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The True Value of a SPA: An Inside Look at CorMedix, Inc. ($CRMD)

|Includes: CorMedix Inc. (CRMD)
The granting of a Special Protocol Assessment (“SPA”) by the U.S. Food and Drug Administration is certainly not something to overlook. According to Wikipedia, a SPA “is a declaration from the Food and Drug Administration that an uncompleted Phase III trial's design, clinical endpoints, and statistical analyses are acceptable for FDA approval.”  The written agreement from the FDA also covers the scope and size of the patient population, the safety assessments and the duration of treatment of the always pivotal Phase 3 trial to support an efficacy claim in a New Drug Application (NDA).

Within the definition of a SPA lie critical points that grab the attention of a savvy investor. For starters, the drug in development is in Phase III clinical trials. The early years of determining dosing levels and safety (Phase I) are well behind the drug and more advance, larger-scale trials (Phase II) have shown that the drug is proving a clinical benefit and worthy of research to determine if it is better than other drugs on the market today. Additionally, the SPA is providing acknowledgment of the drug’s potential and helps define a regulatory strategy for the drug maker to drive towards commercialization.
CorMedix, Inc. (AMEX: CRMD; StockTwits: $CRMD) recently was the recipient of a SPA agreement with the U.S. FDA for their drug, Deferiprone, as an indication for Contrast-Induced Acute Kidney Injury. The SPA takes into consideration a modification to the dosing regimen contained in the previously submitted protocol. Scheduled to be conducted in over 80 centers worldwide an encompassing more than 800 patients, the study will assess the efficacy and safety of Deferiprone (CRMD001) in the reduction of morbidity and mortality in patients with Chronic Kidney Disease (CKD) undergoing diagnostic or interventional cardiac procedures and receiving an iodinated radiocontrast agent.
According to research by Somjot S. Brar et al. published in the Clinical Journal of the American Society of Nephrology,
“Contrast-induced acute kidney injury (CI-AKI) is probably the most common iatrogenic cause of acute kidney injury and a common complication of iodinated contrast medium exposure, with a published incidence ranging from 2 to 50%. It results in increased morbidity, prolonged hospital stay, and increased healthcare expenditure and is associated with a higher mortality.”

Normally, that information combined with the late-stage research that CorMedix is conducting under the SPA would be enough to deem it a value proposition with its paltry market cap of $16 million. The Company could be filing for an NDA and, upon approval, be commercialized in the multi-billion dollar industry in 2013. In the terms of biotech investing, that’s a blink of an eye.
What gives CorMedix even more luster, however, is the fact that it could be generating revenue even before Deferiprone hits desks as a NDA at the FDA through another drug in its pipeline, Neutrolin®. Following their business strategies of attacking cardiorenal diseases, Neutrolin® (CRMD003) is proposed as 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. CorMedix has slated clinical studies for Neutrolin® in the second half of 2011 and has filed a Request For Designation with the FDA. Moreover, CorMedix expects to complete its initial submission of the Neutrolin Design Dossier to the European notified body by the end of the second quarter 2011 and anticipates a European launch in the first half of 2012, pending CE mark approval. CorMedix is actively pursuing European partnerships to maximize revenue potential in the near term.
Given the uniqueness and latter stages of the CorMedix pipeline, it is a bit of a quandary as to the low price of the stock presently. The lower volume can certainly be explained by the fact that there are only 10 million shares of CRMD available for free trading, a double-edged sword for true traders as shares can move quickly on very little pressure, but slowly until that pressure arrives. When it comes to companies in Phase III clinical trials that are targeting an area of great unmet need, conducting the trials under a SPA, and have more in the control that could produce a strong, international cash flow, one would be hard-pressed to find many companies the caliber of CorMedix. This all goes without mentioning that, unlike so many biotechs, CorMedix has cash on hand to the tune of over $6 million in the bank presently.