Summary of the CRMD Roth presentation and discussions :
Here is a summary of the main presentation and the small private meeting we had with Dr Chew and Bob Cook - these are my interpretations based on notes and memory and may not be exactly what they said. Please listen to webcast and also do your own due diligence thanks.
1) Meeting room was more crowded than I expected – I was there with two long term CELG and CRMD investors….one who runs an investment advisor firm specializing in the management of equity and fixed income portfolios with a great track record and another who owns a 50 yr old successful business in So Cal. Most in attendance were hedge funds, mutual funds, investment advisors and other wall street firm personnel.
2) In general, I found Dr Chew very knowledgeable and confident this trial proved beyond a shadow of a doubt that Neutrolin reduces the prevalence of CRBSIs and that with a p value of .0006 and this large trial without any safety issues he feels supports approval on this one halted trial for staggering efficacy and he will push hard for it to be in all catheters including cancer and ICU. More later.
3) I thought they did a good job on the presentation – unfortunately the recording of the replay was not of the highest quality as there are like 1000 people buzzing around the Ritz Carlton for this event and you can hear them even inside the room. We were lucky to have the ability to ask questions – I asked 3 - I will address separately below and one other person asked a question about future reimbursement that I didn’t think the company would address in detail quite yet and they didn’t.
4) My first question during the webcast came at about 20:35 of the presentation was on possible broader approval for all catheters or just dialysis
My Question: “Congratulations on the trial, with a p value of .0006 in this large (795 patient) trial and absolutely no safety issues – could you talk a little bit about the oncology and ICU indications and is the catheter lock similar and do you feel you have enough to have a discussion with the FDA for a broader approval if you get the go ahead on the NDA as opposed to just dialysis – are the catheter locks similar enough”
Dr Chew Answer “The answer to that is yes. We are protecting the patient by protecting the catheter. So, there is no systemic exposure since it doesn’t leave the tip of the catheter. Actually, even if they forget to take it out it would be such a small volume vs pharma-kinetic studies its really not an issue. We feel, of course, that a catheter is a catheter…. we will see what the FDA will think”
5) My second question was related to publication
My Question: “Dr Chew do you intend to have this published in a major medical journal”
Dr Chew Answer was garbled on replay not near Mike but he said they intended to publish this in a major medical journal (more below)
6) My third question challenged Bob Cook on the reasons for the Reverse Split rationale.
My Question: ”Bob you mentioned something on the conference call about the reverse split and one reason was certain funds couldn’t buy under $5 or $3 but it appears that a lot of those funds/parameters are not officially in their parameters for buying but could you talk a little about anecdotal discussions you’ve had with investors that justify the reverse split
Mr Cook Answer “With respect to your question as to the reasons why we are implementing the reverse split, the point that you raised is among several points that we examined before we made the decision – the information you mentioned is primarily in some in the mutual fund industry – not an official policy but one of those factors you have to overcome for some mutual fund companies to invest in a companies stock. (Frankly wasn’t satisfied with this answer so dove into it in our group meeting – notes below).
Small Group Meeting
1. We discussed the FDA meeting they had and that he was clear on the conf call this was not a pre-NDA meeting and no one should have expected an okay to go to NDA on one trial based upon this first meeting. They felt the meeting was very positive and successful especially that FDA suggested LPAD path and that there was no mention on the FDA part of a second Ph 3. Company did not have the entire data set very long before they met with FDA – but made the point that this is a large 795-person trial with no bias (was not only double blind but the company chose to remain blind EVEN AFTER THE INTERIM halt and both arms used viles that had clear liquid that looked identical). The .0006 p value was discussed and FDA noted that the drug worked. Company left the meeting in a very positive frame of mind with detailed data follow up request as expected – that would have had to be done for the NDA anyway. Any cut of this data will be positive so they are excited to provide the data to the FDA in the next several weeks (incremental positive vs the previous PR)
2. Once submitted the FDA could request additional information or they could go right to the end of Ph 3 meeting…..they were not explicit but it appears there is a possibility the company could be told there that an NDA is possible on this trial alone in the end of Ph 3 meeting but of course not guaranteed. I do not believe they expect it to take maximum number of 75 days. Then a possible pre-NDA meeting. Again, not expecting maximum days. FDA knows there is an unmet need. They are DATA DRIVEN. And this is the top priority of the FDA – infections and anti-biotic resistance. Everything considered after FDA feedback their expectation is to submit the NDA this yr (possibility FDA will allow rolling submission) with hopes of approval in 2020 and sales in second half of 2020 (also said during main presentation) ……of course Dr Chew mentioned its in the FDA’s hands and you never know – the appropriate caveat.
3. I asked Dr Chew again to expand on the possibility of a broad approval not just dialysis and he seemed confident that Neutrolin should be approved as a solution in all catheter locks. Said Heparin is an anticoagulant and does not prevent infections. Says if Neutrolin is used properly there is no systemic exposure it does not get into the blood stream and it would not mix with chemo or other drugs. Again even if improperly used and a small amount of Neutrolin got into the vein because of error, he said the volume is so small it would not have an effect. The risk reward of possible infections vs the possibility in error in use resulting in a small vol of Neutrolin getting in the system and then somehow reacting negatively to some chemo agent – remote – clearly should be on the side of broader approval. CorMedix clearly will be aggressive in pursuing broader approval but again its in the FDA’s hands of course. Risk – reward they feel justifies broader approval – maybe with a Ph 4 post marketing study. Of course this is in no way close to being guaranteed and completely up to the FDA.
4. Asked Dr Chew if him being “a Consultant Adviser Chief Medical Officer at CorMedix” would have any impact on FDA discussions. He said absolutely not his background is clear (a reminder below) and the FDA has clearly been focused only on the data during discussions – “The FDA is data driven” and he conveyed that the data is staggeringly positive and highly statistically significant showing undeniable efficacy.
5. He agrees the one 795 person trial is basically the equivalent of 2 trials and that the .0006 p value means the trial was “too big”. He said in his yrs as group Chief CMO at Sanofi he ran many trials with thousands of patients and never had a p value near .0006. They intend to "Aim high" when seeking publication of this in a major medical journal. I thought they should go for the NEJM or Lancet....he agreed they will aim high - its the type of halted study in an unmet medical need that the top journals crave. No guarantee but its clear they are aiming high and not some nephrology newsletter.
6. Probably most important tidbit – the CASH BALANCE and comments on the Q4 call last week DO NOT INCLUDE THE ADDITIONAL $5.4 million of NJ NOL sales that is pending. The buyers have their indications and CorMedix has the NJEDA approval to receive $5 million so this is in process and should be completed soon and this will ADD ANOTHER $5 million to the cash balance. Like an additional $5 million cash raise without dilution. Certainly again dispelling need for the imminent raise many expect because of the RS.
7. I told Bob Cook I was not satisfied with the answer on the Reverse Split during the main presentation and pressed him for the reasons again. Below is my interpretation of our discussions and not direct quotes:
o There has been additional fund interest since the full data set .0006 p value PR and update on FDA discussions mentioning LPAD and not mentioning a second Ph 3 and they expect even more interest if they obtain clearance to file NDA on the one trial. There have been discussions with funds where funds indicated that it would be easier to buy the stock if it was over $5 and especially $3 although he agrees it may not be official written guidelines.
o A few analysts appear more interested in coverage post .0006 p value full data set PR and some analysts shy away from initiation of companies with low stock price per share. This seemed more real to me and I actually expect one or more analyst initiations maybe a month or two post reverse split. They are clearly talking to new analysts.
o It appears in conjunction with the $7.5 million convertible announced early January that the shares would have to be available for the common stock would need to be available the latest April 30…. the reverse split obviously frees up shares for this without having to authorize more shares.
o The company has had more inquiries from funds since the recent full data set and FDA news. It will be good to have shares available if a major fund wanted to get in after a run on the NDA decision. I took this in a positive way – there is no imminent raise and those fearing a wainwright deal with over a yr of cash and a likely ok to file NDA this yr just don’t get it. This was not done to have more shares to issue down here – Lefkowitz is clear they don’t need cash. (even better with number 6 above the additional $5 mill to come by the way)…..but lets say stock triples on some FDA news of an NDA okay or more than dialysis label and hypothetically Baker Broths or Orbimed wanted to by a few million shares at $6 – they would have that option.
o Also the company IMO expects Big Pharma or Big Bio inquires to heat up – they said Big Pharma is aware of what is happening at CorMedix and expect Big Pharma interest to increase once they know the NDA is cleared to file on this one halted trail. So to have authorized shares available for potential partnership where perhaps there could be a cash infusion and maybe an equity buy at maybe double fair value (ala say JUNO-CELG – completely different market caps but possible smaller $$$ deal with that structure if we have shares available)
So, I now have some understanding of some of the reasons for the reverse split I share with the board. It does not mean I thought it was smart to do it or timing of it, in fact I have let the CEO, CFO, CMO and one board member know I was displeased with the reverse split and especially the timing offsetting three grand slam positives on the call and that I thought the stock would be approaching $2.50 instead of $1.50 if they did not do it. I’m sure they feel their time is more wisely spent elsewhere than preparing and getting approval for more shares. In the end it wont matter and if the weak hands that don’t understand the reverse split want to sell into it all I can do as an investor is take advantage of that stupidity and I look forward to doing so.
AI
