Afternoon, everyone. I'm Rahul Sood, managing director in the healthcare investment banking group at Wells Fargo. I'm joined on the stage today with Joseph Todisco, Chairman and CEO of CorMedix. Joe, welcome.
Thank you. Good to be here, Rahul.
Thank you. Thank you for being here. So why don't we get started? CorMedix has seen a lot of change over the past couple of years.
Take us through the journey, where CorMedix was in 2024, where CorMedix is today.
Well, look, I joined CorMedix in 2022, right? We've changed significantly since then. I joined a company that was pre-commercial, single product company, resolving a CRL, right? But had a great product in DefenCath with a really strong clinical proposition, and a really unique reimbursement, right? This TDAPA reimbursement that can present some challenges. In 2024, we had gotten the product approved in late 2023, but from where we were in 2024, we were building out launch infrastructure, we were starting to commercialize the product. Only one of three TDAPA launches at the time. I think what we made, it was one of the first that was really truly successful over that two-year period of time where you have separate payment.
We leveraged that and that cash flow into the acquisition of Melinta and really built the company into a diversified, specialty pharmaceutical company with a large deployment in institutional settings of care, right? That being hospitals, infusion clinics. We'll be entering into the hematology oncology space, hopefully with the approval of REZZAYO for an expanded indication next year. But really built a more robust, diversified platform.
Great. You touched upon this, that you acquired Melinta. Your portfolio's gone from single product to eight marketed products today, sold in more than 500 hospitals, infusion centers and clinics. How would you describe the commercial platform that you built, and what does it let you do next?
Look, it's big and it's scalable, right? In terms of we are deployed in the inpatient space, in the hospital space. We have touchpoints into infusion clinics, right? We're building touchpoints into the hematology oncology bone marrow transplant center space. There's a lot of commonality amongst what I call institutional settings of care, particularly for injectable drugs, in terms of how they're sold, how they're priced, how they're marketed, where you really don't need to necessarily focus just on a single therapeutic area to obtain some types of synergy. Look, we're focused on, one, executing on the assets we have in that space, but also looking to layer on additional assets that are synergistic with that field deployment.
Got it. You touched upon Melinta. That acquisition closed last year.
So you've gone past the one-year anniversary mark on it. Can you review the rationale for that transaction and how do you see that business positioned today for success?
Sure. You're right, we just hit the one-year anniversary last week of the Melinta acquisition. For us, it was really transformational. We were, as I said, in the midst of the first year of our TDAPA, driving decent cash flow, but knowing that we have this reimbursement transition and kind of wanting to parlay that cash flow and success into a more diversifying transaction. Melinta gave us that, right? It gave us what I'll call a stable-ish base business of institutionally utilized anti-infective drugs like VABOMERE and MINOCIN, as well as a potential future growth asset with REZZAYO, right? Which we've just read out the phase III data for prophylaxis of fungal infections. So for us, I really see it as transforming the business and putting us in a much stronger position today than we were 12 months ago.
Got it. Let's switch gears onto DefenCath. You touched upon the TDAPA piece. That's something quite unique. Not a whole lot of drugs have gone through that reimbursement mechanism. You guys have done it quite successfully. DefenCath has been a driver for the business over the past couple of years. Can you discuss the shift now that you're going in this new reimbursement dynamic, and where do you see the business going over the next 12 - 18 months with that?
Yeah. The shift that takes place is under TDAPA, this transitional drug add-on payment, you get 24 months or two years of separate payment, buy and bill reimbursement, and then it transitions into three years of a bundled add-on. In the ESRD space, the dialysis operators essentially get a fixed amount of money, right? For all drugs and services used in administering dialysis and then for innovative drugs, they give an add-on payment for a period of time. We are working through that transition right now, and our goal when our TDAPA ended on June 30th, and we moved into July 1, was to essentially preserve patient volumes. We had built up a good, in our mind, patient run rate, and we decided to really discount the price in order to make it more cost neutral for the dialysis operators to maintain patients on therapy.
Our expectation is that in 2027, the bundled add-on will go up from what it was calculated for the third and fourth quarter, and we will be able to get a little bit more price appreciation, or sorry, a little more profitability.
In 2027. Now, 12 - 18 months, there is a lot of moving parts for DefenCath and things that are going to impact kind of what the potential for DefenCath sales will be as we enter 2027 into 2028. Later this year, the ESRD final rule will come out from CMS. One of the aspects is the amount of money that will go into the bundle for 2027, but also how they elect to do the bundleized calculation. They had proposed to move from an annual to a quarterly. We are going to have to see what happens with that. A lot of public comment was submitted. In opposite of that, we are working very hard to obtain, with Medicare Advantage, separate reimbursement for DefenCath. We view this as the biggest untapped market potential for DefenCath, for DefenCath patients. MA patients are more than 1/2.
Our estimate is around 60%-65% of patients fall under Medicare Advantage. We think very few of our patients today are Medicare Advantage patients. We think most of them are fee-for-service. If we are able to obtain separate reimbursement for that patient population, I think it will set the product up well for better long-term viability as a value driver. I think it is also worth noting, we submitted two letters to CMS in the comment period on the ESRD proposed rule. One was around the actual calculations of TDAPA itself and things that could be done longer term to benefit TDAPA. The other was very specific to DefenCath, and their classification of DefenCath as an existing functional category under the PPS. They made that determination in 2024. When you actually look at how the functional categories are spelled out, there is no category for prevention of infections.
There's a category around treatment of fungal and bacterial infections, but we don't fall within that category. We think the appropriate remedy would be for CMS to create a new functional category, which would, instead of a three-year TDAPA, would require a permanent adjustment to the bundle that would provide more sustainable reimbursement. We're working multiple angles to try to create sustainable reimbursement value for DefenCath and for the betterment of patients.
Can you talk a little bit of the timeline for these as well?
The timeline for the ESRD final rule is likely late November. I think last year it slipped into December, but there was a government shutdown that kind of kicked everything out. Our expectation is at some point in November, I think, the ESRD final rule would come out. On Medicare Advantage, these are large organizations that don't historically move quickly. I think we've made a lot of progress over the past several months in, one, getting buy-in on the pharmacoeconomic and then clinical value proposition for DefenCath, and now really trying to work through operational aspects of what this could look like. I like to say I'm cautiously optimistic. We could have something by early next year, that's in place, but we're trying to do something that's never been done, which takes something that's inside the bundle and then contract it for separate payment.
We're also one of only a handful of TDAPA drugs, and we're the only preventative. There's a unique value proposition for DefenCath in terms of eliminating cost from the system, the hospitalization costs, the infection costs, and those costs fall squarely on the MA plan.
Got it. Very helpful. You recently announced a pilot for DefenCath with the LDO. What could this mean longer term, outside of just some of the other things that you just talked about?
Look, that is a good question, and that is something that we were really excited to finally get across the goal line, so to speak, in terms of having an agreement in place with this dialysis operator. They are the largest. They were one of the only top five that did not adopt DefenCath during the two-year TDAPA period. So they have initiated a pilot that we believe is an operational pilot, not a clinical pilot. We will be meeting with them later in the fall and hopeful that this could turn into something that becomes a value driver, certainly from a volume standpoint. To drive value from a pricing standpoint, we are going to need some of those other things that I mentioned, whether it is a change in reimbursement on TDAPA or Medicare Advantage to kick in from a pricing standpoint.
But we really see them as a meaningful validation of the clinical value that DefenCath brings to patients.
So I think you just touched upon this. It appears to me that now you have commercial supply agreements in place with all five of the largest dialysis providers.
That's correct.
In the U.S. What should that tell investors about the value prop of DefenCath and how it sits as a standard of care?
Look, we've put out a treasure trove of real-world evidence that shows that this product absolutely works, not just in terms of reducing infections, but it keeps patients out of the hospital. That's the biggest source of savings for the payer. Unfortunately, traditional Medicare fee-for-service patients, the framework is not there for separate contract negotiation for traditional Medicare patients. But it is possible for Medicare Advantage. That's why we're spending so many resources there, because the real-world evidence is compelling, that this product absolutely works. We have more data coming out later this year in the fall in multiple settings of care, not just in outpatient hemodialysis centers, but also in the hospital inpatient setting that shows that we have a material impact on infection rates.
Got it. Just staying on that topic, you had the US Renal Care interim analysis which showed a 72% reduction in catheter-related bloodstream infections and a 70% reduction in annualized CRBSI-related hospitalizations. Pretty compelling data sets.
Yes.
How does that help you? How does that help you in the conversations with the payers that you're going through?
It was really a needle mover at the beginning. That's actually what got us in the door. Because the real-world evidence, and it's not a small handful number of patients, it's in thousands of patients. The way that the real-world evidence study was designed with US Renal Care is a complete apples to apples. We took the same patients two years prior and then a year after, and we're able to compare BSI rates on a patient-to-patient level and have a material impact on infections and hospitalizations. That can be directly translated A - B into savings. Medicare Advantage knows exactly what they spend on each hospitalization on average and can actually look at the value of investing in prevention. So, it's been incredibly helpful.
Later this year, US Renal Care will be publishing the full data set for that interim period, as well as some other analysis that was done from a pharmacoeconomic standpoint on the benefits of DefenCath in the outpatient setting. We're excited for both of those.
Got it. Let's switch gears a little bit and talk about the REZZAYO and the prophylactic.
For our audience's benefit, can you just quickly recap the top-line data that came out earlier this year? I believe there is a full data set that will be coming out at a conference.
Yeah, I apologize. I did not memorize the data, Rahul. Look, we met the primary endpoint for non-inferiority versus standard of care. More importantly, we announced certain secondary endpoints, which really had to do with safety of the drug in comparison to the standard of care, which are these azole antifungal drugs.
Now, why we are excited about REZZAYO, which is currently approved for treatment of Candida-related infections. That is a smaller total addressable market treatment, and the patient population is almost exclusively inpatient setting, which has some payer headwinds. You have this DRG reimbursement that can be a little bit of a headwind in the inpatient setting. For prophylaxis, a large amount of the treatment opportunity is outpatient, which means buy and bill reimbursement. So you do not have that payer headwind. You have a large total addressable market in terms of total number of patients across multiple underlying conditions that have to get prophylactic antifungal therapy already. The standard of care are these azole antifungal therapies, which are known to have certain kind of safety side effects. They tend to be hepatotoxic. They also have a large number of drug-drug interactions with other drugs that this patient population is taking.
We do see an opportunity for another entrant in this space. I believe that we have shown a better overall safety profile in the initial top-line data. We do expect to have the full data set coming out in the fourth quarter of this year.
Can you talk about the potential market opportunity that you see here which gets you excited?
Look, as we said, the TAM is significantly larger than in treatment, and the TAM spans both multiple underlying conditions compared to just where we ran the clinical study, as well as multiple pathogens, so to speak. We have a good breakout of the TAM in our corporate deck. Now, the market, if you just look at apples to apples, the design of our clinical study, it's $500 million. It's a big market opportunity alone, just where we ran the clinical study, which is patients with underlying hematological malignancies that are getting bone marrow transplant. As I said, we do see the market opportunity potentially broader than that. Ultimately, we have to see what the FDA label ends up being from an underlying condition standpoint, as well as a pathogen standpoint.
But by and large, because of the issues associated with the standard of care, we see a lot of low-hanging fruit there just with patients for which the azoles are contraindicated.
Given how much clinicians weigh drug-drug interactions and talks in the setting, can you just elaborate a little bit more on how do you see REZZAYO fitting in?
Well, look, I think it's going to matter, regardless of label. Even if, as I said, if you just look at the low-hanging fruit. I don't know ultimately how. Once we have the full data set out, the goal was to take that data and then go do another round of market research with the actual product profile and see, okay, what this ramp is really going to look like and what uptake is going to be. Just looking at the number and the amount of patients or the percentage of patients for which existing antifungal therapy is discontinued because of toxicity or drug-drug interactions, the feedback or the market intel we've seen is upwards of 15%-20%, depending on where the survey is done, have to discontinue this azole therapy.
There's a whole other slew of patients for which they don't even attempt azole therapy. That, to me, says there's a big market opportunity there, even if you're not the standard of care, to come out and establish a position in this space.
Thank you. The prophylaxis indication could expand REZZAYO's addressable market roughly eightfold from what I can see, and I think you've said publicly you're adding 15 -2 0 commercial and medical positions to be ready for this. Can you just walk us through the launch prep and the path from the sNDA to an approval in the first half of 2027?
Right. The activities we're doing now are more along the lines of staffing. We've started to identify key roles and add on critical personnel that were going to be needed that either have those relationships in the BMT hematology space or deep expertise in that space. It's an incremental add-on from what we had. It's not a complete or large build, and I think we'll be ready in the first half of next year. As I said, we're also waiting for the full data set to be published. Unfortunately, because we are partnered with Mundipharma on this, and they're the global sponsor, we don't have unilateral control of how and how much data comes out into the public realm. But they are going to be publishing more data at upcoming medical conferences in the fourth quarter.
That'll give us the opportunity to have the full data set available to begin socializing with key opinion leaders. That's really where, I don't want to call them pre-marketing activities, but we'll be doing additional market research, additional ad boards, and preparing for a rollout of the drug, hopefully in the second half of next year.
The existing commercial infrastructure that you have in the hospital space, you can leverage.
Yes. We have a field deployment in the hospital inpatient space, in the infusion clinic space. We'll be pivoting some of that into the hematology oncology infusion space, as well as the bone marrow transplant centers. Now, there's not a large number of BMT centers, right? So it's not that difficult to reach those locations with the same amount of headcount. We also have an inside sales team that's really effective at hitting white space, right? The areas where it's not cost efficient to have a key account manager in that space, but can do it remotely.
Got it. Very helpful. You talked about that Mundipharma is the partner.
They own the rights, right? But if I understand it right, the ownership of the U.S. NDA transfers to CorMedix on approval of the prophylactic sNDA. How meaningful is it for CorMedix to own and control the U.S. asset outright?
Well, look, I think it's meaningful to the extent that we have control and we are the primary mouthpiece then with the agency or with anyone else. I think we've been fortunate that Mundipharma is a good partner. As we've gone through this process in terms of compiling the sNDA, they've taken our feedback. We'll see how, as we go through, hopefully label negotiations with FDA, that we can get to a place where we're all happy with the final label.
Got it. Can you talk us through the other key products that are in your portfolio and any key trends that you're seeing in those franchises?
Yeah. Well, look, as part of the Melinta transaction, as I said, we diversified the business and we brought in a, what I'll call a stable-ish base business of some anti-infective drugs, right? The two largest being VABOMERE and MINOCIN from a revenue standpoint. They provide good durability with very little SG&A required to kind of maintain those market opportunities. But one of the products I think we're excited about for next year is Kimyrsa, which is a long-acting anti-infective, one of only two drugs in the class. The other drug, Dalvance, went generic last year. We do think there's going to be a relaunch opportunity from a promotional standpoint, the drugs on the market, middle of next year with the infusion clinic space. So we're going to look for that to be a catalyst going forward in the future as well.
And then we also have a drug like BAXDELA, which is a fantastic broad-spectrum antibiotic that is partnered with BARDA, right, in a biodefense collaboration. I think we're hopeful that down the road, that could lead to a stockpile arrangement. I think there's some other good kind of hidden value drivers in that Melinta portfolio.
How should investors think about the durability of the portfolio that you have with DefenCath, with the portfolio that came from Melinta? Just to remind the audience, REZZAYO has patent exclusivity coverage out to 2038.
Right.
I believe the other products that you have, they're all into 2030s.
Well, look, DefenCath's durability has very little to do with IP, right? It's all about reimbursement and what we're able to do from creating sustainable long-term reimbursement for that product. That will really guide what durability this product can have in the upcoming years. From an IP standpoint, it's got data exclusivity to 2032, patent protection into the 2040s. We're not aware of anyone actively working on development at this time. REZZAYO as well, long data exclusivity, long IP. I think the shortest term is really MINOCIN, which has an LOE date in 2031. Then drugs like VABOMERE, the API is incredibly difficult and expensive to develop and make. We're not aware of any DMFs that have been filed for VABOMERE. Same with eravacycline, very difficult and expensive to make.
I think we're hopeful that in addition to the IP that's out there's a little bit of a technological moat around those two assets.
Got it. Can you talk a little bit about CorMedix today?
With the portfolio you have. You've got DefenCath, which has an application inside the hospital, but also in the dialysis centers. How do you view CorMedix five years from now in terms of the portfolio composition and what else you may do.
Okay.
Versus where it is today?
Well, look, I think we've been pretty vocal about what we're looking to do in terms of building this business with add-on or tuck-in business development that's highly synergistic, either with the field deployment in hospital, in the infusion clinic space, hematology, oncology, institutional settings of care focused on largely injectable drugs, I think is what we're focused on. From a deal type standpoint, we're looking for things that are either commercial or very close to commercial. Things that are going to be near term accretive and drive value from shareholders where we can extract commercial synergy and EBITDA.
Okay. In terms of the scalability of this platform, you already have a big footprint within the hospital. How scalable is it if you're adding one, two, or three more products?
We've got capacity for more products.
Yeah.
The typical field team can handle multiple products in the bag. I think a great example would be our strategic investment in Talphera. We've taken a minority stake in Talphera. We have a right of first negotiation to acquire that company after its phase III data readout, which will either be late this year or early next year. That's a product that's used exclusively in a hospital ICU setting. We would not need to add any additional boots on the ground to commercialize that product. Those are the types of things that fit very well, I think, within the portfolio.
Very well. You reported about $260 million in cash.
June 30th for Q2. You just talked about business development as not the only pillar, but one of the pillars.
And avenues for growth. Can you talk a little bit about the capital allocation in terms of these priorities?
Yeah. Look, I think we were pretty active early in the year in terms of stock repurchasing when we were trading where we were. We're sitting here today over $300 million in cash on hand. We'll report a number later on. But we're focused right now on building dry powder for business development. That's really the core focus. In addition to the cash that we have on hand, we've got good debt capacity on the balance sheet right now, the ability. If we found the right synergistic deal, we could add a turn or two of debt to increase our funding capability, and we can certainly supplement that with equity possibly, depending on where we're trading and how we think about the specific deal that we're looking at.
There's a very strong free cash flow generation at the company. You generated about, just a tad shy of $130 million in the first half.
A little bit more than $275 million of adjusted EBITDA over the trailing 12 months. You talked about the share repurchase, the $75 million that was authorized. How do you view the buybacks against the business developments?
Well, look, I think we continue to evaluate the buybacks as we go based on where the stock is trading and what we see. As I said, we were active in the early part of the year. The focus right now is on building dry powder and looking for business development opportunities that are going to provide longer term strategic value to the shareholders.
Can you talk about what an ideal next deal for CorMedix could look like in terms of therapeutic area, stage, size? I understand the hospital.
Well, if I'm going to create a perfect world.
Yeah. Let's talk about that.
It's something that is commercial, fits very well, likely with REZZAYO in the prophylaxis indication. I think that's or could be with the hospital and patient deployment. Something in those two spaces that already comes with an established revenue position, but we do think we can get additional growth. That's a perfect world. An even more perfect world, maybe it's got a pipeline asset attached to it that's ready to be approved. I don't have a crystal ball or a magic wand. I can't create that out of thin air. But we would try to find deals that replicate some pieces of that, and see. We've got a pretty big business development funnel and a lot of things that are under valuation right now, and hopefully we can get something across the goal line in the near term.
Got it. What are your thoughts on the key milestones for CorMedix over the next six months, 12 months?
Okay.
That we should be looking out for?
Look, we've got a few. First, I know we announced that we were intending to submit the sNDA in the third quarter, but shareholders should be looking for an announcement around an acceptance for review. We won't ever comment on when something's submitted, but rather when FDA accepts it for review, and gives us a target action date. I think we have real-world evidence coming out later this year around DefenCath. That's going to be pretty exciting and compelling. As I said, we're working with Medicare Advantage plans. And hopefully, can get something that we can announce publicly that I think can move the needle. But yeah. I think those are the near-term catalysts next six months.
Got it. Any last takeaways that you would like to leave the investors with?
Look, I'm excited about where we are. We've got a really strong balance sheet. We've got robust cash on hand. I said the ability to add more. We've put a really strong team in place, both from a leadership standpoint as well as from a sales and operational and medical deployment standpoint. And we can layer more assets onto this organization and continue to build for the future.
Wonderful. Any questions from the audience?
All right.
Joe, thank you so much for joining us.
Thanks for having me, Rahul.