CorMedix Inc. (NYSEMKT: CRMD), the biopharmaceutical company developing treatments for infectious and inflammatory diseases, has almost gotten kill according to its chart. However, we are positive about the company, and we believe that the market overreacted to the bad news and did not pay attention to its fundamentals. In this article, we will tell you more, but first have a look at the recent decline:
The company and its products
CorMedix has one product candidate: Neutrolin. The product is explained as follows in the last annual report:
“A novel anti-infective solution (a formulation of taurolidine, citrate and heparin 1000 u/ml) for the reduction and prevention of catheter-related infections and thrombosis in patients requiring central venous catheters in clinical settings such as dialysis, critical/intensive care, and oncology. Infection and thrombosis represent key complications among critical care / intensive care and cancer patients with central venous catheters. These complications can lead to treatment delays and increased costs to the healthcare system when they occur due to hospitalizations, need for IV antibiotic treatment, long-term anticoagulation therapy, removal/replacement of the central venous catheter, related treatment costs and increased mortality” Source
The company launched the Phase 3 clinical in the U.S. in December 2015. At this point in time, CorMedix is still in discussion with the FDA for developing the design of a Phase 3 clinical trial in oncology patients with catheters. We expect that the FDA will eventually approve the product. Other countries in the European Union have already done it. The CE Mark approval was granted in July 2017, and the product can be bought in Germany and other European Union and Middle Eastern countries.
The FDA approval will be an important catalyst for the company, but there is more. The company stated that it is evaluating other development opportunities for the possible expansion for taurolidine as a platform. This is an extract from the annual report:
“Patent applications have been filed in: wound closure, surgical meshes, wound management, and osteoarthritis, including visco-supplementation. There exists a need to control and protect against surgical site infections upon wound closure. We believe taurolidine can also offer benefits not currently available in marketed antimicrobial medical devices. It can also provide a significant advantage in devices for burn victims and use in less sterile environments. We are also involved in a pre-clinical research collaboration for the use of taurolidine as a possible treatment for rare orphan pediatric tumors.” Source
If these new patent applications are accepted, the number of products that the company may sell will be higher than initially expected and the top line may finally increase.
Recent developments and financial results
On April 12, 2017, the company communicated that it had entered into commercial agreement with Toulouse-based Hemotech SAS. Under this new contract, Hemotech will commercialize Neutrolin in France and other territories overseas. President and CEO of CorMedix, Khoso Baluch, celebrated the announcement noting that Hemotech covers 92% of French dialysis organizations. We believe that this announcement is quite relevant and other traders seemed to think the same as the share price grew by 11% on the day of announcement.
Another interesting announcement was released on January 9, 2017. The company communicated that a putative shareholder derivative action against the company had been dismissed without prejudice. You can find more information in this press release. This is in general very good news that will affect the share price as well as the reputation of the company positively.
On March 17, 2017, the last quarter results and the annual report were released. The company made a decent recap in the press release about the most important milestones achieved in the last quarter. But, it did not give a lot of information about its financing; the cash standing in the balance or the R&D. We went to the 10-k to have a look.
As of December 31, 2016, the company holds an amount of total assets of $22 million, and the good news is that these assets are very liquid. It holds $8 million in cash and $12 million in short-term investments. These were not only the only figures that we liked. The total amount of liabilities is only $4 million and there is no long term debt included in that figure.
The company seems to have a large amount of current assets and no liabilities. This means that the management has a lot of time to find new treatments until this cash is burnt out. The total outstanding shares are approximately 40 million. Thus, the cash per share right now is $0.5 and the book value per share is $0.44. If we take into account that the company reports revenues since it sells products in Europe, it seems that we have identified an opportunity since the shares are exchanged at $1.19. To sum up, if you buy shares of CorMedix Inc., you will be buying 42% cash, and a product being sold in Europe and maybe in the United States.
Some Insiders have been buying share of the company recently. Take a look:
- TELLEZ CORA M (Automatic Purchase at $1.66 per share) on March 30, 2017
- TELLEZ CORA M (Automatic Purchase at $2.10 per share) on February 28, 2017.
- BALUCH KHOSO (Purchase at $1.77 per share) on Dec 9, 2016
Subscribe to our newsletter or check from time to time other sources to check the purchases and sales of insiders.
CorMedix Inc. has not been profitable yet and shareholders have punished the company by selling shares for a long time. However, we had a look at the balance sheet and company seems to be very undervalued by the market. The market is failing to recognize that the company is selling products in Europe and may sell them soon in the United States. On the top of it, the company is researching new opportunities and may produce more treatments in the future. Additionally, insiders have been buying shares in the last months. Investors need to do their own research, but we believe that they will arrive at the same conclusion. Other authors at Seeking Alpha did so as well. Check, for example, this article, or this other one of a short investor closing his position and expecting a bounce.
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Disclosure: We have no position in CRMD and have not been compensated for this article.