CorMedix Inc. (CRMD) Earnings Call Transcript & Summary

Hi, all, and welcome to the session. My name is Arvind, and I'm an associate at JPMorgan. I'm excited today to introduce CorMedix. With us today, we have Joe Todisco, Chairman and CEO. And just a reminder on format, we'll have a 20-minute presentation followed by 20 minutes of Q&A. So please hold all your questions until the end. Thank you.

Thank you, Arvind. I know it's late in the day, so I appreciate such a packed room for this time of day, and I know it's been long, so I'll try and keep it succinct. I am Joe Todisco, I'm the Chairman and CEO of CorMedix, and welcome to CorMedix 2026 JPMorgan presentation. A quick look at our forward-looking statements, which you can find in more detail in our SEC filings. I'll start by talking a little bit about who is CorMedix Therapeutics. So CorMedix Therapeutics is a diversified specialty pharmaceutical company with a portfolio of commercial and pipeline drugs predominantly focused on institutional settings of care, and that would be products that are utilized in hospitals, infusion centers, mostly injectable drugs. We have an attractive financial profile. We have about $150 million cash on hand, close to 0 net debt. Our revenue guidance for 2026 is over $300 million in revenue and $100 million to $125 million of EBITDA. But most importantly, from a cash position, we expect to add to cash throughout the year. We are a scalable platform, right? We've got a solid commercial team with experience across multiple therapeutic areas on which we can onboard additional assets. And then most importantly, we have 2 meaningful growth drivers in our pipeline. The first is REZZAYO, which is actively in Phase III clinical studies with a readout in the second quarter for prophylaxis of fungal infections in patients that are immune compromised. The second is an expanded indication for DefenCath in TPN. Both of those have large total addressable markets with REZZAYO at over $2 billion and DefenCath and TPN at up to $750 million. As I mentioned, we have a deep and experienced leadership team. Much of the leadership team has been with us over the last few years since we began, as we officially became a commercial company a few years back, but I do want to highlight 2 new additions to the team. The first is Mike Seckler, who joined us as Chief Commercial Officer this past week. Mike brings to the organization a wealth of experience, most recently as CEO of Evome Medical Technologies, but also as a Senior Commercial Executive at Ferring International and Chief Operating Officer at FerGene. I'd also like to highlight Susan Blum, who recently joined us as CFO, came to the organization as part of the Melinta transaction, and we're super excited to have her as part of the team. So a quick look at our key financial statistics. 2025 was a record year for CorMedix. Two significant positives with the heart of our TDAPA reimbursement for our lead product, DefenCath, took place during 2025, which allowed us to drive almost $260 million of revenue for DefenCath. In addition, we completed the transaction of acquiring Melinta, which added another $140 million on a pro forma basis. So for the full year, revenue exceeded the $400 million mark. We just issued our 2026 guidance of $300 million to $320 million. 2026 is going to be a transitional year for the company as the first half of the year is the end of our 2-year ASP-based TDAPA reimbursement period and July begins our post-TDAPA add-on period. So we're going to have a little bit of a revenue transition that takes place during the year. We also thought it was important to give investors visibility into the revenue runway for DefenCath. So we took the unusual step to issue 2027 revenue guidance. We do expect, and we'll talk about it a little more as we move through the deck under TDAPA and the way CMS does the price add-on calculations for our net selling price in 2027 to increase from where we are going to be at the end of Q3 and Q4 of 2026. But I do want to highlight the balance sheet, $150 million in cash, $150 million in debt, close to 0 net debt. The combined portfolio spans 8 products, most of which, as I said, are used in the institutional setting. Those call points are hospitals, infusion clinics, some home infusion, predominantly injectable drugs, predominantly anti-infectives currently. I want to talk about a couple of the products in a little bit more detail. So DefenCath, historically, our lead drug, DefenCath was approved in 2023 -- late '23. It's what's called a catheter lock solution. It's not injected into the patient. It dwells in the catheter in between times the catheter is accessed. The standard of care for catheter locking is heparin. Our product is a combination of heparin and our proprietary new chemical entity, taurolidine. Taurolidine is a unique molecule. It's not an antibiotic, it's an amino acid, but it shows broad spectrum activity against gram-positive and gram-negative bacteria, as well as fungus, but it's not demonstrated any antimicrobial resistance to date. Now I said the product was approved in 2023, but launched in the middle of 2024. The initial indication for which DefenCath is approved is in the reduction in risk associated with catheter-related bloodstream infections or CRBSIs, in patients that are undergoing hemodialysis through a CVC. Now the hemodialysis space is highly concentrated. Though it's a large market, about 40 million vials of DefenCath, 90% of that takes place in outpatient hemodialysis centers. And in the U.S., 5 dialysis operators make up about 90% of that market. We do have 4 of those top 5, about 60% of the market actively implementing DefenCath in patients. But what's unique to this space is really the reimbursement. So under its current label, DefenCath falls under what CMS classifies as the end-stage renal disease prospective payment system or the ESRD PPS, which is a bundled payment system. Now to incentivize innovation, they've created something called the TDAPA, transitional drug add-on payment adjustment. This is essentially 5 years of reimbursement, of which the first 2 years is on a buy-and-bill basis, very similar to any other Medicare B drug. But then it transitions into a post TDAPA add-on. Now as we go through this transition in 2026, our first 2 years of TDAPA are coming to an end at the end of June and we will transition into a post TDAPA bundle adjustment. Now for the last 2 quarters of 2026, the way in which CMS has done the calculation for the add-on, they have taken an older period of time that doesn't exactly match up with our current utilization. So it is going to, under our customer agreements, produce a lower net selling price for those 2 quarters, but we do expect that to rebound in 2027, which is why we've taken the additional step to give that 2027 revenue guidance. That guidance, however, doesn't include upside from our strategy of pursuing Medicare Advantage contracting. And that is a meaningful part of our post TDAPA patient utilization growth strategy. Now I think it is worth spending some time just talking about catheter-related bloodstream infections and the impact on the health care system and the impact on patients. These infections, they're the most significant consequence associated with getting hemodialysis through a CVC and they're actually one of the most significant consequences of having a CVC for any indication. These infections, they happen fast. About half of all infections happen in the first 90 days a patient has a catheter. They happen often, right? About 1/3 of patients will get a CRBSI that have a catheter, and they come with at an alarming rate, right? Despite the prevalence of other risk mitigation techniques for infections, the mortality rate from these infections is still 25% on average in the U.S. But there's also a corresponding impact on the health care system from a cost standpoint, right? Patients that have a CRBSI have doubled the amount of hospitalizations a year, 4x longer hospital stays and twice the hospitalization cost as patients that don't. Now DefenCath as a preventative is in a position to offset a large amount of that cost for the health care system if broadly deployed. Now our Phase III clinical study, LOCK-IT-100 demonstrated a 71% reduction in risk associated with CRBSI. But I think what is really more relevant and more interesting and more current is the impact we've had in the real world, right? So U.S. Renal Care, which is the third largest dialysis operator in the country, was our initial anchor customer for DefenCath. They were the first to implement DefenCath broadly in patients in July of 2024. And we collaborated with U.S. Renal Care on tracking outcomes in thousands of patients. We tracked infection rates, hospitalization rates in a large group of patients compared to their baseline retrospectively. And what we saw was really compelling, right? Not only were we able to replicate our Phase III clinical results from a CRBSI infection rate, we were able to have a corresponding reduction in hospitalizations, a 70% reduction in hospitalizations. Medicare alone spends over $3 billion a year on costs associated with CRBSIs and treatment and related hospitalizations, and we are in a position to offset a meaningful amount of that cost if broadly deployed as the standard of care. I'd also like to spend some time talking a little bit about REZZAYO and some of the Melinta products, specifically. The acquisition we did last year, a big part of the catalyst was what we saw as the ability to add a very stable-ish base business with a portfolio of assets, but also a meaningful growth driver in REZZAYO. And we really look at REZZAYO as one of our most -- or our most valuable future growth asset. Now it's currently approved with a fairly modest total addressable market in its existing label, right? So it's a long-acting once-weekly echinocandin IV that is approved for the treatment of invasive fungal infections specific to Candida, right? So this is a 4-week course of therapy. It is a patient population of about 55,000 a year. It's a TAM of about $250 million a year. But we're really excited about REZZAYO, and we'll talk about in a couple of slides, is the future indication for which we are currently in Phase III. The study is fully enrolled and expected to read out in the second quarter, which is for the prophylaxis of invasive fungal infections in patients that are immune compromised. I look at some of the other kind of meaningful contributors from the Melinta portfolio. MINOCIN has shown a pretty good growth trajectory over the last few years, growing from $39 million to almost $50 million in 2025. We do expect it to break the $50 million mark in 2026. VABOMERE also has grown from $20 million to $26 million, and it's closing in on $30 million in annualized net sales. Both of these products are anti-infectives utilized in a hospital inpatient setting and both patent-protected MINOCIN through 2032, VABOMERE through 2039. So let's talk about a little bit about where we were and kind of where we are and where we're going, right? So 18 months ago, CorMedix was a pre-commercial single product company on the verge of launching DefenCath, right? I think that we've done a really excellent job of maximizing the value of our 24-month TDAPA period. We've parlayed that cash flow into the acquisition of Melinta, right, as I said, which has given us a fairly sizable base business as well as an attractive growth asset with REZZAYO. We have very rapidly integrated Melinta, right? We've achieved $35 million in synergies in 4 months and have fully integrated on a run rate basis forward. And now we're focused on future growth. As I said, the REZZAYO Phase III study is going to read out in the second quarter. We have an attractive opportunity in the Phase III study for TPN, for DefenCath for TPN. Hopeful for that study to read out early in 2027. We also, as I said, a very flexible balance sheet, strong cash position, the ability to do smart strategic tuck-in BD. I think the Talphera transaction is a great example of the type of product that we pursue that is highly complementary to our existing field team and gives us another shot on goal with a modest risk. But ultimately, where we are and where we see ourselves is a scalable platform, experienced team in multiple therapeutic areas and the ability to onboard additional assets as we move forward. Sorry, it's been a long day. But I do want to take some time and walk through some of our clinical studies. And as I mentioned, REZZAYO is currently in Phase III for prophylaxis with that second quarter readout. We also have 2 ongoing Phase II studies, one in pneumocystis, and these are treatment studies, the other in aspergillus. Now the pneumocystis study is fully enrolled, and we expect that data to be available by the end of this year. And the aspergillus study should be fully enrolled by the end of this year with data in 2027. While those are both Phase II studies, they do have the ability to be supportive of an expanded label for treatment with FDA, and we'll certainly look to pursue that based on the strength of that data. For DefenCath, we have the ongoing Phase III for TPN, which is targeted toward completion in early 2027. We also have an ongoing hemodialysis study that's part of our post-marketing commitment to FDA. I want to take some time talking about the study design for the Phase III Prophy study for REZZAYO as well as the total addressable market and why we're excited about this opportunity and why we consider this to be our most -- one of our most valuable assets. The study is a global study. It's being run in conjunction with our development partner, Mundipharma. For the REZZAYO product, CorMedix holds U.S. rights, but Mundipharma has all ex-U.S. marketing rights. It is designed as a non-inferiority study compared to the standard of care with the primary endpoint being fungal-free survival at day 90. Now the standard of care is a combination regimen of either fluconazole or posaconazole in combination with Bactrim and is a 13-week course of therapy currently being run in allogeneic bone and marrow transplants that are immune compromised. I think why we're most excited is certainly we want to hit our primary endpoint, but it is in the secondary endpoint, right? When we look at the standard of care, our market research indicates a significantly high discontinuation rate of the standard of care due to issues of toxicity or drug-drug interactions with other drugs in the regimen that these patients are taking. Both fluconazole and posaconazole are known to be hepatoxic. Bactrim is known to be myelosuppressive, and we think we do have an opportunity with a secondary endpoint here in a non-inferiority study to really differentiate ourselves and carve out a meaningful niche for REZZAYO as a prophylactic antifungal therapy in these immune-compromised patients. And when we look at the total patient population, different from what we saw with DefenCath, where nothing was really being done from a prophylactic standpoint when we entered the market. Here, you do have a somewhat of a formed market, right? We have 130,000 patients in the U.S. with various underlying conditions that are actively getting prophylactic antifungal therapy. We see this as a total addressable market of over $2 billion. And as I said, given a favorable clinical outcome, we do think we have an opportunity to drive meaningful value here with this product. TPN study is also well underway. This is a smaller study compared to what we ran for LOCK-IT-100 for DefenCath with a little bit more straightforward endpoint in terms of incidence of CLABSI. CLABSI or central line associated bloodstream infections are very similar to CRBSIs. And we are running head-to-head against heparin, which is the standard of care for catheter lock in. Now I think what's interesting in terms of what's very similar to the hemodialysis market when you look at TPN, which is basically patients getting IV nutrition therapy, is you have very high infection rates, right, where we -- you have infection rates of upwards of 25% in this patient population, and you have significant mortality from those infections in this patient population as well as very little being done prophylactically to prevent these infections. So you have a critical unmet medical need in this patient population, but what's different from hemodialysis is the reimbursement landscape. This is not a bundled payment system, right? This is -- most of these patients are reimbursed or under Medicare Part B or commercial, similar outpatient services. So we do see this as a meaningful value proposition, total addressable market up to $750 million, about 5 million infusions a year with more traditional reimbursement. So as we said, we have a very -- we're in a very strong cash position, about $150 million. We do expect to have sustained profitability through 2026 and beyond. We expect to bolster that cash significantly over the course of this year. And we have the ability to pursue, as I'd say, smart strategic tuck-in business development, similar to what we've done. I do want to highlight the Talphera transaction. For Talphera, we took a minority strategic investment, just under 20% in conjunction with a right of first negotiation to acquire the company upon favorable Phase III data readout for their product, Niyad. Niyad is an anticoagulant that is used predominantly in a hospital inpatient setting as part of the CRRT process. This product would fit incredibly well from a sales force deployment standpoint with our existing field team, and we're excited for that data readout, hopefully toward the midpoint or the third quarter of this year. We also have a number of upcoming catalysts and milestones toward the first half and toward the back part of this year and into '27. Most notably is the Phase III data readout on REZZAYO, as I said, coming in the second quarter. We're also going to be doing an Analyst Day in February, on February 10. And I think one of the things that's important is that we do a better job on educating investors and analysts on the other catalysts beyond DefenCath and hemodialysis. And our Analyst Day on February 10, we'll have KOLs. We'll be talking a lot more about the disease state for both REZZAYO prophylaxis as well as DefenCath TPN and really setting the stage for the growth trajectory for the company over the next couple of years. We do have other catalysts as we move toward the back part of the year. We -- as I said, the Niyad study for Talphera. We expect to provide some updates on the TPN study with clinical data, hopefully available in the first half of 2027, early part of 2027 and hopefully, submission of the REZZAYO sNDA for prophylaxis as well as updates from CMS on the 2027 add-on reimbursement for DefenCath for fee-for-service patients. Where we are, I think, in closing, look, we are a robust, diversified specialty pharmaceutical company. We have a strong financial profile, strong base business, cash flow generating through 2026. And we haven't put out guidance yet for 2027, but we see ourselves as a growth story, right? We think this is an attractive platform, one that is likely underrecognized and underappreciated and a deep and experienced leadership team with experience in launching drugs across multiple therapeutic settings. So we're excited about 2026 and where we're going to take this business in '27 and '28 and happy to take questions from the audience.

Thanks, Joe. CorMedix currently trades at a fairly low multiple of EBITDA and revenue relative to peers. Do you think this is reflective of the actual business fundamentals? Or is there something investors in Wall Street might be missing?

It's a really good first question, Arvind. Thank you. Look, I think from our view, I think it's pretty clear that something is missing, right, that we need to do a better job at messaging, right? We don't necessarily trade a discount. We're at a pretty big discount to where our peers are right now. Our peers are probably in the 12x EBITDA range, 4x revs. We're at about 5x and probably less than 2x. So I think that tells me that we need to do a better job in educating on the kind of the sum of the parts of our business. I think clearly, with this valuation, a lot of emphasis is on the DefenCath hemodialysis revenue stream. But unfortunately, I think it's solely on that. And I don't think any real value right now is being ascribed to REZZAYO for prophylaxis DefenCath for TPN or candidly, the base business for Melinta, which we've acquired. I think if any one of those pieces traded independently as its own business, there'd be a meaningful valuation. So we've got work to do, right, on our end from an educational standpoint.

So assuming that it is undervalued, what can the company do to drive increased shareholder value?

Look, I think a couple of things, right? So -- and the first is what I just mentioned is better education, right? We're starting here today, a lot of one-on-ones and into the Analyst Day on February 10 and really kind of laying out the groundwork for what are the key value drivers here and why should investors be excited about CorMedix, right, beyond DefenCath in hemodialysis. Look, beyond that, I think everything is on the table, right? I think as we move throughout the year, if we see that we're still not getting appropriate valuation from public markets, share repurchase is on the table. Let's see where we go, but I certainly echo the sentiment and agree that we're currently undervalued.

You guided cash OpEx of $145 million to $160 million. Is that net of synergies from the Melinta deal? And how should we think about go-forward OpEx beyond 2026 as well as future EBITDA trends?

Okay. I'll take the first part of that first. So -- the OpEx guidance of $145 million to $160 million, yes, that is net of synergies. So on a combined basis, CorMedix and Melinta historically would have been at about $180 million, $185 million of cash OpEx. So $145 million to $160 million is net of synergies. And I guess the delta between the $145 million to $160 million is really kind of gated based on the prophylaxis study data, right? So there's a decent amount of prelaunch activities we would want to do in the second half of the year. Presumably, if that data is positive, and that's what puts us up at the upper end of that range. Now you asked about -- it was a read-through to EBITDA, I think, in '26 and beyond. Look, so obviously, we can't -- we're not going to guide 2027 EBITDA. And I think if you kind of look at where we're trading today, the read-through obviously must be that EBITDA is either uncertain or declining and certainly not the way we see things, right? So 2026, EBITDA $100 million to $125 million. And we're looking at this as a growth story, right? We've got big catalysts, some coming in early '27, some coming later, some coming in '28, looking for this to be a growth story over the next couple of years.

Great. You guided 2026 DefenCath sales between $150 million and $170 million, but posted more than $90 million for Q4 2025. Can you give some color around what assumptions drive the 2026 guidance and the sales trend for the first half of the year for the TDAPA expiration? Also, what drives your confidence in your 2027 DefenCath revenue to be able to provide guidance and what assumptions does it make?

Those are 2 good questions. Yes. So the read-through from Q4 to Q1 shouldn't assume that utilization is dropping. So during the 24-month TDAPA period, our customer agreements are essentially under an ASP pricing model, where we essentially sell at ASP minus some percentage, and then there's rebates involved. And as those rebates get paid, ASP declines over time. And with most buy-and-bill drugs, that ASP erosion happens over the course of a decade. With the TDAPA drug, that ASP erosion happens over a couple of quarters, right? So we have a situation where as we're coming to the last 2 quarters of our 24-month TDAPA period, we're going to see some ASP step downs in Q1 and Q2. We are expecting utilization growth between Q4 and Q1. And then what we've kind of assumed is let's assume to be conservative that we maintain that utilization as opposed to building growth into our base assumptions. We also have a dynamic where the first half of our year is really about 5 months' worth of volume or value. Once we get to June, we do have an obligation to do a shelf stock adjustment for customers based on July pricing. So we've conservatively built in about 4 weeks, assuming they have 4 weeks of inventory on hand when we get to July, there might be some favorability there with smaller customers. But again, we want to be conservative when we issue our guidance. Now the back part of the year is really where, as I said, we have this anomaly that's kind of been caused by the way CMS did their post TDAPA add-on calculation, they've created this 2 quarter, what we've been referring to as a stub period, where they've kind of under captured the utilization from a dollar value standpoint, but really are going to kind of try to make it up in 2027 with a higher reimbursement and a post-TDAPA add-on. So when you say kind of what gives us the confidence in our guidance around '27, a lot of it's math, right? So we have a good sense for what we've shipped and what utilization is going to go into that post-TDAPA calculation. We've given a range of 3x to 5x, right, publicly. I think we're hopeful it will be toward the top end of that range based on our calculations. And ultimately, we've taken a lot of steps -- and part of the lower pricing in the third and fourth quarter is to do right by customers and keep that utilization, right, as we move into '27. So we do have a decent level of comfort to be able to issue that guidance this far out. And we'll update as we go throughout the year. But I think it's also worth mentioning there are a couple of upsides that we've excluded from guidance. First, as I said before, we've not taken any benefit from potential Medicare Advantage contracting, right? That's a big part of our strategy, right? We have our real-world evidence data that shows a meaningful impact on hospitalizations. The Medicare Advantage plans are the ones that are on the hook for those costs, a huge amount of cost in the system. So I do think we have a compelling value proposition for Medicare Advantage, and we're going to update right, as we go through the year. The other big upside is really there's legislation pending that could really upend TDAPA for the better. There's bipartisan bills currently in the House and the Senate that there's a possibility could be attached to legislation over the next couple of months. We have an eye on that. But again, legislation is always speculative, right? It wouldn't be right to take that in our base forecast, but that's a meaningful upside catalyst just specific to DefenCath in hemodialysis.

You talked about doing complementary BD in your presentation and highlighted the Talphera deal as a modest shot on goal. Would the company consider larger M&A type deals similar to what you did with Melinta last year?

Yes. Well, look, we're in a little bit different of a position than where we were last year, right? So last year, I think we were pretty clear that the strategy was a transformational M&A deal, right? So we raised money at risk. We went out. We got our #1 target, which was Melinta. This was #1 on our list in terms of fit and strategic value. And then we've integrated it fairly quickly. So from a transformational M&A standpoint, I think certainly, we're always open-minded. It's -- but we're not at the position where we were last year. Let's see where we progress, right, from a share appreciation standpoint. We need to execute on the things I talked about in terms of messaging and creating value for shareholders, right? So...

Great. We'll open up questions to the audience. Please raise your hand if you have any.

[Indiscernible]

Sure. So DefenCath, DefenCath is -- first has data exclusivity in 2 forms, has an NCE 5 years of exclusivity as well as stacked GAIN exclusivity. So that gives 10 years of exclusivity under which FDA cannot approve a generic ANDA against DefenCath. The earliest an ANDA can be filed is on the GAIN Act exclusivity minus 1 date. So that would be in November of 2032. It would be the earliest somebody could file. In addition, we do have what I'll call a composition patent that goes to 2042 that has, in my view, some decently broad claims that will be difficult for a generic to design around. I think it'd be more likely they'd have to pursue an invalidity case and that patent went through reexam. So we do feel good about the IP that is around DefenCath. Now from a REZZAYO standpoint, it also has NCE and GAIN exclusivity to 2033. So again, the earliest somebody could file is 2032. But it also -- but REZZAYO has composition of matter coverage until 2032, a pending patent term extension that could bring it to 2036 and has other patents that go to 2038.

Any other questions? No other questions, that concludes the presentation. Thanks, Joe.

All right. Thank you, everybody. Appreciate the time.