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Item 7. Management’s Discussion and Analysis

2025-03-25 compared with 2024-03-12 · 365 added, 303 removed, 32 unchanged (95% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

should read the following discussion and analysis together with our audited consolidated financial statements and the accompanying notes

contained elsewhere in this report.

This discussion contains forward-looking statements, within the meaning of Section 27A of Securities

Act, Section 21E of the Exchange Act, and the Private Securities Litigation Reform Act of 1995, including statements regarding our

expected financial condition, business and financing plans.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

You should read the following

discussion and analysis together with our audited consolidated financial statements and the accompanying notes contained elsewhere in

This discussion contains forward-looking statements, within the meaning of Section 27A of Securities Act, Section 21E of

the Exchange Act, and the Private Securities Litigation Reform Act of 1995, including statements regarding our expected financial

condition, business and financing plans.

These statements involve risks and uncertainties.

Our actual results could

differ materially from the results described in or implied by these forward-looking statements as a result of various factors, including

those discussed below and elsewhere in this Annual Report on Form 10-K, particularly under the heading “Risk Factors.”

and our wholly owned subsidiaries (collectively, with our wholly owned subsidiaries, referred to herein as “we,” “us,”

“our” or the “Company”) is a biopharmaceutical company focused on developing and commercializing therapeutic

products for the prevention and treatment of life-threatening diseases and conditions.

Our primary focus is on the

commercialization of our lead product, DefenCath, in the U.S.

Our actual results could differ materially

from the results described in or implied by these forward-looking statements as a result of various factors, including those discussed

below and elsewhere in this Annual Report on Form 10-K, particularly under the heading “Risk Factors.”

The Company is a biopharmaceutical

company focused on developing and commercializing therapeutic products for life-threatening diseases and conditions.

Our primary focus is commercializing

our lead product, DefenCath® (taurolidine and heparin), in the U.S.

The name DefenCath is the U.S.

proprietary name that was approved by the

DefenCath is an antimicrobial

catheter lock solution (“CLS”) (a formulation of taurolidine 13.5 mg/mL, and heparin 1000 USP Units/mL) indicated to reduce

the incidence of catheter-related bloodstream infections (“CRBSI”) in adult patients with kidney failure receiving chronic

hemodialysis through a central venous catheter (“CVC”).

It is indicated for use in a limited and specific population of patients.

CRBSIs 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 CVC, related treatment costs, as well as increased

proprietary name approved by the

Food and Drug Administration (“FDA”).

CorMedix launched the product commercially in April 2024 in the inpatient setting

and July 2024 in the outpatient hemodialysis setting.

is an FDA approved antimicrobial CLS (a formulation of taurolidine 13.5 mg/mL, and heparin 1000 USP Units/mL) indicated to reduce the

incidence of CRBSI in adult patients with kidney failure receiving chronic hemodialysis through a CVC.

It is indicated for use in a limited

and specific population of patients.

CRBSIs, a clinically confirmed subset of the epidemiological surveillance term, central line associated

bloodstream infection (“CLABSI”), can lead to treatment delays and increased costs to the healthcare system when they occur

due to extended and often repeat hospitalizations, need for IV antibiotic treatment, long-term anticoagulation therapy, removal/replacement

of the CVC, related treatment costs, as well as increased mortality.

We believe DefenCath can address a significant unmet medical need.

Following the submission of

a duplicate NTAP application to CMS, CMS issued the IPPS 2024 proposed rule that includes a NTAP per hospital stay for DefenCath.

NTAP represents reimbursement to inpatient facilities of 75% of the wholesaler acquisition cost (“WAC”) price per 3 mL vial,

and an average utilization of 19.5 vials per hospital stay.

The final IPPS rule amended as of October 1, 2024 to reflect the current WAC

of $249.99 per 3ml vial resulting in a potential maximum NTAP of $3,656.10.

On November 15, 2023, we announced

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through a CVC.

DefenCath is indicated for use in a limited and specific population of patients.

DefenCath is the first and only FDA-approved

antimicrobial CLS in the U.S.

and was shown to reduce the risk of CRBSI by up to 71% in a Phase 3 clinical study.

As a result of

the November 2023 FDA approval, we are currently preparing for the commercial launch of DefenCath.

DefenCath is the first and only FDA-approved antimicrobial CLS in the U.S.

and was shown to reduce the risk of CRBSI by

up to 71% in a Phase 3 clinical study.

As a result of the November 2023 FDA approval, CorMedix launched the product commercially in April

2024 in the inpatient setting and July 2024 in the outpatient hemodialysis setting.

DefenCath is listed in the

Orange Book as having NCE exclusivity (5 years) expiring on November 15, 2028, and the Generating Antibiotic Incentives Now or GAIN exclusivity

extension of the NCE exclusivity (an additional 5 years) expiring on November 15, 2033.

The GAIN exclusivity extension of 5 years is the

result of the January 2015 designation of DefenCath as a Qualified Infectious Disease Product (“QIDP”).

We announced on April 26,

2023 that following the submission of a duplicate New Technology Add-On Payment (“NTAP”) application in the fourth quarter

of 2022 to CMS, CMS has subsequently issued the Inpatient Prospective Payment System (“IPPS”) 2024 proposed rule that includes

a NTAP of up to $17,111 per hospital stay for DefenCath.

This NTAP represents reimbursement to inpatient facilities of 75% of the anticipated

wholesaler acquisition cost price of $1,170 per 3 mL vial, and an average utilization of 19.5 vials per hospital stay.

The final IPPS

rule was published in early August 2023 and confirmed this payment amount in that final rule.

This NTAP was conditioned upon the DefenCath

NDA obtaining final FDA approval prior to July 1, 2024.

As the NTAP was calculated by CMS based upon an anticipated WAC price of $1,170,

and following FDA approval of the DefenCath NDA, an actual WAC of $249.99 per 3ml vial was established, we anticipate that CMS will revise

the amount of the NTAP payment to reflect the actual WAC price in the next IPPS rulemaking, effective October 1, 2024.

Upon the listing

in the compendia of the actual WAC price of $249.99 per 3ml vial, the Company notified CMS of the new lower WAC pricing and recommended

that CMS make an off-cycle adjustment to the NTAP to reflect the current lower WAC pricing amount.

CMS subsequently communicated to the

Company that they do not intend to update the NTAP reimbursement amount until the next review cycle in October 2024.

Orange Book as having NCE exclusivity (5 years) expiring on November 15, 2028, and the GAIN exclusivity extension of the NCE exclusivity

(an additional 5 years) expiring on November 15, 2033.

The GAIN exclusivity extension of 5 years is the result of the January 2015 designation

of DefenCath as a QIDP.

On January 25, 2024, CMS determined

that DefenCath should be classified as a renal dialysis service that is subject to the Medicare end-stage renal disease prospective payment

system ( “ESRD PPS”).

The ESRD PPS provides bundled payment for renal dialysis services, but also affords a transitional drug

add-on payment adjustment, or TDAPA, which provides temporary, additional payments for certain new drugs and biologicals.

an application for TDAPA on January 26, 2024, and CMS has confirmed receipt.

We also submitted a HCPCS application for a J-code to CMS

on December 8, 2023, for DefenCath, which is relevant to billing and the TDAPA application.

CMS has confirmed the coding application is

under review.

TDAPA reimbursement is calculated based on 100 percent ASP (or 100 percent of wholesale acquisition price or else manufacturers’

list price, respectively, if such data is unavailable).

If CMS grants TDAPA and post-TDAPA add-on payment adjustments for DefenCath, collective

payments would be for five years (with such add-on payments applying to all ESRD PPS payments for years three through five).

that DefenCath should be classified as a renal dialysis service that is subject to the Medicare ESRD PPS.

The ESRD PPS provides bundled

payment for renal dialysis services, but also affords a transitional drug add-on payment adjustment, or TDAPA, which provides temporary,

additional payments for certain new drugs and biologicals.

We submitted an application for TDAPA on January 26, 2024, and received confirmation

that our application was approved on April 18, 2024 for a July 1, 2024 implementation.

We also submitted a HCPCS application for a J-code

to CMS on December 8, 2023, for DefenCath, which is relevant to billing and the TDAPA application.

The HCPCS J-code for DefenCath was

published by CMS on April 2, 2024.

TDAPA reimbursement is calculated based on 100 percent ASP (or 100 percent of wholesale acquisition

price or manufacturers’ list price, respectively, if such data is unavailable).

TDAPA and post-TDAPA add-on payment adjustments

for DefenCath apply for five years (with such add-on payments applying to all ESRD PPS payments for years three through five).

CMS confirmed

to the Company that, assuming a favorable review, CMS is working towards a July 1, 2024 implementation date for TDAPA.

We may pursue additional indications

for DefenCath use as a CLS in populations with unmet medical needs that may also represent potentially significant market opportunities.

While we are continuing to assess these areas, potential future indications may include use as a CLS to reduce CRBSIs in total parenteral

nutrition patients using a central venous catheter and in certain oncology patients using a central venous catheter.

In 2024, the company

anticipates discussing with the FDA potential pathways for expanded indications.

We currently have one FDA

approved source for each of our two key APIs for DefenCath, taurolidine and heparin sodium, respectively.

With regards to taurolidine,

we have a DMF filed with the FDA.

There is a master commercial supply agreement between a third-party manufacturer and us in place from

We are currently in the process of identifying and qualifying an alternate third-party manufacturer for taurolidine under

our existing DMF.

With respect to heparin sodium API, we have identified an alternate third party supplier and intend to qualify such

supplier under the DefenCath NDA over the next twelve months.

We received FDA approval of

DefenCath with finished dosage production from our European based CMO Rovi Pharma Industrial Services.

We believe this CMO has adequate

capacity to produce the volumes needed to meet near term projected demand for the commercial launch of DefenCath.

We previously announced commercial

arrangements with additional finished dosage CMOs, Alcami Corporation and Siegfried Hameln, that provide for the manufacture of commercial

sterile parenteral drug products.

The Company anticipates the submission to the FDA of a supplement adding Siegfreid Hameln as an alternate

manufacturing site in the second fiscal quarter of 2024.

The Company will also discontinue its relationship with Alcami as a potential

alternate manufacturing site for DefenCath.

We announced on May 1, 2023

that the USPTO allowed our patent application directed to a locking solution composition for treating and reducing infection and flow

reduction in central venous catheters.

This application was granted on August 29, 2023 as U.S.

Patent reflects the unique and proprietary formulation of our product, DefenCath, for which we received FDA approval on November

This patent supplements the coverage of our existing licensed U.S.

7,696,182, and has the potential to provide an

additional layer of patent protection for DefenCath through 2042.

As part of the DefenCath approval

letter, the FDA communicated the existence of a required pediatric assessment under the Pediatric Research Equity Act, or PREA.

PREA requires

sponsors to conduct pediatric studies for, among other things, NDAs for a new active ingredient, such as taurolidine in DefenCath, unless

a waiver or deferral is obtained from the FDA.

A deferral acknowledges that a pediatric assessment is required but permits the applicant

to submit the pediatric assessment after the submission of an NDA.

FDA deferred submission of the pediatric study for DefenCath because

the product is ready for approval for use in adults and the pediatric study has not been completed.

We are obligated to conduct the study

communicated in the approval letter:

an open-label, two-arm (DefenCath vs.

standard of care) study to assess safety and time to CRBSI

in subjects from birth to less than 18 years of age with kidney failure receiving hemodialysis via a central venous catheter.

this is a required post-marketing study, we must make annual reports to the FDA.

Pediatric studies for an approved product conducted under

PREA may qualify for pediatric exclusivity, which, if granted, provides an additional six months of exclusivity that attaches to the end

of existing marketing exclusivity and patent periods for DefenCath.

Depending on the timing of final report submission, DefenCath could

potentially receive a total marketing exclusivity period of 10.5 years.

However, there are factors that could affect whether this exclusivity

is received or the duration of exclusivity, and DefenCath may or may not ultimately be eligible for the additional 0.5 years of exclusivity

associated with this pediatric study.

Neutrolin was previously sold

in the EU and other territories where we received CE-Mark approval for the commercial distribution of Neutrolin as a CLS.

has elected to discontinue sales of Neutrolin for lack of commercial viability.

The winding down of our operations in the EU is nearly

complete and Neutrolin sales in both the EU and the Middle East have been discontinued since 2022.

In addition to DefenCath,

we have sponsored a pre-clinical research collaboration for the use of taurolidine as a possible treatment for rare pediatric tumors.

In February 2018, the FDA granted orphan drug designation to taurolidine for the treatment of neuroblastoma in children.

We may seek one

or more strategic partners or other sources of capital to help us develop and commercialize taurolidine for the treatment of neuroblastoma

Operations Overview

have not generated substantial revenue since our inception.

Through December 31, 2023, we have funded our operations primarily through

debt and equity financings.

and Development Expense

a July 1, 2024 implementation date for HCPCS and TDAPA.

We announced on June 6, 2024

that the CMS has determined that DefenCath qualified for pass-through status under the hospital Out-Patient Prospective Payment System

Pass-through status provides for separate payment under Medicare Part B for the utilization of DefenCath in the

outpatient ambulatory setting for a period of at least two years, and up to a maximum of three years.

While vascular access for hemodialysis

can be initiated in an inpatient setting, ambulatory surgical centers or vascular access centers offer a less-invasive, outpatient-based

alternative for patients.

We estimate that up to 100,000 HD-CVC placements occur each year, and pass-through status offers providers

a separate reimbursement mechanism in this setting of care administration of DefenCath.

Subsequent to the launch

of DefenCath in April 2024, we announced U.S.-based multi-year commercial supply agreements consisting of a large and several mid-sized

dialysis organizations.

Each provider has customized an implementation plan to provide access to patients based on a variety of clinical

and other factors.

We believe the currently contracted customer base represents roughly 60% of the outpatient dialysis centers in the

Financial Operations Overview

Our ability to continue to generate revenue and become profitable depends

on our ability to continue to successfully commercialize DefenCath and achieve gross profits from DefenCath sales that are greater than

our ongoing operating costs.

If we fail to continue to successfully commercialize DefenCath, or any other product lines we advance in

a timely manner or obtain regulatory approval for them, our ability to generate future revenue, and our results of operations and financial

position, could be adversely affected.

Prior to the commercial launch of DefenCath, we have funded our operations primarily through equity

Cost of Revenues

Cost of revenues include

direct and indirect costs related to the manufacturing and distribution of DefenCath, including product cost, packaging services, freight,

amortization of the license intangible asset and an allocation of overhead costs that are primarily fixed such as salaries, benefits

and insurance.

Research and Development Expense

Research and development,

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(i) internal costs associated with our development activities;

(ii) payments we make to third party contract

research organizations, contract manufacturers, investigative sites, and consultants;

(iii) technology and intellectual property license

(ii) payments we make to third-party

contract research organizations, contract manufacturers, investigative sites, and consultants;

(iii) technology and intellectual property

license costs;

(iv) manufacturing development costs;

(v) personnel related expenses, including salaries, stock–based compensation expense,

benefits, travel and related costs for the personnel involved in drug development;

(vi) activities relating to regulatory filings and

pre-clinical studies and clinical trials;

(vii) facilities and other allocated expenses, which include direct and allocated expenses for

rent, facility maintenance, as well as laboratory and other supplies;

and (viii) manufacturing-related costs, including previously expensed

pre-NDA approval inventory amounting to approximately $6,400,000.

(v) personnel related expenses, including salaries, stock–based compensation

expense, benefits, travel and related costs for the personnel involved in drug development;

(vi) activities relating to regulatory filings

and pre-clinical studies and clinical trials;

and (vii) manufacturing-related costs, including previously expensed pre-NDA approval inventory

amounting to approximately $6,400,000, through November 15, 2023.

All R&D is expensed as incurred.

process of conducting pre-clinical studies and clinical trials necessary to obtain regulatory approval is costly and time consuming.

The probability of success for each product candidate and clinical trial may be affected by a variety of factors, including, among others,

the quality of the product candidate’s early clinical data, investment in the program, competition, manufacturing capabilities

and commercial viability.

As a result of the uncertainties associated with clinical trial enrollments and the risks inherent in the development

process, we are unable to determine the duration and completion costs of future clinical stages of our product candidates or when, or

to what extent, we will generate revenues from the commercialization and sale of any of our future product candidates.

timelines, probability of success and development costs vary widely.

We are currently focused on the commercialization of DefenCath in

The process of conducting

pre-clinical studies and clinical trials necessary to obtain regulatory approval is costly and time consuming.

The probability of success

for each product line and clinical trial may be affected by a variety of factors, including, among others, the quality of the product

line’s early clinical data, investment in the program, competition, manufacturing capabilities and commercial viability.

of the uncertainties associated with clinical trial enrollments and the risks inherent in the development process, we are unable to determine

the duration and completion costs of future clinical stages of our product lines or when, or to what extent, we will generate revenues

from the commercialization and sale of any of our future product lines.

Development timelines, probability

of success and development costs vary widely.

We are currently focused on the commercialization of DefenCath in the U.S.

Selling and Marketing Expense

Selling and marketing, or

S&M, expense includes the cost of salaries and related costs for personnel in sales and marketing, brand building, advocacy, market

research and consulting costs.

Selling and marketing expenses are expensed as incurred.

General and Administrative Expense

general and administrative, or SG&A, expense includes costs related to commercial personnel, medical education professionals, marketing

and advertising, salaries and other related costs, including stock-based compensation expense, for persons serving in our executive,

sales, finance and accounting functions.

Other SG&A expense includes facility-related costs not included in R&D expense, promotional

expenses, costs associated with industry and trade shows, and professional fees for legal services and accounting services.

Currency Exchange Transaction Gain (Loss)

currency exchange transaction gain (loss) is the result of re-measuring transactions denominated in a currency other than our functional

currency and is reported in the consolidated statement of operations as a separate line item within other income (expense).

The intercompany

loans outstanding between our Company based in New Jersey and our subsidiary based in Germany are not expected to be repaid in the foreseeable

future and the nature of the funding advanced is of a long-term investment nature.

As such, unrealized foreign exchange movements related

to long-term intercompany loans are recorded in other comprehensive income (loss).

income consists of interest earned on our cash equivalents and short-term investments.

expense consists of interest incurred on financing of expenditures.

of Operations

of the Years Ended December 31, 2023 and 2022

following is a tabular presentation of our consolidated operating results for the years ended December 31, 2023 and 2022 (in thousands) :

Cost of sales

General and administrative,

or G&A, expenses consist principally of salaries and related costs for personnel in executive, finance and administrative functions

including payroll taxes and health insurance, stock-based compensation and travel expenses.

Other general and administrative expenses

include facility-related costs, insurance and professional fees for legal, patent review, consulting, and accounting services.

and administrative expenses are expensed as incurred.

Foreign Currency Exchange Transaction Gain

Foreign currency exchange

transaction gain (loss) is the result of re-measuring transactions denominated in a currency other than our functional currency and is

reported in the consolidated statement of operations as a separate line item within other income (expense).

The intercompany loans outstanding

between our New Jersey-based company and our subsidiaries will not be repaid and the nature of the funding advanced was of a long-term

investment nature.

As such, unrealized foreign exchange movements related to long-term intercompany loans are recorded in other comprehensive

income (loss).

Interest Income

Interest income consists

of interest earned on our cash and cash equivalents and short-term investments.

Interest Expense

Interest expense consists

of interest incurred on financing of expenditures.

Results of Operations

Comparison of the Years Ended December 31, 2024 and 2023

The following is a tabular

presentation of our consolidated operating results for the years ended December 31, 2024 and 2023 (in thousands) :

Cost of revenue

Operating Expenses:

Research and development

Selling, general and administrative

Selling and marketing

General and administrative

Total operating expenses

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Interest income

Foreign exchange transaction (loss) income

Foreign exchange transaction loss

Interest expense

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Loss before income taxes

Other comprehensive gain (loss)

Other comprehensive (loss) income

Comprehensive loss

Revenue for the year ended December 31, 2023 was $0 as compared to $65,000 for the same period in 2022, attributable to the winding

down of our operations in the EU and the discontinuance of Neutrolin sales in both the EU and the Middle East.

Cost of sales for the year ended December 31, 2023 was $0 as compared to $4,000 for the same period in 2022, attributable

to the winding down of our operations in the EU and the discontinuance of Neutrolin sales in both the EU and the Middle East.

and Development Expense .

R&D expense for the year ended December 31, 2023 was $13,155,000, an increase of $2,475,000 from $10,680,000

the year ended December 31, 2024 was $43.5 million as compared to $0 for the same period in 2023.

Revenue consists of sales of DefenCath,

which was approved by the FDA in November 2023 and launched in the U.S in April 2024 (inpatient setting) and July 2024 (outpatient setting)

and reflects the shipment of DefenCath to direct customers and specialty distributors, net of estimates for applicable variable consideration,

which consists primarily of distribution service fees, prompt pay and other discounts, product returns, chargebacks, rebates and volume

incentive rebates.

Cost of Revenue.

of revenue for the year ended December 31, 2024 was $3.2 million as compared to $0 for the same period in 2023.

Cost of revenues include

direct and indirect costs related to the manufacturing and distribution of DefenCath, including product cost, packaging services, freight,

amortization of the license intangible asset and an allocation of overhead costs that are primarily fixed such as salaries, benefits

and insurance.

Direct costs of product sales during the year ended December 31, 2024 were minimal as DefenCath sold to date represented

validation lot units previously expensed as R&D.

This only marginally benefited the total gross margin in 2024 and the majority of

validation batch product has been sold as of December 31, 2024.

Indirect costs of approximately $3.0 million for the year ended December

31, 2024, represent the proportion of supply chain and quality personnel, benefits and insurance expenses representing excess capacity

in the production of sellable product.

As unit sales increase, a greater proportion of these costs will be capitalized as a component

of inventory and expensed at the point-of-sale.

Research and Development

R&D expense for the year ended December 31, 2024 was $3.9 million, a decrease of $9.2 million, or 70%, from $13.2 million

for the same period in 2023.

The increase was driven by an increase in personnel expenses of $1,177,000 as a result of higher R&D

headcount in 2023 as compared to 2022, net increases in costs related to medical affairs activities of $941,000, and an increase in costs

related to the technical and quality operations for the manufacturing of DefenCath prior to its marketing approval in November 2023 of

Selling, General and Administrative

SG&A expense for the year ended December 31, 2023 was $35,803,000, an increase of $15,797,000 from $20,006,000 for the

same period in 2022.

The increase was primarily attributable to an increase in costs related to market research studies and pre-launch

activities for DefenCath of $12,248,000, and an increase in personnel expenses of $3,693,000 as a result of additional SG&A hires

in 2023 in preparation for the marketing launch of DefenCath.

These increases were partially offset, among others of lesser significance,

a decrease in legal fees of $1,120,000.

Interest income for the year ended December 31, 2023 was $2,682,000, an increase of $2,356,000 from $326,000 for the same

period in 2022.

The increase was attributable to higher interest-bearing balances and higher interest rates this year as compared to

the same period last year.

Exchange Transaction Income (Loss) .

Foreign exchange transaction income (losses) for the years ended December 31, 2023 and 2022 were

due to the re-measuring of transactions denominated in a currency other than our functional currency.

The decrease was driven by the approval of DefenCath.

As a result of the transition to commercial operations,

costs related to medical affairs and certain other personnel that supported R&D efforts prior to the FDA approval of DefenCath of

approximately $6.9 million began supporting non research and development operations and have been recognized in cost of revenue or general

and administrative expense during the year ended December 31, 2024 Also, in 2023, prior to FDA approval, there were $1.5 million of costs

recognized in R&D related to the manufacturing of DefenCath validation batches.

These types of costs are now capitalized in inventory

as DefenCath is a commercialized product.

Selling and Marketing Expense.

S&M expense was $28.7 million for the year ended December 31, 2024, an increase of $10.6 million, or 59%, from $18.1 million for

the same period in 2023.

The increase was due primarily to increased marketing efforts and new personnel hired in late 2023 or throughout

2024, inclusive of our sales force and support for the commercial launch of DefenCath during 2024.

Subsequent to December 31, 2024, we

severed our internal sales force, future costs associated with the Syneos sales force are expected to be similar to those recognized internally

General and Administrative

G&A expense for the year ended December 31, 2024 was $30.0 million, an increase of $12.3 million, or 69%, from $17.7

million for the same period in 2023.

The increase was driven by the approval of DefenCath.

As a result of the transition to commercial

operations, certain medical affairs, other personnel and consulting expenses of approximately $6.0 million previously classified in R&D

are included in G&A expense during the year ended December 31, 2024.

Additional G&A personnel were also hired throughout 2024

in anticipation of and to support commercial operations, representing an increases of $2.8 million as well as increases in legal and

compliance of $1.7 million and consulting fees of $0.9 million.

Interest Income .

income for the year ended December 31, 2024 was $2.6 million, a decrease of $0.1 million, or 4%, from $2.7 million for the same period

in 2023, due to lower short-term investments during this period as compared to the same period last year.

Foreign Exchange Transaction

Income (Loss) .

Foreign exchange transaction income (losses) for the years ended December 31, 2024 and 2023 were due to the re-measuring

of transactions denominated in a currency other than our functional currency.

Balances and changes were immaterial for all periods presented.

Other Income.

income relates to a settlement with a previously utilized vendor, occurring during the year ended December 31, 2024.

Interest Expense .

expense for the year ended December 31, 2023 was $34,000 as compared to $26,000 for the same period in 2022.

The increase of $8,000 was

due primarily to higher interest rates on expenses that were financed this year as compared to the same period last year.

for the year ended December 31, 2022 of $586,000, was an income tax benefit due to the sale of our unused NOL for the state fiscal year

2021, which was sold in fiscal year 2022, through the NJEDA Program.

Interest expense pertains to certain liabilities we chose to finance.

Balances and changes were immaterial for all periods presented.

for the year ended December 31, 2024 was $1.4 million, due to the sale of our unused NJ State net operating losses for fiscal year 2023,

which were sold in fiscal year 2024, through the NJEDA Program.

There was no tax benefit from the sale of unused net operating losses

for fiscal year 2023.

Comprehensive Income (Loss) .

Unrealized foreign exchange movements related to long-term loans and the translation of the foreign

affiliate financial statements to U.S.

dollars and unrealized movements related to short term investment are recorded in other comprehensive

income (loss) which resulted in a gain of $11,000 and a loss $(4,000) for the years ended December 31, 2023 and 2022, respectively.

and Capital Resources

a result of our R&D and SG&A expenditures and the lack of substantial product sales revenue, our ongoing operations have not

been profitable since our inception.

During the year ended December 31, 2023, we received net proceeds of $42,878,000 from the issuance

of 9,000,093 shares of common stock and pre-funded warrants to purchase 2,500,625 shares of common stock in connection with a public

In addition, during the year ended December 31, 2023, we received net proceeds of $12,949,000 from the issuance of 2,977,637

shares of common stock under our at-the-market-issuance sales agreement, or ATM program, as compared to $17,770,000 net proceeds for

the same period in 2022 from the issuance of 4,704,259 shares of common stock.

We may need to raise additional capital through various

potential sources, such as equity and/or debt financings, strategic relationships, potential strategic transactions or out-licensing

of our products until profitability is achieved, if ever.

Cash Used in Operating Activities

Other Comprehensive (Loss)

Unrealized foreign exchange movements related to long-term intercompany loans, the translation of the foreign affiliate financial

statements to U.S.

dollars and unrealized movements related to short-term investment are recorded in other comprehensive (loss) income.

Other comprehensive income (loss) is considered immaterial for all periods presented.

Quarterly Results of Operations (Unaudited):

The following table is the

summary of the Company’s unaudited quarterly condensed consolidated results of operations for the year ended December 31, 2024

(amounts in thousands, except for per share amounts):

Gross profit (loss)

Income (loss) from operations

Net income (loss) per common shares – basic*

Weighted average common shares outstanding – basic*

* Diluted earnings per share are not presented in this table

Liquidity and Capital Resources

Sources of Liquidity

As a result of our R&D,

S&M and G&A expenditures and the lack of substantial product sales revenue, our ongoing operations have not been profitable on

an annual basis since our inception.

We achieved profitability in the fourth quarter of 2024, driven by product sales of DefenCath.

the year ended December 31, 2024, we received net proceeds of $18.9 million from the issuance of 3,049,878 shares of common stock under

our at-the-market-issuance sales agreement, or ATM program, as compared to $12.9 million net proceeds in 2023 from the issuance of 2,977,637

shares of common stock.

Also, in 2023, we received net proceeds of $42.9 million from the issuance of 9,000,093 shares of common stock

and pre-funded warrants to purchase 2,500,625 shares of common stock in connection with a public offering.

We may continue to be reliant

on external sources of cash until we are able to generate sufficient operating cash flow to fund operations.

In March 2024, we received

$1.4 million, net of expenses, from the sale of our unused New Jersey net operating losses (“NOL”), that were eligible for

sale under the State of New Jersey’s Economic Development Authority’s New Jersey Technology Business Tax Certificate Transfer

program (“NJEDA Program”).

The NJEDA Program allowed us to sell our available fiscal 2023 NJ state NOL tax benefits in the

amount of approximately $1.5 million.

Net Cash Used in Operating Activities

Net cash used in operating

activities for the year ended December 31, 2023 was $38,409,000 as compared to $24,357,000 in 2022, an increase in net cash use of $14,052,000.

The increase is primarily driven by an increase in net loss of $16,637,000, attributable to a net increase in operating expenses of $18,272,000,

primarily due to increased pre-launch commercial activities for DefenCath.

Net Cash Used in Investing Activities

used in investing activities for the year ended December 31, 2023 was $17,062,000 as compared to $3,709,000 of cash provided in the same

period in 2022.

The net cash used during the year ended December 31, 2023, was mainly driven by the higher amount invested in short-term

investments as compared to the same period in 2022.

Cash Provided by Financing Activities

cash provided by financing activities for the year ended December 31, 2023 was $55,917,000 as compared to $17,898,000 for the same period

in 2022, an increase of $38,019,000, primarily attributable to net proceeds we received from the sale of our common stock and pre-funded

warrants in the public offering during 2023.

Additionally, during the year ended December 31, 2023, we generated net proceeds of $12,949,000

from the sale of our common stock in our ATM program, as compared to $17,770,000 in the same period last year.

Requirements and Liquidity

Our total cash and cash equivalents and short-term

investments as of December 31, 2023 and 2022, excluding restricted cash of $181,000 and $226,000, respectively, was $76,031,000 and $58,792,000,

respectively.

During the year ended December 31, 2023, we realized net proceeds of $42,878,000 of net proceeds from the public offering

and exercise of the underwriters’ option and an aggregate of $12,949,000 of net proceeds from the issuance of 2,977,637 shares of

common stock under our ATM program.

As of December 31, 2023, we have $104,400,000 available under our shelf registration statement filed

in August 2021 for the issuance of equity, debt or equity-linked securities.

our business has not generated positive operating cash flow and if we do not raise significant revenue, we may need to raise additional

capital in order to continue to fund our research and development activities, as well as to fund operations generally.

Our continued

operations are focused on the commercial launch of DefenCath and we can provide no assurances that financing or strategic relationships

will be available on acceptable terms, or at all, if additional funds are needed.

We expect to continue to fund

operations from cash on hand and through capital raising sources as previously described, which may be dilutive to existing stockholders,

through revenues from the licensing of our products, or through strategic alliances.

We may seek to sell additional equity or debt securities

through one or more discrete transactions, or enter into a strategic alliance arrangement, but can provide no assurances that any such

financing or strategic alliance arrangement will be available on acceptable terms, or at all.

Moreover, the incurrence of indebtedness

would result in increased fixed obligations and could contain covenants that would restrict our operations.

Raising additional funds through

strategic alliance arrangements with third parties may require significant time to complete and could force us to relinquish valuable

rights to our technologies, future revenue streams, research programs or product candidates, or to grant licenses on terms that may not

be favorable to us or our stockholders.

Our actual cash requirements may vary materially from those now planned due to a number of factors,

including any change in the timing of the commercial launch of DefenCath or the focus and direction of our research and development programs,

any acquisition or pursuit of development of new product candidates, competitive and technical advances, the costs of commercializing

any of our product candidates, and costs of filing, prosecuting, defending and enforcing any patent claims and any other intellectual

property rights.

expect to generate product sales for DefenCath in the U.S.

In the absence of significant revenue, we are likely to continue generating

operating cash flow deficits.

We will continue to use cash as we increase other activities leading to the commercialization of DefenCath,

pursue business development activities, and incur additional legal costs to defend our intellectual property.

activities for the year ended December 31, 2024 was $50.6 million as compared to $38.4 million in 2023, an increase in net cash use of

$12.2 million.

The increase in cash use is primarily driven by an increase in trade receivables of $51.8 million and inventories of $3.4

million offset by a net increase in the change of accrued expenses and accounts payable of $15.4 million, primarily attributable to the

gross-to-net-deductions accruals and decreased net loss of $28.4 million.

Net Cash Provided by (Used in) Investing

Net cash provided by investing

activities for the year ended December 31, 2024, was $21.2 million as compared to $17.1 million of net cash used in investing activities

for the same period in 2023.

The net cash provided during the year ended December 31, 2024, was mainly driven by maturing short-term

investments used to help fund operations, and lower purchases of short-term investments in 2024.

Net Cash Provided by Financing Activities

Net cash provided by financing

activities for the year ended December 31, 2024, was $26.3 million as compared to $55.9 million for the same period in 2023, a decrease

of $29.6 million.

The decrease was mainly attributable to the net proceeds of $42.9 million from a public offering completed during the

year ended December 31, 2023, offset by increases in proceeds from the exercise of stock options of $7.4 million, and increased ATM net

proceeds of $6.0 million during the year ended December 31, 2024.

Funding Requirements and Liquidity

Our total cash, cash equivalents

and short-term investments as of December 31, 2024, was $51.7 million, excluding restricted cash of $0.1 million, compared with $76.0

million for the year ended December 31, 2023, excluding restricted cash of $0.2 million.

As of December 31, 2024, $30.2 million of the

Company’s common stock remains available for potential sale under the ATM program.

Additionally, we have $100.0 million of remaining

capacity available under our 2024 Shelf Registration Statement for the issuance of Company securities.

We expect to continue to

fund operations from cash collections from accounts receivable, plus cash, cash equivalents and short-term investments and through capital

raising sources, which may be dilutive to existing stockholders.

In May 2024, we implemented an ATM program, which may be utilized to

support our ongoing funding requirements.

We may seek to sell additional equity or debt securities through one or more discrete transactions,

or enter into a strategic alliance arrangement, but can provide no assurances that any such financing or strategic alliance arrangement

will be available on acceptable terms, or at all.

Moreover, the incurrence of indebtedness would result in increased fixed obligations

and could contain covenants that would restrict our operations.

Raising additional funds through strategic alliance arrangements with

third parties may require significant time to complete and could force us to relinquish valuable rights to our technologies, future revenue

streams, research programs or product candidates, or to grant licenses on terms that may not be favorable to us or our stockholders.

Our actual cash requirements

may vary materially from those now planned due to a number of factors, including any material change in commercial operations pertaining

to DefenCath or the focus and direction of our research and development programs, any acquisition or pursuit of development of new product

candidates, competitive and technical advances, the costs of commercializing any of our product candidates, and costs of filing, prosecuting,

defending and enforcing any patent claims and any other intellectual property rights.

Because our business has not generated consistent

and sustained positive operating cash flow, we may need to raise additional capital in order to continue to fund our research and development

activities, as well as to fund operations generally and we can provide no assurances that financing or strategic relationships will be

available on acceptable terms, or at all, if additional funds are needed.

If we are unable to raise additional funds when needed, we

may be forced to slow or discontinue our commercial operations pertaining to DefenCath.

We may also be required to delay, scale back

or eliminate some or all of our anticipated research and development programs.

Each of these alternatives would likely have a material

adverse effect on our business.

We currently estimate that

as of December 31, 2024, we have sufficient cash, cash equivalents and short-term investments to fund operations for at least twelve months

from the issuance of this Annual Report on Form 10-K, and will enable us to fund the launch of DefenCath through to anticipated profitability.

These estimates are based upon the assumption of commercial launch in the second quarter of 2024, and other base case assumptions for

market penetration, average selling price, R&D expense and commercial infrastructure cost.

Additional financing may be needed to build

out our commercial infrastructure and to continue our operations.

If we are unable to raise additional funds when needed, we may be forced

to slow or discontinue the commercial launch of DefenCath.

We may also be required to delay, scale back or eliminate some or all of our

research and development programs.

Each of these alternatives would likely have a material adverse effect on our business.

entered into a seven-year operating lease agreement in March 2020 for an office space at 300 Connell Drive, Berkeley Heights, New Jersey

The lease agreement, with a monthly average cost of approximately $17,000, commenced on September 16, 2020.

Accounting Estimates

Our management’s discussion and analysis of our financial condition

and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles

generally accepted in the United States, or GAAP.

The preparation of these consolidated financial statements requires us to make estimates

and judgments that affect the reported amounts of assets, liabilities and expenses.

On an ongoing basis, we evaluate these estimates and

We base our estimates on our historical experience and on various other assumptions that we believe to be reasonable under

the circumstances.

These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities

that are not readily apparent from other sources.

Actual results and experiences may differ materially from these estimates.

Our significant

accounting policies are more fully described in Note 3 to our financial statements included with this report.

Quantitative and Qualitative Disclosures About Market Risk

from the issuance of these financial statements.

Contractual Obligations

We entered into a seven-year

operating lease agreement in March 2020 for an office space at 300 Connell Drive, Berkeley Heights, New Jersey 07922.

The lease agreement,

with a monthly average cost of approximately $17,000, commenced on September 16, 2020.

In December 2024, we entered

into a three-year agreement with Syneos Health Commercial Services, LLC (“Syneos”) where Syneos will provide a dedicated

inpatient field sales force of sales that will exclusively promote DefenCath to hospitals and health systems.

We are obligated to an

up-front implementation and a fixed monthly fee.

Upon the twelve-month anniversary of the deployment date, expected to be in the

second quarter of 2025, the agreement is cancelable provided 60 days written notice.

As of December 31, 2024, the minimum amount

committed under this agreement totals $9.6 million.

In 2008, the Company entered

into a License and Assignment Agreement (the ND License Agreement) with ND Partners, LLP (NDP).

Pursuant to the ND License Agreement,

NDP granted the Company exclusive, worldwide licenses for certain antimicrobial catheter lock solutions, processes for treating and inhibiting

infections, a biocidal lock system and a taurolidine delivery apparatus, and the corresponding United States and foreign patents and

applications (the NDP Technology).

During the year ended December 31, 2024, net sales milestones in the amount of $2 million were achieved

and are accrued in our consolidated balance sheet.

The Company anticipates payment will be due in 2025 in accordance with the agreement

terms at the end of the twelve-month period post attainment.

Critical Accounting Estimates

We prepare our consolidated

financial statements in accordance with U.S.

generally accepted accounting principles, which require our management to make estimates

that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet dates,

as well as the reported amounts of revenues and expenses during the reporting periods.

To the extent that there are material differences

between these estimates and actual results, our financial condition or results of operations would be affected.

We base our estimates

on our own historical experience and other assumptions that we believe are reasonable after taking account of our circumstances and expectations

for the future based on available information.

We evaluate these estimates on an ongoing basis.

We consider an accounting estimate to

be critical if:

(1) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting

estimate was made, and (2) changes in the estimate that are reasonably likely to occur from period to period, or use of different estimates

that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations.

Management has discussed the development and selection of these critical accounting estimates with the Audit Committee of our Board of

In addition, there are other items within our financial statements that require estimation, but are not deemed critical as

defined above.

Changes in estimates used in these and other items could have a material impact on our financial statements.

● Litigation contingencies are assessed and judgments are made

to determine if an unfavorable outcome is considered probable or reasonably possible, and when considered reasonably possible but not

probable, the contingency is disclosed along with an estimate of the possible loss or range of loss.

If a liability is possible or probable,

but no reasonable estimation of loss can be made, we will disclose the nature of the contingency and state that such an estimate cannot

Such estimates and judgements are based on information obtained through the discovery process, court filings and follow on filings

by the plaintiffs as well as the stage of litigation.

There have been no changes in management’s estimates in 2024.

● We account for product

revenue from the sale of our product, DefenCath, in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”)

which entails our estimates and judgments primarily in determining the transaction price and more specifically as it relates to variable

consideration associated with the contracts.

Our customers are located in the United States and consist primarily of outpatient service

providers and to a lesser extent specialty wholesale distributors.

Variable consideration pertaining to an allowance for product returns

of short-dated or expired product requires estimation as our customers may have differing utilization, storage and distribution methods

and we do not yet have significant historical trends.

The Company’s product accrual takes into consideration estimates of product

held by its customers, the distribution channel, the shelf life of the product held by customers, as well as when the product is eligible

for return based on our returns good policy.

At December 31, 2024, the Company had $0.7 million in accrued returns allowance.

established the estimate for returns based on specific customer circumstances, industry best practices and management experiences.

return windows open and we experience actual returns we will further refine our estimate methods.

Quantitative and Qualitative Disclosures About Market

Financial Statements and Supplementary Data

information required by this Item 8 is included in Part IV, Item 15, and is incorporated by reference.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

The information required

by this Item 8 is included in Part IV, Item 15, and is incorporated by reference.

Changes in and Disagreements with Accountants on Accounting

and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis