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Item 7. Management’s Discussion and Analysis

2023-03-30 compared with 2022-03-29 · 404 added, 475 removed, 28 unchanged (97% of the section changed)

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.

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.

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 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®.

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.”

and our wholly owned German subsidiaries, CorMedix Europe GmbH and CorMedix Spain, S.L.U.

(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 life-threatening diseases and conditions.

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 ® .

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 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

proprietary name that was conditionally approved by the U.S.

Food and Drug Administration, or FDA, while the name Neutrolin was 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.

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.

We believe DefenCath addresses

a significant unmet medical need and a potential large market opportunity.

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.

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 with 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.

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.

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 us in its

Complete Response Letter, or CRL, that it could 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 contract manufacturing organization,

Additionally, the FDA required 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.

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 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.

We and the CMO determined that additional process qualification was 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, 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

We believe that LPAD will provide additional flexibility for the FDA to approve DefenCath to reduce CRBSIs in the limited

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

February 28, 2022, 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

On March 28, 2022, we announced that the resubmission of the NDA for DefenCath had been accepted for filing by the FDA.

considered the resubmission as a complete, Class 2 response with a six-month review cycle.

The CMO notified us that an onsite inspection

by the FDA was conducted that resulted in FORM FDA 483 observations that are being addressed.

The CMO submitted responses to the inspectional

observations along with a corrective action plan and requested a meeting with the FDA to discuss.

We were also notified by our supplier

of heparin, an active pharmaceutical ingredient, or API, for DefenCath, that an inspection by the FDA for an unrelated API resulted in

a Warning Letter due to deviations from good manufacturing practices for the unrelated API.

August 8, 2022, we announced receipt of a second CRL from the FDA regarding our DefenCath NDA.

The FDA stated that the DefenCath NDA

cannot be approved until deficiencies conveyed to the CMO and the heparin API supplier are resolved to the satisfaction of the FDA.

were no other requirements identified by the FDA for us prior to resubmission of the NDA.

The FDA has acknowledged the progress reports

submitted by the CMO on implementation of the ongoing corrective actions.

Validation of manufacturing with heparin from an alternative

supplier is underway to prepare for resubmission of the NDA in the event that the Warning Letter at our current API supplier remains

Corrective actions have been implemented to address the inspectional observations at the CMO and are under review by the

As part of the NDA review process, the FDA notified

us that although the tradename DefenCath was conditionally approved, the FDA now has identified potential confusion with another pending

product name that is also under review.

The ultimate acceptability of our proposed tradename is dependent upon which application is approved

As a precaution, we are preparing to submit an alternative proprietary name to the FDA which will undergo review.

previously announced an agreement with Alcami Corporation, or Alcami, a U.S.

based contract manufacturer with proven capabilities for

manufacturing commercial sterile parenteral drug products.

Alcami may function as an alternate manufacturing site for DefenCath for the

As part of the technology transfer and validation of the manufacturing process at Alcami, we would also expect to qualify

an alternate source of heparin API sourced from a major U.S.

intend to 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 oncology patients using a central venous

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.

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

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 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

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.

acknowledges that a pediatric assessment is required but permits the applicant to submit the pediatric assessment after the submission

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.

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 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.

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.

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 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).

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.

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.

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

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.

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;

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

Research and development, or R&D, expense

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 and we do not intend to pursue renewal of our registration with the SFDA.

announced in May 2022, we began the process of winding down our operations in the EU and discontinued Neutrolin sales in both the EU

and the Middle East at the end of 2022.

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.

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, 2022, we had an

accumulated deficit of approximately $275.4 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, 2022, we have funded our operations primarily through

debt and equity financings.

and Development Expense

and development, or R&D, expense consists of:

(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

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) :

(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;

costs related to the manufacturing of the product that could potentially be available to support the commercial launch prior to marketing

All R&D is expensed as incurred.

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.

timelines, probability of success and development costs vary widely.

We are currently focused on securing the marketing approval for

DefenCath in the U.S.

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 financing of expenditures.

of Operations

of the Years Ended December 31, 2022 and 2021

following is a tabular presentation of our consolidated operating results for the years ended December 31, 2022 and 2021 (in thousands) :

Cost of sales

11 unchanged sentences

Comprehensive loss

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.

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.

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

Revenue for the year ended December 31, 2022 was $65,000 as compared to $191,000 for the same period in 2021, a decrease of $126,000.

The decrease was attributable to lower sales in 2022 as compared to the same period in 2021, as a result of 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, 2022 was $4,000 as compared to $149,000 for the same period in 2021, a decrease

The decrease was primarily attributable to the net decrease in cost of materials due to lower sales in 2022 as compared

to the same period in 2021, as a result of 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, 2022 was $10,680,000, a decrease of $2,453,000 from $13,133,000

for the same period in 2021.

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

The decrease was driven by a decrease in personnel expenses of $731,000, as a result of lower R&D headcount

in 2022 as compared to 2021, net decreases in costs related to the manufacturing of DefenCath prior to its potential marketing approval

of $617,000, and a decrease in consulting fees of $591,000, attributable to lower costs related to the resubmission of the DefenCath

NDA to the FDA.

Additionally, there was also a decrease of $352,000 in non-cash charges for stock-based compensation.

General and Administrative Expense .

SG&A expense for the year ended December 31, 2022 was $20,006,000, an increase of $3,660,000

from $16,346,000 for the same period in 2021.

The increase was primarily attributable to an increase in costs related to market research

studies and pre-launch activities in preparation for the potential marketing approval of DefenCath of $2,982,000 and an increase in legal

fees of $1,175,000, mainly due to securities litigation.

There was also an increase in personnel expenses of $382,000, as a result of

additional SG&A hires in 2022 as compared to 2021.

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

decrease in non-cash charges for stock-based compensation of $622,000, a decrease in consulting fees of $412,000.

Interest income for the year ended December 31, 2022 was $326,000, an increase of $312,000 from $14,000 for the same period

The increase was attributable to higher interest rates this year as compared to the same period last year.

Exchange Transaction Income (Loss) .

Foreign exchange transaction income (losses) for the year ended December 31, 2022 and 2021 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, 2022 was $26,000 as compared to $16,000 for the same period in 2021.

increase of $10,000 was due primarily to higher interest rates on expenses that were financed this year as compared to the same period

Tax benefits for the years ended December 31, 2022 and 2021 of $586,000 and $1,250,000, respectively, was an income tax

benefit due to the sale of our unused NOL for the state fiscal years 2021 and 2020, respectively, through the NJEDA 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 a loss of $4,000 and $15,000 for the years ended December 31, 2022 and 2021, respectively.

and Capital Resources

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, 2022, we received net proceeds of $17,770,000 from the

issuance of 4,704,259 shares of common stock under our at-the-market-issuance sales agreement as compared to $41,456,000 of net proceeds

for the same period in 2021 from the issuance of 3,737,862 shares of common stock.

Additionally, we also received $129,000 and $165,000

from the exercise of warrants during the years ended December 31, 2022 and 2021, respectively.

We will continue to be reliant on external

sources of cash for the foreseeable future until we are able to generate revenue.

Cash Used in Operating Activities

cash used in operating activities for the year ended December 31, 2022 was $24,357,000 as compared to $21,155,000 in 2021, an increase

in net cash use of $3,202,000.

The increase is primarily driven by an increase in net loss of $1,492,000, attributable to a net increase

in operating expenses of $1,206,000, and lower net proceeds from tax benefits of $586,000 as compared to $1,250,000 for the same period

Additionally, the increase in net cash used in operating activities for the twelve months ended December 31, 2022 was due to

a decrease in accounts payable of $7,000 as compared to an increase of $1,082,000 for the same period in 2021, and a decrease in prepaid

expense and other current assets of $187,000 as compared to $667,000 last year, offset by an increase in accrued expenses of $962,000

compared to $94,000 for the same period in 2021.

Cash (Used in) Provided by Investing Activities

used in investing activities for the year ended December 31, 2022 was $3,709,000 as compared to $9,135,000 of cash provided in the same

period in 2021.

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.

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.

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.

The net cash used during the year ended December 31, 2022, was mainly driven by the higher amount invested in short-term

investments, offset by the higher amount of matured investments and lower purchases of equipment as compared to the same period in 2021.

Cash Provided by Financing Activities

cash provided by financing activities for the year ended December 31, 2022 was $17,898,000 as compared to $41,758,000 for the same period

During the year ended December 31, 2022, we generated net proceeds of $17,770,000 from the sale of our common stock in our at-the-market,

or ATM program, and $129,000 from the exercise of warrants.

In the same period in 2021, we generated net proceeds of $41,456,000 from

the sale of our common stock in our ATM program, $165,000 from the exercise of warrants and $137,000 from the exercise of stock options.

Requirements and Liquidity

total cash and cash equivalents and short-term investments as of December 31, 2022 and 2021, excluding restricted cash of $226,000 and

$234,000, respectively, was $58,792,000 and $65,466,000, respectively.

During the year ended December 31, 2022, we realized net proceeds

of $17,770,000 from the sale of 4,704,259 shares of common stock under our ATM program.

At December 31, 2022, 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 $31,640,000

under our ATM program, filed in November 2020.

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

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.

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 property.

currently estimate that as of December 31, 2022, we have sufficient cash to fund operations for at least twelve months from the issuance

of this Annual Report on Form 10-K, after taking into consideration the costs for resubmission of the NDA and initial preparations for

the commercial launch for DefenCath.

Additional financing will likely be needed to build out our commercial infrastructure following

FDA approval 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.

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

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.

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.

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.

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.

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 rate.

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.

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.

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.

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.

the financial statements included at the end of this Annual Report on Form 10-K 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