Yes. Thank you very much. Hi. My name is Michael Addeo. I'm part of the banking team here at Jefferies. I'm here with Joe, CEO of CorMedix. We'll have a little chat, and hopefully you get some insights on CorMedix.
Thanks, Michael. Can you hear me okay? I've got to lean forward? All right. Thanks for having me.
Okay, great. I think we should lean forward. There we go.
Okay.
Okay, Joe. Great. Joe, a little bit on CorMedix. Could you please take us back to where CorMedix was about four years ago versus where you sit today? What's the company now, and what problem are you solving?
Okay. We are a drastically different company. I think 4 years ago, I think the point you're asking is when I joined. I joined 4 years ago last May. We were, at that point in time, a company with an enterprise value of about $150 million. A single asset company that was developing DefenCath, which was a great product from a clinical standpoint. At the time, had a, what I'll call, a broken supply chain. There was a complete response letter and some things that needed to be fixed. A great clinical product in a really challenging reimbursement landscape. I'm really proud of the team that we put together. We got the product approved. We commercialized it into an incredibly difficult reimbursement landscape. I think we did very well. We've parlayed that success into the acquisition of Melinta. We've diversified our business.
We've put together a portfolio of some durable assets that are used in institutional settings of care. Those would be hospitals, infusion clinics. We've added a pipeline asset with Melinta and REZZAYO, which we just had a very successful phase III preliminary top-line data readout. We've put together a strategy for, call it the post-reimbursement, the post-TDAPA phase of DefenCath. We sit here today with an enterprise value closer to $700 million, and I think that we're well-positioned for future growth. We have good cash on hand, the ability to do additional transactions, and that's what we're focused on.
Great. I think the answer opens up nicely to a series of other questions. The next one is on Melinta.
specifically. The deal closed in the second half of last year at a cost of $300 million upfront, plus additional milestone payments. What did you acquire exactly, and what was the strategic rationale? You touched upon it a little bit.
Sure. Look, I think the strategic rationale was first, to diversify ourselves away from being a single-product company focused in the renal space. Move us into, if you think about it, changing neighborhoods, right? Changing ZIP codes, moving from the Bronx to Brooklyn, right?
With REZZAYO prophylaxis, maybe we're looking to move into Manhattan, being in the heme-onc space. Looking to continue to diversify the company, build ourselves into what maybe investors perceive to be more valuable or more favorable therapeutic areas. We see ourselves as a company that is not necessarily pigeonholed into one therapeutic area, but we look across what I call institutional settings of care. Those would be hospital inpatient, hospital outpatient, infusion centers, heme-onc centers. These are settings where products are administered, mostly injectable drugs, administered by a healthcare professional to a patient.
Mm-hmm. No, that's great. Do you mind just telling us a little bit.
About Melinta?
Yeah. What is it within Melinta?
Look, the portfolio of Melinta, a lot of them, mostly injectable drugs, a lot of anti-infective drugs. Some used in the inpatient setting.
predominantly like amikacin and VABOMERE, others used and REZZAYO for treatment. Others, like Comarsa, used in an outpatient infusion clinic setting. You had a portfolio of products that, combined for, at the time we acquired, more than $130 million of trailing revenue. Some of them are small steady growth. Others we think have more growth potential, like REZZAYO.
not only in the treatment indication, which we think there's still room for penetration, but in the potential new indication for prophylaxis of fungal infections.
Maybe a follow-up question on the Melinta acquisition and REZZAYO specifically. You've recently reported positive phase III data. Can you let us know a little bit, what is REZZAYO more specifically? I know you touched upon it again.
Sure. REZZAYO's a long-acting echinocandin. Right?
The initial indication is for treatment of fungal disease, specifically candida-related fungal infections. The product is being developed in conjunction with our global development partner, Mundipharma, who holds global IP rights for a broader indication of prophylaxis of invasive fungal infections in patients that are immune-compromised and have underlying hematological malignancies, and the study was run in patients that are getting bone and marrow transplant.
We did read out preliminary top-line results. There's still more data to come, and hopefully more data that our partner, Mundipharma, will be publishing in the coming months. As we said in our release.
we see what we think is evidence of efficacy against all three measured pathogens in the study, as well as some favorable secondary endpoints from a safety standpoint compared to the standard of care. These are patients, by and large, that are immune-compromised. They're getting prophylactic antifungal therapy already. The standard of care is usually an azole, usually posaconazole or fluconazole in combination with Bactrim.
We ran head-to-head, a non-inferiority study against the standard of care, and met the primary endpoint from a non-inferiority standpoint. Really from a marketability standpoint, focused heavily on the secondary endpoints related to some of the safety endpoints, such as drug-drug interactions and discontinuations for reasons of toxicity.
Mm-hmm. No, excellent. I think that provides a good overview of what REZZAYO is. Maybe discussing DefenCath a little bit. DefenCath delivered a strong first quarter.
You've also been very clear that the reimbursement dynamics will make the second part of this year look different.
How should investors think about the underlying profile of the business in 2027?
Sure
beyond that?
We've taken the extra step to give some longer term guidance. I think you have to understand what DefenCath is, right? DefenCath's a catheter lock solution.
Sits in the catheter in between times catheters access. It acts as a preventative for bloodstream infections. The initial indication is in hemodialysis patient population, very high catheterization rates, very high bloodstream infection rates in that patient population from catheters that are often fatal. Unfortunately in the ESRD patient population, when I said it's a challenging reimbursement landscape, there's no long-term sustainable reimbursement for innovative drugs.
They have a five-year program, but the first two years is really the period where it functions similar to outpatient oncology drugs that are buy and bill. So you have two years of buy and bill reimbursement to essentially increase product utilization. Then three years of a bundleized payment system. Essentially that's all in the fee-for-service Medicare patients, which are just under half our target patient population. The other half is Medicare Advantage, which we see as a good growth opportunity long term for which right now there really is no separate reimbursement.
We're going to go through that transition on June 30th. The first two years of our TDAPA period's going to expire. We've guided this year between $175 million and $195 million of revenue.
for DefenCath. A lot of that is front-ended in the first part of the year. In addition, our first quarter was incredibly strong, as you mentioned. We had over $90 million of sales in the first quarter. The $60 million, we're going to have a one-time charge related to price changes that take place in July. We have to take some adjustments in June for those changes and kind of equalize the inventory that's on the shelf at our customers.
The back part of the year, we're going to take significant price erosion in order to maintain patient volume. The goal, we've been working with patients, and our top three account for over 90% of our volumes, is essentially to make sure that we maintain the product that is in thousands of patients currently, as we head into 2027.
The way that CMS does their calculation for post-TDAPA add-on, we see a significant increase coming in 2027 with the math the way that it is. Our expectation is that we're going to get a higher selling price in 2027. We've guided to a sales point in 2027 that is a little bit higher than what the exit run rate will be for the third and fourth quarter of 2026, or significantly higher. Sorry.
Understood. Okay. That's clear. Now we've spoken about DefenCath, we've spoken about REZZAYO. What else is in the pipeline?
Well, I think on DefenCath, I think it's also worth understanding that we've guided based on that fee-for-service business only, right?
We do think one of the initiatives that we're spending a lot of time on is working with Medicare Advantage.
Medicare Advantage is almost half of ESRD patients. We have very little, if any, DefenCath penetration there today. They are the party, so to speak, that is most incentivized to want to reduce cost in the healthcare system. What DefenCath has shown in a real world setting over the last two years is not only the ability to reduce infections, but to cut hospitalizations.
We've partnered with U.S. Renal Care. We've recently put out real world evidence. We were able to cut their hospitalization rate from CRBSIs by over 70%. That's a huge source of savings for the Medicare Advantage payer. What we are working with them on creating something that's really never been done, which is taking something that's in the ESRD bundle and trying to contract it for separate payment. I think it's a unique opportunity to do that as a preventative drug because we take cost out of the system.
I think we're hopeful that over the next couple of years, 2027, 2028, 2029, Medicare Advantage becomes the real value driver for DefenCath going forward.
No, that's excellent.
Sorry, your next question was about-
My next question.
oh, the pipeline.
was about the pipeline, and why are those programs important for patients? I think you can touch upon it a bit.
In addition to REZZAYO for prophylaxis, we do have DefenCath in a clinical trial currently for an expanded indication into patients.
that are getting parenteral nutrition, right? This is another population, very high catheterization rates, excuse me, very high infection rates from those catheters, and they lead to excess mortality. The study is running a little bit slower than what we had hoped. We had hoped to wrap up the study in 2027. It's looking more like 2028 right now. We're taking steps to try to accelerate that. We're opening more study sites.
We're going to submit a protocol to FDA to try to remove some of the exclusion criteria to broaden the patient pool. Hopefully we can kind of nudge that end date back into 2027. That's another source of expansion for DefenCath. In addition to that, I think we've done some creative business development. We've taken just under a 20% minority stake in a company called Talphera. Talphera's got a product called Niyad that is in phase III as an anticoagulant in the CRRT process. That's continuous renal replacement therapy. That study should read out at the end of this year, and in conjunction with that stake, we have a right of first negotiation to acquire Talphera on a favorable phase III. I think that was a really, from our perspective, smart way to make a small bet on something that could pay off big.
Absolutely. Any other programs you'd like to?
Right now, we don't have any other ongoing, what I'll call material R&D programs. We have some pediatric programs that are under PREA that are FDA requirements.
REZZAYO for prophylaxis, DefenCath for TPN, Niyad with Talphera are really the programs that are currently active that really, I think, move the needle. We are out actively looking for additional business development opportunities. We've got good cash on hand.
We've communicated, we want to target things that are near term or accretive, things that could be tuck-in or add-on or synergistic with the infrastructure that we have. Those are the things that we're looking for.
Understood. Maybe moving more to how the industry is profiling itself or a bit of a market question. Hospital-acquired infections and antimicrobial resistance remain sort of a major healthcare.
challenge with drug-resistant fungi increasingly in the spotlight, right? Obviously with all the elements you just mentioned, where does CorMedix fit within the broader landscape, and is this system doing enough to address these issues?
Well, the system question is a good one, right? The system, unfortunately, is not designed to rapidly uptake new antimicrobials, right?
That is always a challenge when someone invests in new studies around anti-infectives that would be used in the hospital setting, right? You need new drugs to attack the bugs, but they're going to be used sparingly at first, right? That needs to be kind of factored into the equation in the inpatient setting. When I look at things that we may acquire similar to VABOMERE, what I liked about them was that they were already entrenched into their position, right?
They've been on the market for a number of years. They've got somewhat durable positioning and we look at them as fairly stable from a sales standpoint. I think when you invest in new anti-infectives, I think the clinical hurdle's a little bit higher than, for the most part, just non-inferiority. I think, the argument for REZZAYO being different because you have such a disparity from a safety standpoint with the standard of care, and it's an outpatient-utilized product as opposed to hospital inpatient, that it really differentiates itself with those secondary endpoints. I think what's great about DefenCath as an example as an antimicrobial to date has not demonstrated any antimicrobial resistance. It's got broad-spectrum activity, kills gram-negative and gram-positive bacteria as well as fungus.
antimicrobial resistance. It's really a great product to utilize in institutional settings.
Fantastic. Thank you. The next question is more around sort of the perception that CorMedix has in the market. You've said publicly that you think CorMedix is undervalued. What do you think the market is missing?
Well, look, I think we've been saying that probably since earlier this year. We put out our 2027 guidance and saw I mean, our 2026 guidance and saw a little pullback in the stock price, and there was obviously a disconnect between what investors were expecting and what we put out there publicly. I think obviously there was a lack of understanding of TDAPA, what was going to happen in July.
when we guided to the back part of the year. It obviously caused that type of dislocation. I think what investors need to understand or have confidence in is the way in which we're kind of guiding DefenCath for Q3 and Q4, as well as what's going to happen in 2027. We have a decent degree of confidence in kind of maintaining those volumes and what we think is going to happen with price. I also think we likely don't get much of any credit for REZZAYO for prophylaxis, right?
Factored into our valuation. I think there are a lot of upside potential. Clearly, there's Medicare Advantage for DefenCath is obviously a show-me story, right? We're going to have to produce results there before, I think, people credit us. When you look at us relative to our peers and how we trade as a multiple forward EBITDA, we're obviously on the lower end of those-
multiples. Likely because it is a complicated story, right? It takes a lot of understanding. It's a unique reimbursement landscape on DefenCath, and there aren't a whole lot of precedents for similar products that have gone through that.
Thank you. Maybe as a final question, what's the single most important takeaway you'd want the audience to leave with?
Look, I think I want the audience to leave that we are a strong management team that has shown the ability to execute, right?
We're dealt a very difficult hand. I think when we took over DefenCath with the CRL, got the product approved, commercialized in the face of a very challenging reimbursement landscape, as had parlayed that into a diversification acquisition. We integrated that in a matter of months, not years.
I think we've positioned ourselves now, right, to be able to grow. We're in a very strong cash position. Negative net debt, right? We've got more cash than we have debt. We have the ability to do additional kind of tuck-in and bolt-on, whether it's product deals or smaller acquisitions to continue to build this business, right?
I think we have all the building blocks that we need to keep building CorMedix into something much larger and much more successful.
Great. Maybe one final question then. Again, this is more on the outlook. What are the key milestones over the next 12 to 18 months that we should be watching for?
Sure. I think, starting with REZZAYO, right, for prophylaxis. We've just had our preliminary top-line results.
come out. We have not even had the ability to put out full data, right? Obviously, that data is in partnership with Mundipharma. There'll be a pre-NDA meeting with the FDA in the coming weeks. On the heels of that, we'll work with our partner, Mundipharma, toward submission of the NDA, and once it's submitted we'll communicate timeline around PDUFA.
Right. Those are certainly milestones to track for REZZAYO. On the DefenCath side, we're actively looking at a couple of things that we really didn't get into, things that could improve the reimbursement landscape for DefenCath. In the near term, we're looking at the ESRD proposed rule for 2027, which should come out by the end of June, early July at the latest, hopefully. We're also actively watching the legislative process in Washington around the Kidney Care Access Protection Act. The law has good bipartisan support, a number of co-sponsors. It's got committee leadership support from Ways and Means, would really be transformational, not just for DefenCath, but for innovative drugs for end-stage renal patients altogether, right? What it would create is a sustainable long-term reimbursement landscape for innovative drugs in the ESRD space, which doesn't exist today. It really kind of revolutionizes TDAPA.
We've actively been spending a lot of time working on that in Washington, and we're actively watching that as well. Those are all things investors can kind of keep an eye on and track for the benefit of CorMedix.
Fantastic. Joe, thank you very much.
Thanks. I know we're running early. Are there any?
Are there-
questions from the audience, or?
Can take any questions.
Nope. All right.
All right. Well.
Well, thank you.
Joe, thank you very much.
Appreciate it. It's a very nice meeting you.