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U.S. Research: August 24, 2010
We are initiating coverage on CorMedix Inc. (NYSE AMEX: CRMD) with a BUY rating and a 12-
month price target of $6.00 for CRMD shares for the following reasons:
Neutrolin® (CRMD003): CRMD’s lead program opens the door to a $675 million sales
opportunity via the prevention of catheter-related bloodstream infections, a major healthcare
challenge;
CRMD001 (a novel formulation of deferiprone): 3-Month Price Chart
strengthens CRMD’s pipeline prospects with a
potential market opportunity of $365 million; and
Several catalysts, including Neutrolin®’s IDE
submission and subsequent pivotal trial and
preliminary data for CRMD001 Phase II in 4Q ‘10
expected to drive value for CRMD shares.
Source: Yahoo.com
Chrystyna
Mark Merrill
Bedrij*
212-509-9500
646-442-1441
CBedrij@GriffinSecurities.com
MMerrill@GriffinSecurities.com
INVESTMENT SUMMARY
The heart and kidney are inextricably linked and oxidative stress and endothelial dysfunction are common
to both. Much of the morbidity and mortality associated with kidney disease is cardiovascular. Patients
with chronic kidney disease have increased risk of accelerated atherosclerosis, nonfatal myocardial
infarction, congestive heart failure, atrial and ventricular arrhythmias, and cardiac death.1 CRMD is
developing therapies and enabling diagnostics to address this cardio-renal epidemic. Its two platform
technologies, Neutrolin® and CRMD001 (deferiprone), target kidney disease and concomitant
cardiovascular complications.
Neutrolin® (CRMD003): CRMD’s lead program opens the door to a $675 million sales
opportunity via the prevention of catheter-related bloodstream infections, a major healthcare
challenge. The Center for Disease Control (CDC) has identified catheter-related bloodstream
infection as one of its seven major healthcare challenges. They estimate the annual incidence of
cases at 250,000 with the cost to the healthcare systems of approximately $4.6 billion per year.
Neutrolin®’s potential to become the first FDA-approved catheter lock solution (to be administered into
a patient’s catheter at the conclusion of each hemodialysis session) to prevent catheter-related
bloodstream infection would be significant. A pivotal registration trial is expected to begin as early as
1H ‘11.
CRMD001 – a novel formulation of deferiprone – strengthens CRMD’s pipeline prospects with
a potential market opportunity of $365 million. CRMD is advancing CRMD001 to prevent contrast-
induced nephropathy in high risk patients. The iron chelator acts by removing excess labile, or "toxic",
iron associated with X-ray dyes/imaging procedures in high-risk patients with chronic kidney disease.
A Phase II study started in 2Q ’10. Favorable results are expected to lead to the launch of a pivotal
Phase III trial in 2H ‘11. We forecast a potential market opportunity of $365M in the US for
CRMD001’s first indication, contrast-induced nephropathy.
Several catalysts, including Neutrolin®’s IDE submission and subsequent pivotal trial and
preliminary data for CRMD001 Phase II in Q42010 expected to drive value for CRMD shares.
The development and advancement of the Neutrolin® program is likely to be the biggest driver of
value for CRMD shares in the near term. In addition, positive results from the CRMD001 Phase II trial
(preliminary data and final data expected in 4Q ’10 and 1H ’11, respectively) would likely substantially
increase the value of the program based on decreased clinical risk and increased potential of an early
corporate deal (e.g., either a big pharmaceutical partnership, sale of the program, etc.). Increased
visibility as a relatively new public company should also provide increased sponsorship.
Our discounted cash flow (DCF) model supports a valuation of $6.60/share. Therefore, we are
initiating coverage on CorMedix Inc. (NYSE AMEX: CRMD) with a BUY and establishing a 12-
month price target of $6.00 per CRMD share.
1 Peter A . McCullough, MD, MPH, “Scope of Cardiovascular Complications in Patients with Kidney Diseaese”, Journal of Ethnicity
& Disease, Volume 12 2002.
PROGRAM HIGHLIGHTS
NEUTROLIN® (CRMD003) – A BREAKTHROUGH PRODUCT IN INFECTION CONTROL
Favorable Neutrolin® clinical data support advancement into pivotal trial for the prevention of
catheter-related bloodstream infection and maintenance of catheter function in patients
receiving hemodialysis for the treatment of end-stage renal disease, a large unmet medical
need. Four published clinical studies demonstrate the potential to significantly improve the ability to
prevent catheter-related bloodstream infection.2,3,4,5 The commercial opportunity for an antimicrobial
that has broad-spectrum activity, prevents bacteremia and fungal infection resulting from biofilm
structures in catheters, and does not lead to antibiotic resistance or systemic side effects is
significant. The market potential for the initial indication is close to $300 million, and expansion into
other areas that rely on central venous catheters and peripherally inserted central catheter use for
chemotherapy, systemic antibiotic therapy, or total parenteral nutrition, could expand the potential
target market to $675 million.
The Center for Disease Control (CDC) has identified catheter-related bloodstream infection as
one of its seven major healthcare challenges. Neutrolin® has tremendous potential to address
this unmet medical need. Neutrolin® is a broad-spectrum antimicrobial compound that prevents
bacterial biofilm from developing in the catheter and eradicates existing biofilm growth. Bacteremia,
which has been linked to biofilm, is a serious complication of dialysis catheter use that often leads to
major systemic complications, including endocarditis, osteomyelitis, epidural abscess, septic arthritis,
and even death.6,7,8,9 The Center for Disease Control (CDC) estimates that 65% of hospital-acquired
infections in the U.S. are caused by microbial biofilms formed on indwelling medical devices,
including catheters. Studies have shown that annual healthcare costs for treating catheter-related
bloodstream infection alone may exceed $800 million annually (in hemodialysis alone).10 Additionally,
recent reports from the National Nosocomial Infections Surveillance (NNIS) System and CDC show
rapidly increasing rates of resistance by some common pathogens associated with catheter-related
bloodstream infection to antibiotics (including methicillin, gentamycin, and vancomycin). Neutrolin®
has tremendous potential to positively impact vascular access outcomes for many patients who rely
on central venous catheters and are at significant risk of catheter-related bloodstream infection.
Neutrolin® aims to establish the first FDA-approved catheter-related bloodstream infection
prevention treatment. Dr. Michael Allon, principal investigator (PI) of Neutrolin® and a pioneering
physician whose work in hemodialysis and vascular access has brought him recognition as one of the
world’s foremost experts, stated that “We observed a dramatically lower frequency of hemodialysis
catheter-related bacteremia among patients whose tunneled catheters were instilled with
2Allon, M. Prophylaxis Against Dialysis Catheter-Related Bacteremia with a Novel Antimicrobial Lock Solution. Clin Infect Dis, 2003.
36: p. 1539-44.
3 Betjes, M.G.H. and van Agteren, M., Prevention of Dialysis Catheter-Related Sepsis with a Citrate-Taurolidine-Containing Lock
Solution. Nephrol Dial Transplant, 2004. 19(6): p. 1546-51.
4 Taylor. J of Renal Care 2008. 34(3): 116-20.
5 Sodemann. Poster. American Society of Nephrology. 2001.
6Marr, K.A. et al. Catheter-related bacteremia and outcome of attempted catheter salvage in patients undergoing hemodialysis. Ann
Intern Med 1997. 127: p. 275-80.
7Beathard, G.A. Management of bacteremia associated with tunneled-cuffed hemodialysis catheters. J Am Soc Nephrol 1999. 10:
1045-9.
8Tanriover, B. et al. Bacteremia associated with tunneled dialysis catheters: comparison of two treatment strategies. Kidney Int
2000. 57: p. 2151-5.
9 Krishnasami, Z. et al. Management of hemodialysis catheter related bacteremia with an adjunctive antibiotic lock solution. Kidney
Int 2002. 61: p. 1136-42.
10 Allon, M., Prophylaxis Against Dialysis Catheter-Related Bacteremia: A Glimmer of Hope. Am J Kidney Dis, 2008. 51(2): 165-68.
Neutrolin®.11 I look forward to CorMedix initiating the final phase of the drug
development program that could establish the first FDA-approved catheter-related bloodstream
infection prevention treatment.”12
CRMD001 (NEWLY FORMULATED DEFERIPRONE) FOR THE PREVENTION OF ACUTE KIDNEY INJURY
Deferiprone is designed for the prevention of morbidity and mortality associated with
contrast-induced nephropathy (CIN). The Company’s first targeted indication for CRMD001 is for
the prevention (decrease in rate of incidence) of morbidity and mortality associated with acute kidney
injury in subjects with moderate to severe chronic kidney disease and other risk factors undergoing
interventional cardiac procedures and receiving an iodinated radio-contrast agent. There are multiple
lines of evidence that form the scientific and clinical basis for the potential efficacy of CRMD001 in
preventing morbidity and mortality associated with x-ray dye. Patients with moderate to severe
chronic kidney disease are at an elevated risk of contrast-induced nephropathy because they have
increased renal iron content, in addition to chronic oxidative stress, inflammation, endothelial
dysfunction, and other damage to the renal system. It is believed that by binding and translocating
this excess iron, deferiprone minimizes the generation of reactive oxygen species, resulting in
reduced damage to cell structures via oxidative stress.
The Company is advancing its iron-binding/chelating drug, CRMD001, in a Phase II trial for the
prevention of contrast induced nephropathy in high-risk patients with chronic kidney disease
by removing the excess labile, or "toxic", iron associated with X-ray dyes/imaging
procedures. A Phase II study commenced in 2Q ‘10 with favorable Phase II data expected to lead
to a pivotal Phase III trial in 2H ‘11. We forecast annual peak sales potential of $365 million in the US
for CRMD001’s first indication, contrast-induced nephropathy.
There is a great body of evidence supporting CRMD001’s use and safety in patients. CRMD001
has previously been administered safely in over 7,500 patients in numerous studies in a variety of
indications and approved and available for sale in 50 countries worldwide (ex-U.S.) as a treatment
option for iron overload disorders. There is, however, no U.S. FDA-approved preventative agent for
contrast-induced nephropathy, which represents a new indication with a clear unmet medical need.
This is CRMD’s initial focus with its CRMD001 program in the U.S. Excess labile iron pools appear to
be one of the key causes of contrast-induced nephropathy that may lead to cardiovascular
complications, permanent kidney damage, and possibly death.13,14 Increasing evidence, including a
July 2010 publication in the Canadian Journal of Physiology and Pharmacology, suggests that iron
redistribution may be an effective therapeutic strategy to pursue to treat diseases of iron
accumulation.15 Excess labile iron pools appear to be one of the key causes of contrast-induced
nephropathy, so an iron-targeting agent such as deferiprone may be the ideal treatment strategy.16,17
11 Allon, M. Prophylaxis Against Dialysis Catheter-Related Bacteremia with a Novel Antimicrobial Lock Solution. Clin Infect Dis,
2003. 36: p. 1539-44.
12 Griffin Securities conference call, June 25, 2010.
13 Dangas G. et al. Contrast-induced nephropathy after percutaneous coronary interventions in relation to chronic kidney disease
and hemodynamic variables. Am J Cardiol, 2005. 95(1): 13-9.
14 Rihal et al. Incidence and prognostic importance of acute renal failure after percutaneous coronary intervention. Circulation,
2002. 105(19): 2259-64.
15 Kakhlon, O. et al. Iron redistribution as a therapeutic strategy for treating diseases of localized iron accumulation. Can J Physiol
Pharmacol, 2010. 88: 187-96.
16 Bakris, G. et al. Radiocontrast medium-induced declines in renal function: a role for oxygen free radicals. Am J Physiol, 1990.
285: F115-20.
17 Yoshioka, T. et al. Reduced activity of antioxidant enzymes underlies contrast media-induced renal injury in volume depletion.
Kidney Int, 1992. 41(4): 1008-15.
*Zachary Ajzenman of Griffin Securities, Inc., assisted with the research for this report.
TABLE OF CONTENTS
COMPANY OVERVIEW..............................................................................................................................6
PRODUCT DEVELOPMENT PIPELINE....................................................................................................................6
ANTICIPATED EVENTS & MILESTONES..................................................................................................7
NEUTROLIN® (CRMD003)............................................................................................................................7
CRMD001 (NEWLY FORMULATED DEFERIPRONE)..............................................................................................7
MANAGEMENT...........................................................................................................................................8
BOARD OF DIRECTORS...................................................................................................................................8
CARDIORENAL SCIENTIFIC ADVISORY BOARD......................................................................................................9
NEUTROLIN® EXECUTIVE COMMITTEE...............................................................................................................10
ABOUT NEUTROLIN® (CRMD003)...........................................................................................................11
NEUTROLIN®’S FORMULATION........................................................................................................................12
CLINICAL TRIAL RESULTS (TAUROLIDINE 1.35% AND CITRATE 4% FORMULATION)..................................................13
UPCOMING PIVOTAL TRIAL............................................................................................................................14
INTELLECTUAL PROPERTY.............................................................................................................................14
COMPETITIVE LANDSCAPE FOR NEUTROLIN®......................................................................................................15
ABOUT CRMD001 (NEWLY FORMULATED DEFERIPRONE)...............................................................16
PROOF-OF-CONCEPT PHASE II STUDY AND UPCOMING PIVOTAL PHASE III STUDY WITH SPA....................................18
INTELLECTUAL PROPERTY.............................................................................................................................18
COMPETITIVE LANDSCAPE FOR CRMD001.....................................................................................................19
ABOUT CRMD004....................................................................................................................................21
ABOUT CRMD002....................................................................................................................................21
INVESTMENT CONCERNS AND RISKS..................................................................................................21
FINANCIAL FORECASTS & VALUATION...............................................................................................22
HISTORICAL BALANCE SHEET........................................................................................................................22
REVENUE ASSUMPTIONS...............................................................................................................................23
INCOME STATEMENT....................................................................................................................................25
DISCOUNTED CASH FLOW (DCF) MODEL.......................................................................................................26
APPENDIX A: HEMODIALYSIS OVERVIEW...........................................................................................27
DISCLOSURES..............................................................................................................29
Disclosures
COMPANY OVERVIEW
CorMedix Inc. (NYSE AMEX: CRMD) is a clinical-stage pharmaceutical company. CRMD’s most
advanced product is Neutrolin®, an antimicrobial/anticoagulant solution containing taurolidine (1.35%),
citrate (4%), and heparin (1000 u/ml). Intended for local use, it is expected to enter a pivotal clinical trial to
prevent catheter-related bloodstream infection and maintain catheter function as a catheter lock solution.
CRMD’s second product is CRMD001, an oral, small molecule iron chelator in studies for the prevention
of contrast-induced nephropathy, a form of acute kidney injury, in high-risk patients with chronic kidney
disease. Additional pipeline candidates include CRMD004, a gel formulation of Neutrolin®, and
CRMD002, a urine test to diagnose chronic kidney disease.
CorMedix was founded as a Delaware corporation in 2006 under the name Picton Holding Company, Inc.
The Company changed its name to CorMedix Inc. in 2007 and became a publicly-traded company in
March 2010 following its initial public offering (IPO).
Development
Timeline
4Q‘10– IDE 1H‘11– Initiate 1H‘12– Release 1H‘13– FDA approval
submission for pivotal trial of preliminarydata from for Neutrolin®via
Neutrolin® Neutrolin® pivotal trial PMA
2011 2012 2013
Neutrolin®
NEUTROLIN® (CRMD003)
4Q ‘10 – Investigational Device Exemption (IDE) submission.
1H ‘11 – Initiate pivotal clinical trial of Neutrolin® in catheter-related bloodstream infection prevention.
2H ‘12 – Release final data from pivotal Phase III DEFEND-AKI trial.
MANAGEMENT
John C. Houghton – President, Chief Executive Officer
• Joined CorMedix in 2007
• 20 years of experience spans from global strategic to affiliate tactical roles covering the full
product life-cycle from research through generics, biologicals and devices
• Established the global sales and marketing infrastructure for the Biotech division of Stryker
• Prior to Stryker Biotech, worked at Aventis for over 14 years where he led the global launch of
Nasacort®
Mark T. Houser, MD, MBA – Chief Medical Officer
• Joined CorMedix in 2007
• At Johnson & Johnson (OrthoBiotech) responsible for clinical development projects in oncology
and critical care, business development projects focused on the cardiorenal area, had Medical
Affairs responsibilities, and was an internal nephrology consultant to J&J family of companies
• Clinical Medical Director of a dialysis network and performed research in areas of oxidative stress
and acute kidney injury as a clinical and academic Nephrologist
BOARD OF DIRECTORS
Russell H. Ellison, MD, MSc – Director (Chairman of the Board)
• Director of the Company and Chairman of the Board since 2007
• Executive Vice President, Paramount BioSciences
• Served as Vice President, Clinical Development of Fibrogen, Inc.
• Served as Vice President, Medical Affairs and Chief Medical Officer of Sanofi-Synthelabo, USA
• Served as Vice President, Medical Affairs and Chief Medical Officer of Hoffman-La Roche, Inc
Bamdad (Bami) Bastani, PhD – Director
• Director of CorMedix since February 2010
• Chairman, VSSB Medical Nanotechnology Inc.
• Chairman, B2Global Consulting
• Served as President and CEO of Anadigics, Inc. a provider of semiconductor solutions
Richard M. Cohen – Director
• Director of CorMedix since 2009
• Since 2002 served as a Managing Director of Encore/Novation
• Served as Chief Financial Officer of Dune Energy
Gary A. Gelbfish, MD – Director
• Director of CorMedix since 2009
• Been in private practice as a Vascular Surgeon since 1990, also has practiced vascular surgery
at Beth Israel Hospital and NYU Downtown Hospital
18 Allon, M., Prophylaxis Against Dialysis Catheter-Related Bacteremia: A Glimmer of Hope. Am J Kidney Dis, 2008. 51(2): 165-68.
19 Allon, M., Prophylaxis Against Dialysis Catheter-Related Bacteremia: A Glimmer of Hope. Am J Kidney Dis, 2008. 51(2): 165-68.
20 Lok, C.E., Fistula First Initiative: Advantages and Pitfalls. Clin J Am Soc Nephrol, 2007. 2(5): p. 1043-53.
21 Allon, M., Prophylaxis Against Dialysis Catheter-Related Bacteremia: A Glimmer of Hope. Am J Kidney Dis, 2008. 51(2): 165-68.
22 Donlon, R.M., Biofilm Formation: A Clinically Relevant Microbiological Process. Clin Infect Dis, 2001. 33(8): p. 1387-92.
23 LaPlante, K.L. and L.A. Mermel, In Vitro Activity of Daptomycin and Vancomycin Lock Solutions on Staphylococcal Biofilms in a
Central Venous Catheter Model. Nephrol Dial Transplant, 2007. 22(8): p. 2239-46.
Despite these dramatic results, there are several important drawbacks to the catheter lock solution
formulations introduced thus far, including (i) the resulting development of highly antibiotic-resistant
infections from long-term use, (ii) the systemic toxicity of some of the agents
used when they leak from the catheter lumen into circulation, and (iii) the NEUTROLIN® FORMULATION
occurrence of catheter thrombosis (clotting). Neutrolin® represents a potential
breakthrough in catheter lock solution development by addressing all of the Antimicrobial
major concerns noted to date with other formulations. Taurolidine 1.35%
Anticoagulants
NEUTROLIN®’S FORMULATION Citrate 4.0%
Neutrolin®’s unique formulation of an antimicrobial and two anticoagulants Heparin 1000 u/ml
should allow it to achieve anti-biofilm and anti- infection results while
addressing the main drawbacks of other catheter lock solutions, including (i) the long-term risk of creating
antibiotic-resistant infection, (ii) the danger of toxicity if any of the solution leaks into circulation, and (iii)
excessive occurrence of catheter thrombosis. The original formulation of Neutrolin® that CRMD acquired
worldwide rights to from BioLink Corporation contained just taurolidine and citrate. While this initial
formulation proved effective at significantly reducing the occurrence of catheter-related bloodstream
infection in several studies, it also displayed inferior results in catheter patency, resulting in higher
catheter thrombosis rates for patients using Neutrolin®. CRMD believes that the addition of heparin to the
new Neutrolin® formulation will improve catheter patency and may test this as one of their potential
endpoints in the planned pivotal trial.
Neutrolin®’s main ingredient, taurolidine, is well-known as an antimicrobial agent and is commercially
available as a 2% solution in Germany, Austria, Switzerland, Poland, and the Netherlands. Taurolidine
has demonstrated effectiveness against numerous strains of antibiotic-resistant bacteria strains, as well
as several fungi, in an effective contact time of four hours in a topical or local setting. Additionally, there is
no evidence of the development of antibiotic resistance to taurolidine in humans, a critical factor for its
long-term success as a catheter lock solution. Taurolidine has also demonstrated safety as a systemic
therapy, but it does not maintain adequate concentration levels in human plasma for systemic
Additionally, Neutrolin® was well-tolerated by patients with no adverse effects reported. An earlier pilot
study published in Clinical Infectious Diseases in 2003 found similar results.25 A total of 50 patients
participated. 20 patients received Neutrolin® and 30 patients received a heparin-only control lock. The
results are displayed below in Figure 3.
Figure 3: Clinical Trial Results:
Neutrolin® Demonstrated Significant Reduction in Catheter-Related Sepsis Versus Control
24 Betjes, M.G.H. and van Agteren, M., Prevention of Dialysis Catheter-Related Sepsis with a Citrate-Taurolidine-Containing Lock
Solution. Nephrol Dial Transplant, 2004. 19(6): p. 1546-51.
25 Allon, M. Prophylaxis Against Dialysis Catheter-Related Bacteremia with a Novel Antimicrobial Lock Solution. Clin Infect Dis,
2003. 36: p. 1539-44.
Of the 20 patients receiving a Neutrolin® lock, only one developed a catheter-related bloodstream
infection. This compares to 16 patients that developed catheter-related bloodstream infections out of 30
total patients in the control group. This study was also done in a majority of patients with catheters in
place at the time of enrollment. Since catheter biofilm develops in 24 hours, it is highly likely that the
presence of biofilm was already established prior to trial commencement. Given that Neutrolin® patients
still benefited from a significant reduction in catheter-related bloodstream infection events, it suggests that
Neutrolin® destroys existing biofilm colonies in addition to preventing new formations. These previous trial
results validate Neutrolin®’s promising effectiveness as an infection-preventing catheter lock solution and
set the stage for the upcoming pivotal trial expected to begin in the 1H ‘11.
UPCOMING PIVOTAL TRIAL
CRMD anticipates beginning enrollment in a pivotal clinical trial of Neutrolin® in the 1H ‘11. The
randomized trial is expected to enroll a total of 400 subjects across 30 study centers and evaluate
Neutrolin®’s effectiveness in preventing catheter-related bloodstream infection as a catheter lock solution
versus a heparin control while maintaining catheter patency.
Table 1: Potential Pivotal Study Details
Estimated Enrollment: 400 randomized subjects across 30 study centers.
Active Ingredients: taurolidine 1.35%, citrate 4%, and heparin 1000 u/ml
Duration of Treatment: 180 days
Powering: 90% for each primary endpoint
Endpoints:
Primary: • Freedom from catheter-related bloodstream infections.
Adequate catheter function is maintained.
•
Secondary: • Infection rate per 1,000 catheter days.
• Various catheter function measures.
• Dialysis adequacy.
• Mortality.
Source: CorMedix, Inc.
We anticipate preliminary data from the pivotal trial by 1H ‘12 and potential FDA approval by 1H ‘13 via
the Premarket Approval (PMA) application process.
INTELLECTUAL PROPERTY
Table 2: Neutrolin® Intellectual Property
Jurisdiction Patent Number Expiration Date
United States 7,696,182 May 4, 2025
United States 6,166,007 May 10, 2019
United States 6,350,251 January 18, 2020
United States 6,423,706 May 10, 2019
United States 6,451,003 August 16, 2020
United States 6,498,157 May 10, 2019
United States 6,569,852 May 10, 2019
United States 6,575,945 August 16, 2020
United States 6,803,363 March 31, 2022
China ZL 02108774.1 May 10, 2019
China ZL 02108777.6 August 16, 2020
Europe 1089738 May 28, 2019
Hong Kong HK 1059535 May 10, 2019
Hong Kong HK 1059746 August 16, 2020
Source: CorMedix, Inc.
The patent family relates to antimicrobial locking solutions comprising taurinamide derivatives and
biologically acceptable salts and acids with the addition of small concentrations of heparin. The present
invention relates to inhibiting or preventing infection and protecting against patency complications after a
blood catheter has been inserted in a patient comprising administering to the device a pharmaceutically
effective amount of a composition comprising: (A) at least one taurinamide derivative, (B) at least one
compound selected from the group consisting of biologically acceptable acids and biologically acceptable
salts thereof; and (C) heparin at a low concentration. The patents also relate to a method of inhibiting or
preventing infection and blood coagulation in or near a medical prosthetic device after said device has
been inserted in a patient.
COMPETITIVE LANDSCAPE FOR NEUTROLIN®
As discussed above, listed below is the current competitive landscape for Neutrolin®. Neutrolin® offers
effective antibiofilm and antimicrobial activity without a high risk of long-term antimicrobial resistance and
with minimal toxicities and catheter clotting events without many of the drawbacks associated with other
catheter lock solutions. Below are the other companies developing other catheter lock solutions. Other
antibiotic or antimicrobial coated catheters have been launched by some device companies as short term
prevention of catheter infection. These are not effective for hemodialysis catheters due to long term use
and high blood flow.
Zuragen®, developed by Ash Access Technology, Inc., is developing catheter lock solutions comprising
citrate, a paraben, and a photo-oxidant such as methylene blue. Similar to CorMedix’s Neutrolin®, the
product is administered into a patient’s catheter at the conclusion of each hemodialysis session.
Zuragen’s formulation is methylene blue, citrate, and parabens, whereas Neutrolin®, a clear liquid,
combines the anti-coagulants citrate and heparin and broad-spectrum antimicrobial, taurolidine. Ash
Access completed a 407 patient clinical trial using Zuragen® in August 2008 and filed a PMA with the
FDA. We believe that the timeline for approval of Zuragen® may be uncertain because the clinical trial
was un-blinded due to the blue staining caused by methylene blue.
B-Lock™, in development by Great Lakes Pharmaceuticals, Inc., combines minocycline, EDTA, and
ethanol. In July 2010 Greak Lakes announced that they were planning to file an Investigational Device
Exemption (IDE) in 3Q ‘10 to begin clinical trials in human subjects. The issues with this formulation
revolve around minocycline, an antibiotic that once implemented, may eventually be overcome by
resistance against the antimicrobial agent that could develop with long term use necessary for permanent
use catheters used for dialysis patients.
Phase II proof-of-concept study commenced June 25, 2010, with preliminary data
expected to be available by the end of CY ‘10 and complete results expected in the 1H ‘11. CRMD plans
to initiate a pivotal Phase III trial of deferiprone for the prevention of contrast-induced nephropathy
assuming favorable data from the proof-of-concept Phase II study. Collaborators working with CRMD
have also published proof-of-concept studies of CRMD001 as a potential treatment for chronic kidney
disease.
CRMD001 is currently approved and available for sale in 50 countries worldwide (ex-U.S.) under the
brand name Ferriprox® as a treatment option for iron overload in patients with thalassemia, a rare
inherited blood disease. Notably, CRMD001 is the most studied iron chelator with data from over 7,500
patients who have been administered deferiprone for a variety of diseases and disorders at a range of
dose levels and durations of therapy. Importantly, CRMD001 has a proven safety record at drug exposure
levels well in excess of the levels likely required for the renal indications CRMD is targeting. CRMD001 is
believed to work by mobilizing iron in reticuloendothelial, hepatocellular, and myocardial stores, from
intracellular ferritin and hemosiderin, and from transferrin and non-transferrin bound iron in the serum.
Increasing evidence suggests that iron redistribution is a valid therapeutic strategy and iron plays an
important and direct role in contrast-induced nephropathy, most likely though renal tissue injury resulting
from the generation of reactive oxygen species.30,31 The pathophysiology of contrast-induced nephropathy
includes increased availability of labile iron, among other effects.32 It is believed that by binding and
translocating excess iron, deferiprone minimizes the generation of reactive oxygen species, resulting in
reduced damage to cell structures via oxidative stress.
Patients with moderate to severe chronic kidney disease, defined as estimated glomerular filtration rate
(eGFR) less than 60 mL/min, are at an elevated risk of contrast-induced nephropathy because they have
increased renal iron content, in addition to chronic oxidative stress, inflammation, endothelial dysfunction,
and other damage to the renal system. Figure 4 shows the increased risk of contrast-induced
nephropathy as kidney function decreases as measured by eGFR:
30 Kakhlon, O. et al. Iron redistribution as a therapeutic strategy for treating diseases of localized iron accumulation. Can J Physiol
Pharmacol, 2010. 88: 187-96.
31 Tumlin J. et al. Pathophysiology of contrast-induced nephropathy. Am J Cardiol, 2006. 98(6A): 14K-20K.
32 Tumlin J. et al. Pathophysiology of contrast-induced nephropathy. Am J Cardiol, 2006. 98(6A): 14K-20K.
As eGFR falls below 60 mL/min, the rate of contrast-induced nephropathy increases from approximately
10% to nearly 50%. For patients with chronic kidney disease, the increases in the labile iron pool in renal
tissue and oxygen free radicals are thought to be the critical factors leading to susceptibility to contrast-
induced nephropathy.33,34 Exposure to contrast has been associated with a further increase in catalytic
iron. This association is shown in Figure 5:
Figure 5: Increase in Catalytic Iron Associated with Contrast Agents
7.0
Baseline
6.0 48 hours after IVP
5.0 P<0.001
4.0
+115%
3.0
C
r m
l/g
o
n
2.0
1.0
0.0
Urinary catalytic iron
Source: Rajapurkar, M. et al. ASN 2006.
48 hours following contrast administration, urinary catalytic iron levels show an increase of 115% from
baseline. Administration of an iron chelator, such as CRMD001, has been shown to protect the kidneys
from serious damage caused by contrast agents in an animal model by helping to remove this excess
catalytic iron. With oral administration, a large database of patient safety records, an ongoing Phase II
33 Bakris, G. et al. Radiocontrast medium-induced declines in renal function: a role for oxygen free radicals. Am J Physiol, 1990.
285: F115-20.
34 Yoshioka, T. et al. Reduced activity of antioxidant enzymes underlies contrast media-induced renal injury in volume depletion.
Kidney Int, 1992. 41(4): 1008-15.
trial, and SPA designation for a potential pivotal Phase III trial, we believe CRMD001 has
the potential to become the first FDA-approved therapy for the prevention of contrast-induced
nephropathy, a significant unmet medical need.
PROOF-OF-CONCEPT PHASE II STUDY AND UPCOMING PIVOTAL PHASE III STUDY WITH SPA
On June 25, 2010, CRMD initiated a randomized, double-blind, placebo-controlled Phase II proof-of-
concept study of CRMD001 for the prevention of contrast-induced nephropathy in patients with chronic
kidney disease.35 The study is expected to enroll approximately 60 patients at several centers in the U.S.
The primary endpoint is to assess the impact of CRMD001 compared to placebo on measures of kidney
injury following contrast usage. Secondary endpoints include measures of the safety and tolerability of
CRMD001 for short-term use. Preliminary interim data is anticipated to be available by the end of CY ‘10
and complete results are expected in the 1H ‘11. We expect CRMD to use the results from the Phase II
study to initiate a pivotal Phase III study.
CRMD’s potential pivotal Phase III with SPA is called DEFEND-AKI and will evaluate CRMD001’s ability
to reduce kidney damage in high-risk patients with chronic kidney disease receiving dye injections for
cardiac angiography imaging.
Table 4: Potential Pivotal Phase III Study Details
Estimated Enrollment: 800 randomized subjects
Dosing: Oral, one immediate release & two extended release tablets before imaging, two tablets daily for eight days post-
imaging
Powering: 80% for the primary endpoint
Composite Endpoint: MACE (death, myocardial infarction, dialysis, stroke, heart failure, or re-hospitalization)
Source: CorMedix, Inc.
INTELLECTUAL PROPERTY
Since deferiprone is already marketed in approximately 50 countries outside of the United States as a
treatment for iron overload in a rare condition called thalassemia, CorMedix’s marketing exclusivity
strategy for CRMD001 (novel formulation of deferiprone) is primarily focused on being the first marketed
preventive agent for contrast-induced nephropathy (with morbidity and mortality claims) which would
provide five years of marketing exclusivity provisions under the Hatch-Waxman Act. In parallel, given that
there are fewer than 200,000 contrast-induced nephropathy patients (incidence) in the U.S., orphan
designation would also be pursued with the FDA, which would likely provide seven years of exclusivity
(two years added on to base exclusivity). Furthermore, deferiprone with a morbidity-mortality claim could
rapidly become the standard of care due to medical safety issue/litigation risk, which would provide a
significant hurdle to potential followers. There are other potential indications for deferiprone, including
pediatric uses. If clinical studies of CRMD001 are conducted in children, an additional six months of
exclusivity could be added to the exclusivity periods. In addition, if CRMD001 is first to market, it will also
be considered a Reference Listed Drug, at least for so long as no other deferiprone product is approved
by the FDA. CorMedix will be able to list any of its patents claiming its approved deferiprone formulation
and associated approved uses in the Orange Book (an FDA reference of approved drugs and therapeutic
equivalence evaluations). This could further delay generic competition.
In addition, CorMedix has also amassed an IP portfolio of claims that are related to both the diagnosis
and treatment of human kidney diseases as it relates to iron chelation. This is important for potential
expansion of deferiprone’s product utility. In particular, the patents focus on the progression of kidney
disease that essentially can be halted and the severity of kidney disease can be reduced by the
administration of iron chelators to humans afflicted with a progressive kidney disease. The patent
methods include measuring catalytic iron content in urine in a human afflicted with a progressive kidney
35 CorMedix, Inc. press release. CorMedix Doses First Patient in Phase II Clinical Trial of CRMD-001. June 25, 2010.
disease and administering an iron chelator to the human. The method can include
measuring total urinary protein content, blood urea nitrogen or creatinine in a blood sample before, during
or after the administration of an iron chelator.
Table 6: CRMD001
T Compared to Marketed Iron Chelators
Deferiprone Deferiprone Desferasirox Deferoxamine
CRMD-001 Ferriprox® Exjade® Desferal®
(CorMedix)
Route: Oral IR/ER Oral IR Oral daily I.V./S.C.
(b.i.d) (t.i.d)
Renal No No Yes No
Toxicity:
Active drug in urine: Yes Yes No Yes
Method of use patents in Yes No No No
cardiorenal disease:
Effective at redistributing iron/ Yes Yes Yes No
membrane permeable:
Launch date: N/A 2000 EU 2006 1970s
Source: CorMedix and Griffin Securities, Inc.
Deferoxamine (Desferal®) has been available for the longest period of time. Derefoxamine has proven to
induce net iron excretion, deplete iron from the heart, and extend life by reducing total body iron. Because
of poor oral bioavailability (large molecule), it is given intravenously or subcutaneously over an 8-12 hour
period 5-6 days per week, making compliance an issue. The large size of the molecule does not
adequately penetrate cells and does not access iron stores as effectively as CRMD001. Further, we
believe the parenteral delivery system will preclude its use in CorMedix’s targeted indications.
The Ferriprox® brand of deferiprone is sold in Europe and Asia as a 500mg immediate release
formulation with a high Cmax (associated with nausea) that must be given three times daily, exhibiting a
completely different pharmacokinetic profile from the CorMedix formulations.
Desferasirox (ExJade®) is an oral iron trap that has frequent and significant renal adverse events
(increasing proteinuria and creatinine) including cases of fatal renal failure, making it unlikely, in our
opinion, that this product could be used for cardiorenal indications.
Another company, FerroKin BioSciences, is developing a novel ion-binding compound FBS0701 for
patients who have iron overload from chronic transfusions. A fourth clinical trial is scheduled to begin later
this year. Preliminary evidence suggests that it may also be more nephrotoxic than CRMD001.
Transfusional iron-overload is a common complication in the treatment of anemias that required chronic
transfusions of red blood cells. These conditions include hereditable blood diseases such as b-
thalassemia and sickle cell anemia as well as anemias that develop during adulthood. Whilst FBS0701 is
a promising product, FerroKin is treating iron overload caused by chronic transfusions versus CorMedix’s
CRMD001 designed for contrast-induced nephropathy.
Prophylactic strategies currently under investigation include nesiritide, Reprieve® Endovascular
Temperature Therapy, Benephit® CV Infusion System, and RenalGuard® therapy.
• Reprieve® Endovascular Temperature Therapy — cooling system for core body temperature
• Benephit® CV Infusion System — renal artery infusion catheter for targeted drug delivery or
fluids
• RenalGuard® Therapy — matched fluid replacement device
These potential treatment options are all more complex to administer compared to the oral CRMD001
tablet. Nesiritide is only available through intravenous administration, and the other three options are
complex medical devices that use catheter systems to access the renal system.
We believe that none of these approaches will match the efficacy and simplicity of a short course of
CRMD001 tablets given before and after contrast administration.
ABOUT CRMD004
CRMD004 is a next-generation gel formulation of Neutrolin® in early stages of development. It is currently
being considered for the prevention of catheter-related bloodstream infection and for the maintenance of
catheter patency in a variety of settings, including hemodialysis, chemotherapy, and intravenous nutrition
administration. The gel is thixotropic, meaning it is designed to be semi-solid when it is in the catheter but
change to liquid under pressure during insertion into and withdrawal from the catheter. This property
could help prevent spillage from the catheter in the event that the catheter becomes
disengaged and could also eliminate the need for an anticoagulant within the formulation.
ABOUT CRMD002
CRMD002 is a diagnostic test in early stages of development that could potentially be used to identify
patients with chronic kidney disease, patients at risk of developing chronic kidney disease, and as a
monitoring tool to be used with deferiprone. CRMD002 is being developed as a urine test for the detection
of labile iron, or highly reactive iron that can damage cells through oxidative stress that is found in
increased levels in patients with chronic kidney disease.
Stock risk and market risk: There is a limited trading market for the Company’s common stock.
There can be no assurance that an active and liquid trading market will develop or, if developed, that
it will be sustained, which could limit one’s ability to buy or sell the Company’s common stock at a
desired price. Investors should also consider technical risks common to many small-cap or micro-cap
stock investments, such as small float, risk of dilution, dependence upon key personnel, and the
strength of competitors that may be larger and better capitalized.
Initial Public Offering share lockup expiration risk: The lockup expiration date for certain
restricted equity issued in the Company’s Initial Public Offering and the issuance of equity associated
with convertible debt is September 22, 2010. Potential new equity issuance includes 1,022,154
common shares to licensors at par value ($0.001/share), 621,689 common shares to founders at par
value ($0.001/share), and 5,914,445 common shares to convertible debt holders at $3.125/share and
$2.1875/share. Selling of these common shares following the lockup date may result in downside risk
to CorMedix’s share price.
New and rapidly changing field: The pharmaceutical and biotechnological markets are rapidly
evolving, and research and development are expected to continue at an accelerated pace with
increased frequency. Other companies are also actively engaged in the development of therapies to
directly or indirectly treat those disorders being pursued by CorMedix. These companies may have
substantially greater research and development capabilities, as well as significantly greater
marketing, financial, and human resources abilities than CorMedix.
Products still in development phases: Although the Company intends to continue with clinical
development of Neutrolin® for the prevention of catheter-related bloodstream infection, CRMD001 for
the prevention of contrast-induce nephropathy, and other future pipeline candidates in various
$ in thousands
ASSETS
Current Assets
Cash & equ
Grants rece
Inventory, n
Prepaid exp
GRIFFIN SECURITIES EQUITY RESEARCH
27
Clinical
March Data,
__, 2007
Inc.
REVENUE ASSUMPTIONS
Neutrolin (CRMD
As of December 31, 2006 there were about 506,000 End-Stage Renal Disease (ESRD) patients in
Starting penetration ra
The price per treatment grows at an annual rate of 3%;
Neutrolin® penetrates the addressable market at 5% in 2013 and reaches a peak penetration of 40%
of the addressable market in 2017; and
The market is projected to grow approximately 3% annually.39
Deferiprone
Years (CRM
between penetr
There are approximately 165,000 patients per year that inherit kidney damage caused by contrast-
Year
Peak penetration
penetration starts
induced nephropathy (CIN)40,41;
36USRDS, U.S.
NIH.
Renal Data System, USRDS 2009 Annual Data Report: Atlas of End-Stage Renal Disease in the United States,
37Allon, M., Prophylaxis Against Dialysis Catheter-Related Bacteremia: A Glimmer of Hope. Am J Kidney Dis, 2008. 51(2): p. 165-
68.
38Allon, M., Current Management of vascular access, J Am So Nephrol, 2007. 2(4): p. 786-800
39Allon, M., Prophylaxis Against Dialysis Catheter-Related Bacteremia: A Glimmer of Hope. Am J Kidney Dis, 2008. 51(2): p. 165-
Durationpenetration
Starting ra
of peak pene
68.
40 American Society for Pharmacology and Experimental Therapeutics: Drug Metab Dispos, February 2009. 37:322-329
41 Chertow GM, Lazarus JM, Christiansen CL, Cook EF, Hammermeister KE, Grover F, Daley J: Preoperative renal risk
stratification. Circulation, 1997. 95:878-84
Approximately 75% percent of patients with kidney damage can use deferiprone to
help treat CIN;
CRMD001 penetrates the market beginning in 2013 at a price of $2,000 per cycle;
The price per treatment grows at an annual rate of 3%;
CRMD001 penetrates the market the addressable market at 5% in 2013 and reaches a peak
penetration of 40% of the addressable market in 2016;
The market is projected to grow approximately 3% annually.
INCOME STATEMENT
$ in thousands, except pe
Total revenue
COGS
Income Statement Assumptions:
■ COGS of 20% of total sales for Neutrolin® and 1% of total sales for CRMD001;
Gross profit
29
Clinical
March Data,
__, 2007
Inc.
■ Research and Development (R&D) expenses of $6.0 million in FY2010, $9 million in FY2011,
$17 million in FY2012, $14 million FY2013, and $12 million in FY2014;
■ Sales and Marketing (S&M) expense of $2.7 million in FY2011 increasing to $25 million in FY2014 to
support the commercial launches of both products;
■ General and Administrative (G&A) expenses of $2.0 million in FY2010, $3.0 million in FY2011, and
$4.0 million in FY2012 to FY2014;
■ Income tax rate of 38%;
■ The number of shares outstanding increases due to equity financings and the exercise of stock
options and warrants.
■ The lockup expiration date for certain restricted equity issued in the Company’s Initial Public Offering
and the issuance of equity associated with convertible debt is September 22, 2010. Potential new
equity issuance includes 1,022,154 common shares to licensors at par value ($0.001/share), 621,689
common shares to founders at par value ($0.001/share), and 5,914,445 common shares to
convertible debt holders at $3.125/share and $2.1875/share.
$ in thousands, except p
Revenue
GRIFFIN SECURITIES EQUITY RESEARCH
30
Clinical
March Data,
__, 2007
Inc.
Discount Rate
7.5%
10.0%
APPENDIX A: HEMODIALYSIS OVERVIEW
The kidneys are organs that are responsible for removing wastes and fluids from the body, as well as
12.5%
regulating bodily water and chemicals in the blood, removing toxins introduced to the body, and releasing
hormones that regulate blood pressure, the production of red blood cells, and bone development. When
kidneys become damaged and lose their ability to function, the result is chronic kidney disease (CKD), a
condition currently affecting approximately 26 million Americans. Up to two-thirds of CKD cases are
caused by diabetes and high blood pressure.42
15.0%
The most advanced form of CKD, end-stage renal disease (ESRD), occurs when the kidneys lose the
ability to function at a level required to sustain day-to-day life. The two main treatment options for patients
with ESRD are kidney transplant or hemodialysis. As of December 31, 2006, there were approximately
500,000 ESRD patients in the U.S., of whom approximately 355,000 (70%) were receiving
hemodialysis.43 Hemodialysis works by allowing the blood to flow through a filter that acts as an “artificial
kidney” by removing wastes and extra fluids. The following diagram illustrates the typical hemodialysis
17.5%
procedure.
Hemodialysis Procedure
There are three main kinds of vascular access for hemodialysis, an arteriovenous (AV) fistula, an AV
graft, and a central venous catheter (CVC). Each of the three vascular access methods is displayed
below:
The AV fistula is the preferred vascular access method due to its high rates of blood flow, low rate of
complications, and longevity, but the AV fistula takes up to 6 months to develop and may not be
successful in all patients. If HD is necessary while the AV fistula is
developing, or if the AV fistula procedure fails, a CVC is typically
the vascular access
method used.
Approximately 82% of
patients that start chronic
HD begin treatment with a CVC, and more than 25% HD patients use a CVC as the
primary vascular access.44
44Allon, M. Current Management of Vascular Access. Clin J Am Soc Nephrol, 2007. 2(4): p. 786-800.
DISCLOSURES
ANALYST(s) CERTIFICATION: The analyst(s) responsible for covering the securities in this report certify that the
views expressed in this research report accurately reflect their personal views about CorMedix Inc. (the “Company”)
and its securities. The analyst(s) responsible for covering the securities in this report certify that no part of their
compensation was, is, or will be directly or indirectly related to the specific recommendation or view contained in this
research report.
MEANINGS OF RATINGS: Our rating system is based upon 12 to 36 month price targets. BUY describes stocks
that we expect to appreciate by more than 20%. HOLD describes stocks that we expect to change plus or minus
20%. SELL describes stocks that we expect to decline by more than 20%. SC describes stocks that Griffin Securities
has Suspended Coverage of this Company and price target, if any, for this stock, because it does not currently have
a sufficient basis for determining a rating or target and/or Griffin Securities is redirecting its research resources. The
previous investment rating and price target, if any, are no longer in effect for this stock and should not be relied upon.
NR describes stocks that are Not Rated, indicating that Griffin Securities does not cover or rate this Company.
DISTRIBUTION OF RATINGS: Currently Griffin Securities has assigned BUY ratings or NO RATINGS on all of the
companies it covers. The Company has provided investment-banking services for 19% of companies in which it has
had BUY ratings in the past 12 months, 0% for companies in which it has had NR or no coverage in the past 12
months or has suspended coverage (SC) in the past 12 months.
MARKET MAKING: Griffin Securities does not maintain a market in the shares of this Company or any other
Company mentioned in the report.
COMPENSATION OR SECURITIES OWNERSHIP: The analyst(s) responsible for covering the securities in this
report receive compensation based upon, among other factors, the overall profitability of Griffin Securities, including
profits derived from investment banking revenue. The analyst(s) that prepared the research report did not receive any
compensation from the Company or any other companies mentioned in this report in connection with the preparation
of this report. The analysts responsible for covering the securities in this report currently do not own common stock in
the Company, but in the future may from time to time engage in transactions with respect to the Company or other
companies mentioned in the report. Griffin Securities from time to time in the future may request expenses to be paid
for copying, printing, mailing and distribution of the report by the Company and other companies mentioned in this
report. The Company is currently a client of Griffin Securities, Inc. Griffin Securities’ services for the Company consist
of non-investment banking securities-related services and non-securities services. Griffin Securities has received
compensation from the Company in the past 12 months for non-investment banking services. Griffin Securities
expects to receive, or intends to seek, compensation for investment banking services from the Company in the next
three months.
PRICE CHART
BUY
Source: Yahoo.com
8/24/2010 – Initiating Coverage: share price (08/23/10): $1.45; rating: BUY; 12-month price target: $6.00.
FORWARD-LOOKING STATEMENTS: This Report contains forward-looking statements, which involve risks and
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