Good afternoon. I'm Serge Belanger, one of the healthcare analysts at Needham. I want to welcome everybody to day two of Needham's 24th Annual Healthcare Conference. For our next fireside chat session, we have CorMedix with us and the company's CEO, Joe Todisco. Before I hand it over to Joe so he can give us an overview of the company and discuss some recent developments, I just want to highlight to the audience that you have the option to submit questions on the portal that you're watching this presentation on. We'll take those questions as they come in. With that being said, I'll hand it over to Joe so he can give us an overview of the company, and especially for those who aren't familiar with CorMedix.
All right. No, thanks, Serge. It's great to be here. CorMedix is a commercial stage, small-cap biotechnology company. Got our lead product approved at the end of 2023 and began commercialization in early 2024. The product is what's called a catheter lock solution. It sits in the catheter in between times a catheter is accessed. The proprietary new chemical entity in our formulation is taurolidine, which is an amino acid that has broad-spectrum antimicrobial activity against gram-positive and gram-negative bacteria, as well as fungus. Taurolidine is combined with heparin in our formulation. The lead indication, or the initial indication, is for reduction of incidence in catheter-related bloodstream infections in hemodialysis patients that get hemodialysis through a central venous catheter. Now, hemodialysis patients that are catheterized have very high infection rates, upwards of 25%-33% of patients will contract a CRBSI while they have a catheter.
Those infections come with an incredibly high mortality rate. Over 20% of those infections can prove fatal. Absolutely a critical unmet medical need. The initial indication, as I said, is in hemodialysis. We are now exploring expanded indications and about to kick off our clinical study, Phase 3 clinical study for patients undergoing parenteral nutrition. We hope to have first patient in by the end of April and have that study completed within 18 months. We launched the product in the hemodialysis setting around early to middle of last year. First two quarters or three quarters now of sales, I think, have been a real strong trend. We are happy about the progress.
Great. You guys had an update this morning, kind of pre-announcing Q1 results and updating your first half 2025 guidance. Looks like you had some surprise new orders in the final week of the quarter. Maybe just highlight what.
Yeah. Yeah. I think it's a really good question, Serge. We had our fourth quarter earnings call a couple of weeks ago. At that point in time, we decided to kind of give first quarter guidance and then maybe first half guidance of where we thought we were going to land. At that point in time, we didn't have full visibility or that we have now of how much inventory was kind of in the trade. Our largest customer, U.S. Renal Care, we had estimated they probably had somewhere between 45-60 days on hand. To that extent, thought last week of March orders would be much lighter than they ended up being. As we got into the end of March, we saw higher than expected orders, which is great.
We also got better visibility of inventory on hand with not only U.S. Renal Care, but some other customers. We saw that while they were holding a little bit more than 30 days, they were not quite holding as much as our concerns were. That gave us the flexibility to increase guidance, which we are happy to announce this morning, as well as land the first quarter much higher than where we thought. We are really happy with that first quarter performance and what we think we are going to see over the first half of the year.
When I think also back around what we talked about in earnings, I think one of the things just in talking to investors over the last couple of weeks that was not properly understood, we do think we have a small timing issue now of shipments between the first quarter and second quarter, maybe not as large as what it could have been. We absolutely think volume with existing customers is going to increase over the third and fourth quarter. We do think we're still onboarding patients with all customers that we're currently shipping to and would expect to see volume increases over second, third, and fourth quarter.
Okay. I guess, just to be clear, this was not a new customer. This was just an existing customer reordering product?
Yeah, it actually ended up we had made an assumption. Let's say that if someone was holding 45 days across, let's say, 400 clinics, that they might move inventory between clinics. Not all clinics were holding the same amount of inventory. What we saw was as some of the other clinics ran low, they placed new orders as opposed to shifting inventory, which we see as a very positive sign for ongoing demand, not just those smaller clinics, but the clinics that are comfortable holding a little bit more inventory. Look, indicative of a really positive trend.
I think the way that I'm looking at the business right now, Serge, from what's called a base business revenue standpoint, is that on a monthly basis for the first half of the year, let's say we're likely running somewhere between $11 million net sales and $12 million net sales a month. To the extent that we're at 11, we'll be at the midpoint of our guidance. If we're at 12, we'll be at the top point of our guidance. We also obviously left room if we've overestimated a little bit. I think with the visibility that we have now, this is what we see. We are expecting growth in the back part of the year from base business, as well as potentially new customers coming on board.
Got it. For the second quarter, you mentioned, I mean, you had discussed this on the earnings call, kind of a tick down from the first quarter, not because of a decrease in utilization, but just the timing of shipments. Just maybe kind of provide a little more color what's behind those movements.
I think a lot of it's with U.S. Renal Care. I think they bought one or two weeks extra inventory in the fourth quarter, maybe one to two weeks in the second quarter. If we do start to see much more patient growth, that'll normalize faster. I think in our guidance, we've left ourselves a little bit of room here for, let's say, if they're holding 45 days, to end up moving down more to 30 or 25 days right on hand. I think utilization is absolutely growing in terms of patient numbers that we're seeing over fourth quarter to first quarter, now hopefully into second and third quarter.
Got it. The ASP movements from first quarter to second quarter, what are you expecting there?
Yeah. That's a good question. I think that's another question on the earnings call. Maybe we didn't explain as clearly as we could have. I think it's important to understand the difference between government ASP and our net selling price, which are two different numbers. Government ASP is what the providers get reimbursed. It's a calculation that the government does based on data we report around discounts and rebates and deductions from the net selling price. The government calculates it on a two-quarter lag. By nature, the first two quarters our government ASP was the WAC, the list price on the product was $250. For the first quarter, after they account for some rebates on a two-quarter lag, it went to $245, and now we're at $243.
Now, I do think for the third quarter, we're going to see a little step down for government ASP, but that doesn't necessarily mean we're going to see a step down in our net selling price. I think, and we're trying to get an accurate calculation here, our net selling price for the second quarter might be a notch higher than the first quarter, like our internal price, and then moderate a notch lower in the third quarter. We're talking total movements of probably low single-digit percentage, not huge movements. I think that that's important for investors to understand. I think over the course of the year, it should even itself out.
Okay. You mentioned on the opening, U.S. Renal Care has been one of your big customers. Just curious what the other MDOs have been contributing and how you get them on board and start increasing the utilization in orders.
Look, they're growing. They came on board later. I mean, U.S. Renal Care did a great job, came on board July of last year, had a great process in place to identify patients, and has continued to expand that to different cohorts as we've continued to roll out with them. The two other MDOs, which are IRC and DCI, they came on later in the year last year, began buying around November. I'd say one of them is running a little bit further ahead than the other is right now. We're working with both of them to kind of increase utilization. We have seen a positive trend with both from November up through the first quarter. It's still certainly early.
In terms of what we can do to increase utilization, we just did a large virtual training session for around 200 nurses with one of them, kind of a train-the-trainer type thing. We are providing additional resources to the other and hopeful to see continued momentum as we move through 2025.
Okay. So far, how has U.S. Renal Care kind of integrated their product and their protocol?
Look, as I said, they established their own processes and procedures in place. They triage their patients. They have criteria for who is a DefenCath patient, who is not. They have an alternative process for patients that don't fit the criteria for DefenCath. It's been going quite well.
Okay. The idea is to replicate that same kind of model in the other MDOs?
It is not our model to replicate. We can advise. I mean, different dialysis operators have different SOPs, need to do things differently, certainly have different medical perspectives. We are happy to advise on what we have seen and what we have seen be successful. Hopefully, we can replicate some semblance of that at other customers.
Okay. I do not know if you have disclosed this, but how much of a number of patients or maybe a percentage of patients within U.S. Renal Care that they are seeing utilization?
We don't have exact numbers. We are tracking data with them through the real-world evidence study. To that extent, we know that we are, let's say, deployed or have been deployed in over 3,100 patients. I don't know that you can't just extrapolate that and say it's that steady state, because there's patients that miss sessions, there's patients that transition in and out of clinics. We like the trend that we've seen as we've been tracking data. We're not actually able to see the data, but we see the total patient numbers that are part of the process.
Okay. You entered a partnership with one of the LDOs. I believe it was in September last year. Anyway, any updates since the last?
Yeah. Look, we've been in touch with them regularly over the last two months. Certainly, again, since the last earnings call, I think what I'm comfortable saying is I'm cautiously optimistic of making progress on the timeline that we disclosed, which was about mid-year. As I said, I'm happy with the communication that's going back and forth. The types of questions that we're getting are more around how to operationalize. I think I have a better appreciation now for maybe why it's taken so long and the size of the organization and how complex it is. As I said, we are being as supportive as possible and responsive to requests that come in, whether that's for training materials or other resources we have for benefits verification, hub support. We're just hopeful to implement hopefully by mid-year.
Okay. The agreement doesn't hold them to order any kind of minimal or?
No, they don't have a minimal. They don't have a minimal order quantity.
Okay. Nothing's changed from the original agreement. I think there was a 4,000 patient number. That's what I was thinking with that.
Yeah. The 4,000 patients was not necessarily in the agreement. That was a target that their medical folks had given us of how they were planning to implement. Now, what I can sense from the questions we are being asked is obviously they are looking at how they want to go about implementing. They have not communicated to us anything differently than 4,000 patients. We are here and we are ready to go when they are ready to go.
Okay. Clearly, 4,000 patients would be pretty impactful to utilization relative to where it is now?
Yeah. I'd say it's probably about double where we're currently running at. I think for an LDO, it's a small percentage of their categorized population. I do think once we get off the ground and start implementing, there's good upside.
Okay. When they do start everything, it'll be obvious on the sales trajectory.
I would expect so.
Okay. On the other LDO, any updates there regarding?
No. Look, we continue to make approaches, and we've had some dialogues. I think all they've communicated to us is for the time being, they believe they have an acceptable infection rate. They don't publish that data. We see their mortality data, which is up. We have to guess that some portion of that is related to BSIs. We are going to, again, continue to try to make inroads. Perhaps once we get the other LDO up and running, it'll kind of put pressure on them. That's what we hope.
You feel this is a market where usage can be contagious if the MDOs and one of the LDOs are using the product, and there'll be pressure on?
Absolutely. Look, I think that's all of medicine with a key opinion leader type mentality. If he's using it, I'll use it type mentality.
Okay. I think the other question we get from investors in CorMedix or those interested in CorMedix is TDAPA. I feel it's not a reimbursement mechanism that's common to all products. Maybe if you can just describe it for us in its various phases and how you think the price will move through those phases.
Look, it is unique. It's a unique reimbursement program. It's not perfect. It's something that has evolved over time from CMS. I think it is going to continue to evolve. We're aware of, one, there's a lot of momentum with stakeholders, either through rulemaking at CMS to make improvements to TDAPA, but also there may be pending legislation later this year. There's a trade group and patient advocacy group working on generating bipartisan legislation that would increase the length of TDAPA, change a little bit of the payment dynamics, and make it even more of an incentive to invest in innovative therapies for end-stage renal disease. Ultimately, that's what this is about, is how do you incentivize biotech companies and investors to support development in end-stage renal disease.
I think TDAPA was a novel idea, and it's improved over time, and I think it'll continue to improve. The way it works right now is the first two years, the reimbursement is at ASP, government ASP, over the first eight quarters. For years three through five, there is a bundled adjustment that takes place. There's a calculation that they have, and then a bundled adjustment is made to providers. I think what we're hopeful is to see, rather than a bundled adjustment, a shift toward reimbursement following the product, where it's dispensed with the patient, but also longer durations of time. That two years is a very tight time period for that initial phase, and we'd like to see that expand.
I think for us, though, we're in a little bit of a unique, I think, situation compared to other products that have been deemed a renal dialysis service. Us as a preventative and as a product that prevents bloodstream or as a preventative that reduces the incidence of bloodstream infections, we're in a position to hopefully save the end payer a significant amount of money that is spent on these downstream infection costs. The Medicare Advantage, as an example, which currently is about half of ESRD patients, they're on the hook for over $100,000 of cost per infection, including hospitalization and other downstream costs. We're in a position to offset to the extent we can prevent infections, a large amount of that cost.
That, for us, I think, presents an opportunity as we move toward the back part of TDAPA to actually shift toward right now, we're in a passive approach with Medicare Advantage to being more active, contracting with MA plans and contracting for more sustainable long-term reimbursement.
Okay. Would that contracting potentially be in place by next summer when the first phase of TDAPA moves?
Yeah. That's actually something we're discussing internally, is what is the appropriate time point? Is it year three? Is it year four? I don't know that yet. I think first, I'd like to see what progress is made, either through rulemaking for the current TDAPA period or with pending legislation. I think as we move through this year, that's a decision we'll have to make.
Okay. On the legislation front, you would expect something to happen within a year? I mean, it seems.
Do I expect somebody to bring a bill forward? Yes. Do I expect that bill to become a law? I mean, come on.
That's a different story.
What I can say is ESRD and investment in innovative therapies for ESRD patients are a bipartisan issue. This is not really a controversial issue. It is probably more of a timing issue of all the things that are going on right now in the world and the ability to get visibility for legislation like that. As I said, I am hopeful as some of the things that we are seeing now in the U.S. hopefully calm down over the next couple of months, that there will be room for this type of legislation to make its way through Congress.
Okay. I guess too early to start having real visibility on what the price could be moving forward after July 2026.
Yeah. We're not going to guide on price at this point in time. Hopefully, as we get more visibility to TDAPA environments, but also to our own utilization, we can get a better sense around that.
Utilization is going to play a big role in the calculation?
Under the current structure of TDAPA, yes.
Okay. So getting the LDO on board is important for the calculation?
Under the current structure, yes.
Okay. Got it. You touched a little bit on this, the Medicare Advantage versus fee for service. I think you've talked about that the market's eventually going to move more towards Medicare Advantage.
We've just seen that. That's just a shift that we've seen. Medicare Advantage, maybe three years ago, was 20% of ESRD patients. It's grown to 50%. Patients are selecting Medicare Advantage as part of their process. I think that percentage is going to grow. I think it may become 60%-70% of patients, which, as I said, for us, I think is an opportunity because it functions much more like a commercial framework where you have the ability to contract.
What is driving that movement? Is it just patients opting for Medicare Advantage?
My understanding is that that's largely what's driving. I think it's my understanding. I think it's economics and patients electing that.
Okay. Got it. Let's talk about the inpatient launch of the product. I think you've always said it would be, you know, it's a smaller market opportunity, but it'll also be a slower launch ramp. Here's where you're currently at.
Obviously, when I say we launched inpatient, we started calling on hospitals early last year. Inpatient launches, it is a very slow ramp. It takes a lot of time to get in front of a P&T meeting. It takes even more time to get a decision from a P&T committee to get on formulated on a hospital. Even large systems might have multiple P&T committees for regions or for different hospitals. I wasn't thrilled with the progress we were making on the inpatient side at the end of last year. In January, we announced that we were going to kind of bifurcate our field team and build a dedicated inpatient team. We've just finished staffing that team, and training should be wrapped up this week. They'll be in the field next week or next week or week after once they finish certification.
I'm excited about the opportunity. We've changed the profile of what our key account managers are from a background standpoint. Initially, we had tried to straddle both settings of care with one field team that was heavily experienced in outpatient renal. We've built now a dedicated team of folks with experience in launching innovative products in the inpatient setting, a lot of whom have infectious disease experience. I think that's going to be beneficial. Outside of that team, we have started to see some traction over the first quarter. I think when we kind of pre-announced, I had said that where we were running was about 3% of units and 4% of dollars being in the inpatient. I was happy with that percentage. That was before we got those larger-than-unexpected orders on the outpatient side.
Those percentages are probably a little bit lower, but still a really, really positive trend inpatient that I want to see those volumes with those accounts keep growing over the course of the next few months and then add in with this field team, add in new inpatient accounts as well.
Okay. You talked about a partnership with Syneos Health. That is online now?
Yeah. That is the hospital field team. Syneos, by and large, I mean, they are a contract sales organization, but this is not a field team we are sharing with anyone or any other products. These key account managers are dedicated to CorMedix. They carry a CorMedix business card. What we rely on Syneos for is their back-office support resources, their ability to manage fleet, ability to do recruiting, CRM, a lot of things that for a business our size, it made a lot of sense. We could scale that team a lot faster by working with Syneos. That has been really helpful.
Okay. It's been more, I guess, close to a year, I guess, April. Next week, it's going to be a year since you launched in the inpatient segment. I'm just curious here, do you think the market opportunity is kind of the same as when you had first set out the launch?
I think from a size standpoint, in terms of amount of dialysis sessions, yeah, I don't think that has changed. I do think inpatient launches are tough, mainly because there are a lot of institutions that will wait to see what other larger institutions do. As I said, it's kind of the key opinion leader mentality. We have right now, I'd say we have a regional piece of a large national that has started to adopt. I'm hopeful that that can be kind of a start to a broader relationship with that health system. I think there will be someone folks might look to as a key opinion leader.
Within that opportunity, there is one thing that you highlighted with the VA?
I mean, that's separate. VA, we've signed a separate promotional agreement. This is more of a shared field team with WSI that has an existing deployment in that space, which is very specialized. The reps or managers for VA need to be credentialed, need to have experience and relationships with those VA facilities, need to understand how to navigate contracting with VA institutions. They've just started over the last couple of weeks making inroads. I think there's a good opportunity there. About 55,000 veterans suffer from ESRD. My estimate is somewhere around 12,000-15,000 of them are catheterized. Probably 40%-50% of those get their outpatient hemodialysis at a VA facility. There's opportunity for inpatient, for all of the catheterized patients, if and when they are hospitalized, but also for outpatient hemodialysis services.
Okay.
If I had to ballpark the size of the VA, I'd say they're about equal to a mid-sized dialysis operator in terms of total value.
It'd be significant. Just to round out our conversation on DefenCath, I think you have a number of studies that are ongoing. You talked about the one with U.S. Renal Care. Is that fully enrolled at this point?
It is not a study that has a max enrollment. We're working with them, and we're tracking I think we said over 2,000 patients, but we're well over 2,000 patients that we're tracking data on at this point with the goal of, over the course of the study, hopefully, that we show a meaningful impact, not just on infection rates, but on hospitalization rates, on antibiotic use, on lost chair time, all these other metrics that I think will be incredibly helpful for those discussions we want to have with Medicare Advantage as an example.
Okay. You'll be able to start generating data from that. I mean, it's happening now, I guess, but.
The data collection started the day we kicked it off in July of 2024. We set it up as a 24-month study. We've discussed the possibility of doing a mid-study check-in. It's something we'll evaluate later in the year. We'd have to amend the protocol, but it's something we possibly could do.
Got it. Okay. I think there's a pediatric trial that's also planned or about to get underway.
Pediatric first patient could go in in the third quarter. That's an FDA requirement pediatric study. It's a small study, 35 patients. It's up on ClinicalTrials.gov. We think patient enrollment's going to go fairly slowly just because of its super vulnerable patient population, not always a lot of interest in rolling these types of patients in a study. We've budgeted for it to take three to five years and kind of be a slow burn from a spend standpoint.
Yeah. In terms of market opportunity in pediatric, fairly small?
It's very small. We're running, as I said, we're running that study as an FDA obligation, not because there's a meaningful market opportunity. Pediatric physicians that want this product for their patients are likely able to access it. We also have an expanded access study that has been stood up also on ClinicalTrials.gov with a large number of different indications that are listed where patients who have exhausted all other options for infection prevention can get access.
Is that kind of a basket study to explore additional patient populations or?
Look, we're tracking data, and hopefully, some of it will be useful, specifically pediatric TPN as part of expanded access. Standing up something like expanded access is really more about making the product available to vulnerable patients. We get a lot of requests from physicians that want the product. The product, if you qualify for the study, comes free to the patient.
Got it. On the TPN label expansion plans, I think this morning, the press release had some additional numbers around the opportunity.
Yeah. I realized we really hadn't put a total addressable market out kind of into the universe. I thought that was important to do as a frame of reference. We think it's a meaningful market opportunity from a dollar standpoint, somewhere between $500 million and $750 million, depending on ultimately where the product is able to be priced from a net price standpoint. We think in terms of peak sales, if approved, we have the potential to do $150 million to $200 million of incremental revenue.
Maybe highlight how this patient population would differ from the original indication for DefenCath?
It's a different patient population. You have a lot of patients, most of them with short gut syndrome that have to have continuous IV nutrition therapy. They, as a patient population, have very high infection rates as well, also with large mortality. It is another unmet medical need area. When we got approved last year, we got a lot of requests for expanded access for TPN. Unfortunately, because we were going to kick off the study, we were not able to include them in expanded access.
Okay. From a trial perspective, the risk of that trial is fairly low. We should see something similar to.
Look, I think so. I mean, the way I think I view this is a catheter is a catheter. I think you have a very uniform patient population. Catheters are all accessed in regular intervals. I think the study is very straightforward. It's going to be less than 150 patients. Look, I'm hopeful we're going to have better results than HD.
Sure. The reimbursement coverage approach here?
There's no TDAPA. This is an end-stage renal disease. It's a combination. About a third of it is inpatient, which would put it into a DRG. Two-thirds is home use. We're going to do a little bit more payer research. The initial research says it's a combination of commercial, Medicare B, Medicare D. There are multiple types of reimbursement from a home use standpoint.
Got it. Okay. In terms of financials, maybe just give us an overview of where the cash is. And I think you highlighted the EBITDA generation for the first quarter, but where it takes you in terms of profitability.
Look, I think we're in an incredibly strong profitability position currently. I think we're one of the few companies in our peer set right now that is sitting here, cash flow positive, pretty strong EBITDA margin coming out of the first quarter, $77 million cash on hand to end the first quarter, and no debt on the balance sheet. I think we're a company that has the ability to fund our operations and fund our ongoing clinical studies from operating cash flow. I think that that's somewhat rare in this small-cap biotech space right now in terms of what we're seeing from our peers.
Okay. Any appetite for BD and adding new assets at this point or?
Yeah, absolutely. I think something we've talked about over the past couple of months. We've got fixed infrastructure and experience in two areas. One is in outpatient renal. The other is on hospital and inpatient. Could be infectious disease, could be critical care. We are absolutely out scouting and looking for opportunities.
Ideally commercial or you're willing to go down on the R&D?
Ideally commercial or at least near-term commercial. What I'm not looking to do is saddle the company in long-term R&D expense. I think it would likely need to be something where the NDA is filed or about to be filed type situation. It would have to be very late stage or commercial is what I'm looking for.
Got it. Okay. I guess maybe just to wrap up, anything about DefenCath or CorMedix that you feel is underappreciated or still misunderstood?
I think the last couple of weeks, I think obviously a lot might have been misunderstood, but that's why we're out talking to investors and doing fireside chats. I think we've got a good trajectory. We're executing on our goals. I think we're trying to impress upon investors that we've got strong credibility. If when we put an obligation or we put a target out there, we intend to achieve it.
Yep. Okay. All right. I guess we'll end it here. Joe, I want to thank you for spending time with us this afternoon and giving us more color on this recent update that you guys provided this morning.
I know. Thank you, sir. Appreciate being here.