Good morning, and welcome to the CorMedix First Quarter 2024 Earnings Conference Call. [Operator Instructions] Today's conference call is being recorded. [Operator Instructions] At this time, I would like to turn the call over to Dan Ferry from LifeSci Advisors. Please go ahead.

Good morning, and welcome to the CorMedix First Quarter 2024 Earnings Conference Call. Leading the call today is Joe Todisco, Chief Executive Officer of CorMedix and he is joined by Dr. Matt David, Executive Vice President and CFO; Beth Zelnick Kaufman, EVP and Chief Legal Officer; Liz Hurlburt, EVP and Chief Clinical Strategy and Operations Officer; and Erin Mistry, EVP and Chief Commercial Officer. 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 statements other than statements of historical fact regarding management's expectations, beliefs, goals, and plans about the company's prospects and future financial position. Actual results may differ materially from the estimates and projections on which these statements are based due to a variety of important factors. -- including the risks and uncertainties described in greater detail in CorMedix's filings with the SEC, which are available free of charge at the SEC's website 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. 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 Joe Todisco, Chief Executive Officer of CorMedix. Joe, please go ahead.

Thank you, Dan. Good morning, everyone, and thank you for joining us on this call. Though it has only been 2 months since our full year earnings call back in March, the company has achieved a number of key milestones. Most notably, CMS approval of the DefenCath HCPCS J-code application and subsequent determination that DefenCath is eligible for a transitional drug add-on payment adjustment to the ESRD bundle for outpatient reimbursement with a July 1, 2024, effective date. Most importantly, we have commenced the commercial launch of DefenCath in the inpatient setting, an important milestone for CorMedix and for patients undergoing chronic hemodialysis who are at risk for a catheter-related bloodstream infection. I would like to thank and congratulate the countless individuals, including CorMedix employees, contractors and consultants who worked tirelessly over the last decade to bring this innovative drug product to patients in need. Our field team has been actively engaged in discussions with numerous hospitals and health systems in the inpatient setting, and I'm pleased with the progress we've made in only a few weeks of field deployment. Our initial core focus is targeting approximately 900 hospital facilities where those facilities are responsible for roughly 65% of inpatient dialysis procedures in the U.S. As a frame of reference, this represents only about 12% of U.S. hospitals but accounts for the majority of the potential DefenCath inpatient market opportunity. Our field team has met with more than half of our targeted institutions. And as of today, roughly 50 key accounts representing more than 200 individual hospitals have recommended DefenCath for formulary review in the coming months at their respective institutions. In addition, a few hospitals have already added DefenCath on a non-formulary basis, while P&T formulary review remains pending. As we have communicated previously, the inpatient process to obtain…

Thanks, Joe, and good morning, everyone. I am pleased to be here today to provide an overview of our first quarter 2024 financial results as well as an update on CorMedix's cash position. The company has followed its quarterly report on Form 10-Q for the quarter ended March 31, 2024. I urge you to read the information contained in the report for a more complete discussion of our financial results. With respect to our first quarter of 2024 financial results, our net loss was approximately $14.5 million or $0.25 per share compared with the loss of $10.6 million or $0.24 per share in the first quarter of 2023. The higher net loss recognized in 2024 compared with 2023 was driven by an increase in SG&A expenses versus the first quarter of 2023, partially offset by the sale of New Jersey NOLs over $1.4 million. Operating expenses in the first quarter of 2024 increased approximately 44% to $15.9 million compared with $11 million in the first quarter of 2023. R&D expense decreased by approximately 75% to $0.8 million, 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 SG&A expense. SG&A expense increased approximately 98% to $15 million in the first quarter of 2024 compared with $7.6 million in the first quarter of 2023. This increase was primarily attributable to increases in personnel expenses due to the hiring of sales force, medical affairs and marketing personnel. In addition, certain costs related to medical affairs and certain personnel expenses that had been previously recognized in R&D are now recognized in SG&A following the FDA approval of DefenCath. To a lesser extent, the increase…

Thanks, Matt. CorMedix is executing well on our key objectives and is hopeful to provide more substantive updates on sales progress on our next quarterly call in August. I appreciate everyone's continued support of CorMedix, and I'm happy to now take questions.

Thank you. [Operator Instructions]. Your first question comes from Les Sulewski from Truist Securities.

I have 2 on the outpatient side. And then 1 follow-up on. So can you give us a little bit more color around the economics of the ARC partnership, essentially will all of their dialysis centers convert to full use of the DefenCath on day 1 upon the switch into your outpatient launch. Or is that an option left to the patient? And then second, I guess it's very interesting to hear that you're in discussions with 1 of the 2 leading national outpatient dialysis operators, how can we think about that conversation moving along? Is this a pilot run program that could be put in place? And ultimately, what kind of terms and impact on net pricing could we expect if a deal were to occur?

Thanks, Les. I appreciate the question. And I'm actually going to kind of, I think, blend these 2 questions together to some extent. So we're not going to disclose specific terms in any 1 specific outpatient or ultimately inpatient agreement. I think the way we've guided you on price over the past year, it kind of remains consistent on the outpatient side. I think there'll be a healthy gross to net, right, that leaves room for discounts and rebates, volume incentive rebates, things like that, that you'll have to a less -- you'll have that to a lesser extent on the inpatient side. When we think about uptake in the facilities, and as we've communicated previously, right, TDAPA today applies to Medicare fee-for-service patients, which are probably about 40% to 45% of catheterized dialysis patients in any 1 site. So some, I think, facilities will elect to roll out potentially on kind of a payer basis. We're actively in discussions with the Medicare Advantage plans around additional reimbursement. I think they want to see uptake, right, in demand. So they'll be looking to see fee-for-service volumes to some extent. I do think the potential rollout, right, for a larger operator could be, right, some combination of payer based or patient-based focused on potentially high-risk patients. There's a large volume of patients right over many facilities. So the rollout will take time to implement regardless of the customer.

Got it. Appreciate that. And as a follow-up more on the kind of a general corporate strategy. Given the favorable price of CorMedix stock performance and then you're factoring your cash burn, just to give you a little bit of a cushion as you head into closer to profitability or breakeven. Have you considered that an equity raise or any other source of financing, such as a convertible note or warrants?

Well, thanks, Les. Well, in the script today, we announced the letter of intent for the credit facility, which we do expect to close over the next couple of weeks. Certainly, that facility is based upon or would be contingent upon receivables. We've also announced the ATM facility, which will give us some flexibility to utilize it down the road. What I wouldn't want to do, and I think what you're asking is why I wouldn't do a large potentially dilutive rate today, I just think that would be premature and potentially you're responsible to unnecessarily dilute the stock until we get better visibility on commercial execution in the back part of the year. I feel pretty good about where we are in our discussions today with customers. I think we're still in line with our base case expectations and assumptions, right, to get to that kind of run rate breakeven by the end of the year. Now that doesn't necessarily mean I'm going to allow minimum cash to fall below certain levels. And I think the tools that we've put in place today give us that flexibility as we move through the year to reassess, to look at customer orders as they're coming in, to evaluate our payment terms, right, our working capital needs and make that determination. So I hope that's sufficient.

Your next question comes from Gregory Renza from RBC Capital Markets.

Danish on for Greg. Congrats on the progress this quarter. Just first, on the call, you mentioned BD and M&A. Just wanted to dig into that and see how you're thinking about opportunities and areas of interest that would sit well on your platform. And then secondly, maybe if you could just remind us on the commercial opportunity of TPN in [ PEDs ], if you could quantify on lumen locks, et cetera.

Thanks, John. I appreciate the question. So look, from an M&A standpoint, obviously, we're going to continually be opportunistic and take a look as we're moving through our commercial launch this year into next year, we've got a fixed infrastructure cost. It makes a heck of a lot of sense to try to spread that cost across multiple products. So I do think there are opportunities in the market today that could be actionable. We don't have anything that we are currently either negotiating or actively pursuing. But this is just something that I think as we move past, let's say, commercial launch could become a bigger focus, right, in our mind as we develop as a company. We're doing a refresh right now -- on your second question, we're doing a refresh in our market research around TPN and oncology and hope to put something out in the second half of the year.

Greg, did you have any follow-up questions?

No, we're all good here.

[Operator Instructions]. So there are no further questions at this time. So this concludes the audio portion of the day. I'll now turn it back to Dan for written questions from the audience.

Thank you, operator. Joe, we have a couple of written questions from the audience here. The first one is, are there other post-market type studies that the company is considering or that may help with uptake in the inpatient or outpatient settings?

Okay. Thanks, Dan. Actually, that is something that we are actively pursuing right now. I think that when you talk about post-marketing studies, we're looking at real-world evidence studies, right? We want to be able to demonstrate the efficacy and health economic benefits of DefenCath in a real-world setting. So we are currently in discussions with what I would characterize as value-based care entities to run this type of an evaluation. It's not something that will happen overnight, but I do think it's something that over the course of time, will help demonstrate the value of DefenCath and certainly be useful increasing uptake.

All right. Great. Thanks, Joe. Another one here. What are the formularies focused on when it comes to their decision-making? In other words, how does DefenCath fit into those themes?

Okay. And I'm assuming from formularies that the question is asking about inpatient P&T process. So I guess I'll address that. So I think a typical P&T process in a hospital is going to focus on first clinical efficacy. And then from there, they're going to look at price and the health economic impact of the product. I think with DefenCath, there's a couple of other unique things that might factor into the discussion that are certainly beneficial for us. The first is within these institutions, antibiotic stewardship has become an incredibly important issue for them, right? They want to minimize the use of antibiotics and right, to the extent that you can reduce or prevent any infections, it lessens the need for antibiotics. The second is, as a preventative measure, these hospitals they get evaluated, right, based on their infection rates and their readmission rates. And I think that DefenCath fits squarely within that need. So I'd say that's likely part of the discussion. I think that works well in DefenCath's favor as we're going through these P&T processes.

Okay. Great. Thanks, Joe. Operator, that concludes the written portion of the Q&A session. You may now close the call.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.