect your lines at this time, thank you for your participation.
Okay.
Okay.
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Oh.
Yeah.
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