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Item 7. Management’s Discussion and Analysis

2022-03-29 compared with 2021-03-30 · 477 added, 550 removed, 26 unchanged (98% of the section changed)

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 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.

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 report, particularly under the heading “Risk Factors.”

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

and the “Company”), is a biopharmaceutical company focused on developing and commercializing therapeutic products

for the prevention and treatment of infectious and inflammatory diseases.

In May 2020, we formed a wholly-owned Spanish subsidiary,

CorMedix Spain, S.L.U.

Our primary focus is

on the development of our lead product candidate, DefenCath™, for potential commercialization in the United States, or U.S.,

and other key markets as a catheter lock solution, or CLS.

We have in-licensed the worldwide rights to develop and commercialize

DefenCath and Neutrolin®.

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 report, particularly under the heading “Risk Factors.”

CorMedix Inc., together with our wholly owned

subsidiaries, (collectively referred to herein as “we,” “us,” “our” and the “Company”),

is a biopharmaceutical company focused on developing and commercializing therapeutic products for the prevention and treatment of infectious

and inflammatory diseases.

In May 2020, we formed a wholly-owned Spanish subsidiary, CorMedix Spain, S.L.U.

Our primary focus is on the development of our lead product candidate,

DefenCath™, for potential commercialization in the United States, or U.S., and other key markets as a catheter lock solution, or

We have in-licensed the worldwide rights to develop and commercialize DefenCath and Neutrolin®.

The name DefenCath is the U.S.

proprietary name conditionally approved by the U.S.

Food and Drug

Administration, or FDA, while the name Neutrolin®

is currently used in the European Union, or EU, and other territories where

we received CE-Mark approval for the commercial distribution of Neutrolin as a CLS regulated as a medical device.

DefenCath/Neutrolin

is a novel anti-infective solution (a formulation of taurolidine 1.35% and heparin 1000 u/ml) intended for the reduction and prevention

of catheter-related infections and thrombosis in patients requiring central venous catheters in clinical settings such as hemodialysis,

total parenteral nutrition, and oncology.

Infection and thrombosis represent key complications among hemodialysis, total parenteral

nutrition 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 intravenous, or IV, antibiotic treatment, long-term

anticoagulation therapy, removal/replacement of the central venous catheter, related treatment costs and increased mortality.

believe DefenCath addresses a significant unmet medical need and a potential large market opportunity.

In January 2015, the

FDA designated DefenCath as a Qualified Infectious Disease Product, or QIDP, for prevention of catheter-related blood stream infections

in patients with end stage renal disease receiving hemodialysis through a central venous catheter.

Catheter-related blood stream

infections and clotting can be life-threatening.

The QIDP designation provides five years of market exclusivity in addition to

the five years granted for a New Chemical Entity upon approval of a New Drug Application, or NDA.

In addition, in January 2015,

the FDA granted Fast Track designation to DefenCath Catheter Lock Solution, a designation intended to facilitate development and

expedite review of drugs that treat serious and life-threatening conditions so that the approved drug can reach the market expeditiously.

The Fast Track designation of DefenCath provides us with the opportunity to meet with the FDA on a more frequent basis during the

development process, and also ensures eligibility to request priority review of the marketing application.

December 2015, we launched our Phase 3 Prospective, Multicenter, Double-blind, Randomized, Active Control Study to Demonstrate

Safety & Effectiveness of DefenCath/Neutrolin in Preventing Catheter-related Bloodstream Infection in Subjects on Hemodialysis

for End Stage Renal Disease, or LOCK-IT-100, in patients with hemodialysis catheters in the U.S.

The clinical trial was designed

to demonstrate the safety and effectiveness of DefenCath compared to the standard of care CLS, Heparin, in preventing CRBSIs.

The primary endpoint for the trial assessed the incidence of CRBSI and time to CRBSI for each study subject.

Secondary endpoints

were catheter patency, which was defined as required use of tPA, or removal of catheter due to dysfunction, and removal of catheter

for any reason.

previously agreed with the FDA, an interim efficacy analysis was performed when the first 28 potential CRBSI cases were identified

in our LOCK-IT-100 study that occurred through early December 2017.

Based on these first 28 cases, there was a highly statistically

significant 72% reduction in CRBSI by DefenCath relative to the active control of heparin (p=0.0034).

Because the pre-specified

level of statistical significance was reached for the primary endpoint and efficacy had been demonstrated with no safety concerns,

the LOCK-IT-100 study was terminated early.

The study continued enrolling and treating subjects until study termination, and the

final analysis was based on a total of 795 subjects.

In a total of 41 cases, there was a 71% reduction in CRBSI by DefenCath relative

to heparin, which was highly statistically significant (p=0.0006), with a good safety profile.

The FDA granted our

request for a rolling submission and review of the NDA which is designed to expedite the approval process for products being developed

to address an unmet medical need.

Although the FDA usually requires two pivotal clinical trials to provide substantial evidence

of safety and effectiveness for approval of an NDA, the FDA will in some cases accept one adequate and well-controlled trial, where

it is a large multicenter trial with a broad range of subjects and study sites that has demonstrated a clinically meaningful and

statistically very persuasive effect on a disease with potentially serious outcome.

In March 2020, we

began the modular submission process for the NDA for DefenCath for the prevention of CRBSI in hemodialysis patients, and in August

2020, the FDA accepted for filing the DefenCath NDA.

The FDA also granted our request for priority review, which provides for

a six-month review period instead of the standard ten-month review period.

As we announced in March 2021, the FDA has informed

us that it will not approve the NDA for DefenCath in its present form.

The FDA noted concerns at the third-party manufacturing

facility after a review of records requested by the FDA and provided by the manufacturing facility.

We are working with the manufacturing

facility to develop plans for resolution of the deficiencies.

Additionally, the FDA is requiring a manual extraction study to

demonstrate that the labeled volume can be consistently withdrawn from the vials despite an existing in-process control to demonstrate

fill volume within specifications.

We expect to be able to complete this requirement expeditiously.

Satisfactory resolution of

these issues is required for approval of the DefenCath NDA by a pre-approval inspection and/or adequate manufacturing facility

responses addressing these concerns.

If an inspection is required, we may encounter delays in obtaining FDA approval because the

FDA is currently facing a backlog due to the pandemic and is actively working to define an approach for scheduling outstanding

inspections once safe travel may resume.

We will request a meeting with the FDA, which we estimate will occur in mid-April, to

obtain agreement with the FDA on the proposed resolutions of the deficiencies.

FDA did not request additional clinical data and did not identify any deficiencies related to the data submitted on the efficacy

or safety of DefenCath from LOCK-IT-100.

In draft labeling discussed with the FDA, the FDA added that the initial approval will

be for the limited population of patients with kidney failure receiving chronic hemodialysis through a central venous catheter.

This is consistent with our request for approval pursuant to the Limited Population Pathway for Antibacterial and Antifungal Drugs,

LPAD, passed as part of the 21st Century Cures Act, is a new program intended to expedite the development and approval

of certain antibacterial and antifungal drugs to treat serious or life-threatening infections in limited populations of patients

with unmet needs.

LPAD provides for a streamlined clinical development program involving smaller, shorter, or fewer clinical trials

and is intended to encourage the development of safe and effective products that address unmet medical needs of patients with

serious bacterial and fungal infections.

We believe that LPAD will provide additional flexibility for the FDA to approve DefenCath

to prevent CRBSIs in the limited population of patients with kidney failure receiving hemodialysis through a central venous catheter.

intend to pursue additional indications for DefenCath use as a CLS in populations with an unmet medical need that also represent

a significant market opportunity.

For example, we intend to pursue marketing authorization in the U.S.

for use as a CLS to reduce

CRBSIs in oncology and total parenteral nutrition patients using a central venous catheter.

In addition to DefenCath,

we are sponsoring a pre-clinical research collaboration for the use of taurolidine as a possible treatment for rare orphan pediatric

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 in children.

We are also evaluating opportunities for the possible expansion of taurolidine as a platform

compound for use in certain medical devices.

Patent applications have been filed in several indications, including wound closure,

surgical meshes, and wound management.

Based on initial feasibility work, we are advancing pre-clinical studies for taurolidine-infused

surgical meshes, suture materials and hydrogels.

We will seek to establish development/commercial partnerships as these programs

were granted a deferral by the FDA under the Pediatric Research Equity Act, or PREA, that requires sponsors to conduct pediatric

studies for NDAs for a new active ingredient, such as taurolidine in DefenCath, unless a waiver or deferral is obtained from the

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

after the submission of an NDA.

We have made a commitment to conduct the pediatric study after approval of the NDA for use in

adult hemodialysis patients.

Pediatric studies for an approved product conducted under PREA may qualify for pediatric exclusivity,

which if granted would provide an additional six months of marketing exclusivity.

DefenCath would then have the potential to receive

a total marketing exclusivity period of 10.5 years, including exclusivity pursuant to NCE and QIDP.

FDA regards taurolidine as a new chemical entity and therefore an unapproved new drug.

Consequently, there is no appropriate predicate

medical device currently marketed in the U.S.

Food and Drug Administration, or FDA, while the name Neutrolin® is currently used

in the European Union, or EU, and other territories where we received CE-Mark approval for the commercial distribution of Neutrolin as

a CLS regulated as a medical device.

DefenCath/Neutrolin is a novel anti-infective solution (a formulation of taurolidine 13.5 mg/mL and

heparin 1000 USP Units/mL) intended for the reduction and prevention of catheter-related infections and thrombosis in patients requiring

central venous catheters in clinical settings such as hemodialysis, total parenteral nutrition, and oncology.

Infection and thrombosis

represent key complications among hemodialysis, total parenteral nutrition and oncology patients with central venous catheters.

complications can lead to treatment delays and increased costs to the healthcare system when they occur due to hospitalizations, need

for intravenous, or IV antibiotic treatment, long-term anticoagulation therapy, removal/replacement of the central venous catheter, related

treatment costs and increased mortality.

We believe DefenCath addresses a significant unmet medical need and a potential large market

In January 2015, the FDA designated DefenCath

as a Qualified Infectious Disease Product, or QIDP, for prevention of catheter-related blood stream infections in patients with end stage

renal disease receiving hemodialysis through a central venous catheter.

Catheter-related blood stream infections and clotting can be

life-threatening.

The QIDP designation provides five years of market exclusivity in addition to the five years granted for a New Chemical

Entity upon approval of a New Drug Application, or NDA.

In addition, in January 2015, the FDA granted Fast Track designation to DefenCath

Catheter Lock Solution, a designation intended to facilitate development and expedite review of drugs that treat serious and life-threatening

conditions so that the approved drug can reach the market expeditiously.

The Fast Track designation of DefenCath provides us with the

opportunity to meet with the FDA on a more frequent basis during the development process, and also ensures eligibility to request priority

review of the marketing application.

In December 2015, we launched our Phase 3 Prospective,

Multicenter, Double-blind, Randomized, Active Control Study to Demonstrate Safety & Effectiveness of DefenCath/Neutrolin in Preventing

Catheter-related Bloodstream Infection in Subjects on Hemodialysis for End Stage Renal Disease, or LOCK-IT-100, in patients with hemodialysis

catheters in the U.S.

The clinical trial was designed to demonstrate the safety and effectiveness of DefenCath compared to the standard

of care CLS, Heparin, in preventing CRBSIs.

The primary endpoint for the trial assessed the incidence of CRBSI and time to CRBSI for

each study subject.

Secondary endpoints were catheter patency, which was defined as required use of tPA, or removal of catheter due to

dysfunction, and removal of catheter for any reason.

As previously agreed with the FDA, an interim

efficacy analysis was performed when the first 28 potential CRBSI cases were identified in our LOCK-IT-100 study that occurred through

early December 2017.

Based on these first 28 cases, there was a highly statistically significant 72% reduction in CRBSI by DefenCath

relative to the active control of heparin (p=0.0034).

Because the pre-specified level of statistical significance was reached for the

primary endpoint and efficacy had been demonstrated with no safety concerns, the LOCK-IT-100 study was terminated early.

The study continued

enrolling and treating subjects until study termination, and the final analysis was based on a total of 795 subjects.

In a total of 41

cases, there was a 71% reduction in CRBSI by DefenCath relative to heparin, which was highly statistically significant (p=0.0006), with

a good safety profile.

The FDA granted our request for a rolling submission

and review of the NDA, which is designed to expedite the approval process for products being developed to address an unmet medical need.

Although the FDA usually requires two pivotal clinical trials to provide substantial evidence of safety and effectiveness for approval

of an NDA, the FDA will in some cases accept one adequate and well-controlled trial, where it is a large multicenter trial with a broad

range of subjects and study sites that has demonstrated a clinically meaningful and statistically very persuasive effect on a disease

with potentially serious outcome.

In March 2020, we began the modular submission

process for the NDA for DefenCath for the prevention of CRBSI in hemodialysis patients, and in August 2020, the FDA accepted for filing

the DefenCath NDA.

The FDA also granted our request for priority review, which provides for a six-month review period instead of the

standard ten-month review period.

As we announced in March 2021, the FDA informed in its Complete Response Letter, or CRL, to us that

it cannot approve the NDA for DefenCath in its present form.

The FDA noted concerns at the third-party manufacturing facility after a

review of records requested by the FDA and provided by the contract manufacturing organization, or CMO.

Additionally, the FDA is requiring

a manual extraction study to demonstrate that the labeled volume can be consistently withdrawn from the vials despite an existing in-process

control to demonstrate fill volume within specifications.

In April 2021, we and the CMO met with the FDA

to discuss proposed resolutions for the deficiencies identified in the CRL to us and the Post-Application Action Letter, or PAAL, received

by the CMO from the FDA for the NDA for DefenCath.

There was an agreed upon protocol for the manual extraction study identified in the

CRL, which now has been successfully completed.

Addressing the FDA’s concerns regarding the qualification of the filling operation

necessitated adjustments in the process and generation of additional data on operating parameters for manufacture of DefenCath.

the CMO determined that additional process qualification is needed with subsequent validation to address these issues.

The FDA did not

request additional clinical data and did not identify any deficiencies related to the data submitted on the efficacy or safety of DefenCath

from LOCK-IT-100.

In draft labeling discussed with the FDA, the FDA added that the initial approval will be for the limited population

of patients with kidney failure receiving chronic hemodialysis through a central venous catheter.

This is consistent with our request

for approval pursuant to the Limited Population Pathway for Antibacterial and Antifungal Drugs, or LPAD.

LPAD, passed as part of the

21st Century Cures Act, is a new program intended to expedite the development and approval of certain antibacterial and antifungal drugs

to treat serious or life-threatening infections in limited populations of patients with unmet needs.

LPAD provides for a streamlined

clinical development program involving smaller, shorter, or fewer clinical trials and is intended to encourage the development of safe

and effective products that address unmet medical needs of patients with serious bacterial and fungal infections.

We believe that LPAD

will provide additional flexibility for the FDA to approve DefenCath to prevent CRBSIs in the limited population of patients with kidney

failure receiving hemodialysis through a central venous catheter.

On February 28, 2022, we announced that we resubmitted

the NDA for DefenCath to address the CRL issued by the FDA.

In parallel, our third-party manufacturer submitted responses to the deficiencies

identified at the manufacturing facility in the PAAL issued by the FDA concurrently with the CRL.

FDA will evaluate the submission to

accept for filing and determine the review timeline.

FDA has stated that it expected all corrections to facility deficiencies to be complete

at the time of resubmission so that all corrective actions may be verified during an onsite evaluation of the manufacturing facility

in the next review cycle, if the FDA determines it will do an onsite evaluation.

If an onsite inspection is required, we may encounter

delays in obtaining FDA approval because the FDA is currently facing a backlog due to the COVID-19 pandemic.

The FDA issued a guidance

document on its plan to use voluntary remote interactive evaluations at facilities, including for a pre-approval inspection to assess

a marketing application.

The FDA will request the manufacturing facility to participate in a voluntary remote interactive evaluation,

if the FDA believes it is appropriate.

A manufacturing facility cannot request the remote interaction.

The FDA expects the use of remote

interactive evaluations should help the FDA operate within normal timeframes in spite of the COVID-19 pandemic.

We intend to pursue additional indications for

DefenCath use as a CLS in populations with an unmet medical need that also represent potentially significant market opportunities.

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 oncology patients using a central venous catheter.

In addition to DefenCath, we are sponsoring a

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

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 in

We are also evaluating opportunities for the possible expansion of taurolidine as a platform compound for use in certain medical

Patent applications have been filed in several indications, including wound closure, surgical meshes, and wound management.

Based on initial feasibility work, we are advancing pre-clinical studies for taurolidine-infused surgical meshes, suture materials and

We will seek to establish development/commercial partnerships as these programs advance.

We were granted a deferral by the FDA under the

Pediatric Research Equity Act, or PREA, that requires sponsors to conduct pediatric studies for 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.

We have made a commitment to

conduct the pediatric study after approval of the NDA for use in adult hemodialysis patients.

Pediatric studies for an approved product

conducted under PREA may qualify for pediatric exclusivity, which if granted would provide an additional six months of marketing exclusivity.

DefenCath would then have the potential to receive a total marketing exclusivity period of 10.5 years, including exclusivity pursuant

to NCE and QIDP.

The FDA regards taurolidine as a new chemical

entity and therefore an unapproved new drug.

Consequently, there is no appropriate predicate medical device currently marketed in the

on which a 510(k) approval process could be based.

As a result, we will be required

to submit a premarket approval application, or PMA, for marketing authorization for any medical device indications that we may

In the event that an NDA for DefenCath is approved by the FDA, the regulatory pathway for these medical device product

candidates may be revisited with the FDA.

Although there may be no appropriate predicate, de novo Class II designation can be

proposed, based on a risk assessment and a reasonable assurance of safety and effectiveness.

the European Union, or EU, Neutrolin is regulated as a Class 3 medical device.

In July 2013, we received CE Mark approval for

In December 2013, we commercially launched Neutrolin in Germany for the prevention of CRBSI, and maintenance of catheter

patency in hemodialysis patients using a tunneled, cuffed central venous catheter for vascular access.

To date, Neutrolin is registered

and may be sold in certain European Union and Middle Eastern countries for such treatment.

September 2014, the TUV-SUD and The Medicines Evaluation Board of the Netherlands, or MEB, granted a label expansion for Neutrolin

to include use in oncology patients receiving chemotherapy, intravenous, or IV, hydration and IV medications via CVC for the EU.

In December 2014, we received approval from the Hessian District President in Germany to expand the label for these same expanded

The expansion also adds patients receiving medication and IV fluids via CVC in intensive or critical care units (cardiac

care unit, surgical care unit, neonatal critical care unit, and urgent care centers).

An indication for use in total parenteral

nutrition was also approved.

September 2019, our registration with the Saudi Arabia Food and Drug Administration, or the SFDA, expired.

As a result, we cannot

sell Neutrolin in Saudi Arabia.

We intend to complete the documentation required to renew our registration with the SFDA, however,

we cannot predict how long the renewal process will take.

As a result, we will be required to submit a premarket approval application,

or PMA, for marketing authorization for any medical device indications that we may pursue.

In the event that an NDA for DefenCath is

approved by the FDA, the regulatory pathway for these medical device product candidates may be revisited with the FDA.

Although there

may be no appropriate predicate, de novo Class II designation can be proposed, based on a risk assessment and a reasonable assurance

of safety and effectiveness.

In the European Union, or EU, Neutrolin is regulated

as a Class 3 medical device.

In July 2013, we received CE Mark approval for Neutrolin.

In December 2013, we commercially launched Neutrolin

in Germany for the prevention of CRBSI, and maintenance of catheter patency in hemodialysis patients using a tunneled, cuffed central

venous catheter for vascular access.

To date, Neutrolin is registered and may be sold in certain European Union countries for such treatment.

In September 2014, the TUV-SUD and The Medicines

Evaluation Board of the Netherlands, or MEB, granted a label expansion for Neutrolin to include use in oncology patients receiving chemotherapy,

intravenous, or IV, hydration and IV medications via CVC for the EU.

In December 2014, we received approval from the Hessian District

President in Germany to expand the label for these same expanded indications.

The expansion also adds patients receiving medication and

IV fluids via CVC in intensive or critical care units (cardiac care unit, surgical care unit, neonatal critical care unit, and urgent

care centers).

An indication for use in total parenteral nutrition was also approved.

In September 2019, our registration with the Saudi

Arabia Food and Drug Administration, or the SFDA, expired.

As a result, we cannot sell Neutrolin in Saudi Arabia.

We intend to complete

the documentation required to renew our registration with the SFDA, however, we cannot predict how long the renewal process will take.

There is no assurance that the registration will be renewed by the SFDA.

novel coronavirus has been declared a pandemic and has spread to multiple global regions.

The outbreak and government measures

taken in response have also had a significant impact, both direct and indirect, on businesses and commerce, as worker shortages

have occurred;

The novel coronavirus has been declared a pandemic

and has spread to multiple global regions.

The outbreak and government measures taken in response have also had a significant impact,

both direct and indirect, on businesses and commerce, as worker shortages have occurred;

supply chains have been disrupted;

facilities and production have been suspended;

and demand for certain goods

and services, such as medical services and supplies, has spiked, while demand for other goods and services, such as travel, has

In response to the COVID-19 outbreak, “shelter in place” orders and other public health guidance measures

have been implemented across much of the United States, Europe and Asia, including in the locations of our offices, clinical trial

sites, key vendors and partners.

Our program timelines may be negatively affected by COVID-19, which could materially and adversely

affect its business, financial conditions and results of operations.

our inception, our operations have been primarily limited to conducting clinical trials and establishing manufacturing for our

product candidates, licensing product candidates, business and financial planning, research and development, seeking regulatory

approval for our products, initial commercialization activities for DefenCath in the U.S.

and Neutrolin in the EU and other foreign

markets, and maintaining and improving our patent portfolio.

We have funded our operations primarily through debt and equity financings.

We have generated significant losses to date, and we expect to use substantial amounts of cash for our operations as we prepare

our pre-launch commercial activities for DefenCath for the U.S.

market and commercialize Neutrolin in the EU and other foreign

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

As of December

31, 2020, we had an accumulated deficit of approximately $217.4 million.

We are unable to predict the extent of any future losses

or when we will become profitable, if ever.

Operations Overview

have not generated substantial revenue since our inception.

Through December 31, 2020, we have funded our operations primarily

through debt and equity financings.

and Development Expense

and production have been suspended;

and demand for certain goods and services, such as medical services and supplies, has spiked, while

demand for other goods and services, such as travel, has fallen.

In response to the COVID-19 outbreak, “shelter in place”

orders and other public health guidance measures have been implemented across much of the United States, Europe and Asia, including in

the locations of our offices, clinical trial sites, key vendors and partners.

Such “shelter in place” orders were previously

lifted, at least partially, in many locations.

However, an increase in the spread of COVID-19 and variants, including the Delta variant,

which may affect the spread or severity of one or more successive waves of the virus, has led, and may continue to lead, to the re-imposition

by many nations and U.S.

of quarantine requirements for travelers from other regions and may lead to the re-imposition of “shelter-in-place”

or other similar orders.

Our program timelines may be negatively affected by COVID-19, which could materially and adversely affect its

business, financial conditions and results of operations.

Since our inception, our operations have been

primarily limited to conducting clinical trials and establishing manufacturing for our product candidates, licensing product candidates,

business and financial planning, research and development, seeking regulatory approval for our products, initial commercialization activities

for DefenCath in the U.S.

and Neutrolin in the EU and other foreign markets, and maintaining and improving our patent portfolio.

have funded our operations primarily through debt and equity financings.

We have generated significant losses to date, and

we expect to use substantial amounts of cash for our operations as we prepare our pre-launch commercial activities for DefenCath for

market and commercialize Neutrolin in the EU and other foreign markets, pursue business development activities, and incur additional

legal costs to defend our intellectual property.

As of December 31, 2021, we had an accumulated deficit of approximately $245.7

We are unable to predict the extent of any future losses or when we will become profitable, if ever.

Financial Operations Overview

We have not generated substantial

revenue since our inception.

Through December 31, 2021, we have funded our operations primarily through debt and equity financings.

Research and Development

or R&D, expense consists of:

Research and development, or R&D, expense

(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 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 the advancement of our product candidates through 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) costs related to the manufacturing of the product that could potentially be available to support

the commercial launch prior to marketing approval.

All R&D is expensed as incurred.

Conducting a significant

amount of development is central to our business model.

Product candidates in later-stage clinical development generally have higher

development costs than those in earlier stages of development, primarily due to the significantly increased size and duration of

the clinical trials.

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 current or 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 product candidates.

Development timelines,

probability of success and development costs vary widely.

We are currently focused on securing the marketing approval for DefenCath

as well as on continuing sales in foreign markets where Neutrolin is approved.

In December 2015, we signed an agreement

with a clinical research organization, or CRO, to help us conduct our LOCK-IT-100 Phase 3 clinical trial in hemodialysis patients

with central venous catheters to demonstrate the efficacy and safety of DefenCath in preventing catheter-related bloodstream infections

and blood clotting in subjects receiving hemodialysis therapy as treatment for end stage renal disease.

Our LOCK-IT-100 study was

completed and all costs related to the agreement with the CRO has been paid.

are pursuing additional opportunities to generate value from taurolidine, an active component of DefenCath.

Based on initial feasibility

work, we have completed an initial round of pre-clinical studies for taurolidine-infused surgical meshes, suture materials, and

hydrogels, which require a PMA regulatory pathway for approval.

We are also involved in a pre-clinical research collaboration

for the use of taurolidine as a possible treatment for rare orphan 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 in children.

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 our convertible debt, amortization of debt discount and on financing of expenditures.

of Operations

of the Years Ended December 31, 2020 and 2019

following is a tabular presentation of our consolidated operating results for the years ended December 31, 2020 and 2019 (in

(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 the advancement of our product

candidates through 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) costs related to the manufacturing

of the product that could potentially be available to support the commercial launch prior to marketing approval.

All R&D is expensed

Conducting a significant amount of development

is central to our business model.

Product candidates in later-stage clinical development generally have higher development costs than

those in earlier stages of development, primarily due to the significantly increased size and duration of the clinical trials.

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

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 current or 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 product candidates.

Development timelines, probability of success

and development costs vary widely.

We are currently focused on securing the marketing approval for DefenCath in the U.S.

as well as on

continuing sales in foreign markets where Neutrolin is approved.

In December 2015, we signed an agreement with a clinical research organization,

or CRO, to help us conduct our LOCK-IT-100 Phase 3 clinical trial in hemodialysis patients with central venous catheters to demonstrate

the efficacy and safety of DefenCath in preventing catheter-related bloodstream infections and blood clotting in subjects receiving hemodialysis

therapy as treatment for end stage renal disease.

Our LOCK-IT-100 study was completed and all costs related to the agreement with the

CRO has been paid .

We are pursuing additional opportunities to generate

value from taurolidine, an active component of DefenCath.

Based on initial feasibility work, we have completed an initial round of pre-clinical

studies for taurolidine-infused surgical meshes, suture materials, and hydrogels, which require a PMA regulatory pathway for approval.

We are also involved in a pre-clinical research collaboration for the use of taurolidine as a possible treatment for rare orphan pediatric

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

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

neuroblastoma in children.

Selling, General and Administrative Expense

Selling, 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.

Foreign Currency Exchange Transaction Gain (Loss)

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 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).

Interest Income

Interest income consists of interest earned on

our cash equivalents and short-term investments.

Interest Expense

Interest expense consists of interest incurred

on our convertible debt, amortization of debt discount and on financing of expenditures.

Results of Operations

Comparison of the Years Ended December 31, 2021 and 2020

The following is a tabular

presentation of our consolidated operating results for the years ended December 31, 2021 and 2020 (in thousands) :

Cost of sales

Gross profit (loss)

Operating Expenses:

6 unchanged sentences

Interest expense, including amortization of debt discount

Total other income (expense)

Total other (expense) income

Loss before income taxes

Other comprehensive income (loss)

Other comprehensive (loss) income

Comprehensive loss

for the year ended December 31, 2020 was $239,000 as compared to $283,000 for the same period in 2019, a decrease of $44,000.

decrease was attributable to decreased sales in the Middle East of $146,000, partially offset by higher sales in the European Union

The sales decrease in the Middle East was mainly due to the expiration of our registration with the Saudi Arabia Food

and Drug Administration.

We intend to renew the registration in order for us to resume selling in Saudi Arabia, however, we cannot

predict how long the renewal process will take.

Revenue for the year ended December

31, 2021 was $191,000 as compared to $239,000 for the same period in 2020, a decrease of $48,000.

The decrease was attributable to lower

sales in the Middle East and European Union countries in 2021 as compared to the same period in 2020.

Cost of Sales.

of sales for the year ended December 31, 2020 was $205,000 as compared to $373,000 for the same period in 2019, a decrease of $168,000.

The decrease is attributable to a decrease in cost of materials of $106,000, mainly due to lower sales in the Middle East, a decrease

in the cost related to replacement of products shipped under warranty of $40,000, and a decrease in the write-off of expired raw

materials of $32,000, offset by an increase in inventory reserve of $17,000.

and Development Expense .

R&D expense for the year ended December 31, 2020 was $13,377,000, an increase of $2,324,000 from

$11,053,000 for the same period in 2019.

The increase was primarily attributable to an increase in costs related to the purchase

of raw materials and manufacturing of DefenCath prior to its potential marketing approval that could potentially support the commercial

launch of $3,345,000, an increase in personnel expenses of $1,391,000, primarily due to additional hires, offset by a reduction

in clinical trial expenses of $2,299,000, attributable to the closing of our LOCK-IT-100 clinical trial and a decrease in consulting

fees of $271,000.

General and Administrative Expense .

SG&A expense for the year ended December 31, 2020 was $13,878,000, an increase of

$4,013,000 from $9,865,000 for the same period in 2019.

The increase was primarily attributable to increases in personnel expenses

of $1,422,000, primarily due to additional hires during the year ended December 31, 2020 and increases in costs related to marketing

research studies in preparation for the potential marketing approval of DefenCath of $1,216,000.

Additionally, there were also

increases in insurance expenses of $395,000 driven by higher directors and officers insurance premium consistent with increases

across our industry, in board fees of $274,000 as a result of a change in compensation which has eliminated issuance of restricted

stock units as compensation, in dues and subscription and office expenses of $195,000, in recruitment fees of $184,000 in search

for additional personnel, in consulting fees of $149,000, and in investor relations and business development activities of $87,000.

Interest income for the year ended December 31, 2020 was $116,000, a decrease of $207,000 from $323,000 for the same

period in 2019.

The decrease was attributable to lower average interest-bearing cash balances and short-term investments during

the year ending December 31, 2020 as compared to the same period in 2019.

Exchange Transaction Gain (Loss) .

Foreign exchange transaction losses for the year ended December 31, 2020 and 2019 were due

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

Interest expense for the year ended December 31, 2020 was $33,000 as compared to $787,000 for the same period in

The decrease of $754,000 was due primarily to the amortization of debt discount and non-cash interest expense recognized

in connection with the senior secured convertible note which is no longer outstanding.

Tax benefit for the years ended December 31, 2020 of $5,169,000 and December 31, 2019 of $5,061,000, represents income

tax benefits due to the sale of our unused NOL for state fiscal year 2020 and 2019, respectively, through the NJEDA Technology

Business Tax Certificate Transfer program.

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 gains of $6,000 and $1,000 for the years ended December 31, 2020 and 2019, respectively.

and Capital Resources

As a result of our

cost of sales, 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, 2020, we received net proceeds of $18,433,000 from

the issuance of 2,687,646 shares of common stock under our ATM program and $412,000 from the exercise of warrants.

Additionally,

in July 2020, we completed an underwritten public offering of our common stock, which yielded net proceeds of approximately $21,255,000.

The public offering was made pursuant to an underwriting agreement with the underwriters thereto, relating to the issuance and

sale of an aggregate of 5,111,110 shares of common stock, including 666,666 shares of common stock pursuant to the full exercise

of the Underwriters’ option to purchase additional shares, at a public offering price of $4.50 per share.

We will continue

to be reliant on external sources of cash for the foreseeable future until we are able to generate revenue.

April 2020, we received approximately $5,169,000, net of expenses, from the sale of most of our remaining unused New Jersey net

operating losses (“NOL”) eligible for sale under the State of New Jersey’s Economic Development Authority’s

New Jersey Technology Business Tax Certificate Transfer program (“NJEDA Program”).

Cost of sales for the year

ended December 31, 2021 was $149,000 as compared to $205,000 for the same period in 2020, a decrease of $56,000.

The decrease was primarily

attributable to the net decrease in cost of materials as a result of lower sales in 2021 as compared to the same period in 2020.

Research and Development Expense .

expense for the year ended December 31, 2021 was $13,133,000, a decrease of $244,000 from $13,377,000 for the same period in 2020.

decrease was driven by net decreases in costs related to the manufacturing of DefenCath prior to its potential marketing approval of $1,489,000

and a reduction in clinical trial expenses of $444,000, attributable to the closing of our LOCK-IT clinical trial.

These decreases were

partially offset, among others of lesser significance, by increases in non-cash charges for stock-based compensation of $704,000, an increase

in consulting fees of $554,000, driven by fees related to the resubmission of the DefenCath NDA to the FDA, and an increase in personnel

expenses of $487,000, as a result of additional hires during the fourth quarter of 2020 through the first half of 2021.

Selling, General and Administrative Expense .

SG&A expense for the year ended December 31, 2021 was $16,346,000, an increase of $2,468,000 from $13,878,000 for the same period

The increase was primarily attributable to an increase in non-cash charges for stock-based compensation of $1,839,000, and an

increase in personnel expenses of $1,237,000, as a result of additional hires during the fourth quarter of 2020 through the first half

These increases were partially offset, among others of lesser significance, by a decrease in consulting fees of $730,000, and

reduced costs related to marketing research studies in preparation for the potential marketing approval of DefenCath of $202,000.

Interest Income .

Interest income for the

year ended December 31, 2021 was $14,000, a decrease of $102,000 from $116,000 for the same period in 2020.

The decrease was attributable

to lower interest rates this year as compared to the same period last year.

Foreign Exchange Transaction Loss .

exchange transaction losses for the year ended December 31, 2021 and 2020 were due to the re-measuring of transactions denominated in

a currency other than our functional currency.

Interest Expense .

Interest expense for

the year ended December 31, 2021 was $16,000 as compared to $33,000 for the same period in 2020.

The decrease of $17,000 was due primarily

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

Tax benefit for the years

ended December 31, 2021 of $1,250,000 and December 31, 2020 of $5,169,000, represents income tax benefits due to the sale of our unused

NOL for state fiscal year 2021 and 2020, respectively, through the NJEDA Technology Business Tax Certificate Transfer program.

Other Comprehensive Income (Loss) .

foreign exchange movements related to long-term loans and the translation of the foreign affiliate financial statements to U.S.

and unrealized movements related to short term investment are recorded in other comprehensive income (loss) which resulted in a loss

of $15,000 and a gain of $5,000 for the years ended December 31, 2021 and 2020, respectively.

Liquidity and Capital Resources

Sources of Liquidity

As a result of our cost of sales, R&D and SG&A

expenditures and the lack of substantial product sales revenue, our ongoing operations have not been profitable since our inception.

the year ended December 31, 2021, we received net proceeds of $41,456,000 from the issuance of 3,737,862 shares of common stock under

our at-the-market-issuance sales agreement as compared to $18,433,000 of net proceeds for the same period in 2020 from the issuance of

2,687,646 shares of common stock.

Additionally, we also received $165,000 and $412,000 from the exercise of warrants during the years

ended December 31, 2021 and 2020, respectively.

We will continue to be reliant on external sources of cash for the foreseeable future

until we are able to generate revenue.

In June 2021, we received approximately $1,250,000,

net of expenses, from the sale of our unused New Jersey NOL eligible for sale under the NJEDA Program.

The NJEDA Program allowed us to

sell approximately $1,250,000 of our total $1,337,000 in available NOL tax benefits for the state fiscal year 2020.

As previously announced,

the NJEDA has approved our application to participate in the NJEDA Program for the state fiscal year 2020.

The approval will

allow us to sell approximately $1.3 million of the total $1.3 million in available tax benefits to an unrelated, profitable New

Jersey corporation in return for approximately $1.3 million in cash.

Closing is subject to NJEDA’s typical closing conditions,

which are in process of completion.

During January and

February 2021, we raised approximately $41,478,000 through the use of our ATM program.

We currently have no available balance under

our ATM program and we have $50.0 million available under our current shelf registration for the issuance of equity, debt or equity-linked

Cash Used in Operating Activities

Net cash used in operating

activities for the year ended December 31, 2020 was $21,968,000 as compared to $15,052,000 in 2019, an increase in net cash use

of $6,916,000.

The increase was mainly attributable to the increase in net loss of $5,595,000, primarily driven by an increase

in operating expenses, due to the research and development expense related to the costs related to the manufacturing of DefenCath

prior to its potential marketing approval and selling, general and administrative expense related to marketing research studies

in preparation for the potential marketing approval of DefenCath.

In addition, the increase was also due to an increase in prepaid

expenses and other current assets for the year ended December 31, 2020 of $992,000, primarily due to a deposit on the equipment,

compared to a $67,000 increase for the same period in 2019.

There was also a decrease in accrued expenses of $1,883,000 for the

year ended December 31, 2020, as compared to a decrease of $363,000 for the same period in 2019, and an increase in accounts payable

of $103,000 for the year ended December 31, 2020, as compared to a decrease of $1,564,000 for the same period in 2019.

Cash (Used in) Provided by Investing Activities

provided by investing activities for the year ended December 31, 2020 was $7,426,000 as compared to $12,020,000 of cash used

in the same period in 2019.

The increase in cash provided during the year ended December 31, 2020 as compared to the year

ended December 31, 2019 was due to the maturity of short-term investments and a decline in purchases of short-term

investments in 2020.

Cash Provided by Financing Activities

cash provided by financing activities for the year ended December 31, 2020 was $40,100,000 as compared to $25,804,000 for the

same period in 2019.

During the year ended December 31, 2020, we generated net proceeds of $21,255,000 from the public offering

of our common stock, $18,433,000 from the sale of our common stock in our at-the-market, or ATM program, and $412,000 from the

exercise of warrants.

In comparison to the same period in 2019, the net proceeds we generated in the amount of $15,235,000 was

from the sale of our common stock in our ATM program, gross proceeds of $8,674,000 and $123,000 from the exercise of warrants

and stock options, respectively, and gross proceeds from an exchange agreement of $2,000,000, respectively.

Requirements and Liquidity

Our total cash and

cash equivalents and short-term investments as of December 31, 2020 and 2019, excluding restricted cash of $0.2 million in each

fiscal year was $46.3 million and $28.3 million, respectively.

During the year ended December 31, 2020, we realized net proceeds

of $21.3 million from the public offering of 5,111,110 shares of our common stock and we sold 2,687,646 shares of common stock

under our ATM program at the weighted average price of $7.13 per share and realized net proceeds of approximately $18.4 million.

At December 31, 2020, we had approximately $17.8 million available under our current ATM program and $75.0 million available under

our current shelf registration for the issuance of equity, debt or equity-linked securities.

On February 5, 2021,

we allocated to our ATM program an additional $25.0 million of the remaining $75.0 million available under our shelf registration

Giving effect to the additional $25.0 million, plus the $17.8 million available at December 31, 2020, we had a total

of $42.8 million available under the ATM program.

During January and February 2021, we sold an aggregate of 3,737,862 shares of

our common stock under the ATM program and realized net proceeds of approximately $41.5 million.

As of the filing of this Annual

Report on Form 10-K, we have no available balance under our ATM program and we have $50.0 million available under our current shelf

registration for the issuance of equity, debt or equity-linked securities.

our business has not generated positive operating cash flow, we will 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 primarily

in activities leading to the pre-launch and commercialization for DefenCath and will depend on our ability to raise sufficient

funds through various potential sources, such as equity, debt financings, and/or strategic relationships and potential strategic

transactions.

We can provide no assurances that financing or strategic relationships will be available on acceptable terms, or

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.

expect to continue to utilize our ATM program, if conditions allow, to support our ongoing funding requirements.

Additionally,

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

The NJEDA has approved our application to participate

in the NJEDA Program for the state fiscal year 2021.

The approval will allow us to sell approximately $0.6 million of the total $0.6

million in available tax benefits to an unrelated, profitable New Jersey corporation in return for approximately $0.6 million in cash.

Closing is subject to NJEDA’s typical closing conditions, which are in process of completion.

Net Cash Used in Operating Activities

Net cash used in operating activities for the

year ended December 31, 2021 was $21,155,000 as compared to $21,968,000 in 2020, a decrease in net cash use of $813,000.

was driven by an increase in accounts payable of $1,082,000 as compared to $103,000 for the same period in 2020, partially offset by

an increase in net loss of $6,182,000 mainly attributable to lower cash received from the NOL sale of $1,250,000 as compared to $5,169,000

for the same period in 2020.

In addition, the decrease was also offset by a decrease in prepaid expenses and other current assets for

the year ended December 31, 2021 of $667,000, primarily due to a deposit on the equipment, compared to a $992,000 increase for the same

period in 2020.

Net Cash (Used in) Provided by Investing Activities

Cash used in investing activities for the year

ended December 31, 2021 was $9,135,000 as compared to $7,426,000 of cash provided in the same period in 2020.

The net cash used during

the year ended December 31, 2021 was mainly driven by the higher amount invested in short-term investments in addition to an increase

in purchases of equipment offset by the lower amount of matured investments as compared to the same period in 2020.

Net Cash Provided by Financing Activities

Net cash provided by financing activities for

the year ended December 31, 2021 was $41,758,000 as compared to $40,100,000 for the same period in 2020.

During the year ended December

31, 2021, we generated net proceeds of $41,456,000 from the sale of our common stock in our at-the-market, or ATM program, $165,000 from

the exercise of warrants and $137,000 from the exercise of stock options.

In the same period in 2020, we generated net proceeds of $21,255,000

from the underwritten public offering of our common stock, $18,433,000 from the sale of our common stock in our ATM program, and $412,000

from the exercise of warrants.

Funding Requirements and Liquidity

Our total cash and cash equivalents and short-term

investments as of December 31, 2021 and 2020, excluding restricted cash of $234,000 and $191,000, respectively, was $65,466,000 and $46,350,000,

respectively.

During the year ended December 31, 2021, we realized net proceeds of $41,456,000 from the sale of 3,737,862 shares of common

stock under our ATM program.

At December 31, 2021, we have $150,000,000 available under our shelf registration statement filed on August

12, 2021 for the issuance of equity, debt or equity-linked securities and $50,000,000 under our ATM program, filed on August 12, 2021.

Because our business has not generated positive

operating cash flow, we will 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 primarily in activities leading to the pre-launch and commercialization

for DefenCath and will depend on our ability to raise sufficient funds through various potential sources, such as equity, debt financings,

and/or strategic relationships and potential strategic transactions.

We can provide no assurances that financing or strategic relationships

will be available on acceptable terms, or at all.

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 expect to continue to utilize our ATM program, if conditions allow,

to support our ongoing funding requirements.

Additionally, 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, any change in

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.

Sales of Neutrolin

outside the U.S.

are not expected to generate significant product revenues for the foreseeable future, and we expect to grow product

sales for DefenCath in the U.S., should we receive FDA approval.

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 upon approval, pursue business development activities, and incur additional legal costs to defend our intellectual

We currently estimate

that as of December 31, 2020 we have sufficient cash on hand to fund operations at least into the second half of 2022, after taking

into consideration the net proceeds received from the ATM program after December 31, 2020 and including the costs for the initial

preparations for the commercial launch of DefenCath, when the NDA is approved by FDA.

Additional financing may be required to build

out our commercial infrastructure and to continue our operations should we decide to market and sell Defencath in the U.S.

If we are unable to raise additional funds when needed, we may be forced to slow or discontinue our preparations for 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.

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

Sales of Neutrolin outside the U.S.

are not expected

to generate significant product revenues for the foreseeable future, and we expect to grow product sales for DefenCath in the U.S., should

we receive FDA approval.

In the absence of significant revenue, we are likely to continue generating operating cash flow deficits.

will continue to use cash as we increase other activities leading to the commercialization of DefenCath upon approval, pursue business

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

We currently estimate that as of December 31, 2021,

we have sufficient cash on hand to fund operations at least through the first half of 2023, after taking into consideration the costs

for resubmission of the NDA and initial preparations for the commercial launch for DefenCath.

Additional financing may be required to

build out our commercial infrastructure following FDA approval and to continue our operations should we decide to market and sell DefenCath

If we are unable to raise additional funds when needed, we may be forced to slow or discontinue our preparations

for the commercial launch of DefenCath.

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

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 07922.

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

Our sublease on our previous premises at 400 Connell Drive, Berkeley Heights, New Jersey 07922 terminated on November 30,

Payments Due in Period

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.

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.

Our sublease on our previous premises at 400 Connell Drive, Berkeley

Heights, New Jersey 07922 terminated on November 30, 2020.

Critical 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 judgments, including those described below.

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.

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,

we believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating our reported

financial results and affect the more significant judgments and estimates that we use in the preparation of our financial statements.

account for stock options according to the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification

718, “Compensation — Stock Compensation” (“ASC 718”).

Share-based compensation

cost is measured at grant date, based on the estimated fair value of the award using a Black-Scholes option pricing model for

options with service or performance-based conditions.

Stock-based compensation cost is recognized as expense, over the requisite

service period on a straight-line basis.

incorporate several variables, including expected term, expected volatility, expected dividend yield and a risk-free interest

We estimate the expected term of the options granted based on anticipated exercises in future periods.

The expected stock

price volatility for the Company’s stock options is calculated based on the historical volatility of the Company’s

common stock.

The expected dividend yield reflects our current and expected future policy for dividends on our common stock.

determine the risk-free interest rate, we utilize the U.S.

Treasury yield curve in effect at the time of grant with a term consistent

with the expected term of our awards which is 5 years for employees and 10 years for non-employees.

adopted the new revenue recognition, ASC 606, “ Revenue from Contracts with Customers” , as of January 1, 2018

using the modified retrospective method.

ASC 606 prescribes a five-step model for recognizing revenue which includes (i) identifying

contracts with customers;

(ii) identifying performance obligations;

(iii) determining the transaction price;

(iv) allocating the

transaction price;

and (v) recognizing revenue.

product Neutrolin received its CE Mark in Europe in July 2013 and shipment of product to the dialysis centers began in December

We recognize net sales upon shipment of product to the dialysis centers and upon meeting the five-step model prescribed

by ASC 606 outlined above.

engage third parties to manufacture and package inventory held for sale and warehouse such goods until packaged for final distribution

Inventories are stated at the lower of cost or net realizable value with cost determined on a first-in, first-out basis.

Inventories are reviewed periodically to identify slow-moving or obsolete inventory based on sales activity, both projected and

historical, as well as product shelf-life.

In evaluating the recoverability of our inventories, we consider the probability that

revenue will be obtained from the future sale of the related inventory and, if required, will write down inventory quantities

in excess of expected requirements.

Expired inventory is disposed of and the related costs are recognized as cost of product sales

in our consolidated statements of operations.

analyze our inventory levels to identify inventory that may expire prior to sale, inventory that has a cost basis in excess of

its estimated realizable value, or inventory in excess of expected sales requirements.

Although the manufacturing of our products

is subject to strict quality controls, certain batches or units of product may no longer meet quality specifications or may expire,

which would require adjustments to our inventory values.

the future, reduced demand, quality issues or excess supply beyond those anticipated by management may result in an adjustment

to inventory levels, which would be recorded as an increase to cost of product sales.

The determination of whether or not inventory

costs will be realizable requires estimates by our management.

A critical input in this determination is future expected inventory

requirements based on our internal sales forecasts which we then compare to the expiry dates of inventory on hand.

To the extent

that inventory is expected to expire prior to being sold, we will write down the value of inventory.

If actual results differ

from those estimates, additional inventory write-offs may be required.

determine the appropriate classification of marketable securities at the time of purchase and reevaluate such designation as

of each balance sheet date.

Investments in marketable debt and equity securities classified as available-for-sale are

reported at fair value.

Fair values of our investments are determined using quoted market prices in active markets for

identical assets or liabilities or quoted prices for similar assets or liabilities or other inputs that are observable or can

be corroborated by observable market data for substantially the full term of the assets or liabilities.

Our marketable

securities are highly liquid and consist of U.S.

government agency securities, high-grade corporate obligations and

commercial paper with maturities of more than 90 days but less than 12 months.

Changes in fair value that are considered

temporary are reported net of tax in other comprehensive income (loss).

Realized gains and losses, amortization of premiums

and discounts and interest and dividends earned are included in income (expense) on the consolidated statements of operations

and comprehensive income (loss).

The cost of investments for purposes of computing realized and unrealized gains and losses

is based on the specific identification method.

Investments with maturities beyond one year, if any, are classified as

short-term based on management’s intent to fund current operations with these securities or to make them available for

current operations.

For declines, if any, in the fair value of equity securities that are considered other-than-temporary,

impairment losses are charged to other (income) expense, net.

We consider available evidence in evaluating potential

impairments of our investments, including the duration and extent to which fair value is less than cost and, for equity

securities, our ability and intent to hold the investments.

Value Measurements

categorize our financial instruments into a three-level fair value hierarchy that prioritize the inputs to valuation techniques

used to measure fair value.

The fair value hierarchy gives the highest priority to quoted prices in active markets for identical

assets (Level 1) and the lowest priority to unobservable inputs (Level 3).

If the inputs used to measure fair value fall within

different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair

value measurement of the instrument.

Financial assets recorded at fair value on our consolidated balance sheets are categorized

● Level 1 inputs—Observable inputs that reflect

quoted prices (unadjusted) for identical assets or liabilities in active markets.

2 inputs— Significant other observable inputs (e.g., quoted prices for similar items in active markets, quoted prices for

identical or similar items in markets that are not active, inputs other than quoted prices that are observable such as interest

rate and yield curves, and market-corroborated inputs).

3 inputs—Unobservable inputs for the asset or liability, which are supported by little or no market activity and are valued

based on management’s estimates of assumptions that market participants would use in pricing the asset or liability.

Authoritative Pronouncements:

December 2019, the FASB issued new guidance which removes certain exceptions to the general principles of the accounting for income

taxes and also improves consistent application of and simplification of other areas when accounting for income taxes.

is effective for us beginning in the first quarter of fiscal year 2021.

Early adoption is permitted.

We are assessing the impact

of adopting this guidance on our consolidated financial statements.

Sheet Arrangements

do not have any off-balance sheet arrangements.

and Qualitative Disclosures About Market Risk

Statements and Supplementary Data

the financial statements included at the end of this report beginning on page F-1.

in and Disagreements With Accountants on Accounting and Financial Disclosure

While our significant accounting

policies are more fully described in Note 3 to our financial statements included with this report, we believe that the following accounting

policies are the most critical to aid you in fully understanding and evaluating our reported financial results and affect the more significant

judgments and estimates that we use in the preparation of our financial statements.

Stock-Based Compensation

We account for stock options according to the

Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) No.

718, “Compensation

— Stock Compensation” (“ASC 718”).

Share-based compensation cost is measured at grant date, based on the

estimated fair value of the award using a Black-Scholes option pricing model for options with service or performance-based conditions.

Stock-based compensation cost is recognized as expense, over the requisite service period on a straight-line basis.

Valuations incorporate several variables, including

expected term, expected volatility, expected dividend yield and a risk-free interest rate.

We estimate the expected term of the

options granted based on anticipated exercises in future periods.

The expected stock price volatility for the Company’s stock options

is calculated based on the historical volatility of the Company’s common stock.

The expected dividend yield reflects our current

and expected future policy for dividends on our common stock.

To determine the risk-free interest rate, we utilize the U.S.

yield curve in effect at the time of grant with a term consistent with the expected term of our awards which is 5 years for employees

and 10 years for non-employees.

Recently Adopted Authoritative Pronouncements:

In December 2019, the FASB

issued ASU 2019-12 which removes certain exceptions to the general principles of the accounting for income taxes and also improves consistent

application of and simplification of other areas when accounting for income taxes.

The guidance was effective for us beginning in the

first quarter of fiscal year 2021.

Early adoption was permitted.

This adoption on January 1, 2021 did not have a material impact on our

consolidated financial statements.

Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Financial Statements and Supplementary Data

See the financial statements included at the end

of this report beginning on page F-1.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

Not applicable.

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