CorMedix Inc.

Hello, and welcome to the Corps Medics, Inc. First Quarter 2022 Earnings Call-In Webcast. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Daniel Ferry with Lifestyle Advisors. Please go ahead.

Good afternoon, and welcome to the Corps Medics First Quarter 2022 2022 Earnings Conference Call. Leading the call today is Joe Tedesco, newly appointed Chief Executive Officer of Corps Medics, and Dr. Matt David, Executive Vice President and CFO. They are joined by Dr. Phoebe Mounts, EVP, General Counsel and Head of Technical Operations, and Aaron Mistry, SVP and Head of Payer Strategy, Government Affairs and Trade. Before we begin, I would like to remind everyone that during the call, management may make what are known as forward-looking statements within the meeting set forth in the Private Securities Litigation Reform Act of 1995. These statements are subject to certain risks and uncertainties and include, but are not limited to, any of the following. Any statements other than statements of historical fact regarding management's expectations, beliefs, goals, and plans about the company's prospects, including its clinical development program, manufacturing activities, and marketing approval for DefendCath in the U.S. and other product candidates, future financial position, future revenues and projected costs, potential market acceptance of DefendCath, NeutralIn, and other product candidates. More specifically, forward-looking statements include any statements about our clinical development plans and the submission and timing, cost, progress, results, estimates, and interpretations thereof, projections as to the company's future capital raising and spending and cash position, expectations as to the timing and nature of anticipated regulatory actions, possible product licensing, business development, or other transactions, any commercial plans and expectations, market projections for our product candidates, and expectations as to manufacturing and product component costs. Actual results may differ materially from these projections or estimates due to a variety of important factors, including, but not limited to, uncertainties related to clinical development, regulatory approvals, and commercialization. These risks are described in greater detail in core medics filings with the SEC, copies of which are available free of charge at the SEC's website at www.sec.gov or upon request from core medics. Core medics may not actually achieve the goals or plans described in these forward-looking statements. An investor should not place undue reliance on these statements. Please note that Corps Medics does not intend to update these forward-looking statements, except as required by law. At this time, it is now my pleasure to turn the call over to Joe Tedisco, Chief Executive Officer of Corps Medics. Joe, please go ahead.

Thanks, Dan. Good afternoon, everyone, and thank you for joining us on this call. I'm excited to begin my tenure this week as the Chief Executive Officer of Corps Medics. I'd like to start by thanking Dr. Matt David for his continued leadership while I fulfilled my contractual obligations to my previous employer. I look forward to working with Matt more closely as our growth and commercial strategy must be aligned with our financial strategy. In addition, I would like to thank the broader CoreMedix team who have worked tirelessly over the last year to complete the DefendCAS NDA resubmission. These past two months during my transition, I've had the opportunity to meet with each CoreMedix employee individually and have been incredibly impressed with the knowledge, skill, and commitment of the current team. I've also developed a deeper understanding of the operational, commercial, financial, and regulatory hurdles the company and our lead product, DefendCast, face in the near to medium term. While my first 100 days will include continued evaluation and understanding, the company must make several key operating and commercial decisions over the next several months in order to be ready to commercialize DefendCast as soon as possible after securing anticipated FDA approval of the NDA. To that extent, I will not have the luxury of delaying many key decisions related to supply chain planning, distribution, commercial strategy, or personnel. As such, this morning we announced certain key management and reporting changes within the leadership team of CoreMedix and operational changes with our international business. Liz Hurlburt, EVP of Clinical Operations, will take on an expanded role as EVP of Clinical and Medical Affairs assuming oversight of medical affairs, drug safety, and pharmacovigilance, in addition to her existing clinical operations responsibilities. Donna Ucci has been appointed to the role of SVP and Head of Global Quality, reporting directly to me. Donna joined us after most recently serving as VP Global Quality Management at Amule Pharmaceuticals, and with more than 20 years quality leadership experience in previous roles, at Impax, Allergan, and Pfizer. Frank Raffael has been appointed to the role of VP of Supply Chain, joining the company with more than 30 years of supply chain experience, including previous roles at Teva and Quotient Sciences. I'm excited to have Don and Frank join the organization as they together add meaningful quality, manufacturing, supply chain expertise, and I look forward to bolstering the organization with other key additions as we aim to transition from a development stage company to a commercial organization. Lastly, the company and Tom Nussbickel, EVP and Chief Commercial Officer, have mutually agreed to part ways. I want to thank Tom for his commitment and dedication to CoreMedix and wish him success in his future endeavors. Until such time as a permanent Chief Commercial Officer is appointed, I will be taking a more active role in the day-to-day activities of the commercial team as we build out our commercial strategy. We've also made the decision to wind down our operations in Europe. The company had previously made Neutralin available for sale in France, Germany, and some Middle Eastern countries as a medical device. Going forward, the company will focus on our U.S. commercialization and launch strategy, and after securing FDA approval, may pursue an international expansion via a larger regional partnership. During our year-end earnings call in March, Matt and Phoebe communicated that FDA has accepted for review our DefendCast NDA resubmission and informed Corps Medics that the resubmission is complete and considered a Class II response to the action letter with a six-month review cycle from the date of submission and an action date in the third quarter. It is important to keep in mind that the PDUFA goal of six months is merely an internal FDA target for the review of 90% of this type of resubmission, and FDA is not compelled or obligated to act on the application within the six-month timeframe. As Phoebe mentioned on the prior earnings call, we expect FDA to conduct a pre-approval inspection of the company's CMO as part of the review cycle. We have been notified by our CMO that FDA has provided a date for that inspection, and that scheduled date is prior to our goal date. It is important to note that any FDA inspection of our CMO will assess the commercial readiness of the facility and manufacturing operations beyond those specific to DeventCAS, and CoreMedix will only have visibility to FDA observations related to our product. It is also worth noting that any planned inspection from FDA could always be delayed or rescheduled as a result of the ongoing COVID-19 pandemic. We also disclosed in our March earnings call an ongoing work stream to identify U.S.-based CMOs that could be utilized for expanded manufacturing capacity to support commercial launch and for development of a pre-filled syringe format. That work stream is progressing on schedule, and we will provide updates later in the year. Lastly, from a supply chain standpoint, we're also continuing initiatives to dual source key components and active ingredients in order to de-risk potential global supply chain disruptions as well as potential governmental regulatory actions at any key supplier. Over the next few months, I will be working closely with the commercial team as we build out our launch strategy for DefendCast, including critical decisions around pricing, reimbursement, messaging, staffing, and sales deployment. Certain roles will need to be filled and decisions made prior to securing FDA approval of the DefendCast NDA. However, it is not my intention to hire or train field-based sales personnel, until we have our FDA approval firmly in hand. A core part of our market access strategy will be working to secure favorable reimbursement for DefendCAS in both the inpatient and outpatient dialysis settings. Based on our expanded understanding of the market opportunity for DefendCAS gleaned from our discussions with key stakeholders, such as dialysis providers, hospitals, CMS, and patient advocacy groups, We see market potential for DefendCast beyond the outpatient dialysis clinics with a meaningful market opportunity for utilization in the hospital inpatient setting. This past Tuesday, May 10th, the Center for Medicare and Medicaid Services, CMS, published in the Federal Register the Fiscal Year 2023 Hospital Inpatient Prospective Payment System, or IPPS for short, a proposed rule to update IPPS hospital policies, which includes the agency's thoughts on new technology add-on payment, or NTAP applications. An NTAP provides a hospital with additional reimbursement for novel therapeutics beyond the bundled payment associated with a DRG for inpatient care in a particular diagnosis code. CoreMedix has submitted its application for DefendCast to receive NTAP designation. It has been reviewed favorably by CMS. against eligibility criteria, and a final rule will be published by CMS in the Federal Register no later than August 1st. Typically, in order for an NTAP to be effective October 1st of a current year, the product NDA must be approved by July 1st of that year. However, because the FENCAS has received Qualified Infectious Disease Product Designation, or QIDP, from FDA, we are eligible for a more flexible start date. Specifically, we expect our NTAP to take effect the first quarter following the anticipated FDA approval of the NDA, provided such approval occurs before July 1st of 2023. In the NTAP application, which was submitted in October of 2021 to ensure a start date as early as possible, we stated that the DefendCath NDA had received a complete response letter and was pending resubmission without being able to provide CMS with information on the anticipated approval timeline. In a Federal Register notice published this week, CMS has incorrectly stated that CoreMedix expects the FDA to approve the DefendCast NDA prior to July 1st of this year. We've advised CMS of this error and requested the agency publish a correction. On the outpatient side, we remain committed to exploring all avenues for product reimbursement, including our efforts to secure a transitional drug add-on payment adjustment, or TdapA, as soon as practicable after securing our anticipated FDA approval. That said, we are also employing a dual strategy with CMS to simultaneously petition the agency to exclude DefendCAS from the ESRD payment bundle entirely, We believe there are compelling arguments that the FENCAS does not fall within the scope of products and services calculated as part of the dialysis bundle under the current statute, and therefore should be reimbursed separately by CMS as an outpatient drug product with a unique J-code. To be clear, any decision to separately reimburse the FENCAS or to grant the FENCAS to DAPA is ultimately at the sole discretion of CMS. but we will be working diligently over these next few months along with other key stakeholders such as hospital systems, dialysis clinics, and patient advocacy groups to make these arguments to CMS. We will disclose more about our market access reimbursement and pricing strategy once we receive anticipated FDA approval and we get closer to our potential commercial launch date. While the company has been focused on obtaining FDA approval of and commercializing to FENCAF, I believe it will be equally important to establish a medium to long-term strategic growth plan that involves not only pursuing new indications for Defend-Cas, but potentially new uses of Tirolavine, as well as potential product in-licensing and acquisitions of products, both commercial and pre-commercial, that will be synergistic with our expected sales deployment in hospitals or dialysis centers. To bolster these efforts, the company recently announced the formation of a new scientific advisory board, or SAB, comprised of experts in nephrology, infectious disease, medical nutrition, and oncology. The SAB's mission is to provide strategic and scientific advice to core medics as we advance toward a potential commercial launch, as well as evaluate lifecycle expansion and business development opportunities for the company. I'll now turn the call over to Matt to cover financial results and cash guidance. Matt?

Thanks, Joe. I'm pleased to be here today to provide an overview of our first quarter 2022 financial results, as well as an update on our cash position. The company has filed its report on Form 10-Q for the first quarter ended March 31st, 2022. I urge you to read the information contained in the report for a more complete discussion of our financial results. With respect to our first quarter of 2022 financial results, Our net loss was approximately 7 million or 18 cents per share compared with the loss of 7.2 million or 20 cents per share in the first quarter of 2021. The marginally lower net loss recognized in 2022 compared with 2021 included a decrease in R&D expenses versus the first quarter of 2021, offset by slight increases in SG&A expenses. Operating expenses in the first quarter of 2022 decreased approximately 3% to $7 million, compared with $7.2 million in the first quarter of 2021. R&D expense decreased by approximately 13% to $2.3 million, driven primarily by net decreases in personnel expenses and non-cash charges for stock-based compensation, offset by an increase in costs related to the manufacturing of DefendCath prior to its potential marketing approval. SG&A expense increased approximately 3% to $4.8 million compared with $4.6 million in the first quarter of 2021. This increase was primarily attributable to an increase in legal fees, mainly due to the securities litigation, and an increase in personnel expenses, partially offset by a decrease in non-cash charges for stock compensation, reduced costs related to market research in preparation for the potential approval of the FENCAS, and a decrease in consulting fees. We recorded net cash used in operations during the first quarter of 2022 of $6.7 million, compared with net cash used in operations of $6.7 million in the first quarter of 2021. As we have discussed on our year-end earnings call, CoreMedix remains in a good position from a balance sheet perspective. The company has cash-in equivalents and short-term investments of $61.7 million as of March 31, 2022. Inclusive of approximately $2.2 million raised since the quarter closed from our ATM program and approximately $0.6 million from the sale of unused New Jersey NOLs, CoreMedix has pro forma cash and equivalents of approximately $64.5 million. We believe our pro forma cash and equivalents gives the company flexibility to fund its operations at least through the first half of 2023 after taking into consideration costs related to commercial supply, and costs related to the initial stages of the potential commercial launch for DefendCath. We remain optimistic about our progress toward an anticipated FDA approval for DefendCath in 2022. As highlighted previously, we believe that our current cash and equivalents, as well as the potential mechanisms available to us for capital raising, allow us to be prepared for the future given we are facing what we hope and believe will be a pivotal time ahead for Chromedics as we seek to bring the PhenCAS to patients in the hemodialysis setting. I will now turn the call back over to Joe for closing remarks. Joe?

Thanks, Matt. As I look toward our next few months, I'm excited about the opportunities and optimistic about the challenges that lay ahead. If approved by the FDA, the PhenCAS has the potential to significantly improve patient outcomes while also having an impact on the health equity disparity that is pervasive in our healthcare system. Catheter-related bloodstream infections, or CRBSIs, place a heavy financial burden on the U.S. healthcare system, estimated at roughly $2.6 billion per year of incremental cost. Hemodialysis patients with a CRBSI have double the rate of hospitalization as non-infected HD patients, with an average duration of stay that is four times longer and a three times higher fatality rate. In addition, African Americans represent under 14% of the U.S. population, but account for more than 35% of the patients undergoing hemodialysis. To that extent, African Americans are disproportionately at risk for a catheter-related bloodstream infection compared to other demographic groups. The FENCAS and clinical trials reduced CRBSI occurrence by 71% in hemodialysis patients compared to the existing standard of care. Taken in totality, the strong clinical profile of DefendCAS and potential to significantly improve patient outcomes and health equity, while also potentially decreasing the overall cost burden on the healthcare system, I see DefendCAS as a strong platform asset for growth from which CoreMedix can build. So thank you for your continued support of and interest in core medics. And this concludes management's presentation. Operator, you can open the call for questions.

Certainly. We'll now be conducting a question and answer session. If you'd like to be placed in the question queue, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. If you'd like to remove your question from the queue, please press star 2. One moment, please, while we poll for questions. Our first question today is coming from Jason Butler from JMP Security. Your line is now live.

Hi. Thanks for taking the questions and congrats on all the progress and the new hires. Joe, congrats on, you know, the start here. Maybe just as a start from a high level, can you just maybe, you know, you started touching this on the prepared comments, but, you know, talk to us about what attracted you to core medics and how you think your prior successes can help set the company up for a successful launch at DefendCath, and then I have a follow-up. Thanks.

Sure. Thanks, Jason, and appreciate the question. So, look, when I think about what I bring to CoreMedix, right, I think I bring a long track record of building and managing commercial organizations across different therapeutic categories and different geographies, as well as deep expertise in business development and strategy. And, you know, in terms of kind of why I'm excited about CoreMedix, you know, I saw in CoreMedix a unique opportunity to lead a company whose primary product has the potential to make a meaningful impact on patient outcomes. And when I think about patient outcomes, I'm talking about saving lives, right? So, DefendCast has, in my opinion, exceptional phase three data. And I see strong potential to expand into additional indications, you know, while also adding new products to CoreMedix, right, beyond the Torolodine platform. So, you know, especially given, you know, recent markets, their impact on our valuation and market cap, I see a lot of potential for growth in CoreMedix from where we are today. So, you know, in my view, I really saw this as a perfect opportunity and an ideal fit between what CoreMedix needed as a company and the skills I bring as a leader.

Great. That's helpful. And then just a On reimbursement, you talked about both the TDAPA program as well as petitioning to have the products excluded from the bundle. Are these mutually exclusive processes or is there any, you know, crosstalk between the two? And then just following on from that, can you speak to how you think DefendCap aligns with the dialysis providers from a health economic perspective?

Okay, thanks. So let me say unequivocally first, you know, this is going to be a dual strategy that, you know, we pursue simultaneously, right? So, you know, to DAPA is absolutely an adequate pathway, you know, to drive reimbursement and build, you know, value for DefendCast. But in pursuing separate reimbursement and pursuing a J-code, we saw the potential to create, let's say, a more sustainable long-term And ultimately, it is CMS that makes that distinction, right? CMS and its sole authority. And it is the same decision maker at CMS, essentially, that's going to work on this parallel pathway. So, you know, those are not mutually exclusive. I'm actually going to defer the question on ATOR to Erin Mistry, who is here with me. And, Erin?

Sure. The health economics component of this certainly plays a big role in how we're going for reimbursement and how we go about it. First of all, it's a health population issue, and we have identified the health disparities and health equity components of this that make up a large portion of that health economic play. So we feel that we've got the right combination of data to support that. And we're doing health economics work across settings of care, both inpatient and the outpatient, to identify where we can put the VenCAS in, where we can have the most value get out of the product.

Great. Thanks for taking the question, and congrats again on the progress.

Thank you, Jason. Thank you. Next question today is coming in from Julie from Truist Securities. Your line is now live.

Yes, good evening. This is Les for June. Thanks for taking my questions. I'll start off with on the EU wind down. Can you just talk about the costs associated with that, how long it might take, and then the impact to the CMO that has currently been producing the product there in the EU. Is that going to be a closure of that CMO? Do you look for a new CMO in the U.S.? And what will happen to that relationship?

Okay, yes. Thanks for the question, Les. Let me clarify that the CMO that was being utilized for production of the product as a medical device is completely different from the CMO we would utilize to commercialize for the United States. So there's absolutely no overlap between the manufacturing for Neutralin and that for DefendCast. In terms of the EU wind down and cost, I'll defer to Matt in a moment if he has any estimates. But look, this is just a decision that's been made. We're starting that process. We're not setting a timeline. I can tell you that we are in the process of discontinuing distribution of the product. The sales, as they were, were not overly meaningful in the near term. So we'll have a better sense for that over the next quarter, I would believe. Matt, any clarity on wind-up costs?

Yeah, I'll just add only that the costs related to Europe will be de minimis. As you can see, the sales have been relatively insignificant in recent quarters, and therefore the costs that we have been spending have also been de minimis. So this is more of a strategic decision, as Joe walked through.

Great. Makes sense. Thank you. And then just to follow up to that on the CMO selection side, it appears that you have identified and identified a number of manufacturers in the U.S. Can you just talk about the progress there on your due diligence process, and when can we, I guess, perhaps hear some announcement on that front?

Yeah, I think we're going to probably be in a position to update on the next call. We've got a couple work streams that are still ongoing, and we're working through those, but the project is moving forward really well, and we'll be able to provide an update in a couple months.

Great, and I guess I'll squeeze one more in. With your current guidance of cash through the first half of 23, with the new hires and bringing in a scientific advisory board, has that impacted any of your cash guidance? Thank you.

I'm going to defer that to Matt. Go ahead, Matt.

Thanks, Joe. Yeah, no problem, June. So, yeah, no, it is included. Look, our cash guidance assumes the assumption of increasing spend related to preparing for the potential commercial launch of the FinCAS, as we've said before. And so we've anticipated for things to increase. We've anticipated to be able to spend on launch supply and the initial stages of a commercial launch. And so we have not changed our guidance that we put out a few weeks back as well.

Got it. Thank you.

Thank you. Next question today is coming from Rohit Basan from Neiman & Company. Your line is now live.

Hi, this is Rohit on for surge. Thanks for taking my question. Can you talk a little bit about how you see the market opportunity for defense cats and what do you think is the main competition based on what hospitals are currently using? And then what kind of preparations are you guys making for in terms of launch in terms of commercial prep and manufacturing supply ahead of time? Thanks.

Okay, thanks for the question. Obviously, we see a market opportunity in two segments, both on the outpatient and inpatient side. I think the outpatient side is clearly well known, largely controlled by the large dialysis operators. On the inpatient side, it's a little bit different of a market opportunity, and we're somewhat dependent on the final label from the FDA as to what that total market opportunity will be. You know, we do know it's a smaller market than the outpatient in terms of, let's say, total lumen locks, right? But we do think there's the potential for, you know, possibly higher net pricing and a more favorable reimbursement landscape, again, depending on the outcome of our discussions, you know, with CMS. On, you know, the launch prep side, when, you know, in terms of, you know, activities that we're currently undertaking, you know, we're doing right now all the you know, typical pre-launch planning. We're building out our commercial plan, building out our core messaging, doing our pricing studies, building our staffing plans. But most importantly, we're engaging those reimbursement activities and engaging key stakeholders to work with CMS. And we see that as one of the most critical components of our launch strategy.

Great, thanks.

Thank you. I'd like to turn the floor back over to Dan for further Q&A.

Thank you, operator. I do have a few written questions from the audience, so let me pull those up here. I appreciate it. First, can you provide any updates on plans for additional indications like pediatrics, TPN, oncology?

Okay, thanks, Dan. I guess first we need to separate, I'd say, pediatrics from what we'll call new indications, right? So we have an obligation to FDA to pursue a pediatric study with the initial indication that we commence once we have final FDA approval of the NDA. So that is a separate clinical trial that will commence expected shortly after we get final approval. On the other side, on TPN, oncology, and potentially some other areas that we're taking a look at, I think the team has done some really good initial analysis of those kind of market segments, and we're in the process of kicking off over the next few weeks what I'll call a deeper evaluation process that's really going to build out a market landscape for both TPN and oncology, as well as a couple other potential options. We're going to look at reimbursement landscape. We're going to look at the clinical trial or expected clinical trial pathway cost and timing, as well as evaluate whether we would need to make any modifications to the formulation for those respective indications. I'd like to be in a position by the back part of the year to make a decision on a pathway forward from a return on investment standpoint.

Okay. Thanks, Joe. And the final question is, what do you see as launch timing relative to your potential approval?

Yeah, thanks. That's a good question, Dan. So, you know, there's a couple of rate-limiting factors when we're thinking about launch timing relative to approval. You know, first, on the reimbursement side, from an outpatient standpoint, whether, you know, we end up ultimately going the Tdapra route or getting separate reimbursement, Both of those processes really kick off when you get your final approval. You submit your application to CMS. On average, I think it's about six months, depending on the pathway, that we'll get a final decision. That said, we would look to kick off our inpatient launch strategy or launch initiative a bit earlier. Depending on the time it would take to, let's say, hire, train a field-based team, as well as get our core messages, those pre-approved by FDA. We have to submit our marketing materials. I would be thinking somewhere between three months, four months post-approval for really a full-scale launch.

Excellent. Thank you, Joe. Operator, this concludes our question and answer session. You may now close the call.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.