CorMedix Inc.

the first step before we put forward a proposal for any uses in oncology. Once we have feedback from FDA and alignment on our proposal related to TPM, we can then craft a proposed study for use in oncology. The decision to prioritize TPM for submission and FDA discussion was based upon the expected timing and cost of the clinical program being proposed relative to the expected market size. Though oncology is potentially a larger market opportunity, we've elected to prioritize the potentially faster program first. Assuming acceptable feedback from the agency in June, anticipate submission of an oncology proposal to FDA later this year. Lastly, from a supply chain perspective, in our efforts to de-risk our reliance on a single finished dose manufacturer, earlier this week we submitted a supplement to our NDA, adding 6-3 to Hamelin's site as an alternate manufacturing Pending a successful FDA review of the supplement, we anticipate Siegfried coming online as a manufacturer as early as the end of 2020. CoreMedix has now grown to approximately 90 employees, and I'm proud of what we have accomplished over these recent months. I would now like to turn the call over to Matt to discuss the company's first quarter financial results and financial position.

Matt? Thanks, Joe, and good morning, everyone. I am pleased to be here today to provide an overview of our first quarter of 2024 financial results, as well as an update on CoreMedix's cash position. The company has filed its quarterly report on Form 10-Q for the quarter ended March 31st, 2024. 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 2024 financial results, Our net loss was approximately $14.5 million, or $0.25 per share, compared with the loss of $10.6 million, or $0.24 per share, in the first quarter of 2023. The higher net loss recognized in 2024 compared with 2023 was driven by an increase in SG&A expenses versus the first quarter of 2023, partially offset by the sale of New Jersey NOLs for $1.4 million. Operating expenses in the first quarter of 2024 increased approximately 44% to $15.9 million, compared with $11 million in the first quarter of 2023. R&D expense decreased by approximately 75% to $0.8 million, driven by the approval of the FENCAP. As a result of the post-FDA approval commercial operations, costs related to medical affairs and certain personnel expenses that supported R&D efforts prior to the FDA approval of the FENCAP have been recognized in SG&A expense. SG&A expense increased approximately 98% to $15 million in the first quarter of 2024, compared with $7.6 million in the first quarter of 2023. This increase was primarily attributable to increases in personnel expenses due to the hiring of sales force, medical affairs, and marketing personnel. In addition, certain costs related to medical affairs and certain personnel expenses that had been previously recognized in R&D are now recognized in SG&A following the FDA approval of the FENCAP. To a lesser extent, the increase was also driven by increases in non-cash charges for stock-based compensation and increases in consulting fees. We recorded net cash used in operations during the first quarter of 2024 of $17.3 million, compared with net cash used in operations of $10.4 million in the first quarter of 2023. The increase is primarily driven by an increase in net loss and decreases in accrued expenses and accounts payable. The company has cash and cash equivalents of $58.6 million as of March 31, 2024. As we have discussed previously, we expect our operating expenses, especially SG&A, to remain at increased levels given the growth of the company and the cost driven by the commercial launch of DefendCath. Cormetics anticipates 2024 quarterly operating expenses to range from around $15 to $18 million to support commercial infrastructure and the ongoing launch of DefendCath. We believe our cash, cash equivalents, short-term investments, and projected future operating cash flow gives the company the ability to fund operations for at least 12 months and to fund the commercial launch of DefendCath through to anticipated profitability, which may occur on a run rate basis by the end of 2024, assuming we are able to achieve our internal base case assumptions for defend cap demand, uptake, net pricing, and reimbursement. I will now turn the call back over to Joe for closing remarks. Joe?

Thanks, Matt. CoreMedix is executing well on our key objectives and is hopeful to provide more substantive updates on sales progress on our next quarterly call in August. I appreciate everyone's continued support in CoreMedix, and I'm happy to now take questions.

Thank you. Ladies and gentlemen, we'll now begin the question and answer session. If you'd like to ask a question, please press star, followed by one on your telephone keypad. If you'd like to withdraw your question, please press star, followed by two. If you're using a speakerphone, please lift the handset before pressing any keys. Following the audio portion of the Q&A, we'll take written questions from the audience as well. Your first question comes from Les Slutsky. From Truist Securities, Les, please go ahead.

Good morning. Thank you for taking my questions. I have two on the outpatient side and then one follow-up. So, can you give us a little bit more color around the economics of the ARC partnership? Essentially, will all of their dialysis centers convert to full use of the FENCAF day one upon the switch into your outpatient launch? Or is that an option left to the patient? And then second, I guess it's, you know, very interesting to hear that you're in discussions with one of the two leading national outpatient dialysis operators. How can we think about that conversation moving along? Is this a pilot-run program that they could put in place? And ultimately, what kind of terms and impact in that pricing could we expect if a deal were to occur?

Thanks, Les. Appreciate the question. And I'm actually going to kind of, I think, blend these two questions together to some extent. So we're not going to disclose specific terms in any one specific outpatient or ultimately inpatient agreement. I think the way we've guided you on price over the past year kind of remains consistent. On the outpatient side, I think there'll be a you know, a healthy gross to net, right, that leaves room for discounts and rebates, volume incentive rebates, things like that, that you'll have that to a lesser extent on the inpatient side. When we think about uptake in the facilities, and as we've communicated previously, right, to DAPA today applies to Medicare fee-for-service patients, which are probably about 40% to 45% of catheterized dialysis patients in any one site. So, you know, some, I think, facilities will elect to roll out potentially on a kind of a payer basis. You know, we're actively in discussions with the Medicare Advantage plans around additional reimbursement. I think they want to see uptake, right, and demand. So they'll be looking to see fee-for-service volumes, you know, to some extent. I do think potential rollout for a larger operator could be some combination of payer-based or patient-based focused on potentially high-risk patients. There's a large volume of patients over many facilities, so the rollout will take time to implement, regardless of the customer.

Got it. Appreciate that. And as a follow up more on the kind of a general corporate strategy, you know, given the favorable price of core medic stock performance, and then you're factoring your cash burn, just to give you a little bit of a cushion as you head into closer to profitability or break even, have you considered an equity raise or any other source of financing such as a convertible note or warrants? Thank you.

Well, thanks, Les. Well, you know, in the script today, you know, we announced the letter of intent for the credit facility, which we do expect to close over the next couple of weeks. Certainly, you know, that facility is based upon or would be contingent upon receivables. You know, we've also announced the ATM facility, which will give us, you know, some flexibility to utilize it down the road. What I wouldn't want to do, and I think what you're asking is why I wouldn't do a large, potentially dilutive race today. I just think that would be premature and potentially irresponsible to unnecessarily dilute the stock until we get better visibility on commercial execution in the back part of the year. I feel pretty good about where we are in our discussions today with customers. I think we're still in line with with our base case expectations and assumptions, right, to get to that kind of run rate break even by the end of the year. Now, that doesn't necessarily mean I'm going to allow minimum cash to fall below certain levels. And I think the tools that we've put in place today give us that flexibility, you know, as we move through the year to reassess, to look at customer orders as they're coming in, to evaluate our payment terms, right, our working capital needs and make that determination. So I hope that's sufficient.

Very helpful. Thank you.

Your next question comes from Gregory Renza from RBC Capital Markets. Gregory, please go ahead.

for Greg. Congrats on the progress this quarter and thanks for taking my questions. Just first on the call, you mentioned BD and M&A. Just wanted to dig into that and see how you're thinking about opportunities and areas of interest that would sit well on your platform. And then secondly, maybe if you could just remind us on the commercial opportunity in TPN and PEDS, if you could quantify on LumenLocks, et cetera.

Thanks again.

Thanks, Sean. I appreciate the question.

So look, from an M&A standpoint, obviously, you know, we're going to continually be opportunistic and take a look as we're moving through, you know, our commercial launch, you know, this year and the next year. we've got a fixed infrastructure cost. It makes a heck of a lot of sense to try to spread that cost across multiple products. So I do think there are opportunities in the market today that could be actionable. We don't have anything that we are currently either negotiating or actively pursuing, but this is just something that I think as we move past, let's say, commercial launch could become a bigger focus in our mind as we develop as a company. We're doing a refresh right now on your second question. We're doing a refresh on our market research around TPN and oncology and hope to put something out in the second half of the year.

Sean?

Hi, Greg. Did you have any follow-up questions?

No, we're all good here. Thank you so much.

Ladies and gentlemen, as a reminder, if you'd like to ask a question, please press star followed by 1. Okay, so there were no further questions at this time. So this concludes the audio portion of our day. I'll now turn it back to Dan for written questions from the audience.

Thank you, Operator.

Joe, we have a couple of written questions from the audience here. The first one is, are there other post-market type studies that the company is considering or that may help with uptake in the inpatient or outpatient settings?

Okay, thanks, Dan.

Actually, that is something that we are actively pursuing right now. I think that when you talk about post-marketing studies, we're looking at real-world evidence studies. We want to be able to demonstrate the efficacy and health economic benefits of DefendCast in a real-world setting. So we are currently in discussions with what I would characterize as value-based care entities to run this type of an evaluation. It's not something that will happen overnight, but I do think it's something that over the course of time will help demonstrate the value of DefendCath and certainly be useful in increasing uptake.

All right, great. Thanks, Joe.

Another one here. What are the formularies focused on? when it comes to their decision making? In other words, how does defend cast fit into those themes?

Okay. And I'm assuming from formularies that the question is asking about inpatient P&T key process. So, I guess I'll address that. So, you know, I think a typical P&T process in a hospital is going to focus on first, you know, clinical efficacy. And then from there, they're going to look at price and the health economic impact of the product. I think with DefendCast, there's a couple other unique things that might factor into the discussion that are certainly beneficial for us. You know, the first is, you know, within these institutions, antibiotic stewardship has become an incredibly important issue. issue for them, right? They want to minimize the use of antibiotics, and right to the extent that you can reduce or prevent any infections, you know, lessens the need for antibiotics. You know, the second is, you know, as a preventative measure, you know, these hospitals They get evaluated, right, based on their infection rates and their readmission rates. And I think that, you know, DefendCat fits squarely within that need. So I'd say that's likely part of the discussion. I think that works well in DefendCat's favor as we're going through these P&T processes.

Okay, great. Thanks, Joe.

Operator, that concludes the written portion of the Q&A session. You may now close the call.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.