Thank you again for being with us this morning at the Citizens Life Science Conference. We're excited to be joined next by CorMedix. CorMedix is a company focused on the launch of DefenCath, a catheter-lock solution in the dialysis setting today, but with an opportunity much broader than we think than the dialysis setting alone. Happy to be joined by Joe Todisco, the company's CEO. Joe, welcome. Maybe just ask you to give a quick intro, a 30-second overview of the company.
Sure, yeah, no problem. Thanks, Jason, for having us here. As I just explained, I'm apologizing to the room for the fact that I'm wearing running shoes. I'm not trying to be Steve Jobs. I came in last night and forgot my dress shoes. They are way more comfortable now that I've been walking around.
No, but thanks for having us. CorMedix today is a commercial stage biotech company. We launched our lead product in the middle of 2024, which is DefenCath. DefenCath is what's called a catheter-lock solution. It sits in a catheter in between the times the catheter is accessed. Our product is a combination of our proprietary new chemical entity, taurolidine, which is an amino acid that has broad-spectrum antimicrobial activity against gram-positive and gram-negative bacteria, as well as fungus. That molecule is combined with heparin, which protects catheter patency. The initial indication for which we pursued approval from the FDA is in the reduction in risk of catheter-related bloodstream infections in patients undergoing hemodialysis with a CVC. We commercialized the product in the middle of last year.
The settings of care where our product is currently applicable with the label that we have is in the outpatient hemodialysis setting, as well as in the inpatient hospital setting. About 90% of our target volume is outpatient hemodialysis. 10% is in the hospital. We are about three-quarters into announced results of commercialization. I'm very pleased with what we've announced. We just announced our first-quarter results, first-quarter sales. We're just over $39 million. First-quarter EBITDA, we just over adjusted EBITDA, over $23 million. I think we're a rare story that has achieved profitability within 12 months of launch, as well as doing it while maintaining, in my view, a pretty clean balance sheet. We have no debt on the balance sheet, pretty strong cash position, and we're looking to continue our growth.
The launch has gone great so far. We're going to talk a lot about the launch. Maybe just before we get there, can you just talk about the product itself, the phase III data, why the opportunity is so compelling for patients?
I mean, certainly in the disease state for which we pursued the label in end-stage renal disease patients or patients receiving chronic hemodialysis that have a central venous catheter, incredibly high infection rates. There is a critical unmet medical need. You have infection rates upward of over 25%. With that, you also have incredibly high mortality. About a quarter of patients that get a CRBSI will ultimately die from that CRBSI. It was a critical unmet medical need. From a catheter-lock solution standpoint, there is no other FDA-approved drug product other than DefenCath as a catheter-lock solution that has antimicrobial activity. The standard of care for locking catheters is typically heparin or saline, neither of which has any antimicrobial capabilities. That is the opportunity that we seek to or the problem we seek to remedy.
From a clinical trial standpoint, our phase III clinical study, the LOCK-IT- 100 study, incredibly impressive results. We had a 71% reduction in risk associated with CRBSI compared to the standard of care in that trial, which was heparin. We are currently undergoing a second phase III study for an expanded label in patients receiving total parenteral nutrition or IV nutrition therapy through a CVC. That study, first patient in, should be this week. We are hoping to run that study. It is a 12-month study, less than 150 patients. We are hoping to run it in about 18 months end to end.
Just one more question here. End-stage renal patients, what are the consequences of getting infections, both to the patient and to the overall healthcare system?
Significantly large. You're dealing with a patient population that's already pretty sick. If you're an end-stage renal disease patient, obviously you're getting chronic hemodialysis three times a week. You have a number of other comorbidities most likely that have developed because you have end-stage renal disease. The cost to the healthcare system is significant. If a patient that gets an ESRD patient that gets a CRBSI and has to be hospitalized, I think the average cost is somewhere between $90,000 and $120,000 per infection. Once hospitalized, these infections, they're persistent. They have incredibly high repeat rates in terms of recurrence. I think more than half of infections recur within 30 days.
Okay. Great. Let's talk about the launch. You've had a lot of success early on in the launch in the outpatient setting. Can you talk about where that success has been driven from? Specifically, US Renal is your largest customer to date. How have they approached adoption of the product?
Sure. In outpatient hemodialysis, which again is the largest market opportunity from a volume standpoint right now, you have a very concentrated customer base. There are five players that make up about 90% of the market. The third largest is U.S. Renal Care. They essentially were our anchor customer. They were the first to come in, started adopting the product in July of 2024. They've done an excellent job of creating internal criteria, which they triage their patients. They determine who is an ideal patient for DefenCath, and then they've done a really good conversion. We believe that we're currently in over 3,000 patients right now at U.S. Renal Care. We are very happy with the way that that has progressed. Later in the last year, we brought on IRC and DCI, who are the fourth and fifth largest. That implementation is still currently ongoing.
Okay. If you think about those 3,000 patients and the profile, how many patients do you think the other two providers, the mid-sized providers, could be close to?
The other two providers combined are about the size of U.S. Renal Care. Where they can get to, I'm not really sure yet. I don't want to commit to a number. Certainly, there is the potential there for them combined to be equal in size if we are able to convert as many patients.
Let me ask a question you get asked all the time. The large two providers, one of them you're contracted with, you're working towards getting them to start ordering. Where are you in that process? What do you think is necessary to get them to the final step?
Look, I don't know that anything more is necessary. Over the last, as I said on the earnings call earlier this week, over the last five weeks, we've seen a heightened amount of activity at the medical and operations level between our two staffs, probably more activity than we saw in the six months prior. That gives me some sense of optimism that hopefully we're getting close to implementation. We're still waiting on them to give us a plan, a date, a target number of patients. We've built out our inventory around some initial numbers that they gave us that we've communicated publicly, which was 4,000 patients. We're still waiting for an update into what they ultimately decide. We're ready to go when they are.
The second large provider, just what's your progress there?
Look, as I said, again, on the earnings call on Tuesday, there are a couple of different avenues of which we are still working communications with them. I do not think anything is imminent. I also do not think over time that they are insurmountable. As I said, they are not going to be early adopters. They are likely to wait and see what happens in the market over the first one to two years. Hopefully we will make progress.
Reimbursement is a real important part of this dynamic. Maybe we should start off with, at a basic level, you've talked about net price this year. Can you just walk us through the dynamics and how we should think about net price in the second half of the year?
Look, I don't think we've analyzed this in a number of different ways. When you talk about our net selling price versus reimbursement, which is government ASP, government ASP, as we've talked about publicly, is going to erode a little bit. So it was $245, let's say, in the first quarter. And I think it was $241 in the second quarter. In the third quarter, we think it's going to come down a tiny bit more. But our net selling price, I think over the first two quarters, is fairly stable. And we said on the earnings call, I think second quarter, our net selling price may be actually a little higher than the first quarter. That's a reflection of a little bit of business mix. The more hospital inpatient business we ship, which is a little bit higher priced, it brings up the overall net selling price.
Also, as some of the volume incentive rebates that we had in place through the first quarter of last year expire, net price overall is going to be a little bit higher. I think that second quarter net pricing should be a little bit probably more favorable than the first quarter. Third quarter may be a little bit more in line with where the first quarter was kind of thing. The back half of the year, I'm thinking, is probably going to be more for third and fourth quarter, more in line with what we saw in the first quarter.
Okay. Reimbursement in the outpatient setting today is covered through the TDAPA program. Can you just walk us through that program and how it will impact net price over not just the first couple of years, but then after?
Right. Look, I mean, TDAPA was set up by CMS to incentivize innovation in products that are used in the end-stage renal disease setting. It's essentially a five-year program. The first two years, reimbursement to the providers is at government ASP. Then years three, four, and five, there's a bundleized adjustment based on a calculation. Now, what we've seen over the last few years is TDAPA has kind of been incrementally improved a little bit each year as they've gone along. This July, we're kind of obviously keen-eyed looking to what comes out in July. Do they make any additional improvements? There's been a number of comments submitted by stakeholders, such as ourselves and everyone else who's kind of in this renal space that touches TDAPA, to say, can you expand the first two years' reimbursement to be all five?
Can you restructure this in a little bit different way? I want to see kind of what transpires in July. Assuming it's status quo and it stays put, you would expect to see some price erosion in years three, four, and five. That's how TDAPA is designed. That's how we priced our product from the start, with the understanding that price was going to have to come down in years three, four, and five, and with the expectation of we'll shift our strategy a bit in those out years to focusing more on volume and how do we drive much, much more volume. Part of that, as we've talked about publicly, is changing our strategy with Medicare Advantage. Right now, we're in a passive position with Medicare Advantage. To a large extent, almost all of the plans are reimbursing TDAPA based on the contracts that they have with providers.
Toward those out years of TDAPA, we're going to want to shift a little bit. We're going to want to contract directly with Medicare Advantage in a more traditional sense to try to drive more volume.
Just walk us through the patient mix there. What percentage of the market is Medicare Advantage versus fee for service? Where are you in terms of that numbers on the earnings call?
Most of these patients are Medicare. If you start by cutting the pie, about 90% of the patients are Medicare. Within that, about half of those are fee for service and half are Medicare Advantage. The Medicare Advantage piece is growing. A couple of years ago, it was 30%. Now it's 50%. I would imagine in three or four years, it's going to be 70%. The future is Medicare Advantage, which also we see as the best opportunity. The Medicare Advantage payer acts a little bit more like a traditional commercial payer. They see both sides of the ledger. They're the ones who are ultimately on the hook for the cost of these infections. They are most incentivized to invest in prevention.
From our view, from a contracting standpoint, there's an ability to negotiate with them fixed dollar amount per year, however we want to structure the agreement, to invest in prevention per patient. And that's what we want to shift to over the next probably one to two years.
Got it. Okay. One other thing that you've been doing, thinking about the long-term reimbursement dynamics, is generating some more data to support the economic pharmacoeconomic value of the product. Just walk us through the study that you're doing.
We kicked off the study last July with U.S. Renal Care. The goal was to enroll over 2,000 patients. We are over 2,000 patients now in terms of data that's being captured, with the goal of being able to utilize that data not just with other providers, but with payers such as Medicare Advantage payers. We're tracking a number of metrics that weren't tracked in our initial clinical study. I think the most important would be, in addition to the infection rate, the hospitalization rate. We want to know exactly how many folks go into the hospital that are on DefenCath versus those that go in that are part of the traditional cohort that we're also tracking that are not on DefenCath.
I think that right there, that plus lost chair time for the provider, antibiotic use for this patient population, I think there's a lot of metrics that go to the cost of treating these infections that are going to be really meaningful from a payer standpoint.
Great. Let's transition to the inpatient setting. Let me start here. Can you talk about the size of the opportunity in the inpatient setting versus outpatient setting?
Sure. We've talked about the TAM in terms of number of vials. And I think we've always said that the TAM for inpatient is about 10% of the market opportunity. But from a dollar standpoint, I think it's a little bit larger than that. We think that the pricing in the inpatient setting is going to be a little bit higher, a little bit more sustainable than in the outpatient hemodialysis market because you're not dealing with TDAPA. You're dealing with traditional inpatient DRG. We do have an NTAP that heads on to the DRG. That NTAP has been extended to November of 2026. I'd say launched in the inpatient segment last year. But it's a very long road on the inpatient side. You're working through P&T committees. You're working through a very long sell cycle and decision-making process on hospital systems.
Late in the year, we actually made the decision to kind of reorg our sales team a little bit. We shrunk the size of the outpatient footprint based on feedback and what we'd learned over six months. Then we decided to build a dedicated inpatient team. That inpatient team staffed up in the first quarter and is fully trained and went live in April. We have seen, even before they hit the field, some good traction over the first couple of months of the year on the inpatient side, based on the work that we did last year. In the first quarter, we shipped about, let's say, 3% of our units went in, 3% of the units we shipped went in the inpatient setting. In April, we've already increased that to about 6%.
I want to see that trend keep continuing in terms of growth in the inpatient segment as we add new accounts and as the existing accounts expand their ordering.
Can you just give us a sense of?
Excuse me.
The number of hospitals where you have got formulary approvals? Is there a goal to get to mid-year, end of the year?
Yeah. Look, we're not going to put metrics out around that right now. What I'd say is, right now, we have a handful of hospital systems that have begun adopting and kind of really driving utilization. We have one, call it large national system, that has adopted on a regional basis. They're starting to implement in that regional setting. We're seeing pretty good uptake there. What we want to see, obviously, is that system take it nationally. That's what we're hoping to see. No, I think it's a good question. We'll think about what metrics we can put out over the next coming months around inpatient so folks can understand what progress we're making beyond just how we're announcing sales and giving those metrics.
Can you maybe help us understand the profile of the patient that is getting the product or the product being used for in the inpatient setting versus outpatient?
Yeah. I think it's twofold. In the outpatient setting, it's almost exclusively ESRD patients. You're an ESRD patient. You're getting dialyzed at an outpatient hemodialysis center. You're getting dialysis three times a week, 52 weeks a year. You have a catheter. In the inpatient setting, I think there's two buckets. You have that ESRD patient that gets hospitalized for whatever reason and has to be dialyzed while they're there. You also get folks that crash land into the hospital and have to be dialyzed. You have a large number of AKI patients. Then a certain percentage of those AKI patients require dialysis. AKI patients tend to be dialyzed daily. They'll be dialyzed every day for two weeks or three weeks while they're admitted. They also have very high infection rates.
Because they're being dialyzed for the first time in the hospital, those are hospital-acquired infections, which also have incredibly high recurrence rates.
Okay. When you're going through this formulary process, you knew it was going to take a long time. What have you learned through the process? How have you evolved your strategy to get on formulary?
As I said, I think the biggest piece that we evolved was realizing that one sales team could not effectively cover outpatient hemodialysis and inpatient. The profile of who we originally hired was much more experienced on the outpatient renal side. What we wanted was the profile of who I want in the inpatient team needed to shift a little bit. We needed to have folks who had predominantly inpatient-based experience, predominant experience with new product launches, innovative product launches, and bringing something through P&T in the past, understanding how to get champions within the health system. It has to be cross-functional in terms of the therapeutic area that the doctor specialized in. It is not just renal. You need the infectious disease folks on board. You need antibiotic stewardship on board.
All of that is kind of what we've pivoted over the first year of the launch and what we're working on now.
Great. Okay. Just one more on the inpatient setting. It's early. The team's only been out there for a few weeks. How would you assess how well it's going?
Look, I think it's going great. I like what I see in terms of the feedback that I'm getting from the organization, the types of meetings we're seeing scheduled. We're already seeing additional orders, even though small, from some of the institutions that are being called on. So far, I like what I see. Also, we recently announced a partnership with WSI for a handful of dedicated sales reps calling on VA facilities. We've already started to see our first couple of orders from VA facilities under that partnership as well and want to see that grow over the course of the year, too.
Okay. You mentioned you're starting a phase III trial in total parenteral nutrition, hopefully enrolling the first patient this week. Just maybe frame for us that opportunity, the size of that opportunity.
Yeah. I think we've talked about we see the total addressable market. We've put a dollar number out there. Somewhere between $500 million-$750 million is kind of how we see the market. We think the peak sales for our product in that space could be in the $150 million-$200 million range. We see that market. It's about 1/3 hospital inpatient, 2/3 home use. We see it as a more traditional reimbursement landscape, probably more akin to what investors are used to seeing in, call it a Medicare B type situation. We feel good about our ability to commercialize in that space.
When you think about reimbursement and talking to Medicare, where does Medicare Advantage fit into this? Is there a conversation that ultimately involves both indications?
Eventually, maybe, because there's definitely going to be Medicare Advantage patients that are part of that cohort. You also have a higher amount of commercial patients that are in the TPN space versus what you have in ESRD. That lends itself very well to a much more traditional contracting type structure.
Can you talk to us a little bit about the phase III trial? Let me ask a slightly obvious question. If the drug works to prevent infections in the hemodialysis setting, why would it not work in other catheter settings?
That's our prevailing assumption as well. I can't come out and just state that. What we view is a catheter is a catheter. We're not out treating a disease state. The way that our drug works, it's by inhibiting biofilm buildup in the catheter. That biofilm ultimately becomes bacteria and leads to infection. Theoretically, what's, I think, more important is how often the catheter is accessed, how often it's instilled with DefenCath, versus whether the patient is a TPN patient or an ESRD patient or has some other disease. We have an expanded access program that we've opened for a number of disease states, some in oncology, some in peritoneal dialysis. Pediatric TPN is going to be part of expanded access. I think our view is, to your point, a catheter is a catheter.
You mentioned at the start, impressively, you've achieved profitability within the first year of product launch. You very rarely see that, if at all. Talk to us about bigger picture strategy. How do you think about reinvesting that capital? How do you see clearly the priority today is DefenCath. As you think out two, three, five years, what's the strategic focus?
I think right now is an interesting time in the small cap biotech space. I think there's a lot of opportunity out there. We've not been bashful about saying we are out there looking on the business development front to see what potentially we could put with DefenCath. I think my focus is on opportunities that are either commercial or about to be commercial. It could be something that's either adjacent in the renal space and that outpatient hemodialysis space or something that's adjacent in the hospital space, where we have two call points and have built kind of infrastructure and experience in both of those areas. You're right. We are generating cash flow. We just reported a cash number for the end of the first quarter, around $77 million.
We're on a trajectory for mid-year to have somewhere just maybe under $100 million if this trajectory continues. We want to be able to deploy that cash in a way that provides a good return for shareholders.
So just wrapping this up, as we think about the rest of the year, revenue obviously being the number one metric. How should we be gauging success of the DefenCath launch as we move through the?
Look, I think revenue and profitability, those are the primary metrics by which any investor is going to gauge success of the company. I think folks are going to want to see how successful are we. I think you asked a good question about inpatient metrics. We should put out some metrics that allow folks to track inpatient progress and understand what type of gains we're making on that front. How do we do in terms of adding new accounts on the outpatient hemodialysis side? I think those are all soft metrics that folks can look at and kind of say, all right, this is still working the way they say it's going to go.
Let me just check. Any questions in the room?
Just have one. On the BSIs, do the dialysis centers, do they have to report those to any national?
I believe there is a reporting requirement for bloodstream infections. I think oftentimes they go misdiagnosed or undiagnosed until the patient actually presents at the hospital. It is a little bit more common. Yes, I do believe they have a reporting requirement if they diagnose.
If you've been talking to, I know you guys are doing the trial. But have you looked at the, have they disclosed anything as US Renal?
No, no. We have not. We have not done any type of internal analysis on the data yet. The study was designed as a 24-month study. We're about to hit the midpoint in July. One of the things we are exploring is whether we do want to amend the protocol to do an interim look in, which we'll make that decision in the third quarter.
Great. Joe, thank you. Really appreciate it.