Q3 2023 CorMedix Inc Earnings Call
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Good afternoon, and welcome to cosmetics third quarter 2020 earnings Conference call. Today's call is being recorded there will be a question and answer session at the end of today's presentation and instructions on how to ask a question there'll be given at that time at this time I would like.
Turning the conference over to Dan Ferry for lifestyle Nisource. These threat.
Good afternoon, and welcome to the <unk> third quarter 2023 earnings Conference call.
We didn't call today is Joseph <unk>, Chief Executive Officer of Carmax and he is joined by Dr. Matt David Executive Vice President and CFO Dr.
Dr Phoebe mounts, EVP and general counsel.
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 1995.
Payments are subject to certain risks and uncertainties that include but are not limited to any of the following any statements other than statements of historical facts regarding.
Regarding managements expectations beliefs goals and plans about the company's prospects.
Including its clinical development program manufacturing activities and marketing approval for <unk> in the U S or for other product candidates future financial position future revenues and projected costs and reimbursement and potential market acceptance of defend cast or.
Our other product candidates.
More specifically forward looking statements include any statements about our clinical development plans. It at the time and the timing cost progress results estimates and interpretations thereof.
Projections as to the company's future capital, raising and spending and cash position, including projections regarding the sufficiency of the company's current cash resources to potentially bring the company through to breakeven profitability, especially expectations as to the timing and nature of anticipated regulatory actions re.
Membership 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 Corybantic filings with the SEC, including the latest quarterly report on Form 10-Q, and in our 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 cosmetics.
<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. Please note that carmax does not intend to update these forward looking statements except as required by law.
This time it is now my pleasure to turn the call over to Joe to Disco Chief Executive Officer of cosmetics, Joe. Please go ahead.
Thanks, Dan.
Good afternoon, everyone and thank you for joining us as we approach tomorrow as target action date for <unk> I'm very pleased with the progress that the company has made toward pursuing final NDA approval from FDA as well as preparations for commercialization.
I'm happy to announce that the FDA completed a preapproval inspection for our finished dose should see don't see demo site. In September we are very pleased with the outcome.
And an establishment inspection report or E. I R is expected to be issued imminently.
I would like to thank and congratulate all of the <unk> employees, who will work diligently with our C D ammo and external consultants and preparation for the inspection as well as thank our C. D. M. L. Ravi pharma industrial services for their commitment to <unk> and defend cats.
Phoebe will provide additional clarity around preapproval inspections, and the status of the NDA review process.
Certainly it's frustrating for us to host this call today, a day ahead of our <unk> date, but this was the last day, we could conduct this call under SEC requirements, and we were hopeful that FDA could potentially take action earlier than our target action date.
FDA has communicated to core metrics that they are working toward taking action on our application tomorrow and at present time. The company is not aware of any outstanding review items or deficiencies that would lead to a negative outcome.
In that regard in advance of our target action date, we have intensified our preparations for commercial launch with a number of key new hires and market access sales training pricing and contracting commercial operations field medical and drug safety and pharmacovigilance.
We are building a significant number of capabilities in house as well as relying on external vendors for certain activities that require larger scale.
Our inpatient field team will consist of a combination.
Of in house market access key account managers as well as external expert advisors with deep relationships at specific high value target institutions and health systems.
In the event, we do receive final FDA approval over the coming days, we are targeting a commercial launch before the end of the first quarter of 2024.
Likely initially focused on the inpatient segment only.
Our assumptions around commercial launch and sales ramp may be impacted by external factors, most notably the timing of reimbursement guidance from the center for Medicare and Medicaid services or CMS around outpatient reimbursement for defend Caf.
Over the past two months, we have been we have been engaged in an active back and forth discussion with CMS, making our case that deferred cash should be properly reimbursed as an outpatient drug product under Medicare part B.
We have provided the government with significant legal commercial and health economic rationale and supportive defend cath obtaining separate payment.
The alternative to separate payment under Medicare part B would be a CMS determination that defend cathodes of renal dialysis service and eligible for a transitional drug add on payment or to dapple.
While we maintain our guidance to analysts and investors to consider to DAP as our base case from a financial modeling standpoint the.
The company feels strongly defend cap does not fall within the current statutory definition of renal dialysis service and therefore should properly be separately reimbursed under Medicare part B.
<unk> is preparing to submit an application to CMS for unique product J code on January one 2024 for part B reimbursement provided our NDA receives FDA approval.
The deadline from CMS to submit an application for to data is also on January one.
Absent direct feedback from CMS advising the company to submit an application for <unk> prior to that January deadline.
<unk> does not intend to submit an application at this time as we do not believe that the product is a renal dialysis service.
At the DAP as a quarterly application process with a full quarter to implement should CMS deemed defend cast to be a renal dialysis service are to DAP application will therefore lag any such determination and may impact the timing of outpatient product launch by a quarter.
It is also worth noting that a prolonged government shutdown could adversely impact the timing of any guidance from CMS around reimbursement and the submission of our view of either a J code or to that application.
With respect to a potential inpatient launch in the first quarter of 2024.
We contemplate this would be a soft launch as we can only begin the process of seeking PNT formulary approval at various health systems once the NDA for defend Cat that's final FDA approval.
Over the past several months, we have accelerated the process of building relationships with key target health systems, identifying key opinion leaders and engaging external advisors, who have existing relationships with those targeted system.
PMT process varies but can take anywhere from three to nine months, depending on the health system.
We are hopeful to be able to land. Some quick early formulary positions. However, the ramp on the inpatient side is expected to be slow over the first three to nine months of launch.
At present time do the inpatient formulary lag and the expected timing to implement any outpatient reimbursement, we would not expect meaningful revenue contributions until the second half of 2024 <unk>.
Provided we obtain timely NDA approval, we anticipate discussing more Greg youre already around inpatient launch ramp and the timing of outpatient launch during our yearend earnings call.
I will now turn the call over to Phoebe for a regulatory update and discuss progress towards potential FDA approval phebe.
Thanks, Joe Good afternoon, everyone.
I would like to thank and congratulate everyone on the teams who've worked so hard toward preparation of the C. D. M. One site for preapproval inspection as well as in responding to all other request by FDA for information on the <unk> NDA Resubmission.
In addition to a preapproval inspection of our primary finished dosage manufacturing site yesterday.
The FDA has also conducted preapproval inspections for defend cat.
Suppliers of active pharmaceutical ingredients con.
Contract laboratories involved in testing and product specifications and packaging facilities. We are not aware of any outstanding review issues at this time.
Over the past several months, we have received multiple requests for information from FDA related to the content how do they then Kathleen including draft prescribing information, which is consistent with the normal NDA review process.
Most recently, we received a request for updated secondary packaging labels as well as a request for information related to our post approval pediatric study commitment.
You may recall that core medics, and FDA agreed to a post marketing commitment to conduct a study in pediatric hemodialysis patients pursuant to Preah or pediatric research equity Act.
N V P C. Hey, we're best Pharmaceuticals for children Act.
This study is completed.
They have the potential to extend six months of marketing exclusivity to the five years of marketing exclusivity for a potential approval defend cap as a new chemical entity or N C E and the additional five years for the designation of defend cat as a qualified infectious disease product.
We view these requests as positive indicators that our NDA review is progressing in line with our expectations.
We have also received written notification from FDA that the proprietary name just end cap remains conditionally acceptable pending final approval of the NDA by FDA.
Lastly, we made the decision to proactively reach out to FCA.
And withdraw from our application our original supplier of heparin API.
You may recall from our prior communications.
During our type a meeting in April the FDA has advised us to resubmit the NDA with two suppliers of heparin API.
Initial supplier, having an ongoing warning letter unrelated to have right.
FDA advise doing hard type a meeting that should the warning letter remain unresolved and we approach our target action days, we would have the ability to withdraw that source as a supplier from the application.
As of late September that warning letter remains unresolved and though our supplier has implemented corrective actions.
No closeout inspection has yet been scheduled by F D. A.
To that extent, we made the decision to withdraw that supplier of heparin API from our NDA application. So it's not unnecessarily delay our eligibility for final NDA approval.
We will reevaluate resubmitting the heparin supplier following clearance in the warning letter and the potential FDA approval has been fantastic.
We now optimistically anticipate FDA action with Tomorrow's target action date.
It is worth emphasizing that the Paducah date is a target action date and not a statutory requirement.
F D. A is not required to take action by the action date and there are recent instances of FDA, taking action on days preceding or following a specific target date is.
Yeah.
<unk> has communicated that the NDA remains under review and the agency is working towards taking action by the producer date.
We are unaware of any outstanding information that is required.
I would now like to turn the call over to Matt who will provide a financial update Matt.
Thanks Phebe.
And good afternoon, everyone I am pleased to be here today to provide an overview of our third quarter and year to date 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 September 30th 2023.
I urge you to read the information contained in the report for a more complete discussion of our financial results.
With respect to our third quarter of 2023 financial results.
Our net loss was approximately $9 7 million or <unk> 17 per share compared with a loss of $6 9 million or <unk> 17 per share in the third quarter of 2022.
The higher net loss recognized in 2023 compared with 2022 included an increase in operating expenses driven by prelaunch activities for defend cat versus the third quarter of 2022.
Operating expenses in the third quarter of 2023 increased approximately 50% to $10 5 million compared with $7 million in the third quarter of 2022.
R&D expense increased by approximately 14% to $2 7 million driven primarily by an increase in costs related to medical affairs activities and an increase in personnel expenses.
SG&A expense increased approximately 69% to $7 8 million in the third quarter of 2023, compared with $4 6 million in the third 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 defend cap 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 nine months year to date 2023 financial results.
Total operating expenses during the nine months year to date of 2023 amounted to $33 3 million compared with $22 3 million in the first nine months of 2022, an increase of 49% R&D expense increased 39% to $10 9 million driven primarily by an increase.
And personnel expenses and increase in costs related to medical affairs activities and an increase in costs related to the technical and quality operations for the manufacturing of defend cast prior to its potential marketing approval.
SG&A expense increased approximately 55% to $22 4 million compared with the first nine months of 2022, primarily driven by an increase in costs related to market research studies and prelaunch activities in preparation for the potential marketing approval of defend Caf and increase in person.
<unk> 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.
We recorded net cash used in operations during the nine months year to date of 2023 of $27 7 million compared with net cash used in operations of $18 2 million in the same period in 2020 to 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 closing of our announced equity offering earlier in the third quarter <unk> is in a strong position from a balance sheet perspective, as we prepare the company for a potential commercial launch in the first quarter of 2024.
The company has cash and cash equivalents of $86 6 million.
As of September 30th 2023, we believe our cash cash equivalents short term investments and other available resources gives the company the capability to fund the commercial launch of defend cap through two anticipated profitability, assuming we are able to obtain timely approval of the defense calf NDA on.
Our action date and commence commercial launch in the first quarter of 2024 as well as achieve other internal base case assumptions.
Now I'll turn the call back over to Joe for closing remarks, Joe Thanks, Matt.
<unk> is keenly focused on our upcoming target action date, and hoping for a positive outcome from FDA. We are firing on all cylinders preparing for a potential commercial launch.
We have the inventory manufactured and ready to be labeled once we have a final label from FDA.
And we have new batches scheduled from our CMO.
We are actively in communications with CMS and once the determination is made regarding our reimbursement structure, we will pivot our launch strategy accordingly.
As I mentioned earlier I do expect to be able to provide more granularity around launch assumptions on our next earnings call. I. Appreciate everyone's continued support in <unk> I'm happy to take questions.
Thank you and ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press the star followed by the number one on your telephone keypad, you will hear at the tongue problem acknowledging your request and get questions from people and they are going to ever see should you wish to decline from the poly processing. These presses.
The star followed by the number two and if you're using a speaker. Please lift the handset before pressing any keys one nominee. Please for your first question.
Okay.
And your first question comes from the line up Jason Butler from JMP Securities. Your line is open.
Thanks for taking the questions and congrats on all the progress to date and obviously, we're a excitedly waiting for a decision from FDA.
Couple of questions.
You mentioned that you've had some label discussions or negotiations with FDA as the label or the draft label that you're aware of today consistent with your expectations and do you think it gives.
It gives you an optimal launch opportunity and then understanding that a full commercial launch will happen in one Q. How soon will the product be commercially available and can you give us any color on the steps that you'll take from from now until commercial of a full commercial launch and how we should think about capacity.
Basically from the the API supplier during the first parts of the launch thanks Alright.
Alright, Thank you Jason.
I think the first question easy to address on the label there were no surprises in anything that we've seen in our communications from FDA. So we're certainly happy with the feedback that we've seen on the label.
And as you point out you know, we're not guiding toward a full commercial launch in the first quarter.
And certainly there are some oh a.
Decision points, we might have to make that could you know.
Cause us to want to.
It may be pushed out a couple of weeks around reimbursement rate, we want to maximize the value of our whatever reimbursement structure that we get and we're very conscious of ASP management, but where.
We're targeting right now having the product available for inpatient launch by the end of the first quarter.
Our 2024.
Capacity are we as I said, we are we have C. D. M O capacity reserved for batches early in the year, we can certainly scale that up towards the back part of the year as we get toward.
Our outpatient kicking off our outpatient launch, but we are also already.
Placed purchase orders for API. So so API capacity should not be a constraint on launch in the back part of the year.
Great and then just last one on the outpatient reimbursement.
Insights into the dialogue with CMS at this point do you feel like have you got any responses from other indicate that you are making progress towards securing approval under Medicare part D.
It's part of being a part D but.
Look I think it's been a productive back and back and forth discussion I think you know we continue to guide that our that our base case for for investors should be to dapper, we think to DAP is perfectly adequate reimbursement structure for end stage.
Renal disease or or or renal dialysis services now we just don't think that defend kept falls within that within the scope of renal dialysis service. So.
I'll say is that we think it's been productive we think we've provided the government with compelling <unk>.
And patient and market data and we're hopeful that CMS would make a determination or give us guidance before the end of the year Theres certainly no timing that theyre bound by.
But they are aware that there is a deadline for a J code in DAP application on Jan one is as we are.
And we're hopeful that barring a long term government shutdown that we could get some direction from them before the end of the year.
Great. Thanks for taking my questions.
Thanks.
And your next question comes from the lineup Joon Lee from <unk> Securities. Your line is open.
Hi, guys. This is less on for June I, just wanted to echo that congrats on the progress looking forward to tomorrow just.
Just to clear up you'll be submitting the application for the outpatient side on the per J code I'm, assuming one Jan one.
Is there a possibility for you to resubmit, it's not approved for the first time and whats the timeline look like on that.
And I have a follow up.
Well I think I think what you're asking there less is if we submit the application and we don't have a determination from CMS on the reimbursement structures is that what you're asking.
Yes.
Well certainly look if if we submit the application and then subsequently CMS guides us that they believe the DAP is the appropriate structure.
We'd have to reevaluate what discussions we would have with them around continuing to pursue pursue separate payment, but I likely would not forgo the opportunity to submit it to DAP application and start that process.
Okay. Thanks.
Thanks for that and you did mention that there is a lingering potential government shutdown.
But in the like an unlikely scenario that does happen how does that impact any of your commercial launch if at all and then also where where are you standing in engagement piece.
PMT meetings and what have been your prelaunch activities, thus far thank you.
Alright.
Well look as I as I mentioned in the script to the extent there was a long term shutdown that prevented CMS from giving us reimbursement guidance we're reviewing.
Either it's a dapper a J code application certainly that could impact the timing of of commercial launch.
Now in order for products to get utilization, they need adequate reimbursement and that needs to be established whether it's for inpatient health systems are outpatient.
The office facilities.
In terms of prelaunch activities, we've been quite active right. We've had a number of discussions.
With various health systems with the LD OS.
Around how potentially different reimbursement structures could fit into our into their system. So where we are preparing for various ultimate scenarios.
And getting ready for commercialization.
Less did we lose you.
Operator can we move to the next question. Please.
Your next question comes from the line of Gregory <unk> from RBC capital markets. Your line is open.
Forward to that decision coming up soon hey, Greg maybe just Greg.
Can you start over you yeah can you start over we didn't hear the first part of what you are saying.
Yes, just adding my congrats on the progress Joe just mentioned that we're now thanks forward to tomorrow.
Moreover, the decision coming up and maybe Joe just my question maybe to build on that.
Some of your mention of the potential government shutdown just wanted to ask you. If you're considering is certainly on the eve of a potential decision or approval and any other macro factors that are.
Part of your consideration and the strategy to really rollout defend Kathryn.
Helpful to hear about the government proceedings, but but also as it comes to.
Labor and the hires and even some of the stakeholder engagement to what extent are you now considering it now that we're sort of.
At the doorstep of a potential approval here and then I have a few.
Follow up.
Okay.
Thanks, Greg and I appreciate the congratulations and as I mentioned in the prepared comments, we've been ramping up and accelerating over the past couple of months I'd say since we we got visibility of the inspection you've likely seen is posting a number of hires.
Adding adding new roles.
Continuing our engagement with key stakeholders.
So.
The government shutdown if it happens will be unfortunate I think we were talking today about the longest shutdown that has happened is only several weeks. So it we don't think that it's.
We're going to be overall devastating but.
Hopefully it can be minimized by the government and nothing more than a blip.
If it does happen at all.
But we know we're just focused on operational execution right now.
Assuming a positive you know we get a positive outcome from FDA tomorrow.
We're doing everything we need to be doing to execute on our launch plan.
Yes, that's great. That's very helpful. Maybe just one quick one just coming back to the clinical value proposition.
And also the ability for <unk> to really be the first.
Proved.
Product in this area, just just remind us of that value proposition really what the landscape looks like when it comes to infection prevention and just curious how you sort of thinking about.
The practice in care standard variability out there on how this could be a solution in the space. Thanks, So much and congrats on looking forward to tomorrow sure thing. Thanks, Greg I appreciate it.
Certainly our our phase III clinical results demonstrated.
Our primary endpoint of 71% reduction with risk associated.
With CRB aside for hemodialysis patients with a CVC. There is nothing currently FDA approved as a drug product for the prevention of CRB assai in this patient population or in any patient population for that matter.
So this truly is a first in class therapy.
You know as you point out yeah, we really looking to change the paradigm from one where.
Infections are treated after the fact right you have a disease state with an incredibly high incidence rate that we've got.
Upwards of a third of hemodialysis patients with a catheter will get to see our BSI.
Half of those infections happen in the first 90 days they have that they have a catheter so they happen fast they happen frequently.
And there are fatal 25% of the time. So so I would say that this is absolutely a critical unmet medical need.
And we're looking forward to.
To providing this option.
Option for prescribers.
And physicians and health systems for their patients.
That's great. Thanks again.
Thank you and at this time I would like to turn it back to Dan ferry from lifestyle advisors for additional or within questions from the audience.
Thank you operator, Joe we have a few here from the audience that was written in here.
The first one is you mentioned that the company is pleased with the outcome of the PKI.
Preapproval inspections can you elaborate what is meant by that.
Yes, Thanks, Dan and I assume that's directed at the at the Preapproval inspection for the.
For our primary CMO, which we've we've announced is roby.
Yes, so typically when when unexpected concludes it takes about 90 days for any IR to issue and we're still waiting on that <unk>.
But we're very happy with the way the inspection progressed at the close of the inspection Inspector verbally communicated.
And that should be recommending voluntary action indicated status and if you're familiar that means that.
That would allow new approvals can proceed from.
From that facility also I'd say over the over the last couple of days.
Our manufacturing partner <unk> recently announced that another sponsor received approval.
Of an application of our registration from the same facility, where we intend to make defend cast.
So from a compliance standpoint that gives us a lot of comfort.
Okay.
Okay, Great Joe.
Just a few more here you described during the call the potential launch in Q1 2024.
Can you give us some color regarding one what investors can expect to see.
Some revenue.
Two what metrics <unk> intends to report related to the launch.
You know in the form of maybe hospitals are patients can you give us some color here.
Sure. Thanks.
Thanks, Dan so.
As we mentioned, we're expecting a soft launch and in the early part of the year that we would look to certainly accelerate as we go.
Get our outpatient reimbursement solidified whether it's to DAP or a separate payment.
We would expect to give some directional revenue guidance.
Hopefully on our next earnings call should we provided we have a reimbursement determination from CMS.
But along the way I think theres going to be catalysts that certainly we can talk about and report.
Whether it's a certain health systems formulary status potentially agreements with.
L D OS or M D O's right at where we could point to directional revenue guidance and value.
All of that could certainly be over the over the upcoming months.
Excellent. Thanks, Joe one final inherent good segway.
What do you view as some of the key catalysts going into 2024 for Carmax.
Yes, obviously I touched on some of them you know the first and foremost as approval. We yes, we have thought we have to lockdown NDA approval hopefully tomorrow.
Beyond that we're waiting on a decision from CMS around the reimbursement.
Structure for deferred Caf that'll guide, how we rollout our launch strategy in inpatient and outpatient.
But some of those key catalysts that I, just mentioned potential agreements with L. D O us or M D OS.
Updates around larger health systems, PMT and formulary adoption.
And.
Potentially.
Later next year updating on a label expansion for defend cath into until additional indications.
Excellent. Thank you Joe Operator, you may now close the call.
Thank you presenters and ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect.
Okay.