CorMedix Inc. (CRMD) Q2 2025 Earnings Report, Transcript and Summary

Good day, and welcome to the CorMedix Inc. Second Quarter 2025 Financial Results Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Daniel Ferry, Managing Director of LifeSci Advisors. Please go ahead.

Good morning, and welcome to the CorMedix Second Quarter 2025 Earnings and Corporate Update Conference Call. Leading the call today is Joe Todisco, Chief Executive Officer of CorMedix, and he is joined by Dr. Matt David, Executive Vice President and CFO. In addition, Beth Zelnick Kaufman, EVP and Chief Legal and Compliance Officer; Liz Hurlburt, EVP and Chief Clinical Strategy and Operations Officer; and Erin Mistry, EVP and Chief Commercial Officer, are on the line and will be available during the Q&A session. Before we begin, I would like to remind everyone that during the call, management may make what are known as forward-looking statements within the meaning set forth in the Private Securities Litigation Reform Act of 1995. These statements are statements other than statements of historical facts regarding management's expectations, beliefs, goals and plans about the company's prospects and future financial position. Actual results may differ materially from the estimates and projections on which these statements are based due to a variety of important factors, including the risks and uncertainties described in greater detail in CorMedix filings with the SEC, which are available free of charge at the SEC's website 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. CorMedix does not intend to update these forward-looking statements, except as required by law. During this call, the company will discuss certain non-GAAP measures of its performance. GAAP to non-GAAP financial reconciliations and supplemental financial information are provided in CorMedix earnings release and the current report on Form 8-K filed with the SEC. This information is available on the Investor Relations section of CorMedix website. At this time, it's now my pleasure to turn the call over to Joe Todisco, Chief Executive Officer of CorMedix. Joe, please go ahead. Joe, please go ahead.

Thank you, Dan. Good morning, everyone, and thank you for joining us on this call. Today, concurrent with our second quarter earnings announcement, CorMedix announced the acquisition of Melinta Therapeutics in a combination cash and stock transaction. This deal is transformational for CorMedix, creating a fully diversified specialty pharmaceutical company with a broad portfolio of commercial and pipeline products concentrated in the acute care and anti-infectives areas. The Melinta product portfolio and existing operational infrastructure are highly synergistic with CorMedix current commercial portfolio and sales deployment and also provides an exceptional complement to future potential expanded indications for our lead product, DefenCath. I would like to congratulate Christine Miller, Melinta Therapeutics President and CEO and her team on building such a high- performing organization with deep expertise in the hospital acute care and infectious disease arena. From a financial standpoint, Melinta adds to CorMedix a stable base of revenue for which we are currently guiding full year 2025 Melinta revenue between $125 million and $135 million spread across multiple assets, including 6 commercial stage products in the acute care and infectious disease space. We see opportunities for growth from both the existing commercial assets as well as their lead pipeline drug opportunity, a potential expanded indication for REZZAYO for the prophylaxis of invasive fungal diseases in adult patients undergoing allogeneic blood and marrow transplantation. In terms of key highlights of the transaction, the acquisition is expected to be near-term accretive with double-digit EPS accretion in 2026, and we are forecasting that will drive mid- to long-term revenue and cash flow growth. The addition of the pipeline opportunity of REZZAYO's expanded indication for prophylaxis provides a valuable growth driver of future revenue, and we estimate that if approved, peak annual sales potential in this indication could exceed $200 million. In the combined company, we also expect to capture significant near-term operating expense synergies estimated in the range of $35 million to $45 million, which will foster near- term EBITDA growth and EPS accretion. We have already submitted the necessary filings to the Federal Trade Commission in order to comply with the Hart-Scott-Rodino Act, otherwise known as HSR, and we expect to close this transaction as early as September 1, pending regulatory approval and other customary conditions of closing. The deal was structured as a combination of cash and stock with Deerfield Management Company to receive $40 million of the upfront purchase price in the form of CorMedix equity. Deerfield has also subscribed to $35 million of the $150 million debt offering executed concurrently with the transaction, which was used to fund the cash portion of the purchase price. We are excited to have Deerfield as a long-term investor in the new combined company given their long history as an investor in Melinta and in the health care space. On a pro forma basis, we are guiding to full year combined 2025 revenue of $305 million to $335 million with $180 million to $200 million of contribution from DefenCath net sales. In addition, we are guiding to pro forma fully synergized adjusted EBITDA for 2025 in the range of $150 million to $170 million. Turning now to the CorMedix business and our second quarter updates. We were excited to announce a few weeks ago that our LDO customer initiated purchases of DefenCath, and we can now confirm that they have initiated utilization in patients beginning in early July. Based upon feedback from the LDO, their rollout plan involved a limited clinic rollout for the month of July to establish workflow practices and a system-wide rollout that is taking place this week across all of their more than 2,000 clinics. We expect the system-wide rollout to initially target approximately 6,000 patients. However, we do not yet have visibility from the LDO into the pace for that rollout. As we get more information and better visibility from our LDO partner, we will update investors accordingly. On the clinical front, we have made great progress on our Phase III study for DefenCath in the reduction of CLABSI in adult patients receiving parental nutrition through a CVC. We now have multiple sites up and running and patients enrolled, and we are on track to complete the study and submit the NDA in the late 2026 to early 2027 time frame. We have also begun enrollment in our pediatric study for the reduction in CRBSI in pediatric patients undergoing hemodialysis through a CVC, with the first patient expected to begin dosing in August. Lastly, we have made the decision to perform an interim analysis of our real-world evidence study with U.S. Renal Care and hope to be in a position to provide interim data by the end of 2025. This is significant as we aim to evaluate patient outcomes and the impact of DefenCath utilization on the cost of patient care, infection rates, hospitalizations and mortality, all metrics that are critical to our goal of making DefenCath the standard of care for the reduction of bloodstream infections in patients getting hemodialysis through a CVC. I'd now like to turn the call over to Matt to discuss the company's second quarter financial results and financial position. Matt?

Thanks, Joe, and good morning, everyone. I'm excited to be here today to provide an overview of our second quarter 2025 financial results as well as an update on CorMedix's cash position and recent financing activities. The company will soon file its quarterly report on Form 10-Q for the quarter ended June 30, 2025. I urge you to read the information contained in the report for a more complete discussion of our financial results. With respect to our second quarter of 2025 financial results, our net revenue for the second quarter of 2025 amounted to $39.7 million. Our net income was approximately $19.8 million or $0.29 per share compared with a net loss of $14.2 million or $0.25 per share in the second quarter of 2024. The positive net income recognized in 2025 was driven by commercial sales of DefenCath. Operating expenses in the second quarter of 2025 increased approximately 18% to $18.3 million compared with $15.6 million in the second quarter of 2024. R&D expense increased by approximately 275% to $2.4 million, primarily driven by increases in personnel and clinical trial services in support of the ongoing clinical studies. Selling and marketing expense decreased 14% to $6.4 million in the second quarter of 2025 compared with $7.4 million in second quarter of 2024. G&A expense increased 25% to $9.5 million in the second quarter of 2025 versus $7.6 million in second quarter of 2024. The decrease in selling and marketing expense was attributable primarily to marketing costs related to the commercial launch of DefenCath. The increase in G&A expense was primarily driven by the noncash charges for stock-based compensation and an increase in costs related to business development. We recorded net cash provided by operating activities during the second quarter of 2025 of $30 million compared with net cash used in operations of $14 million in the second quarter of 2024. The increase is primarily driven by net income for the period versus a net loss in the prior comparison period and a decrease in trade receivables. On June 27, CorMedix announced the pricing of an underwritten public offering of common stock for which we received net proceeds of $82.4 million. We noted in the press release at the time that the use of proceeds from the offering included general corporate purposes, expenses related to R&D and potential strategic transactions that complement CorMedix's business. In addition to strengthening our balance sheet, the transaction included a number of high-quality new and existing investors. Concurrent with our announcement today of the acquisition of Melinta Therapeutics, we are also announcing the pricing of $150 million convertible debt offering with use of proceeds to fund the acquisition of Melinta. The key terms of the convertible debt are 5-year tenor with a 4% annual coupon and priced at a premium of 30%. In addition to Deerfield, the investors include a small group of high-quality life sciences institutional and convertible debt investors. As reported today, CorMedix has cash and cash equivalents of $190.7 million as of June 30, 2025. The company expects to use approximately $110 million of cash on hand in addition to the convertible debt proceeds to fund the upfront portion of the purchase price in the acquisition. While CorMedix on a stand-alone basis continues to track toward the low end of previously guided cash OpEx, we expect to issue updated guidance over the coming months for the combined entity. I will now turn the call back over to Joe for closing remarks. Joe?

Thanks, Matt. CorMedix is now firing on all cylinders with the implementation by our LDO customer commencing in July and the acquisition of Melinta targeted for closing in September. We intend to provide additional updates on the integration with Melinta over the coming months. We are excited about the platform we are creating for future growth and the opportunity to continue to create shareholder value. I appreciate everyone's continued support in CorMedix, and I'm happy to take questions.

Yes. [Operator Instructions] And the first question comes from Leonid Timashev with RBC Capital Markets.

It's Anish on for Leo. Congrats on the progress this quarter and the deal with Melinta. Just a couple of quick questions from us. First, if you could just talk to us about the guidance dynamics, how you're getting to the $180 million to $200 million range for DefenCath and what the sensitivities are there? And second, just quickly on Melinta, how are you thinking about the potential risks to the ongoing BARDA collaborations given the current policy and regulatory environment?

Thanks, Anish. Appreciate the question. Look, so in terms of putting the guidance together, which to reiterate for DefenCath, we're guiding revenue in the $180 million to $200 million range. It's based on what we see today in terms of customer orders and our estimation for what we think is a conservative ramp towards the back part of the year, right? We have some visibility, but not full visibility yet of what we think the LDO could convert in the coming months. But obviously, we want to give ourselves room, right? We do think there's potential upside, but this is where we are comfortable today establishing guidance at this part -- this point in the year. Look, in terms of risk from a BARDA standpoint, certainly, as we look at the value that Melinta brings, and I'm going to go through a couple of things. We view the collaboration with BARDA as upside potential, not really something that underwrote the value of the deal. So to that extent, not a tremendous amount of concern on our part in terms of what's driving the value of this transaction for CorMedix. I mean let's -- first and foremost, right, this diversifies our revenue base and gives us a stable base of revenue. It's expected to be near term and possibly immediately accretive depending on how quickly we can start to capture synergies, which we will get a sense for in the upcoming weeks. It's highly synergistic and not just from a operational overlap standpoint, but from a strategic direction standpoint and where we want to take DefenCath in terms of future indications, their additional potential indication for REZZAYO expands our pipeline, gives us multiple shots on goal, gives us an asset with significant growth potential. And from a valuation standpoint, I think this is a very attractive post-synergy valuation deal multiple for us, right, given the growth potential of the platform and the other assets. And not to be overlooked, they have a very strong and established team in the hospital and acute care arena, right? So this -- when we have been talking over the last month about the types of transactions we would consider, this really checks all the boxes and then some, right? So we are super thrilled with the transaction, and this is absolutely transformational for us.

The next question comes from Jason Butler with Citizens.

Let me add my congrats on the quarter and the acquisition. Joe, could you talk to us a little bit about the growth potential of the current approved portfolio commercial profile of the Melinta assets?

Sure. Is that the -- are you going to have any follow-ups, Jason? Is that the...

Yes, sure.

Okay. All right.

And then just in terms of your commercial infrastructure in the hospital setting, how should we think about what Melinta looks like today and what the combined company will look like as a footprint targeting the hospital setting?

That's fair. Okay. That's good. Look, in terms of the growth of the existing portfolio, there's absolutely growth potential there. Certainly, we see it with REZZAYO in the treatment space for its current indication for MINOCIN, a little bit for VABOMERE and for ORBACTIV and KIMYRSA. So the biggest growth driver, obviously, is the potential expanded indication for REZZAYO. We do think BAXDELA and VABOMERE have upside as part of that BARDA collaboration that I mentioned, but that's not something that we've really incorporated into our valuation to underwrite the deal. Look, from a commercial synergy and overlap standpoint on that side, that's something we're going to look at over the next couple of weeks and see what makes the most sense from a structure standpoint. Obviously, we've got a strong team. They've got a strong team. We want to look at the best ways to put these 2 together and put them together in a way that makes the most sense for the organization.

And the next question comes from Les Sulewski with Truist.

A couple for me. Just provide perhaps, Joe, a little bit of a background on the Melinta transaction, specifically if there was a competitive process. And then second, across their portfolio of products, how competitive is this space either from branded and other or generic offerings? And then second, on the integration and the synergies, what sort of integration expenses can we assume for this year and the progress within your Syneos sales team in inpatient side? Is this something that could be multiple product offerings, including DefenCath with Melinta on board?

Thanks, Les. You went through those quick, and I think I wrote them down and got them. Look, in terms of the background on the process, yes, this was a competitive auction process, which we understand there were multiple bidders involved. There were multiple rounds of bidding. And we participated in that process, right? I'm not sure how much more detail you're looking for on that front. But from a portfolio and competitive standpoint, obviously, the anti-infective space, certainly, those that are used on the inpatient setting, yes, it is competitive. There's typically a triage that infectious disease docs go through likely using less expensive generics first before getting to newer branded products. That's a known dynamic of that space, right? I think one of the things that makes the expanded indication for REZZAYO so attractive is that it's used in the outpatient setting, right, in the largely infusion clinics, oncology clinics, where, right, it's not inpatient DRG reimbursement, but outpatient buy-and-bill reimbursement. So that is certainly an attractive opportunity from that standpoint. In terms of integration expenses, we're not guiding on that at this time, and perhaps we'll provide more color once we are post close. And then I think in terms of the operational synergies with our existing team, I somewhat touched on that with -- I think it was Jason's last question, right? We're going to look at that over the coming weeks. We think we have a very strong team. We know that they have a very strong organization, and we're going to look at the best ways to put these 2 together.

Next question comes from Roanna Ruiz with Leerink.

This is [ Mezzie ] on for Roanna Ruiz. So I guess just building on the Melinta acquisition. So what key asset that you're acquiring are you most excited about? And then secondly, I guess, beyond the Melinta acquisition, how are you thinking about capital allocation? Are there other strategic opportunities you're evaluating? And I guess big picture, what's your philosophy on returning cash to shareholders versus reinvesting for future growth?

Thanks for the question. So -- and so I guess in terms of the asset I'm most excited about, it's kind of like being asked to pick your favorite kid. But certainly, I think the expanded indication for REZZAYO, right, has huge or potential upside, right, that is attractive to us and that we are very excited about. But certainly, as I said before, the full portfolio of assets largely diversifies our revenue base and adds right, stability as well as growth. And that's highly attractive to us as an organization. And I think your -- the second question was kind of like a combination of capital allocation/business development question. And yes, we certainly are -- once we get a chance to catch our breath, willing to start looking at other opportunities. that would be, again, highly synergistic with the organization, near- term accretive, right? These are the criteria that we've kind of long established that -- of what the deals we are looking at or willing to look at right now should be, right, in terms of generating near-term value for shareholders, right? That is a big focus. And that's the primary focus right now as opposed to looking at a future dividend policy. So that's where we stand today.

And the next question comes from Brandon Folkes with H.C. Wainwright.

Congratulations on the deal and the quarter. Maybe just following on from the prior question. As you take these steps to build a specialty pharma company, how do you look at the post-close commercial infrastructure you will have? I guess, twofold. One, especially in terms of adding TPN to the bag, do you think TPN now potentially largely drops to the bottom line? And then as you go forward and do add potential additional products, how do you feel about the number of products in the acute care reps bags today versus additional acquisitions coming with additional sales force versus just the bringing in products to the combined commercial infrastructure?

That's fair. So I think, again, a lot of the -- I guess, the first part of that question, I somewhat answered to Jason Butler. I'll reiterate that, as I said, we think both teams are incredibly strong. We're going to look at how to put them together. Now I think in terms of the Melinta team, you hit the nail on the head. The TP -- the potential TPN indication fits very well within their existing sales deployment as well as with our hospital sales deployment. In terms of how many, right, products a typical account manager can carry in their bag, I think it varies. And at all points in time, every product is not necessarily getting the same amount and level of attention in a detail, right? There's products that will be fairly stable without significant promotion and others that require right, significant effort and constant education. So it's going to be a mix. This is something that we're going to work on quite intensely in the upcoming months and put together an organization, right, that is strong and positioned for growth.

And maybe just one follow-up, if I may, just coming back to DefenCath. Any additional color, and I understand if you can't, what you contemplate in terms of the LDO ordering in your updated guidance? And then secondly, is the outpatient setting for DefenCath now a little bit more hands off and you as a company can focus more on the inpatient setting? Or is there still sort of quite a high touch in that outpatient setting as well as you grow the inpatient setting? That's all for me.

Yes. Look, I'll take the second question first, actually. In terms of -- I think you're guiding -- you're asking about kind of sales and marketing effort. And I think you're right. In the outpatient setting, as I said, I think on some prior calls, it's a smaller footprint that's needed. It is less of a touch point. It's more key account management at a very high level within these organizations. But there's still effort. And there's also, right, smaller dialysis operators are out there, and we have a small targeted team that is working on those accounts. Right, in terms of additional color on kind of LDO ramp, as I said in, I think one of the earlier questions, we've based our guidance on what we think is a conservative ramp with the information that we have. We've left ourselves, we think, meaningful room for upside, right, as we evaluate orders over the upcoming weeks. But we're very comfortable with the range that has been set based on the information we have today.

And the next question comes from Serge Belanger with Needham & Company.

Congrats on the acquisition. Obviously, a big day for CorMedix. First question, regarding the Melinta portfolio, I think you highlighted 6 to 7 products. Can you just maybe talk about which are the key ones that are generating the growth for this portfolio? Second question, it sounds like the REZZAYO label expansion opportunity is a significant potential upside for the potential of this product. Can you just maybe talk about this Phase III trial, when you expect results and maybe what the outcome needs to be to be successful? And then lastly, on DefenCath, any additional progress regarding the remaining LDO customer?

Thanks, Serge. Look, as we get through closing, we'll obviously give more guidance -- directional guidance on each of the products, right? So we've just now announced the transaction. Big picture on the portfolio, as I mentioned earlier, in terms of the approved products, obviously, REZZAYO, MINOCIN, VABOMERE, right, the ORBACTIV commercial franchise, all opportunities, right, for growth. BAXDELA, right, is a fairly small product. I think you all have access to IQVIA data. You can see it's right now, a very small sales contributor, but something like that, that is actively part of that BARDA agreement has potential upside right down the road. In terms of the label expansion, the Phase III study is expected to complete in the first part of 2026. I don't have a commitment date for when that data will be available. The study is being run in collaboration with Melinta's partner, Mundipharma. And when we have more information, we'll certainly be able to share that. In terms of the other LDO customer, I would say that, as I mentioned on the last call, right, once we operationalized our existing LDO, we would attempt to resume discussions. And I'd say that's the stage that we're at. And as we make progress, we'll provide updates.

Thank you. That concludes the question-and-answer session as well as the event. Thank you so much for attending today's presentation. You may now disconnect your phone lines.