CorMedix Inc

Previous wording

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are subject to risks and uncertainties. Forward-looking statements are often identified by the use of words such as, but not limited to, “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “will,” “plan,” “project,” “seek,” “should,” “target,” “will,” “would,” and similar expressions or variations intended to identify forward-looking statements. All statements, other than statements of historical facts, regarding management’s expectations, beliefs, goals, plans or CorMedix’s prospects should be considered forward-looking statements. Readers are cautioned that actual results may differ materially from projections or estimates due to a variety of important factors, and readers are directed to the Risk Factors identified in CorMedix’s filings with the SEC, including its most recent Annual Report on Form 10-K, copies of which are available free of charge at the SEC’s website at www.sec.gov or upon request from CorMedix, and a summary of which is copied below. CorMedix may not actually achieve the goals or plans described in its forward-looking statements, and such forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Investors should not place undue reliance on these statements. CorMedix assumes no obligation and does not intend to update these forward-looking statements, except as required by law.

Current wording

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are subject to risks and uncertainties. Forward-looking statements are often identified by the use of words such as, but not limited to, “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “will,” “plan,” “project,” “seek,” “should,” “target,” “will,” “would,” and similar expressions or variations intended to identify forward-looking statements. All statements, other than statements of historical facts, regarding management’s expectations, beliefs, goals, plans or CorMedix’s prospects should be considered forward-looking statements. Readers are cautioned that actual results may differ materially from projections or estimates due to a variety of important factors, and readers are directed to the Risk Factors identified in Part II, Item 1A of this Quarterly Report on Form 10-Q and in CorMedix’s other filings with the SEC, including its most recent Annual Report on Form 10-K, copies of which are available free of charge at the SEC’s website at www.sec.gov or upon request from CorMedix, and a summary of which is copied below. CorMedix may not actually achieve the goals or plans described in its forward-looking statements, and such forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Investors should not place undue reliance on these statements. CorMedix assumes no obligation and does not intend to update these forward-looking statements, except as required by law.

Previous wording

Our primary focus is on the commercialization of our lead product, DefenCath, in the U.S. The name DefenCath is the U.S. proprietary name that was approved by the FDA.

Current wording

Our primary focus is on commercializing our lead product, DefenCath® (taurolidine and heparin), in the U.S. The name DefenCath is the U.S. proprietary name approved by the FDA.

Previous wording

We announced on April 26, 2023 that following the submission of a duplicate New Technology Add-On Payment (“NTAP”) application in the fourth quarter of 2022 to Centers for Medicare and Medicaid Services (“CMS”), CMS has subsequently issued the Inpatient Prospective Payment System (“IPPS”) 2024 proposed rule that includes a NTAP of up to $17,111 per hospital stay for DefenCath. This NTAP represents reimbursement to inpatient facilities of 75% of the anticipated wholesaler acquisition cost price of $1,170 per 3 mL vial, and an average utilization of 19.5 vials per hospital stay. The final IPPS rule was published in early August 2023 and confirmed this payment amount in that final rule. This NTAP was conditioned upon the DefenCath NDA obtaining final FDA approval prior to July 1, 2024. As the NTAP was calculated by CMS based upon an anticipated wholesale acquisition price (“WAC”) of $1,170, and following FDA approval of the DefenCath NDA, an actual WAC of $249.99 per 3ml vial was established, we anticipate that CMS will revise the amount of the NTAP payment to reflect the actual WAC price in the next IPPS rulemaking, effective October 1, 2024. Upon the listing in the compendia of the actual WAC price of $249.99 per 3ml vial, the Company notified CMS of the new lower WAC pricing and recommended that CMS make an off-cycle adjustment to the NTAP to reflect the current lower WAC pricing amount. CMS subsequently communicated to the Company that they do not intend to update the NTAP reimbursement amount until the next review cycle in October 2024.

Current wording

We announced on April 26, 2023 that following the submission of a duplicate New Technology Add-On Payment (“NTAP”) application in the fourth quarter of 2022 to Centers for Medicare and Medicaid Services (“CMS”), CMS has subsequently issued the Inpatient Prospective Payment System (“IPPS”) 2024 proposed rule that includes a NTAP per hospital stay for DefenCath. This NTAP represents reimbursement to inpatient facilities of 75% of the wholesaler acquisition cost (“WAC”) price per 3 mL vial, and an average utilization of 19.5 vials per hospital stay. The final IPPS rule was published in early August 2023 and subsequently amended as of October 1, 2024 to reflect the current WAC of $249.99 per 3ml vial.

Previous wording

On January 25, 2024, CMS determined that DefenCath should be classified as a renal dialysis service that is subject to the Medicare end-stage renal disease prospective payment system (“ESRD PPS”). The ESRD PPS provides bundled payment for renal dialysis services, but also affords a transitional drug add-on payment adjustment, or TDAPA, which provides temporary, additional payments for certain new drugs and biologicals. We submitted an application for TDAPA on January 26, 2024, and received confirmation that our application was approved on April 18, 2024. We also submitted a HCPCS application for a J-code to CMS on December 8, 2023, for DefenCath, which is relevant to billing and the TDAPA application. The HCPCS J-code for DefenCath was published by CMS on April 2, 2024. TDAPA reimbursement is calculated based on 100 percent ASP (or 100 percent of wholesale acquisition price or else manufacturers’ list price, respectively, if such data is unavailable). TDAPA and post-TDAPA add-on payment adjustments for DefenCath apply for five years (with such add-on payments applying to all ESRD PPS payments for years three through five). CMS confirmed a July 1, 2024 implementation date for HCPCS and TDAPA.

Current wording

On January 25, 2024, CMS determined that DefenCath should be classified as a renal dialysis service that is subject to the Medicare end-stage renal disease prospective payment system (“ESRD PPS”). The ESRD PPS provides bundled payment for renal dialysis services, but also affords a transitional drug add-on payment adjustment, or TDAPA, which provides temporary, additional payments for certain new drugs and biologicals. We submitted an application for TDAPA on January 26, 2024, and received confirmation that our application was approved on April 18, 2024. We also submitted a HCPCS application for a J-code to CMS on December 8, 2023, for DefenCath, which is relevant to billing and the TDAPA application. The HCPCS J-code for DefenCath was published by CMS on April 2, 2024. TDAPA reimbursement is calculated based on 100 percent ASP (or 100 percent of wholesale acquisition price or manufacturers’ list price, respectively, if such data is unavailable). TDAPA and post-TDAPA add-on payment adjustments for DefenCath apply for five years (with such add-on payments applying to all ESRD PPS payments for years three through five). CMS confirmed a July 1, 2024 implementation date for HCPCS and TDAPA.

Previous wording

We announced on June 6, 2024 that the Center for Medicare & Medicaid Services (CMS) has determined that DefenCath® qualified for pass-through status under the hospital Out-Patient Prospective Payment System (OPPS). Pass-through status provides for separate payment under Medicare Part B for the utilization of DefenCath in the outpatient ambulatory setting for a period of at least two years, and up to a maximum of three years. While vascular access for hemodialysis can be initiated in an inpatient setting, ambulatory surgical centers or vascular access centers offer a less-invasive, outpatient-based alternative for patients. We estimate that up to 100,000 HD-CVC placements occur each year, and pass-through status ensures that providers are reimbursed separately for administration of DefenCath in this setting of care.

Current wording

We announced on June 6, 2024 that the CMS has determined that DefenCath qualified for pass-through status under the hospital Out-Patient Prospective Payment System (“OPPS”). Pass-through status provides for separate payment under Medicare Part B for the utilization of DefenCath in the outpatient ambulatory setting for a period of at least two years, and up to a maximum of three years. While vascular access for hemodialysis can be initiated in an inpatient setting, ambulatory surgical centers or vascular access centers offer a less-invasive, outpatient-based alternative for patients. We estimate that up to 100,000 HD-CVC placements occur each year, and pass-through status offers providers a separate reimbursement mechanism in this setting of care administration of DefenCath.

Previous wording

We may pursue additional indications for DefenCath use as a CLS in populations with unmet medical needs that may also represent potentially significant market opportunities. While we are continuing to assess these areas, potential future indications may include use as a CLS to reduce CRBSIs in total parenteral nutrition patients using a central venous catheter and in certain oncology patients using a central venous catheter. In June 2024, CorMedix announced that the U.S. Food and Drug Administration (FDA) provided feedback to the Company’s request to discuss development plans for additional indications for DefenCath. The FDA provided supportive feedback regarding the Company’s plans to pursue an expanded indication in adult Total Parenteral Nutrition (TPN) patients. CorMedix expects to submit a complete clinical protocol to FDA in the 3rd quarter of 2024 with a goal of gaining further alignment and initiating the program by year-end 2024. In addition, the FDA confirmed its requirement that the Company conduct a study in pediatric hemodialysis (HD) patients under the Pediatric Research Equity Act (PREA).

Current wording

We may pursue additional indications for DefenCath use as a CLS in populations with unmet medical needs that may also represent potentially significant market opportunities. While we are continuing to assess these areas, potential future indications may include use as a CLS to reduce CRBSIs in total parenteral nutrition patients using a central venous catheter and in certain oncology patients using a central venous catheter. In June 2024, we announced that the FDA provided feedback to our request to discuss development plans for additional indications for DefenCath. In response to these comments, we created and submitted three clinical protocols specifically, the post-marketing requirement of a pediatric hemodialysis (“HD”) study as an obligation under the Pediatric Research Equity Act (“PREA”) a Phase 3 study protocol to reduce the risk of central-line associated bloodstream infections (“CLABSI”) for adult patients receiving total parenteral nutrition (“TPN”) through a CVC and Expanded Access Program (“EAP”) to FDA that allows for pediatric and adult patients, utilizing a CVC for the treatment or maintenance of many serious illness, to access DefenCath to protect their central line from serious infection. The Company expects the EAP to be available to patients at the end of 2024 and to begin enrollment for the adult TPN and pediatric HD studies in early 2025.

Previous wording

We currently have one FDA approved source for each of our two key APIs for DefenCath, taurolidine and heparin sodium, respectively. With regards to taurolidine, we have a DMF filed with the FDA. There is a master commercial supply agreement between a third-party manufacturer and us in place from August 2018. We are currently in the process of identifying and qualifying an alternate third-party manufacturer for taurolidine under our existing DMF. With respect to heparin sodium API, we have identified an alternate third-party supplier and intend to qualify such supplier under the DefenCath NDA over the next twelve months.

Current wording

We currently have one FDA approved source for each of our two key APIs for DefenCath, taurolidine and heparin sodium, respectively. With regards to taurolidine, we have a drug master file (“DMF”) filed with the FDA. There is a master commercial supply agreement between a third-party manufacturer which has been in place since August 2018. We are currently in the process of identifying potential alternate third-party manufacturers for taurolidine under our existing DMF. In addition, we are working with our existing manufacture to source sufficient quantities of taurolidine API to cover at least 24 months of potential future demand. With respect to heparin sodium API, we have identified an alternate third-party supplier and intend to qualify such supplier under the DefenCath NDA over the next twelve months.

Previous wording

We received FDA approval of DefenCath with finished dosage production from our European based CMO Rovi Pharma Industrial Services. We believe this CMO has adequate capacity to produce the volumes needed to meet near-term projected demand for the commercial launch of DefenCath.

Current wording

We received FDA approval of DefenCath with finished dosage production from our European based contract manufacturing organization (“CMO”) Rovi Pharma Industrial Services. We believe this CMO has adequate capacity to produce the volumes needed to meet near-term projected demand for the commercial launch of DefenCath. We have also qualified Siegfried Hameln as an alternate finished dosage manufacturing site.

Previous wording

As part of the DefenCath approval letter, the FDA communicated the existence of a required pediatric assessment under the Pediatric Research Equity Act, or PREA. PREA requires sponsors to conduct pediatric studies for, among other things, NDAs for a new active ingredient, such as taurolidine in DefenCath, unless a waiver or deferral is obtained from the FDA. A deferral acknowledges that a pediatric assessment is required but permits the applicant to submit the pediatric assessment after the submission of an NDA. FDA deferred submission of the pediatric study for DefenCath because the product is ready for approval for use in adults and the pediatric study has not been completed. We are currently obligated to conduct the study communicated in the approval letter: an open-label, two-arm (DefenCath vs. standard of care) study to assess safety and time to CRBSI in subjects from birth to less than 18 years of age with kidney failure receiving hemodialysis via a central venous catheter. CorMedix announced in June 2024 that the FDA confirmed its requirement that the Company conduct a study in pediatric hemodialysis (HD) patients under the Pediatric Research Equity Act (PREA). Because this is a required post-marketing study, we would be required to make annual reports to the FDA. Pediatric studies for an approved product conducted under PREA may qualify for pediatric exclusivity, which, if granted, provides an additional six months of exclusivity that attaches to the end of existing marketing exclusivity and patent periods for DefenCath. Depending on the timing of final report submission, DefenCath could potentially receive a total marketing exclusivity period of 10.5 years. However, there are factors that could affect whether this exclusivity is received or the duration of exclusivity, and DefenCath may or may not ultimately be eligible for the additional 0.5 years of exclusivity associated with this pediatric study.

Current wording

As part of the DefenCath approval letter, the FDA communicated the existence of a required pediatric assessment under the PREA. PREA requires sponsors to conduct pediatric studies for, among other things, NDAs for a new active ingredient, such as taurolidine in DefenCath, unless a waiver or deferral is obtained from the FDA. A deferral acknowledges that a pediatric assessment is required but permits the applicant to submit the pediatric assessment after the submission of an NDA. FDA deferred submission of the pediatric study for DefenCath because the product is ready for approval for use in adults and the pediatric study has not been completed. We are currently obligated to conduct the study communicated in the approval letter: an open-label, two-arm (DefenCath vs. standard of care) study to assess safety and time to CRBSI in subjects from birth to less than 18 years of age with kidney failure receiving hemodialysis via a central venous catheter. We announced in June 2024 that the FDA confirmed its requirement that we conduct a study in pediatric HD patients under the PREA. Because this is a required post-marketing study, we would be required to make annual reports to the FDA. Pediatric studies for an approved product conducted under PREA may qualify for pediatric exclusivity, which, if granted, provides an additional six months of exclusivity that attaches to the end of existing marketing exclusivity and patent periods for DefenCath. Depending on the timing of final report submission, DefenCath could potentially receive a total marketing exclusivity period of 10.5 years. However, there are factors that could affect whether this exclusivity is received or the duration of exclusivity, and DefenCath may or may not ultimately be eligible for the additional 0.5 years of exclusivity associated with this pediatric study.

Previous wording

We have not generated substantial revenue since our inception. Our ability to generate future revenue and become profitable depends on our ability to successfully commercialize DefenCath beginning in the second quarter of 2024 and any product candidates that we may advance in the future. If we fail to successfully commercialize DefenCath, or any other product candidates we advance in a timely manner or obtain regulatory approval for them, our ability to generate future revenue, and our results of operations and financial position, could be adversely affected. Through June 30, 2024, we have funded our operations primarily through debt and equity financings.

Current wording

Our ability to continue to generate revenue and become profitable depends on our ability to successfully commercialize DefenCath and achieve gross profits from DefenCath sales that are greater than our ongoing operating costs. If we fail to successfully commercialize DefenCath, or any other product candidates we advance in a timely manner or obtain regulatory approval for them, our ability to generate future revenue, and our results of operations and financial position, could be adversely affected. Through September 30, 2024, we have funded our operations primarily through equity financings.

Previous wording

Research and development, or R&D, expense consists of: (i) internal costs associated with our development activities; (ii) payments we make to third party contract research organizations, contract manufacturers, investigative sites, and consultants; (iii) technology and intellectual property license costs; (iv) manufacturing development costs; (v) personnel related expenses, including salaries, stock–based compensation expense, benefits, travel and related costs for the personnel involved in drug development; (vi) activities relating to regulatory filings and pre-clinical studies and clinical trials; (vii) facilities and other allocated expenses, which include direct and allocated expenses for rent, facility maintenance, as well as laboratory and other supplies; and (viii) manufacturing-related costs, including previously expensed pre-NDA approval inventory amounting to approximately $6,400,000. All R&D is expensed as incurred.

Current wording

Research and development, or R&D, expense consists of: (i) internal costs associated with our development activities; (ii) payments we make to third party contract research organizations, contract manufacturers, investigative sites, and consultants; (iii) technology and intellectual property license costs; (iv) manufacturing development costs; (v) personnel related expenses, including salaries, stock–based compensation expense, benefits, travel and related costs for the personnel involved in drug development; (vi) activities relating to regulatory filings and pre-clinical studies and clinical trials; (vii) facilities and other allocated expenses, which include direct and allocated expenses for rent, facility maintenance, as well as laboratory and other supplies; and (viii) comparative period costs include certain pre-NDA manufacturing-related costs expensed as R&D. All R&D is expensed as incurred.

Previous wording

Selling and marketing expense includes the cost of salaries and related costs for personnel in sales and marketing, brand building, advocacy, market research and consulting. Selling and marketing expenses are expensed as incurred.

Current wording

Selling and marketing, or S&M, expense includes the cost of salaries and related costs for personnel in sales and marketing, brand building, advocacy, market research and consulting. Selling and marketing expenses are expensed as incurred.

Previous wording

General and administrative expenses consist principally of salaries and related costs for personnel in executive, finance and administrative functions including payroll taxes and health insurance, stock-based compensation and travel expenses. Other general and administrative expenses include facility-related costs, insurance and professional fees for legal, patent review, consulting, and accounting services. General and administrative expenses are expensed as incurred.

Current wording

General and administrative, or G&A, expenses consist principally of salaries and related costs for personnel in executive, finance and administrative functions including payroll taxes and health insurance, stock-based compensation and travel expenses. Other general and administrative expenses include facility-related costs, insurance and professional fees for legal, patent review, consulting, and accounting services. General and administrative expenses are expensed as incurred.

Previous wording

Comparison of the Three and Six Months Ended June 30, 2024 and 2023

Current wording

Comparison of the Three and Nine Months Ended September 30, 2024 and 2023

Previous wording

*Revenues.*Revenue increased by $0.8 million for both the three and six months ended June 30, 2024. Revenue consists of sales of DefenCath, which was approved by the FDA in November 2023 and launched in the US in April 2024 in inpatient settings and reflects the shipment of DefenCath to specialty distributors, net of estimates for applicable variable consideration, which consists primarily of distribution service fees, prompt pay and other discounts, product returns, chargebacks, rebates and volume incentive rebates.

Current wording

*Revenues.*Revenue increased by $11.5 million and $12.3 million for the three and nine months ended September 30, 2024. Revenue consists of sales of DefenCath, which was approved by the FDA in November 2023 and launched in the U.S in April 2024 and reflects the shipment of DefenCath to direct customers and specialty distributors, net of estimates for applicable variable consideration, which consists primarily of distribution service fees, prompt pay and other discounts, product returns, chargebacks, rebates and volume incentive rebates.

Previous wording

*Cost of Revenues.*Cost of revenues include direct and indirect costs related to the manufacturing and distribution of DefenCath, including product cost, packaging services, freight, amortization of the license intangible asset and an allocation of overhead costs that are primarily fixed such as salaries, benefits and insurance. We expect these relatively fixed costs to become less significant as a percentage of net sales with anticipated sales volume increases. Direct costs of product sales during the three and six months ended June 30, 2024 are minimal as DefenCath sold to date, represents validation lot units previously expensed as R&D. Indirect costs of approximately $0.5 million for the three months and $1.3 million for the six-months ended June 30, 2024, respectively, represent the proportion of salaries, benefits and insurance expenses representing excess capacity pertaining to pre-launch related activities. Certain pre-approval validation batch product previously expensed as R&D will improve margins throughout 2024 or until such inventory is depleted.

Current wording

*Cost of Revenues.*Cost of revenues include direct and indirect costs related to the manufacturing and distribution of DefenCath, including product cost, packaging services, freight, amortization of the license intangible asset and an allocation of overhead costs that are primarily fixed such as salaries, benefits and insurance. We expect these relatively fixed costs to become less significant as a percentage of net sales with anticipated sales volume increases. Direct costs of product sales during the three and nine months ended September 30, 2024 are minimal as DefenCath sold to date, represents validation lot units previously expensed as R&D. The pre-approval validation batch product previously expensed as R&D will positively impact margins throughout 2024 or until such inventory is depleted. Indirect costs of approximately $0.6 million for the three months and $1.9 million for the nine months ended September 30, 2024, respectively, represent the proportion of salaries, benefits and insurance expenses representing excess capacity pertaining to pre-launch related activities. Included in the indirect costs previously expensed as a component of R&D were $0.2 million and $0.7 million of personnel expenses for the three and nine months ended September 30, 2023, respectively.

Previous wording

Research and Development Expense. R&D expense was $0.7 million for the three months ended June 30, 2024, a decrease of $4.1, or 86%, from $4.8 for the same period in 2023. For the six months ended June 30, 2024, R&D expense was $1.5 million, compared to $8.2 million for the six months ended June 30, 2023, a decrease of 82%. The decrease for both comparison periods was driven by the approval of DefenCath. As a result of the post FDA approval commercial operations, costs related to medical affairs and certain personnel expenses that supported R&D efforts prior to the FDA approval of DefenCath have been recognized in selling or general and administrative expense during the three months ended June 30, 2024, as compared to the same period last year that were recognized in R&D. In addition, a portion of the costs related to the manufacturing of DefenCath, previously recognized in R&D, are now capitalized as a result of the FDA approval. There was also a decrease in non-cash charges for stock-based compensation of $0.1 million and $0.5 million for the three months and the six months ended June 30, 2024, respectively.

Current wording

Research and Development Expense. R&D expense was $0.7 million for the three months ended September 30, 2024, a decrease of $2.0 million, or 73%, from $2.7 million for the same period in 2023. For the nine months ended September 30, 2024, R&D expense was $2.2 million, compared to $10.9 million for the nine months ended September 30, 2023, a decrease of $8.7 million, or 80%. The decrease for both comparison periods was driven by the approval of DefenCath. As a result of the post FDA approval commercial operations, costs related to medical affairs and certain personnel expenses that supported R&D efforts prior to the FDA approval of DefenCath have been recognized in cost of revenue or general and administrative expense during the three and nine months ended September 30, 2024, as compared to the same period last year that were recognized in R&D. In the prior three and nine month periods, there were $0.1 million and $1.5 million, respectively, of costs related to the manufacturing of DefenCath validation batches previously expensed as a component of R&D prior to the FDA approval. These types of costs are now capitalized in inventory as DefenCath is a commercialized product. Additionally, there were $1.9 million and $5.8 million in personnel and consulting expenses for the three and nine months ended September 30, 2023, respectively, previously expensed as a component of R&D prior to FDA approval, are now expensed in cost of revenue and G&A.

Previous wording

*Selling and Marketing Expense.*S&M expense was $7.4 million for the three months ended June 30, 2024, an increase of $4.1 million, or 127%. For the six months ended June 30, 2024, S&M expense increased $7.8 million to $13.7 million, an increase of 133%. The increase in both periods was due primarily to increased marketing efforts and new personnel, inclusive of our sales force and support for the commercial launch of DefenCath in the second quarter of 2024 as well as certain expenses previously expensed as a component of R&D prior to FDA approval.

Current wording

*Selling and Marketing Expense.*S&M expense was $6.7 million for the three months ended September 30, 2024, an increase of $2.7 million, or 66%. For the nine months ended September 30, 2024, S&M expense increased $10.5 million to $20.5 million, an increase of 106%. The increase in both periods was due primarily to increased marketing efforts and new personnel, inclusive of our sales force and support for the commercial launch of DefenCath in the third quarter of 2024.

Previous wording

General and Administrative Expense. G&A expense was $7.6 million for the three months ended June 30, 2024, an increase of $3.8 million, or 103%, from $3.8 million for the same period in 2023. For the six months ended June 30, 2024, G&A expense was $16.3 million, compared to $8.7 million for the six months ended June 30, 2023, an increase of $7.6 million, or 87%. The increase was primarily attributable to increases in personnel expenses of $2.0 million and $4.2 million for the three and six months ended June 30, 2024, respectively, in preparation for support activities pertaining to commercial launch, as well as certain expenses previously expensed as a component of R&D prior to FDA approval. There were also increases in legal and compliance of $0.8 million and $1.2 million, consulting fees of $0.3 million and $0.5 million and non-cash charges for stock-based compensation of $0.2 million and $0.5 million, for the three and six month periods ended June 30, 2024, respectively.

Current wording

General and Administrative Expense. G&A expense was $6.6 million for the three months ended September 30, 2024, an increase of $2.9 million, or 76%, from $3.7 million for the same period in 2023. For the nine months ended September 30, 2024, G&A expense was $22.9 million, compared to $12.5 million for the nine months ended September 30, 2023, an increase of $10.4 million, or 83%. The increase for both comparison periods was driven by the approval of DefenCath. As a result of the post FDA approval commercial operations, certain personnel and consulting expenses that supported R&D efforts prior to the FDA approval of DefenCath have been recognized in G&A expense during the three months and nine months ended September 30, 2024, as compared to the same period last year that were recognized in R&D. In the prior three and nine month periods, certain personnel and consulting expenses previously expensed as a component of R&D prior to the FDA approval of $1.7 million and $5.1 million, respectively, are now expensed in G&A. Additionally, there were increases in personnel expenses of $0.7 million and $2.6 million for the three and nine months ended September 30, 2024, respectively, in preparation for support activities pertaining to commercial launch, as well as increases in legal and compliance of $0.2 million and $1.5 million and, consulting fees of $0.1 million and $0.6 million for the three and nine month periods ended September 30, 2024, respectively.

Previous wording

Interest Income. Interest income was $0.7 million and $1.5 million for the three- and six months ended June 30, 2024, compared to $0.6 million and $1.0 million for the same period last year, respectively, an increase of $0.1 million, or 19% and $0.5 million, or 52%, respectively. The increase was attributable to higher interest rates in short-term investments during this period as compared to the same period last year.

Current wording

Interest Income. Interest income for the three months ended September 30, 2024 was $0.6 million a decrease of $0.2 million, or 28%, compared to $0.8 million for the same period last year, due to lower short-term investments. For the nine months ended September 30, 2024, interest income was $2.1 million compared to $1.8 million for the same period last year, an increase of $0.3 million, or 17%, attributable to higher interest rates in short-term investments during this period as compared to the same period last year.

Previous wording

*Other Income.*Other income relates to a settlement with a previously utilized vendor, occurring during the three month period ended June 30, 2024.

Current wording

*Other Income.*Other income relates to a settlement with a previously utilized vendor, occurring during the nine month period ended September 30, 2024.

Previous wording

As a result of our R&D, S&M and G&A expenditures and the lack of substantial product sales revenue, our ongoing operations have not been profitable since our inception. During the six months ended June 30, 2024, we received net proceeds of $1.0 million from the issuance of 231,097 shares of common stock under our at-the-market-issuance sales agreement, or ATM program, as compared to $12.5 million net proceeds for the same period in 2023 from the issuance of 2,866,421 shares of common stock. We will continue to be reliant on external sources of cash for the foreseeable future until we are able to generate profits.

Current wording

As a result of our R&D, S&M and G&A expenditures and the lack of substantial product sales revenue, our ongoing operations have not been profitable since our inception. During the nine months ended September 30, 2024, we received net proceeds of $13.4 million from the issuance of 2,521,121 shares of common stock under our at-the-market-issuance sales agreement, or ATM program, as compared to $12.5 million net proceeds for the same period in 2023 from the issuance of 2,866,421 shares of common stock. Also, for the same period in 2023, we received net proceeds of $42.0 million from the issuance of 9,000,093 shares of common stock and pre-funded warrants to purchase 2,500,625 shares of common stock in connection with the public offering. We may continue to be reliant on external sources of cash until we are able to generate sufficient working capital to fund operations.

Previous wording

Net cash provided by investing activities for the six months ended June 30, 2024, was $15.2 million as compared to $17.1 million of net cash used in investing activities for the same period in 2023. The net cash provided during the six months ended June 30, 2024, was mainly driven by an increase in maturity of the amount invested in short-term investments, partially offset by lower purchase of short-term investments in 2024 as compared to the same period in 2023.

Current wording

Net cash provided by investing activities for the nine months ended September 30, 2024, was $21.5 million as compared to $17.7 million of net cash used in investing activities for the same period in 2023. The net cash provided during the nine months ended September 30, 2024, was mainly driven by an increase in maturity of the amount invested in short-term investments to help fund operations, partially offset by lower purchase of short-term investments in 2024 as compared to the same period in 2023.

Previous wording

Net cash provided by financing activities for the six months ended June 30, 2024, was $1.0 million as compared to $12.6 million for the same period in 2023, a decrease of $11.6 million. The decrease was mainly attributable to the decrease of $11.5 million in net proceeds generated from the sale of our common stock in our ATM program.

Current wording

Net cash provided by financing activities for the nine months ended September 30, 2024, was $15.0 million as compared to $55.4 million for the same period in 2023, a decrease of $40.4 million. The decrease was mainly attributable to $42.9 million of net proceeds from a public offering completed in the three month period ended September 30, 2023 offset by increased ATM net proceeds of $0.9 million and increases in proceeds from the exercise of stock options of $1.6 million during the nine month period ended September 30, 2024.

Previous wording

Our total cash, cash equivalents and short-term investments as of June 30, 2024, was $45.6 million, excluding restricted cash of $0.1 million, compared with $76.0 million for the year ended December 31, 2023, excluding restricted cash of $0.2 million. As of June 30, 2024, $48.8 million of the Company’s common stock remains available for sale under the ATM program. Additionally, we have $100 million of remaining capacity available under our 2024 Shelf Registration Statement for the issuance of Company securities.

Current wording

Our total cash, cash equivalents and short-term investments as of September 30, 2024, was $46.0 million, excluding restricted cash of $0.1 million, compared with $76.0 million for the year ended December 31, 2023, excluding restricted cash of $0.2 million. As of September 30, 2024, $36.0 million of the Company’s common stock remains available for sale under the ATM program. Additionally, we have $100 million of remaining capacity available under our 2024 Shelf Registration Statement for the issuance of Company securities.

Previous wording

We expect to continue to fund operations from cash, cash equivalents and short-term investments and through capital raising sources as previously described, which may be dilutive to existing stockholders, through revenues from the sale of our products or through strategic alliances. In May 2024, we implemented an ATM program, which may be utilized to support our ongoing funding requirements. Additionally, we may enter into a credit facility in case necessary to support ongoing working capital needs. We may seek to sell additional equity or debt securities through one or more discrete transactions, or enter into a strategic alliance arrangement, but can provide no assurances that any such financing or strategic alliance arrangement will be available on acceptable terms, or at all. Moreover, the incurrence of indebtedness would result in increased fixed obligations and could contain covenants that would restrict our operations. Raising additional funds through strategic alliance arrangements with third parties may require significant time to complete and could force us to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates, or to grant licenses on terms that may not be favorable to us or our stockholders. Our actual cash requirements may vary materially from those now planned due to a number of factors, including any change in the timing of the commercial launch of DefenCath or the focus and direction of our research and development programs, any acquisition or pursuit of development of new product candidates, competitive and technical advances, the costs of commercializing any of our product candidates, and costs of filing, prosecuting, defending and enforcing any patent claims and any other intellectual property rights.

Current wording

We expect to continue to fund operations from cash collections from accounts receivable, plus cash, cash equivalents and short-term investments and through capital raising sources as previously described, which may be dilutive to existing stockholders. In May 2024, we implemented an ATM program, which may be utilized to support our ongoing funding requirements. Additionally, we may enter into a credit facility in case necessary to support ongoing working capital needs. We may seek to sell additional equity or debt securities through one or more discrete transactions, or enter into a strategic alliance arrangement, but can provide no assurances that any such financing or strategic alliance arrangement will be available on acceptable terms, or at all. Moreover, the incurrence of indebtedness would result in increased fixed obligations and could contain covenants that would restrict our operations. Raising additional funds through strategic alliance arrangements with third parties may require significant time to complete and could force us to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates, or to grant licenses on terms that may not be favorable to us or our stockholders. Our actual cash requirements may vary materially from those now planned due to a number of factors, including any change in the timing of the commercial launch of DefenCath or the focus and direction of our research and development programs, any acquisition or pursuit of development of new product candidates, competitive and technical advances, the costs of commercializing any of our product candidates, and costs of filing, prosecuting, defending and enforcing any patent claims and any other intellectual property rights.

Previous wording

We expect to generate product sales for DefenCath in the U.S. In the absence of significant revenue, we are likely to continue generating operating cash flow deficits. We will continue to use cash as we increase other activities relating to the commercialization of DefenCath and pursue business development activities.

Current wording

We expect to generate product sales for DefenCath in the U.S. In the absence of significant revenue, we may continue generating operating cash flow deficits. We will continue to use cash as we increase other activities relating to the commercialization of DefenCath and pursue business development activities.

Previous wording

We currently estimate that as of June 30, 2024, we have sufficient cash, cash equivalents and short-term investments to fund operations for at least twelve months from the issuance of this Quarterly Report on Form 10-Q. These estimates are based upon the Company’s base case assumptions for market penetration, average selling price, gross-to-net discounts, research and development expense and commercial infrastructure cost. Additional financing may be needed to build out our commercial infrastructure and to continue our operations. If we are unable to raise additional funds when needed, we may be forced to slow or discontinue the commercial launch of DefenCath. We may also be required to delay, scale back or eliminate some or all of our research and development programs. Each of these alternatives would likely have a material adverse effect on our business.

Current wording

We currently estimate that as of September 30, 2024, we have sufficient cash, cash equivalents and short-term investments to fund operations for at least twelve months from the issuance of this Quarterly Report on Form 10-Q. These estimates are based upon the Company’s base case assumptions for market penetration, average selling price, gross-to-net discounts, research and development expense and commercial infrastructure cost. Additional financing may be needed to build out our commercial infrastructure and to continue our operations. If we are unable to raise additional funds when needed, we may be forced to slow or discontinue the commercial launch of DefenCath. We may also be required to delay, scale back or eliminate some or all of our anticipated research and development programs. Each of these alternatives would likely have a material adverse effect on our business.

Previous wording

For the six months period ended June 30, 2024, there were no significant changes to our critical accounting estimates as identified in our Annual Report on Form 10-K for the year ended December 31, 2023, except as noted below:

Current wording

For the nine months period ended September 30, 2024, there were no significant changes to our critical accounting estimates as identified in our Annual Report on Form 10-K for the year ended December 31, 2023, except as noted below:

Previous wording

Rebates – We are subject to negotiated discount obligations to different prescription benefit managers, other commercial organizations or government programs. The rebate amounts for these programs are determined by statutory requirements or contractual arrangements. Our liability for these rebates consists of invoices received for claims that have not been paid or for which an invoice has not yet been received, estimates of claims for the current quarter are based on expected product utilization, and estimated future claims that will be made for product that has been recognized as revenue, but remains in the distribution channel at the end of each reporting period.

Current wording

Rebates – We are subject to negotiated discount obligations to different GPO’s, direct purchasers, other commercial organizations or government programs. The rebate amounts for these programs are determined by statutory requirements or contractual arrangements. Our liability for these rebates consists of invoices received for claims that have not been paid or for which an invoice has not yet been received, estimates of claims for the current quarter are based on expected product utilization, and estimated future claims that will be made for product that has been recognized as revenue, but remains in the distribution channel at the end of each reporting period.