Good morning, and welcome back to the Cantor Fitzgerald Global Healthcare Conference. My name is Rick Jankowski, one of the analysts here on the biotech team, and today I have the pleasure to be hosting Joe Todisco, CEO of CorMedix. Welcome.
Thanks, Rick. Thank you.
So, this is a fireside chat format, and I'd like to begin by just doing a little bit of level setting for our audience. Could you give a brief introduction to CorMedix and DefenCath?
Sure. So CorMedix is a publicly traded, specialty pharmaceutical company. Our lead product, DefenCath, was approved last November. We began commercialization earlier this year, really a full launch in July, in the outpatient setting. The product, DefenCath, is the first ever antimicrobial catheter lock solution approved by FDA for the reduction in incidence of catheter-related bloodstream infections in hemodialysis patients receiving chronic hemodialysis through a central venous catheter. So there are two settings of care in which the product is primarily utilized under the current label. One is on the hospital inpatient side, for patients that have AKI or ESRD, and have to be dialyzed while they're in the hospital, and they have a catheter. But the primary setting in which the product is utilized is in the outpatient dialysis setting.
As I mentioned, we began our inpatient commercialization in April this year, and outpatient in July.
All right, and maybe just a little bit more of level setting for those in the audience that may not be familiar with this market or this product. So, compared to... I guess, could you tell us what other solutions there are for the management of infection in this setting? You know, is there a standard of care here? What is-
Well, look-
What is DefenCath competing with?
For the most part, the standard of care for locking a catheter is not an antimicrobial lock solution. Right, for the most part, they lock catheters with heparin or saline. The steps that facilities do typically take to mitigate infection are largely around hygiene. There are some antimicrobial caps that can be utilized that can protect the top of the catheter. There are some compounded antibiotic catheter lock solutions. You know, largely, you know, you typically don't want to, or on a long-term basis, wouldn't want to utilize antibiotics as a lock solution, because you build antibiotic resistance to various bacteria. And again, antibiotics tend to have activity only against certain, right, certain bacteria.
What's really novel about DefenCath, our antimicrobial active ingredient, the product's a combination of taurolidine, which is our proprietary new chemical entity, and heparin. Heparin obviously protects catheter patency, but the taurolidine is what demonstrates broad-spectrum activity, kills Gram-positive and Gram-negative bacteria, as well as fungus, but most importantly, it has not demonstrated any antimicrobial resistance to date, so you know, you can utilize it across, right, all strains of bacteria.
All right, perfect. So early days of launch for DefenCath, but there has been progress recently.
... with a press release this morning.
Yeah.
I was hoping you can get a little bit into that, and what the implications are for the launch.
Yeah, absolutely. You know, we're excited. We had the announcement this morning, we had another one last week, as we continue to enter into contractual agreements with outpatient dialysis operators for utilizing DefenCath as part of their solution in their facilities. You know, so the market for outpatient is, it's highly concentrated, right? There's two large dialysis operators that have about 70% of the market, and then there's another three that get you to about 93%-94%. So right now we're under contract with three of the top five. We're very excited about that, hoping to continue that momentum, add additional agreements as we progress through the back part of the year, and just continue to build upon the trajectory that we've set out and we've announced this past August.
All right, and I do believe the launch, the commercial launch began with the inpatient-
Mm-hmm
... launch. So maybe could you get into a little bit of the differences between the inpatient market and the outpatient market? I guess why you chose to first go into inpatient, and generally also, I know this is a multi-part question, but just comparing the scales of those two markets-
Right
... just how big of the overall opportunity is for both settings?
Right. So the scale, in terms of total addressable market, outpatient utilization is significantly higher than on the inpatient side. So we, you know, we look at our market opportunity, total addressable market, somewhere between 40 and 44 million vials, let's say, of DefenCath. About 10% of that is on the inpatient side, about 90% of that is on the outpatient side. The inpatient side, however, we do think will have more durable pricing, in terms of dollar value over time. And we look at the inpatient market opportunity as a more longer-term value driver. Now, they are very different settings in terms of the ability to get more rapid uptake. The inpatient side is a very long sell cycle.
You know, when I say we began commercialization in April, what we began doing is really calling up facilities, building relationships, getting advocates to take the product to P&T, right? So it's a very long process on the inpatient side to get the product recommended for P&T inclusion, get the meeting scheduled, and then, assuming you do get a favorable decision at that meeting, getting it into the order sets, and then actually getting the product utilization. You're talking about a nine-to-12-month process, right? All in, end to end. So, we have a high amount of patience with that side of the launch strategy, looking at it more as something that would be a value driver, right, from probably years two onwards.
Now, on the inpatient side, on the outpatient side, you know, we've seen a little bit of the opposite, right? We began commercialization in July. The initial customer that we brought on board immediately was able to begin converting patients as they identified them in their system, and we've been very pleased with the trajectory that we've seen on the outpatient side. Now, the rationale behind the timing of those two decisions essentially was the effectiveness of reimbursement. On the inpatient side, our reimbursement, which we have currently, right now, under something called an NTAP, a New Technology Add-on Payment, was effective earlier in the year. However, on the outpatient side, our TDAPA, or Transitional Drug Add-on Payment Adjustment, was not effective till July 1st.
Right, understood. And just thinking a little bit more about comparing and contrasting outpatient to inpatient, I know you said there was only a few major players for the outpatient setting. Just how concentrated is the inpatient market, and how difficult is it to, I guess, target as a whole with your sales force?
It's much more fragmented, but there is a decent amount of concentration in terms of larger health systems driving most. We've identified about 800 or some odd hospitals that do, I think, about 65% or 70% of the inpatient dialysis in the United States. We have a very targeted field team. Right now we're about 30 that are focused on those P&T processes, building, you know, relationships with advocates that'll bring the product forward, for P&T inclusion. It's not a large, from my perspective, a large field team that is needed, right, to make headway with the thrust of the market.
Understood. You know, given that DefenCath is a rather unique product, how important is customer education here? How well understood are the benefits of DefenCath, and I guess, how much of a lift is it in the launch to be able to educate customers? Is this also a market that you basically have to build from the ground up or do you have any-
No, I mean, when you talk about education, obviously it differs what the level of education that is needed on the inpatient or outpatient side. Also, the type of education you need for a small dialysis operator versus a large operator, and whether you're talking to a physician or someone who's in administration or procurement, right? Because, you know, this product has some very unique reimbursement aspects, right? Whether it's NTAP or TDAPA, that some folks may not be familiar with, that requires a little bit of education. As an example, we set up a call center specifically for facilities that have reimbursement questions, right? And typically, you would set that up for patients, right, to help walk them through getting a claim covered.
On our end, we've set it up for facilities, right? So they can get education and help them with processing and administration. From a medical standpoint, it is fairly more of a straightforward story. We've got a really strong, robust clinical trial result demonstrated a 71% reduction in incidents of infections compared to the comparator arm. And I think that story is fairly easy for you know, our field team to communicate.
All right. And you did mention the press release last week, the agreement with one of the major players in the outpatient setting.
Mm-hmm.
That PR did note that up to four thousand patients annually would be targeted, and I was hoping you could maybe contextualize this from a utilization standpoint. What does this mean, the four thousand patients-
Well-
as we get into the arc of the sales trajectory here?
We thought it was important to kinda level expectations about how that particular customer was planning to roll the product out. Now, keep in mind, we said initially target four thousand. We didn't wanna give, you know. It's not a situation where that's a cap or anything, but you know, different customers have been rolling the product out differently within their institutions. This particular customer has established some guidelines on a medical need basis that they've developed some internal criteria on their own of what constitutes high risk or the patients that they wanna identify first. They've done their screening and identified around four thousand patients they believe currently meet that criteria within their system.
So we're looking for that to be, you know, the first rollout, and then looking to build more, with the customer from there, over time.
Great, and for the first rollout, is there any guidance around what the expected timing is for the first shipments there under the agreement?
Look, I think we've guided, we don't expect shipments to begin until at some point in the Q4. I think, you know, I think midpoint of the quarter would be a fair guess. Certainly could be a little earlier, a little later than that. But in terms of uptake, given that the patients are theoretically already been identified, I don't think we're talking about, right, a year. I think we're talking about, you know, something significantly less than that, right, to get to kind of the run rate of four thousand. So, I think we feel pretty good about the way we've seen other customers that have identified patients, and how quickly they've been able to roll out as well and get to a good steady state with repeat orders.
Okay, and just to comment on the sales, you did report earnings back in August-
Mm-hmm.
Along with a partial number of $5.1 million in sales of revenues to date for the quarter. I guess since then, have there been any updates you could share, maybe some color around the launch?
Yeah, look, I can't give you a revenue number, obviously. I think we're pleased with everything we've seen. We have new agreements coming on board. We've signaled that those shipments probably won't start until after this quarter ends. But you know, nothing really has changed in our trajectory that would cause me concern with anything I've said in kind of past on that earnings call.
Okay, and since we still are in the early stages of the launch, I was hoping you could maybe just talk about some of the moving parts here. What do you see as some of the, I guess, most important variables for a successful launch over the time period of, let's say, for the next twelve months? What are the most important factors here?
I think for our success, the most important factor is how quickly we can operationalize agreements once they're put in place. You know, providing our customers, right, whether it's information that they need or support, particularly around areas like reimbursement, making sure they understand how to process claims, and then just continue to execute the way that we have.
All right. One of the things I thought that was pretty interesting was the initiative to collect real world evidence-
Mm-hmm
... in adult hemodialysis patients, so first, at a high level, can you maybe get into a little bit what you expect to learn from this study?
Sure. Look, I think this is a really important aspect of our clinical initiatives. So, you know, we demonstrated 71% reduction in infections, right, in the LOCK-IT-100 study. But there's a number of other meaningful outcomes that particularly payers care about, right? Right, lost chair time, hospitalizations, antibiotic use, right, other drug use, comorbidities, all these different things that we can kind of tease out of this real world evidence study. We expect the study is gonna run for between 18-24 months, have about 2,000 patients' total of data. So it will be fairly sizable and fairly meaningful. And we think this data is gonna be valuable, particularly to the Medicare Advantage plans.
As we've seen over the last couple of years, a shift in patients that have ESRD from traditional Medicare into Medicare Advantage. A few years ago, that was 30% of patients; now it's 50%. We think it's gonna be 70% in a couple of years, and we think that's a tremendous opportunity for us. Medicare Advantage is unlike, you know, traditional Medicare right has authority right to negotiate right prices for things that are covered on their formulary and reimbursements. They also bear the cost downstream of these infections and all the other downstream sequelae. So we do think there's a very strong value-based care argument for utilizing DefenCath different from other maybe products that have had a TDAPA in the past.
We have a cost offset component that's unique to, you know, what DefenCath does in the marketplace, and we think that data is gonna be very compelling, as we move through TDAPA and past TDAPA, to negotiate longer-term sustainable reimbursement.
Right. Understood. And I know you gave us timelines for how long this may take to complete. Has this initiative started already or-
No, we targeted to begin in the Q1 of next year, and that's what we announced on our last earnings call. It could start a little bit earlier, right, at the end of the year, but I think that right now we're on our timelines.
All right. Understood, and if we start to think about the opportunities outside of hemodialysis, I know one of the areas that-
Mm-hmm
... you've highlighted before is TPN, or total parenteral nutrition, if I said that correctly?
Yes.
It has been highlighted as a potential label expansion opportunity. So I was hoping you could maybe elaborate on why this is seen as such an attractive opportunity, and why this is the first,
Sure
... area you're going after for label expansion.
First, it's a patient population where reducing or preventing these infections is absolutely a critical medical need. They have a very high rate of infection. You know, upwards of about a quarter of these patients get an infection. It's a patient population that is largely catheterized or has a PICC line. About 85% of those patients are receiving their TPN through a central line, as opposed to maybe a port. From a study design standpoint, as I said, you have a uniform patient population, all catheterized, catheters accessed in regular intervals. It allows for a, call it a less complicated study design than perhaps some other settings of care or disease states where we're also seeing these catheterized infections.
So, we've put out a little bit of market research in our latest corporate presentation. You know, the market opportunity, we think, is just under five million in infusions a year. We think that translates to potential peak sales of $150-$200 million. We're hoping to run the study fairly quickly. It's not a large study. We're estimating between 150 and 200 patients, I believe. And it's, you know, the target would be to have hopefully an approved label by the end of 2027 or early 2028, well ahead of, you know, the end of our five-year, call it, TDAPA period for hemodialysis.
Okay, I know that the company did have previous discussions with the FDA regarding the proposed clinical pathway in TPN. Could you maybe expand a little bit on what feedback the FDA did give, and how this was incorporated into the clinical trial design?
So for TPN, we submitted a draft protocol earlier in the year. We got supportive feedback with a couple of comments. We completed our final protocol, submitted that just before our last earnings call. You know, typically, FDA is obligated to give you comments within thirty days, and in FDA fashion, they rarely do give it within thirty days. So I don't have any updates at this point in time. We are preparing to move forward with this, the study as we design it in our final protocol and think that it's you know should be fairly you know benign from whatever comments we do get from an FDA standpoint.
All right. Understood. TPN is only one of the potential expansion opportunities here.
Mm-hmm.
I know oncology is another area that, you know, investors are interested in potential expansion into. Could you just maybe do some comparing and contrasting of how difficult it would be to expand into the TPN market compared to the oncology market, maybe based on-
Sure
... a clinical trial standpoint, maybe endpoint, endpoint design, or just even how complicated it would be?
So it's a little bit more complicated, and that's the reason why we advanced TPN first, and we haven't put out any public numbers around the market size in oncology or peak potential sales, because what we wanna do is get TPN off the ground or at least get final feedback from FDA on the protocol, because there are a couple questions in there that we wanna make sure that FDA is bought into, because they would impact whatever we propose for oncology. The goal would be to put a draft protocol proposal in front of FDA before the end of this year. Now, in terms of that patient population, you know, you have patients that get chemotherapy every two weeks, every four weeks, different catheter sizes, some have ports, right?
It's not, you know, as homogeneous of a patient population as we see in TPN, right? It just adds a little bit level of complexity there that, you know, it'll be a probably larger study that'll take more time.
Okay, so it sounds like the mechanics are still being worked out internally, how to proceed forward in oncology?
Well, look, we have a framework of a proposal, but certainly we want to get feedback from the agency on TPN, right? I know we're past thirty days, but we haven't heard anything yet. You know, that may largely be just acceptance of positive, right? That there won't be any comments, but you know, let's see as we get over the next couple of months, and we get back to FDA. But you know, we have a draft proposal that we would expect to put in before the end of the year.
All right, and if we could just talk about some financials, start with the balance sheet. Could you remind us how much cash is on the balance sheet and how much runway the company currently has?
Sure. I think we haven't put an updated cash number out. We closed the last quarter, I think it was around $45 million, we finished the last quarter. You know, we've mentioned publicly that we believe we can get to EBITDA breakeven on a runway rate basis by the end of the year. I still maintain that assertion. You know, from a cash standpoint, you know, our OpEx burn, the guidance we've given is about $15-$18 million a quarter. We've been on the low end of that. I think we're gonna stay on the low end of that for at least the next quarter or so. And, you know, we have, in terms of, you know, if we...
The ability to raise cash, we do have an ATM facility in place that we have the ability to utilize if we choose.
All right, and before we close out here, I was hoping you can maybe tell investors what they should be focused on for the next twelve months, and what's ahead for the company.
Look, if I think if I'm an investor in CorMedix, I'm just looking at, right, are we executing on our promises? And I think largely we have, right? The things that we've said we were gonna do, we've done. We still have more to achieve, and we're gonna keep doing that, right? So I think people should just be looking at the track record that we've demonstrated over the last eighteen months, right, of solid execution.
All right. Perfect. Joe, thank you so much for the time.
Thank you.