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CorMedix: Paul Singer's Elliott Management Doubles It's Position In This Small Pharmaceutical Company

|Includes: CorMedix, Inc. (CRMD)

Summary

  • Paul Singer's Elliot Management More Than Doubled It's Stake in CorMedix.
  • According It's Most Recent, 8/11/15 SEC Filing Singer's Elliot Management Significantly Increased It's Shares In CorMedix to 3,596,506 shares, Since It's 3/31/15 SEC Filing.
  • Elliot Management Is One Of The Oldest Hedge Funds In Operation With $8.12B Worth Of Public Equities Under Management.

In a new filing with the U.S. Securities and Exchange Commission, Elliott Management, led by Paul Singer disclosed increasing its activist stake in CorMedix (NYSEMKT:CRMD). The stake was raised to over 3.5 million shares from 1.50 million shares that Elliott Management held at the end of the first quarter of 2015. The stake is equal to 9.9% of the company's outstanding common stock.

Paul Singer

(Source: Google Images)

Elliott Associates was founded by Paul Singer in 1977, making it one as the oldest hedge funds under continuous management. It, together with Elliott International, form the Elliott Management Corporation, which manages roughly $15 billion of capital for large institutional investors and wealthy individuals alike. Elliott International Limited was launched in 1994 and has managed to beat the S&P 500 index by around 5 percentage points per year on the average since its inception. Elliott Associates also has a similar track record. Before founding his fund, Paul Singer earned a BS in psychology from the University of Rochester and a JD from Harvard Law School. After that, Paul Singer spent the next four years working in corporate laws firms and the investment bank Donaldson, Lufkin & Jenrette before founding Elliott Associates.

(Source: Image from CorMedix website)

CorMedix Inc. is a commercial-stage biopharmaceutical company that seeks to in-license, develop and commercialize therapeutic products for the prevention and treatment of cardiac, renal and infectious diseases. CorMedix's first commercial product in Europe is Neutrolin®, a catheter lock solution for the prevention of catheter related bloodstream infections and maintenance of catheter patency in tunneled, cuffed, central venous catheters used for vascular access in hemodialysis patients, in addition to oncology patients, critical care patients, and patients receiving total parenteral nutrition, IV hydration and/or IV medications. Infection and thrombosis represent key complications among patients with central venous catheters. These complications can lead to treatment delays and increased costs to the healthcare system when they occur due to hospitalizations, need for IV antibiotic treatment, long-term anticoagulation therapy, removal / replacement of central venous catheter, related treatment costs and increased mortality when they occur. Plans are in progress to expand commercial distribution of Neutrolin® into the United States, Asia, the Middle East, South America and Africa upon appropriate regulatory approval.

The Following Factors May Account for Singer's Elliott Management Significantly Increasing It's Stake In CorMedix:

  • Neutrolin is a Novel Formulation

As CorMedix's lead pharmaceutical Neutrolin's first-in-class novel formulation of Taurolidine 3.5% Citrate 3.5% and Heparin 1000 units/mL that provides a preventative solution, which decreases the triple threat of infection, thrombosis and biofilm formation thereby keeping catheters operating safely and efficiently by optimizing catheter blood flow while minimizing infections and biofilm formation for oncology, hemodialysis, and intensive care patients. Taurolidine is an amino acid derivative which is an antibacterial and shows broad antibacterial action against gram-positive and gram-negative bacteria, mycobacteria and clinically relevant fungi. Central venous catheters and peripherally inserted central catheters are an important and frequently used method for accessing the vasculature in hemodialysis (a form of dialysis where the patient's blood is circulated through a dialysis filter), administering chemotherapy and basic fluids (total parenteral nutrition) in cancer patients and for cancer chemotherapy, long term antibiotic therapy, total parenteral nutrition (complete or partial dietary support via intravenous nutrients) and critical care/intensive care patients.

  • The Unmet Need For Neutrolin:

Currently, there are no pharmacological agents approved in the United States for the treatment of catheter related bloodstream infections. Yet, annually, there are over 200 million catheter days in intensive care/critical care, oncology and hemodialysis in the United States. There are 1.7 million infections per year of which 25 percent are due to catheter related bloodstream infections (CRBSI), which are also referred to as central line associated bloodstream infections (CLABSI). Infection and thrombosis represent key complications among critical care/intensive care and cancer patients with central venous catheters. These complications can lead to treatment delays and increased costs to the healthcare system when they occur (due to hospitalizations, need for IV antibiotic treatment, long-term anticoagulation therapy, removal/replacement of the central venous catheter, etc.). Additionally, the mortality rate ranges from 20 to 25 percent.

  • Neutrolin FDA Fast Track and QIDP Designations Granted:

In January 2015, the U.S. Food and Drug Administration (FDA) granted Fast Track and Qualified Infectious Disease Product (QIDP) designations for Neutrolin. In order to achieve QIDP designation, a drug product must be intended to treat serious or life-threatening infections, particularly those infections caused by "qualified pathogens," as determined by the FDA. These pathogens include Staphylococcus aureus, Streptococcus species and Pseudomonas species, among others. Neutrolin has shown antimicrobial activity against many of these qualified pathogens, several of which are known to pose a serious threat to the public health by causing bloodstream infections in hemodialysis, oncology, and intensive care patients. The QIDP designation includes an additional five years of market exclusivity in addition to the five years granted for a New Chemical Entity under Hatch-Waxman patent exclusivity.

  • CLINICAL TRIALS:

CorMedix plans to initiate a FDA-approved pivotal Phase 3 multi-center clinical trial in hemodialysis patients with central venous catheters in Q4:2015. CorMedix has also submitted to the FDA for review a Phase 3 protocol to support the use of Neutrolin to prevent catheter related bloodstream infections for oncology patients receiving total parenteral nutrition (TPN) and expects to initiate this Phase 3 trial in Q2:2016.

  • De-Risked FDA-approved Pivital Phase 3 Neutrolin US Clinical Trial:

Data from the NUMP (Neutrolin Usage Monitoring Program) European Union Post-Approval Surveillance Study significantly exceeds the FDA threshold of 40% reduction rate for the Phase 3 study with No Reported Human Resistance, Significantly Reduces the Rates of Infection and Thrombosis in Hemodialysis Patients Enrolled in a Post-Approval Surveillance Study. This European Post-Approval Surveillance Study data continues to improve AND impress.

Since May 30, 2015, when last released, the updated NUMP data reveals the following:

Neutrolin Efficacy shows continued improvement 97% reduction in catheter infections and catheter thromboses with no reported cases of human resistance.

  • # Catheter Days: 29,253 (38% increase - previously: 21,151 catheter days)
  • # Patients: 142 (18% increase - previously: 120 patients)
  • Infections: 3 (Previously 3 - now representing a 97.1% reduction vs. benchmark - Previously: 96%)
  • Thromboses: 2 (Previously 2 - now representing 97.2% reduction vs. benchmark - Previously: 96%)

With the Phase 3 clinical trial designed to have an "early review" at 6 months or when half the patients are enrolled, whichever comes first, by an independent Data Monitoring Committee. This could lead to an early opening of the trial in order to provide patients in the control limb of the trial with Neutrolin. This is a very distinct possibility, when reviewing the most recent NUMP data.

  • US Market Opportunity:

US Sales potential of >$1 billion

Target Segment Annual Patients Catheter Days

Hemodialysis 700,000 127,000,000

Oncology 5,000,000 43,000,000

ICU 5,000,000 38,000,000

  • Increase Current Cash on Hand

~$37,500,000 of cash and short term investments are on CorMedix's balance sheet as of June 30, 2015, representing almost 40% of CorMedix's current market capitalisation.

Take Away:

The above outlined factors may have influenced Paul Singer's Elliott Management decision to markedly increase it's stake in this under-the-radar, small pharmaceutical company.

Disclosure: I am/we are long CRMD.