CorMedix Update: Setting A New Standard For Catheter Care

| About: CorMedix Inc. (CRMD)
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CorMedix has accomplished a lot in the last 3-4 months, but this progress has not been reflected in the stock price.

There are several near term events which could substantially increase the value of CorMedix.

The market for Neutrolin reaches well beyond dialysis to any patient using a central venous catheter.

Back in August, CorMedix (NYSEMKT:CRMD) had a long to do list. In the last 4 months, the company has delivered on many promises:

  • An IND for the pivotal Neutrolin study in the US was filed and accepted.
  • The EU Neutrolin label was successfully expanded to include oncology, parenteral nutrition, and patients in intensive care units.
  • A lawsuit was filed against TauroPharm, a company that was established by Biolink (CorMedix's predecessor) to manufacture Neutrolin. TauroPharm has been selling a "Neutrolin-like" product for many years now.
  • The derivative liability has been removed.
  • The Neutrolin monitoring program is paying off, and on the Q3 conference call, CEO Randy Milby reported that during >1,900 patient days of therapy, not a single infection had been reported in a patient using Neutrolin. Based on historical rates, approximately 5-10 infections should have occurred during this time period.

On top of all these anticipated milestones, management recently announced a distribution deal in the Middle East, which according to Roth, should generate $10-15 million in annual sales in the next 2-4 years. It's worth noting that this is just one regional deal and could result in revenue that is nearly 50% of the current market capitalization.

Overall, CorMedix management has accomplished a lot since mid-2014, yet the stock is still down over 50% from its March highs. At this point in time, it represents a compelling buying opportunity with several impetuses coming in the immediate future:

  • CorMedix applied for Fast Track at some point before the November 14th conference call, which means an FDA response is required in the next 2-3 weeks.
  • CorMedix announced they applied for qualified infectious disease product (QIDP) status for Neutrolin on December 4th, which also has a 60-day window for an FDA response.
  • A hearing on the intellectual property issue will take place in January.

A QIDP status would give CorMedix an extra 5 years of exclusivity for Neutrolin in the United States, increasing the total to 10.5 years. This would increase the value of the company considerably. Cellceutix (CTIX) was recently granted QIDP status for brilacidin and added $100 million in market cap the day the news was announced (although the Cubist/Merck deal also contributed). Again, this one day gain is roughly 3X the current market cap of CorMedix. Furthermore, after the FDA decisions on fast track and QIDP, an announcement of a US partner is likely. CorMedix has been talking to potential partners for over a year now, and a decision on QIDP is probably the last piece required to seal a deal.

While the outcome of the TauroPharm lawsuit is difficult to predict, CorMedix management appears confident, and any sign of a positive outcome from the German patent court would also increase the value of CorMedix substantially. Defending their patent in Germany should mean a relatively quick decision, and according to this article, "Cases are dealt with much more quickly under the Mannheim procedure, where a decision is usually reached within about 10 months after an action is filed." A decision could come as early as this summer, and if favorable, could dramatically increase CorMedix revenue.

CorMedix is slowly expanding beyond the cardio-renal space and setting a new standard for catheter care. In the United States alone, over 5 million catheters are used every year, resulting in at least 150,000-400,000 infections (Frasca 2010). These infections can be fatal and are expensive to treat, costing the United States between $1.25 billion and $2.65 billion (Zimlichman 2013). While there are several antimicrobial lock solutions available in Europe, there is no such product currently available in the United States. If the Neutrolin pivotal study is successful and the drug is approved, Neutrolin could be rolled out to just about every hospital and clinic in the country to meet this critical need. In the meantime, CorMedix will continue to build their revenue base by signing regional deals, such as those in South Korea and the Middle East.

At this point, dilution is the primary risk of investing in CorMedix. The company ended Q3 with $5.9 million in cash which, based on the Q3 call, is enough to fund the company through Q3 2015. While another capital raise is certainly a possibility, all the events discussed above should mitigate or remove completely the need for new financing. In addition, CorMedix still has approximately 4.5 million publicly traded warrants from the IPO with a $3.44 strike, which if fully exercised would surely see the company through to profitability. Last year at this time, CorMedix ran from $0.84 to $3.20 in a little over 2 months, so while it seems improbable now, warrant exercise cannot be ruled out. The fact that these warrants still trade at around $0.16-$0.18 and have not been priced down to a few pennies indicates that investors are still holding out hope for a near term move to $3+.

With a market cap of around $35 million (not factoring in preferred and warrants), CorMedix is one of the best biotech deals out there right now. CorMedix already has an approved product which meets a real need, a growing revenue stream, and is on the cusp of a pivotal US study that could lead to a substantial increase in sales. Use of an antimicrobial catheter lock such as Neutrolin will reduce healthcare costs, reduce antibiotic use (and therefore resistance), and keep patients healthier without any additional effort. It's a win for health care providers, physicians, patients, and soon should be a win for investors as well.

Disclosure: The author is long CRMD.

The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it. The author has no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I am an employee of Amgen, but the views and opinions expressed in this article are mine alone and not the views and opinions of Amgen.

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