Greetings. Welcome to the CorMedix Inc. Fourth Quarter and Fiscal Year 2019 Earnings Call. [Operator Instructions] Please note this conference is being recorded. I'll now turn the conference over to your host, Dan Ferry. You may begin.

Leading the call today is Khoso Baluch, Chief Executive Officer of CorMedix. He is joined by Phoebe Mounts, Executive Vice President and General Counsel. Before we begin, I would like to remind everyone that during the call management may make what are known as forward-looking statements within the meaning set forth in the Private Securities Litigation Reform Act of 1995. These statements are subject to certain risks and uncertainties and include, but are not limited to, any of the following. Any statements other than statements of historical fact regarding management's expectations, beliefs, goals, and plans about the Company's prospects, including its clinical development program for Neutrolin in the U.S. and other product candidates, future financial position, future revenues and projected costs, and potential market acceptance of Neutrolin and other product candidates. More specifically, forward-looking statements include any statements about our clinical development plans and the timing, costs, results, and interpretations thereof, projections as to the Company's future capital raising, and spending and cash position, expectations as to the timing and nature of anticipated regulatory actions, possible product licensing or other business development transactions, any commercial plans and expectations, market projections for our product candidates, and expectations as to manufacturing and product component costs. Actual results may differ materially from these projections or estimates due to a variety of important factors, including, but not limited to, uncertainties related to clinical development, regulatory approvals, and commercialization. These risks are described in greater detail in CorMedix's filings with the SEC, copies of which are available free of charge at the SEC's website at www.sec.gov, or upon request from CorMedix. CorMedix may not actually achieve the goals or plans described in these forward-looking statements, and investors should not place undue reliance on these statements. Please note that CorMedix does not intend to update these forward-looking statements, except as required by law. At this time, it is now my pleasure to turn the call over to Mr. Khoso Baluch, Chief Executive Officer of CorMedix. Khoso, please go ahead.

Thank you, Dan. Good afternoon, everyone, and thank you for joining us on this call. On today's earnings call, we will cover with you our continued effort to bring Neutrolin to the US market for the first indication for use as a catheter lock solution for hemodialysis patients with subsequent expansion into other indications. Phoebe will participate in this call and provide the details on our regulatory program. I plan to cover three topics. First, an update on the significant progress we've made on the NDA filing for Neutrolin. I am very pleased to report that we have begun to submit modules of the NDA following from the FDA's agreement to [grant] [ph] our request for a rolling submission of modules as we announced in February 2020. As we've stated previously, we remain on schedule for a possible NDA approval in the second half of 2020. Phoebe will get into further details on our continuing regulation progress with the FDA. Second, I want to update you on our plans to commercialize Neutrolin for hemodialysis. During our last earnings call, Jack Armstrong covered the progress we've made to establish the supply chain CorMedix will use to manufacture and distribute Neutrolin in the US market. On this call, I will focus on the commercial plans. And finally, we'll update you on the progress we've made in our financial position. The detailed information is available for you to review in the 10-K that we plan to file today. So let's begin with Phoebe.

Thank you very much Khoso. It is a pleasure to be here again and report on the significant progress we have made on the regulatory activities required to secure marketing authorization for Neutrolin in the US. As you know from previous updates, our primary focus has been on preparing information required for filing the new drug application for Neutrolin to secure marketing authorization in the US for the hemodialysis indication. I am extremely pleased to report that through the hard work and focus of the CorMedix team, we have continued to complete regulatory requirements and have begun submitting the NDA with FDA. First, as we have reported previously, in our pre NDA meeting with FDA last year, the agency agreed that we could request to [revoke] [ph] a rolling review for the Neutrolin NDA based on the fast track designation received in 2015. After the pre-NDA meeting, we submitted a formal request to FDA for a rolling submission and review of NDA modules with a proposed submission plan. In January of 2020, FDA granted the request for a rolling review and agreed the submission plan was reasonable. Consistent with the submission plan, we have begun submission of the NDA module. We continue to focus on preparing all of the required information in the module to ensure complete filing and facilitate an efficient review by FDA. We remain optimistic for potential approval of the NDA in the second half of 2020. However, you may be aware that like many government agencies and organizations restrictions on travel overseas have been imposed by FDA for its employees because of the coronavirus pandemic. FDA announced on March 10th that it is postponing most foreign inspections through April and inspections outside of the US deemed mission-critical will still be considered on a case-by-case basis. We…

Thank you Phoebe. As I've stated our goal is to maximize shareholders value because hemodialysis is a very concentrated payer provider market. We are continuing to prepare to launch Neutrolin in the hemodialysis segment, while at the same time being open to potential partnerships. All options on the table and will be valuated with one goal in mind. At the same time, we will refine our commercial organization optimization plan by matching our resources needs and locations where we can target most of the CVC catheral patients receiving hemodialysis. The hemodialysis market is very concentrated market with two or three players providing two-thirds of all dialysis in the US and one large player CMS reimbursing about 90% all dialysis patients. This level of concentration is not very common in the US healthcare market and therefore provides CorMedix a unique opportunity to tailor a strategy that will be leveraged to maximize the return on investment. We have begun building internal functions for medical affairs and payer market. We have begun hiring individuals to fill senior roles in these new units. This gradual build-up will help us move forward in preparing and refining our launch plans as we move closer to a potential Neutrolin approval. We intend to continue building out these functions over the course of the year followed at the end by the hiring of the field sales force if we are in a go-it-alone scenario. In previous earnings call, we've covered the potential size of the different segments of the market. By 2025, the hemodialysis market alone will require an estimated 80 million catheter locks per year. If you add those receiving chemotherapy and total parenteral nutrition then you would add another 150 million catheter lock solutions for a total need of 230 million catheter lock solution estimated in…

[Operator Instructions] Our first question is from Andrew D'Silva from B Riley & Company. Please proceed with your question.

Good afternoon. Thanks for taking my questions. A couple quick ones and just let me know if you gave color on this during your prepared remark. I was jumping between a couple of calls. So just to start, if you could just give a little bit of color on the strategy you have as it relates to sales and marketing and building a sales force and what I am really looking for is really some context if you do go from a direct standpoint context on the size of the sales team and maybe the timing before you determine if you'll be hiring a direct team or not. And then I know you touched on this briefly during prepared remarks, but just how does CMS coverage and Fresenius and DaVita's market share really play a role in your status there.

Okay. Thank you, Andy. In terms of our sales and marketing organization, we have been looking at a very top line in terms of the concentration of where the hemodialysis patients with catheters are located. And we have seen that the requirements of having a direct sales force on the ground are not in a very large organization. If you take a specialty organization pretty much if you would cut a specialty organization in half, you may not even need that many people. Clearly, the payer environment is something that we will pay a lot of attention to and that is the reason why the payer side including medical affairs are the first individuals that leadership that we are bringing into play and have brought into play. The salesforce, the actual boots on the ground will come very much at the tail end when pretty much we are ready knowing that we are going it alone and also at that time we have just about enough time to get them on board and be able to launch product. In terms of your second question about CMS and the importance of CMS, that's a good question and actually it's one of the questions that I have also received from several people via email. So let me try to cover it in its broader sense. The questions that we have received is the role of CMS, what happened while you wait for CMS coverage, what potentially could be the delays in terms of reporting sales and how does the TDAPA program which is the transitional add-on program play into this whole equation. So in order to answer this question completely, let me start the following way. So it's very true that Medicare covers about 90% of all the hemodialysis patients under the…

Okay. Great. Thanks for the color on that and then just my last question just relates to some of the comments you've made previously as it relates to potentially having to run another phase three. That really doesn't apply anymore corrections the FDA granted your request for a rolling review and it's now really if the NDA, once you submit the various modules have been filed adequately and with appropriate amount of data or information, is that a fair assessment or you still unsure as it relates to second phase three?

Phoebe?

It remains a review decision, Andy. So as you said when FDA reviewed the submission and reviewed the data for LOCK-IT-100, it will determine whether or not in its opinion the information in the NDA provides the substantial evidence of safety and effectiveness to meet statutory requirements for drug approval. So if at that time, it decides that the data are not sufficient is then it could request the second phase three trial.

But this isn't really any different than most other companies that run one pivotal and then file an NDA and look for an approval based on that one trial. It's just the way you're articulating it is for more of a conservative stance. Is that - is that a fair assessment or from your previous experience is it from your discussions with the FDA a little bit different relative to running a single phase three versus having to do two?

Well, we believe that the extremely robust data from LOCK-IT-100 does provide substantial evidence of safety and effectiveness as we have summarized previously. It was a milestone study in hemodialysis subjects. It was a very large set with over 800 subjects enrolled. It was conducted at 70 clinical sites across the US that provides evidence to FDA that the product will perform as intended in different patient populations with different demographics across the United States. So we believe that the data will be sufficient but you never can say never with the FDA until they actually get in and review the data.

Our next question is from Ram Selvaraju from H.C. Wainwright. Please proceed with your question.

Thanks very much for taking my questions. Can you hear me? Okay, firstly, I just wanted to ask about the pediatric study plan and where that fits into the processing of the NDA? Is that going to be a gating item meeting the review at approval of the pediatric study plan for the actual approval of the Neutrolin in NDA or is that something that is going to occur before the final NDA submission is completed or is it something that will likely be done before the actual expected PDUFA data approval this year? Just give us an idea of where the pediatric study plan falls in the overall continue of approval process?

We requested and received the deferral for conducting; this is a pediatric study prior to NDA submission. So as part of that deferral process a pediatric study plan was fitted and FDA will then expect us to fulfill our commitment to conduct the pediatric study post approval of the NDA. And as you know, there are lots of things to be done together clinical trial up and running. So while the NDA is under review, we can go forward with those discussions with FDA.

Okay. But does the study plan need to be approved by the FDA before the Neutrolin NDA is approved? And has the study plan actually been approved by the FDA? And my understanding was that, that is still pending.

So pediatric study plan has been submitted to FDA and agreed upon.

Okay. Great. Thank you. Secondly, I was wondering if you could just give us some additional clarity, Khoso you mentioned that some initial hiring has begun and with respect to the sales and marketing infrastructure. Can you just give us sense of what personnel or what staffing if any has actually been spun up, as it were as you prepare for the potential commercialization of facility so far?

So the process has started we have so far appointed two people. One in the payer world and one in medical affairs to be focused here in the US. And we have others lined up behind these to bring on board. As I said the focus will be initially on the payer and medical affairs components and then the rest of the build-up will come through the remaining months and quarters.

Okay. And then I just wanted some additional clarity regarding the differentiation between the new technology add-on payment and TDAPA? And what specific frameworks would apply to Neutrolin specifically?

So I'm maybe not prepared at the moment to talk about the differences of the two programs. What I can focus is on the TDAPA program where if you got a new chemical NT or new molecule then you would be eligible to apply for TDAPA particularly if you've got a drug or biologic that does not fit in any of the categories. Then clearly that is been the position we have taken that they do not fit in those categories. And we will be a new chemical entity but I cannot separate out because the other one covers other supplies, which I don't have the separation of the two. I can get it and provide that to you, Ram.

Okay. Great. And then with respect to the distribution, can you comment at this time on what the distribution channel would look like for Neutrolin and if you expect there to be any kind of learning curve as it were as Neutrolin is deployed into the field with respect to how it is used in conjunction with catheter lock solution or if you expected to be very seamless because everybody uses catheter lock solutions and Neutrolin is basically just going to be incorporated into that.

Yes. I think there are several questions in your question. On is your distribution chain and I think when we had Jack on the call previously, we talked that we will be using a 3PL for coordinating our distribution in the US but we expect and I covered in this call that we are now nailing down how that flow will look but we expect to have sales going through specialty GPOs. We expect sales going through wholesalers and we also expect some direct sales that would be going to the larger dialysis providers. The mix of how that flows is what we will be nailing down over the coming period with the team now we got in play. So that's the first part of your question. The second part of your question could you repeat the last part of your question, I missed that last part.

Yes. It was just to be able to determine if there's going to be any learning curve with regard to adoption of Neutrolin or if you anticipate that to be very seamless because everyone knows what catheral lock solutions are, it's just going to be a component of that.

Yes. So the answer would be our expectation it would be that it would be seamless because today they use a catheral lock solution in the way they would use our catheral lock solution will be exactly the same way. So it will be seamless from that perspective. Clearly, the benefit they get with a 71% reduction in infection rate will make a huge difference. And in today's environment, where we are with what's going on around clearly infections and the implications on infections on loved one means a lot. End of Q&A

And we have reached the end of the question-and-answer session. And I will now turn the call back over to the Khoso for a closing remark.

Okay. So before I do a close there were other questions that I had received and that I'd like to try to cover in this call. So let me just get that question. So let me begin with one question that is pretty much prominent in the minds of people. With a recent report that a big quantity of US antibiotics are being manufactured in China, there's likely going to be potentially pressure that's what the question indicated to us to require some amount of critical drugs to be manufactured in the US going forward. And so the question was will this affect our CMC plan? And if so, what has been done to address it? So let's start with that question, Phoebe?

Thank you, Khoso. I think all of us are aware of COVID-19 and the coronavirus pandemic that's ongoing and that has certainly made us take precautions related to how we work and business-related travel plans. However, CorMedix was well aware of potential issues previously. And we have taken precautions to ensure that our supply chain is not involved China. Nonetheless we will continue to closely monitor the situation and make any adjustments that are needed in the future.

Thanks Phoebe. Another question that we got was two large hemodialysis chains that participated in the LOCK-IT-100 trial that's basically Fresenius and DaVita. Can you give some insight into discussions with these or other companies? So, yes, both of these hemodialysis chains were part of our landmark study. Yes, they both know Neutrolin; there has always been an open dialogue with both of these centers providers. But it would really be inappropriate for me to share any further information of any discussions with them at the moment. There was another question about, what is the status of the NDA submission and how many sections have been submitted? So, Phoebe?

Yes. As I said during the call, we have informed you that the NDA submission has started. FDA will not make a decision on the acceptability of the modules until after all of the modules have been submitted. Our next update will occur once the FDA has accepted the NDA or as we mentioned during prepared remarks, if we hear from the FDA that there is some delay imposed by the COVID-19 pandemic due to travel restrictions then we'll certainly provide an update. However, we are still optimistic that we're planning for a potential approval of Neutrolin and NDA in the second half of 2020.

Thanks Phoebe. Another question that we got is could you comment on CMS TDAPA decisions and how it could affect DaVita and Fresenius negotiations in a positive or negative way? Clearly, the payer strategy will be different if we obtain TDAPA or not. We do believe the robust data from the LOCK-IT-100 study clearly demonstrates to all healthcare providers that implementation of Neutrolin in their catheter dialysis patient should be very carefully considered as Neutrolin's ability to prevent life-threatening infections fulfills a huge unmet medical needs. That would be part of the value proposition that is being developed. Another question that we got was can you please update the status of the NDA. Is CorMedix on schedule to have the FDA review and give their guidance in the second half of 2020? Phoebe?

Yes. As I noted during the call and just a few minutes ago. We remain optimistic for a potential approval of the NDA in second half of 2020. However, it's clear that the impact of the COVID-19 pandemic is continuing to evolve and could significantly change FDA's ability to function effectively, which could delay approval.

Thanks Phoebe. And then just the last question again to Phoebe was that in light of the current coronavirus pandemic, the huge unmet need out there. Have CorMedix had any discussions with government agencies to see how we could contribute in flattening the curve? So Phoebe?

Yes. We agree that the coronavirus pandemic is imposing disruptions throughout the world. And the government is reacting on a daily basis to minimize the spread of the infection and provide medical resources over the next several weeks. We have not had any discussions with government agencies on redirecting limited resources given the unprecedented situation in which the government agencies are operating.

Thanks Phoebe. So those were the questions that we got it in writing. I've tried to categorize them into these different groupings, so that we could answer as many questions as we can. So for my closing remarks, I'd just like to thank you all for your time and attention. CorMedix remains committed to bringing Neutrolin to the US market to help patients in need of protection from life-threatening infections. The importance of preventing infections is even more apparent now during this coronavirus pandemic. So thank you very much for spending time with us this evening. Be safe and look forward to seeing you on future calls. Bye-bye.

Thank you, ladies and gentlemen. And this now concludes today's conference. You may now disconnect your line. Thank you for your participation. And have a good day.