CorMedix Inc. (CRMD) Q2 2015 Earnings Report, Transcript and Summary

Greetings and welcome to the CorMedix Second Quarter 2015 Results Call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Randy Milby, the CEO of CorMedix. Thank you Mr. Milby, you may now begin.

Good morning and welcome to the CorMedix's second quarter 2015 conference call. I will begin by providing you with an update of our clinical and commercial strategy and operational progress. Then Harry O'Grady, our CFO, who is with me here today in New Jersey, will provide a more detailed summary of our financial results. Dr. Pfaffle, our CSO is also available during the question-and-answer portion of the conference call. First, I want to remind you that this conference call may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties. All statements other than statements of historical facts regarding management's expectations, beliefs, goals, plans or the Company's prospects, future financial position, future revenues and projected cost should be considered forward-looking. Our actual results may differ materially from these projections or estimates due to a variety of important factors including uncertainties related to clinical development, regulatory approvals and commercialization. These risks are described in greater detail in CorMedix filings with the SEC, copies of which are available free-of-charge at the SEC's website at www.sec.gov or upon request from CorMedix. CorMedix may not actually achieve the goals or plans described in these forward-looking statements and investors should not place undue reliance on these statements. Please note that CorMedix does not intend to update these forward-looking statements except as required by law. Thank you for joining us. I'm encouraged about where we are today and the progress we have made at CorMedix strategically and tactically this quarter and I want to update you on several important areas, clinical, scientific, financial and operational. I believe we are well positioned. First in terms of clinical progress, we have begun working with a PPD a leading clinical research organization to initiate the first Phase 3 clinical study to evaluate Neutrolin in hemodialysis patients. This study will be named LOCK-IT clinical trial. This means a catheter lock solution investigational trial and we expect to initiate in the fourth quarter of this year. We are laser focused on successful initiation and execution of this study. Further we received guidance from the FDA on the acceptable design of our second pivotal Phase 3 study in oncology TPN and we are working with the FDA to finalize the results as a detail on this study. Second, we continue to gather positive data support the positive findings of evidence around Neutrolin. The data from the Neutrolin Usage Monitoring program, a post-marketing surveillance survey in Germany continues to demonstrate the efficacy of Neutrolin with over 95% reduction in infection of thrombosis versus benchmark in data [indiscernible]. We have added an additional arm to collect catheter blood flow data and then set an biofilm formation. Third, we have greatly improved the financial condition of the company with reporting of the outstanding one exercise and the AGM share issuance we have approximately $37.5 million of cash and short term investments on our balance sheet as of June 30, 2015 which will enable us to initiate the hemodialysis Phase 3 clinical study. And fourth, as you know, the company has engaged in a robust strategic transaction process with our financial advisor, Evercore Partners. Although as announced, this has not resulted in a strategic acquisition for business combination. We are continuing to pursue product development and commercialization partnership/collaboration opportunities as we move forward with our clinical trial and with a broader objective of expanding our collaboration with regional marketing partners to make Neutrolin available to more patients in more countries at the earliest possible date. Our focus on the clinical development of Neutrolin has led me to conclude that I should transition to a board role and work with my colleagues on the board to identify a successor CEO with more substantial regulatory, clinical and reimbursement experience that will be critical to further advance the company. And last but not least, we have added some critical skills to our teams to make us stronger in regulatory, quality assurance, clinical and marketing anti infective expertise to enable us to better execute in these areas. This includes at the board level as well. We are delighted to welcome Janet Dillione who brings over 25 years of experience leading global teams in development and delivery of healthcare technology and services. She has both financial expertise and significant senior management experience that will allow her to be a valued addition to the company's Board of Directors. I hope you will agree that we have accomplished a great deal during the past quarter. Revenue update Q1 [indiscernible] and longer term catalyst for CorMedix's growth and provide further details. As you know, Neutrolin is a Class 3 medical device in the European Union. But the FDA regards it as a drop for purposes of regulatory approval in the U.S. As we discussed during previous calls, the FDA's division of anti infective products and CDER has approved the initiation of a pivotal clinical study in the U.S. In the fourth quarter of 2015 we will begin known patients in LOCK-IT in pivotal, Phase 3 clinical study for the use of Neutrolin patients on a central venous catheter line associated with hemodyalisis with an anticipated enrollment of the proximal 630 patients and approximately 70 centers. We expect to have an interim analysis when we have half the patients enrolled or six months after the first enrollment whichever is earliest. Site selection is a critical aspect and we are working closely with PPD in this regard. As we had discussed on our previous call it is estimated there are approximately 127 million catheter aids hemodialysis in the United States a year. During the quarter we received guidance from the FDA on the acceptable design of the pivotal Phase 3 clinical protocol and oncology TPN and we are working with the agency to finalize the details. This study is planned to have approximately 560 for those oncology patients undergoing total parenteral nutrition. It is estimated they are tracking 43 million catheter days due to treatment for various kinds of cancer. In both these studies, the patients will be monitored for catheter related blood stream infections and in the relevant comparison will be Neutrolin versus Heparin or saline as a wants. In addition we are working to development a smaller 200- patient Phase 4 study to further elucidate the use of Neutrolin in critical care and cancer care patients as part of the Neutrolin label. It is estimated they are approximately capital days in the ICU/CCU settings in the United States each year. As I have previously discussed, we received Fast Track designation from the FDA to prevent catheter related bloodstream infections in patients receiving hemodialysis. Fast Track is intended to facilitate the development and expedite the review of drugs to treat serious conditions and fill unmet medical needs. Importantly, products designated as Fast Track can attain rolling review of demanding application that may lead to expedited approval. In addition, Neutrolin has been designated Qualified Infectious Disease Product or QIDP under the Federal GAIN Act which provides incentives for the development of new antimicrobials. This provides for extension of market exclusivity of an additional five years after drug approval beyond the standard five years for a new chemical entity. When combined a possible additional extension with an [indiscernible] extension of pediatric use. This means that Neutrolin could enjoy and aggregate period of post approval exclusivity in the United States of as long as ten and a half years from the date of launch. In our efforts to gather additional clinical data support future marketing and reimbursement, we initiated a 200 patient post marketing registry study for Neutrolin usage monitoring program in selected dialysis centers and hospitals throughout Germany. We have to date recorded three infections and two thrombosis during 29,253 hemodialysis catheter days. This compares favorably to the average you would ordinarily expect per 1000 catheter days on average of 3.5 infections and 2.5 thrombosis. This is over a 95% reduction in infection and thrombosis. Although this study is not designed to show statistical significance we believe that it provides compelling evidence demonstrating the anti infective and anti clotting value of Neutrolin and helps to de-risk the U.S. Phase 3 study and which the FDA protocol required a 40% reduction in infection. Our update is submitted to and reviewed by the FDA. Earlier data has been approved at the senate after National Kidney Foundation annual meeting in Dallas on March the 28, the Vascular Access Society meeting at Barcelona on April 18 and the European Dialysis and Transplantation Association meeting at London on May 29. All presentations were based on current data and presented by leading academic nephrologist independent of the company. We have been working to translate this positive data to meaningful medical communications with nephrologist, oncologists and intensive care units with patient's on a central venous catheter and again we believe a derisk for U.S. Phase 3 study. We are encouraged by these nice results and as a result have certain centers expanded program to collect catheter blood flow data and assess in analyzed biofilm formation. The financial condition has been greatly improved over the past quarter with our current cash balance of $37 million $500,000. Warrants exercised brought in $14.7 million and the ATM equity offering raised approximately $24 million with an weighted average price of $6.90 per share. We have approximately $15 million remaining in available issuance under the ATM vehicle. As I have said in earlier discussions, we have and will continue to use the ATM judiciously, but always considering financing options are in the best interest of the shareholders. We will not discuss whether ATM window is open or closed. We currently have 34.2 million shares outstanding fully diluted we have 40.5 shares. This concludes warrants, options and convertible notes. Investment bank Evercore was retained to help with evaluating possible business combinations and strategic alternatives to going it alone for CorMedix. This process was really valuable as it has allowed us to explore all possible options to maximize Neutrolin' s value and deliver this underlying value to our shareholders. We consider and we're open to a number of structures that might include product development collaboration, a merger or sale of assets or perhaps some sort of hybrid transaction. As we announced, we determined through this process that at this time there is no viable option involving the sale of the company or a business combination that we believe would be in the best interest of shareholders. However, we continue to work with Evercore as we are involved in several discussions that could involve hard range [ph] and the clinical and compressional development of Neutrolin. Turning now to additional market conditions and research undertaken and completed during the quarter we have been diligently working through a variety of market research innovations on multiple markets in which Neutrolin should be used and we are very encouraged by the results. The market potential appears robust and supports our markets opportunity projections developed during the Evercore process. We believe there is a real need for those product and high level receptivity. As you know, the market potential is not characterized as a single opportunity as there are clear leads involving patients in hemodialysis, oncology or critical care and intensive care. We plan to develop our product definitely in particularly in each of these markets. We also have begun accepting product acceptance or reimbursement prospects in light of the quality metrics established under the Affordable Care Act. We are working to publish the health economic study in peer review journals and are confident that we can position Neutrolin in an optimal manner that will drive reimbursement from government and private payers. I strongly believe that this is the best commercial strategy for CorMedix in that it allows us to prudently introduce Neutrolin to a larger number of central venous catheter patients throughout the world. In summary, this has been an important period for advancing the company. Neutrolin has been designated in QIDP product and has been granted Fast Tract status by the FDA. We will initiate the LOCK-IT study and continue to discuss a partner arrangement or arrangements to help us execute our clinical development strategy. We expect to continue to collaborate with regional marketing partner that will further expand the availability of Neutrolin to patient in additional countries. We have completed important marker research studies evaluating the health, economics, and positioning studies which articulate the value of Neutrolin and we are executing a publication plan to publish these results in peer reviewed journals. We continue to assert our intellectual property right in context of fair compensation law claims brought in Germany. We have initiated our plan to reduce our cost of goods which should improve our current margins in 2016 and enable us to go-to-market in a highly competitive position. In the end it all comes down to execution. We have added staff to our team that will enable us to do just that. People who has done it before and know how to launch anti infective products and to support the patients. As you know, we have announced that we are searching for my successor. I just want to take a moment to express to each of you, how proud and pleased I am to have the opportunity to advance the company, first, as the Chief Operating Officer and now as the CEO and a member of the Board of directors. We have accomplished a great deal and result in the interest of brining nutrient to patients and return value to our shareholders. As I have outlined we have advanced the product successfully through a number of regulatory hurdles and are preparing to launch a pivotal clinical study. We have gathered critical data and support the value proportion of the product and reimbursement. We have expanded our commercial partnerships. These have been the results of sustained effort by our team and I thank you all for the opportunity to serve you. I look forward to your questions. With that, I would like to turn the call over to Harry O'Grady to provide detail on our financials.

Thank you, Randy and thank you all for joining us today. I would like to now review the financial information filed yesterday on Form 10-Q. As mentioned on our last call we expect our cash burn to remain really at high levels as we incurred additional research and development activities to support product registration to conduct product future commercialization initiatives and to initiate our program to reduce the future cost of goods sold for Neutrolin. We also incurred legal costs to defend our IP, increased business development activities, and increased our commercial assets in Germany and the Middle East. As a result, our cash spending in this quarter increased slightly versus Q1, 2015 by approximately $100,000 to $3 million. As Randy has mentioned, as of June 30, 2015 our cash and short term investment position improved significantly to approximately $37.5 million driven mainly by the exercise of warrants mainly from the IPO and our options we got in gross proceeds in the quarter of $8.4 million and also with the issuance of 3.6 million shares of common stock under the ATM program we realized net proceeds of approximately $24 million. As of June 30, the company has raised approximately $15 million additionally under the MLB agreement. For Q2 the quarter ended June 30, 2015 we recorded a net loss of 4.1 million. Of this amount $1.1 million were non-cash items mainly consisting of $1 million for stock based compensation and $100,000 charge in connection with modification of certain warrants. Q2 sales were approximately $120,000 which is an increase of approximately $80, 000 from the same period last year and an increase of approximately $89,000 from Q1 2015. This increase was driven mainly by sales in the Middle East most notably Saudi Arabia. In Q2 our cost of goods was approximately $102,000 compared with $52,000 from the same period last year and was $17,000 in Q1 2015. Cost of goods sold primarily comprised of direct cost to materials which is about $65,000 and some ongoing stability studies which will not be recurred down the road, $35,000. Our operating cost of $4.1 million comprised of $1.8 million for R&D and $2.3 million for SG&A generating a loss from operations at $4.1 million. Including in these amounts were the aforementioned non-cash items of $1.1 million resulting in operating cash cost of $3 million. This was an increase versus same period last year of approximately $1.5 million driven mainly by $0.5 million for the manufacturing process development activities and pharmaco economic pricing market research studies of about $400,000 in addition consulting personnel costs and some legal fees for our IP defense. On a year-to-date basis, for the six months ended June 30, 2015 we recorded a net loss of $9.6 million. Of this amount $3.7 million were non-cash items mainly consisting of $2 million for stock based compensation, $1.6 million charge in connection with the backstop agreement entered into on March 10, 2015 related to the issuance of new warrants and the extension of certain warrants issued in connection with the IPO and $100,000 charge for modification of certain warrants in the second quarter. Year-to-date sales were approximately $151,000 versus $52,000 in 2014 an increase of approximately $99,000 from the same period last year. This increase will still remain by sales in the Middle East most notably Saudi Arabia. Year-to-date our cost of goods was approximately $190,000 compared with $136,000 for the same period last year. Year-to-date cost of goods as mentioned before are primarily comprised of direct cost to materials and ongoing stability studies. In 2014 we had additional significant costs related to transitioning Neutrolin to new labels and packaging which canceled the majority of the decrease versus this year. Our operating costs for year-to-date was $9.6 million compared to $3 million for R&D and $6.6 million for SG&A generating a loss from operations of $9.6 million, including the amounts for the aforementioned non-cash items of $3.7 million resulting operating cash flows of $5.9 million. This is approximately $3 million higher than we spent for the six months ended June 30, 2014 an increase or was the manufacturing process development activities of $600,000 from co-economic pricing and market research studies of $700,000. Additional consulting and personnel cost of $600,000 and legal fees for the IP defense was $500,000. On a liquidity basis, adjusting towards the June 30, 2015 our expectations on the current 2015 revenues instructions marked clearly [ph]. The current development plan in both U.S. and other markets including we expect the Phase 3 clinical trial in the U.S. which is expected to start in the fourth quarter 2015 and the oncology TPN Phase 3 trial in the U.S. which is expected to begin in Q2 2016. We believe that our cash will be sufficient to fund our operations for at least the next 12 months. This also seems that we will not be successful on signing any other partnership arrangements. We are not ready for additional funding through financing activities and we will not alter our current operating expense level. I will now turn the call back to Randy.

Thank you, Harry. Operator we will now open for questions.

Thank you. [Operator Instructions] Our first question is coming from the line of Scott Henry with Roth Capital. Please go ahead with your questions.

Thank you and good morning. A couple of questions. For starters you were talking about the LOCK-IT trial. My question is I know you referenced it, but I mean I've gotten all of it, when is it you expect to do an interim analysis?

Hi Scott, this is Randy. The interim analysis will be six months into the study or when half the patients, so it’s a 630-patient study once we get to the half way point we'll do the interim analysis.

Okay and when do you expect that to be?

We're going to start in the fourth quarter, so you can just run the dates from there.

Okay so it is six months from the first patient enrolled or…?

Yes, six months from the first patient enrolled or only half the patients in the study that are enrolled.

Okay.

So that's why I mentioned on the call is that Dr. Pfaffle and PPD are spending a lot of time right now on site selection. Because getting the patients enrolled early is what we're focused on.

Okay. And when you say or do you take the latter of those two dates, are they earlier or…?

The earlier.

Okay.

The earlier and most will be six months from the start.

Okay, perfect. And then second question, when did you, when were you planning on starting this, the Phase 4 trial?

Okay, for registration we're doing two Phase 3 trials and the label expansion trial would follow those two trials. So…

Okay, two will follow approval of the product. It wouldn’t be run prior to approval?

That's correct.

Okay, that is helpful. Shifting over to the income statement, first the cash, the $37.5 million cash as of June 30, any warrants or ATM activity since the end of the quarter or should we think about that as kind of a firm number?

That's a firm number.

Okay, and then looking at the model, R&D certainly continued to go up in 2Q, how should I think about R&D for the rest of the year, should it go up further from these levels or where should I be thinking about that?

I think R&D for the next quarter probably will be around same level and it is supposed to increase and as we start the trial obviously of course will go up.

Okay, and I guess finally, with regards to the ex-U.S. Neutrolin sale, any thoughts on how I should expect that to track over the remaining part of the year, certainly a big jump from Q1 to Q2?

Yes, we're gaining traction in the Middle East mainly, that's really where we're having some success and it is still early with the ramp up there, but as randy has indicated or what we indicated in the Q is we've added some countries [indiscernible] Qatar and we've had some success with Italy [ph] but as I said it is very early in the process, so we're going to keep a close eye on that and hopefully we can continue doing what we've done through the – in the second quarter.

So Scott we'll be in the Middle East we have countries in the queue as far as getting a registration. So as Harry just mentioned, [indiscernible] Qatar and Morocco are countries that we've added and there will be additional in this next quarter we should have more countries coming on line.

Okay great, thank you for taking the question.

Thank you. [Operator Instructions] Our next question is from the line of [indiscernible] a Private Investor. Please go ahead with your questions.

Yes, good morning, gentlemen. I got on the call a little bit late, so I'm thinking my questions are a little redundant, I apologize in advance. Several questions, number one, this may be directed to Harry. How much we have in carry-forward losses for the company?

Doug, I'll have to get you that information. I don’t have it at the top of my head, but I can get that for you.

Okay.

Carry forward from that tax carry forward loss, I have to get that for you.

Okay. I know this also in release, now board member, Janet Dillione or there about I think was the last name. She has been placed there with Manchester security is that correct?

Manchester is an affiliate, that’s hell yet.

Okay that's what I wanted to find out okay. Where are we at in regards to the dermal application COMD 0004?

We've actually made quite a progress. Recently, we've got a number of provisional patents actually that we're working in this space and it once again Doug, we're looking at this from a Taurolidine franchise point of view. So we can't talk a lot of deal about it but we will be filing some provisional caveats frankly in the next couple of weeks. So there has been an effort in this area and the whole point of this is that the Taurolidine franchise capitalized upon this antimicrobial, antibacterial power to Taurolidine and put it in different applications.

Fantastic. You may have discussed this whole bit, but where are we at on the executive search, and this is a particularly time line that you all can given us as far as any clarity or color on it, what type of reception that were received and just general information please?

Well the process is well underway, you can imagine. And frankly, so sooner the better and we're looking for the right person for the job and the board has actually begun interviewing some of the candidates. So it's moving along quickly – I was on the phone with the executives search person just the other day and he has had a number of viable candidates. But I can’t give you, I cannot give you a definite timeline, but I can tell you that’s moving quickly.

Okay, great, where we at with regards to development of JCOS?

Well, one of things we’re doing as far as and then we’re spending a lot more time on reimbursement. As I mentioned in my earlier texts, as far as bringing in people anti-infective experience the from the on the policy level reimbursement we'll work on the holding levels at Washington, but on the ground from the JCOS, which you’re referring to is we've bought in some consultants have done this before in other companies and that process is getting started now.

Great, I appreciate it. Good job guys.

Thank you.

Our next question is from the line of Paul Schneider, Private Investor. Please go ahead with your question.

Good morning Randy and others and thank you for taking my call. I’m curious if you could give us any information about what sort of feedback you got from companies that Evercore approached about actually buying out CorMedix?

Well, I can talk a little bit about the process. I’m not going to go into discuss the details of the process but I would like to just reiterate that in working with top tier investment bank like Evercore, we haven’t have the opportunity to present the company to wide range of firms that might logically consider strategic transaction or collaborative deal of some form. In the end though they were no proposed business combinations or acquisitions and we consider to be the best interest of our shareholders. Other kinds of collaborative structures are still possible and we continued to work with Evercore and consider them. But in summary, we are very confident. We export all opportunities with Evercore. We simply did not get to appoint where viable transaction was in the best interest of the shareholders.

All right and what you currently believe the U.S. market is worth for all – in terms of sales.

So you can see on the web page is positing our presentation on the website the slide that talks about the number of – days and then greater than a $1 billion market opportunity, obviously that’s based upon assumptions of penetration and pricing.

Okay and how long do you think it will take to fully enrolled your Phase 3 trial?

Hi, Paul its Tony Pfaffle, so we are, as Randy had mentioned site selection is a time goal and we brought a lot of very experienced people. The goal is to obviously choose sites where there is high catheter use rate, and high catheter infection rates so that the product can do its work and we believe that the trial and the discipline – on track will begin as Randy say in the fourth have the site selection process carefully worked out which will enhance enrollment and we believe we’ll stay on that schedule which is a 12 months enrollment, six months follow up. It’s possible because it’s in a – driven trial that things precede well, we could complete the trial well before the period, but that’s a possibility. So we are seeing on the current timeline that we’ve mentioned, 12 months enrollment, 6 months followup, but there is again a possibility again I like possibility that it could be done quicker because of the incidence of infections and et cetera.

Okay, one last question, so it sounds like you’re going to be going for sort of rolling approval first with hemodialysis and then for other indications as time passes.

Not really, so we’re staging the oncology TPM second quarter 2016 because it’s a shorter duration study we wanted to get the hemodialysis is a larger, 637 patients were as the oncology smaller fewer sites, smaller enrollment population and shorter duration. It’s a one year study whereas Tony just mentioned, hemodialysis is 18. So we’re staging the start but the finish should have that this it's being situated so that they can finish at the same time, but it is one submission.

Okay so you will one NDA submission at the completion of both Phase 3s.

Yes, right. And if you recall earlier discussion we had there the FDA encouraged us when we present, when we first met with them to pursue another indication in addition to hemodialysis and the reason we believe that they did that was because of the unmet need in this space.

Absolutely as Randy said, it was at the meeting with the FDA where they suggested to us to do a trial another indication because that their belief that it will be valuable to have not just one indication but multiple indications and we believe one of the prime factors is that is currently no known resistance in humans to neutral [indiscernible] and as a result of that, that is why the agency has given us the support into that.

Okay, thank you very much for your time Randy and Tony, I appreciate it.

Thanks Paul. Thank you.

Thank you. [Operator Instructions] Our next question is from the line of Robert Davidson [ph], a Private Investor. Please go ahead with your questions.

Hi gentlemen, can you hear me?

Yes.

Okay. I have actually have two questions, one is I’m just concerned about the amount of sales of Neutrolin currently the product has been approved non-U.S. for over a year now and then that the follow up to that is do we have any idea of what the TauroLock sales are currently in Germany and in the rest of the world? Thank you.

Bob the world addressed Germany as you heard from Harry we are getting traction in the Middle East and the German sales, the launch has been slow as you I acknowledge that, we have change our country sales leadership, the progress was slower than we anticipated due to a couple of reasons, the economic conditions, the competitive conditions and market access pressures. We also didn’t have the resources to conduct the necessary study to reimburse them and we continue to pay the price for this. However, we have been capitalizing upon the data, the Neutrolin usage monitoring programmed data and recently expanded Neutrolin usage monitoring programmed to obtain additional information to support our reimbursement submission. So again we didn’t have reimbursement and also just the competitive conditions. The other aspect of this is that during the Evercore process, we pretty much stopped our BB activity as far as signing up partners, you will see increased activity in that regard now that and this is a result of some of the Evercore work, but I acknowledge the sales are slow in Germany but I would point you to the Middle East, higher capital use rate, higher infection rates and we are getting good traction there.

Okay. And the second part of the question was do we have any idea what the TauroLock sales are right now through TauroPharm rather?

I really got to a private company and so it is just to be an estimate, that is speculation on the sales but I really don’t have solid numbers.

Okay. Thank you.

Thank you. There are no additional questions at this time. I'd like to turn the floor back to management for further comments.

Just wait, just give a few more minutes to see other questions, just give another minute, I guess somebody is dialing.

[Operator Instructions] And we have a question coming from the line of James Weathers [ph] a Private Investor. Please go ahead with your question.

Yes, thank you. Why is it that we only discuss Germany, what about other countries in Europe?

Other countries, yes. Other countries in Europe that we have, we have independent sales reps in Austria and the Netherlands and we discussed Germany is because we have a contract sales organization people on the ground. The personnel we have in Austria is an independent sales rep, they get paid for success. So they are not on our payrolls. They get compensated for sales, and what we find in these other countries is a tender business. So they have to they submit tenders. So that is why you sometimes you will see jump or not and it is because of the cycle of the tender cycle within a country.

As far as patent protection, you have patent protection in which countries in Europe?

Well, we have the CE Mark which enables us to sell in the European Union. We have had discussions with a number of countries, so that is what I said earlier about we put all those type of discussions on hold during the Evercore process. But I do not intend to have a CorMedix office country-by-country. So we are being very selective.

Okay, thank you.

Thank you. Our next question is from the line of Scott [indiscernible] with Aegis. Please go ahead with your question.

Good afternoon – good morning gentlemen. I have quick a question. We got added to the Russell 3000 and so we have got a lot more institutional awareness and holdings in the company, have you started to reach out to those new institutions that are involved in CorMedix and had any dialogs with those institutions?

We haven’t initiated that yet Scottie, it is something that is hard to do with, we are also signing up for more investor conferences that we will be attending to get the visibility of CorMedix particularly now that we are getting started with the Phase 3 clinical study.

All right, excellent, thank you guys.

Thank you. The next question comes from the line of Mark Read a Private Investor. Please go ahead with your question.

Hi, good morning, I just had a question about the, the last several weeks the news has been relating to CorMedix has been full of the notices of class action lawsuits based on the articles that appeared a month or so ago. Do you expect those to be easy to dismiss given the information and the record that you have or is that something that is going to be a significant dream [ph] on the bottom line as time goes on?

Well, I’m not going to comment on the pending legal matter. We have made our disclosure about the lawsuit and it is clear and complete, we have hired experience counsel and we do not believe that the suite has merit.

All right. Thank you very much.

Our next question is from line of Jonathan Long, a Private Investor. Please go ahead with your question.

Yes, I was wondering why CorMedix shows not to respond to that [indiscernible] obviously full of – article is there particular reason?

I noticed some of you believe that we should not respond to these anonymous postings of one persons opinion, but what we wanted to do is focus the company could advance to the product, so it's just advance the Neutrolin to the market and then in the end I believe the stock price will reflect the medical and clinical value of what we're doing advancing the product into Phase 3.

Okay a second part question may be – it's some shareholders I think would wonder if this may have affected our ability to raise funds through the ATM, if it did and anyway negatively impact us with and may be other so – such a person would CorMedix ever consider being part of that?

Restate tenderness question. I’m sorry.

I’m just wondering if this, if the article kind of had a negative financial impact on CorMedix would it ever pursue I think there is active interest in indentifying its individual and maybe other companies are actually pursuing legal action, what the CorMedix consider to being part of that action?

We would have to take that under advisement of counsel.

Okay, thank you.

You’re welcome.

Our next question is from the line of [indiscernible] a Private Investor. Please go ahead with your question.

Hi, good morning. Can you give us an update on the cost of goods and whether we are seeing reductions going forward as the new cost of good initiatives have being implemented? Thank you.

Yes, so this is Harry. We’re in process of working with RC2 on the cost reduction initiative. We should see the impact in 2016. The program is ongoing and should be completed in first quarter of 16 that’s the target right now and we’re hoping that that will bear fruit for us and get it from where we currently are which is more of an OTC type product margin to a pharma margin, so that’s the game plan. Anything else?

There are no questions at this time.

Okay, well thank you every one for dialing in. In summary I just want to re-summarize. This has been a very important period for advancing the company. As you will know Neutrolin is a QIDP product, ran a Fast Track status by the FDA. We expect to initiate the LOCK-IT clinical study in the fourth quarter of this year. We continue to discuss partnership arrangements with various partners and we will execute the clinical development study with a laser like focus. We have completed important product market research studies, and health economic studies. That is going to well position Neutrolin in the future and we will continue to assert our intellectual property rights in the context of the patent infringement not the competition law claims brought in Germany. And Harry just mentioned we have initiated our plan to reduce the cost and then the end, I just want to reiterate, it all comes down to execution and we have added the right staff members to our team that will enable us to do just that, execute, initiate the Phase 3 study. We've brought in people who have done this before. They have anti infective experience. They know how to work through the reimbursement and gain access and the know how to launch anti infective products. So thank you very much for dialing in and we appreciate your support.

Thank you. This will conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.