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Item 7. Management’s Discussion and Analysis

2024-03-12 compared with 2023-03-30 · 260 added, 357 removed, 75 unchanged (89% of the section changed)

8 unchanged sentences

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 ® .

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

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

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

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

Our primary focus is on the

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

The name DefenCath is the U.S.

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.

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.

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.

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.

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.

proprietary name that was approved by the

DefenCath is an antimicrobial

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

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

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

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

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

antibiotic treatment, long-term anticoagulation therapy, removal/replacement of the CVC, related treatment costs, as well as increased

We believe DefenCath can address a significant unmet medical need.

On November 15, 2023, we announced

that the FDA approved the NDA for DefenCath to reduce the incidence of CRBSI in adult patients with kidney failure receiving chronic hemodialysis

through a CVC.

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

DefenCath is the first and only FDA-approved

antimicrobial CLS in the U.S.

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

As a result of

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

DefenCath is listed in the

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

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

The GAIN exclusivity extension of 5 years is the

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

We announced on April 26,

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

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

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

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

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

The final IPPS

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

This NTAP was conditioned upon the DefenCath

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

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

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

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

Upon the listing

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

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

CMS subsequently communicated to the

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

On January 25, 2024, CMS determined

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

system ( “ESRD PPS”).

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

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

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

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

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

CMS has confirmed the coding application is

under review.

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

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

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

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

CMS confirmed

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

We may pursue additional indications

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

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

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

In 2024, the company

anticipates discussing with the FDA potential pathways for expanded indications.

We currently have one FDA

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

With regards to taurolidine,

we have a DMF filed with the FDA.

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

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

our existing DMF.

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

supplier under the DefenCath NDA over the next twelve months.

We received FDA approval of

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

We believe this CMO has adequate

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

We previously announced commercial

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

sterile parenteral drug products.

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

manufacturing site in the second fiscal quarter of 2024.

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

alternate manufacturing site for DefenCath.

We announced on May 1, 2023

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

reduction in central venous catheters.

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

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

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

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

additional layer of patent protection for DefenCath through 2042.

As part of the DefenCath approval

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

PREA requires

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

a waiver or deferral is obtained from the FDA.

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

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

FDA deferred submission of the pediatric study for DefenCath because

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

We are obligated to conduct the study

communicated in the approval letter:

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

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

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

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

Pediatric studies for an approved product conducted under

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

of existing marketing exclusivity and patent periods for DefenCath.

Depending on the timing of final report submission, DefenCath could

potentially receive a total marketing exclusivity period of 10.5 years.

However, there are factors that could affect whether this exclusivity

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

associated with this pediatric study.

Neutrolin was previously sold

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

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

The winding down of our operations in the EU is nearly

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

In addition to DefenCath,

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

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

We may seek one

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

Operations Overview

3 unchanged sentences

and Development Expense

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

Research 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;

(ii) payments we make to third party contract

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

(iii) technology and intellectual property license

(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

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

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

(vi) activities relating to regulatory filings and

pre-clinical studies and clinical trials;

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

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

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

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

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.

3 unchanged sentences

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.

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

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

timelines, probability of success and development costs vary widely.

We are currently focused on 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.

We are currently focused on the commercialization of DefenCath in

General and Administrative Expense

24 unchanged sentences

Interest income

Foreign exchange transaction loss

Interest expense, including amortization of debt discount

Total other (expense) income

Foreign exchange transaction (loss) income

Interest expense

Total other income

Loss before income taxes

Other comprehensive (loss) income

Other comprehensive gain (loss)

Comprehensive loss

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.

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

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

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

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

and Development Expense .

R&D expense for the year ended December 31, 2022 was $10,680,000, a decrease of $2,453,000 from $13,133,000

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

for the same period in 2022.

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.

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

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

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

Selling, General and Administrative

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

same period in 2022.

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

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

in 2023 in preparation for the marketing launch of DefenCath.

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

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

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

period in 2022.

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

the same period last year.

Exchange Transaction Income (Loss) .

Foreign exchange transaction income (losses) for the year ended December 31, 2022 and 2021 were

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

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

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.

Interest Expense .

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

The increase of $8,000 was

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

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

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

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

for fiscal year 2023.

Comprehensive Income (Loss) .

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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.

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

and Capital Resources

a result of our 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.

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

been profitable since our inception.

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

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

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

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

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

We may need to raise additional capital through various

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

of our products until profitability is achieved, if ever.

Cash Used in Operating Activities

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

Net cash used in operating

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

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

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

Net Cash Used in Investing Activities

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

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The net cash used during the year ended December 31, 2023, 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.

investments as compared to the same period in 2022.

Cash Provided by Financing Activities

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

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.

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

warrants in the public offering during 2023.

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

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

Requirements and Liquidity

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.

Our total cash and cash equivalents and short-term

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

respectively.

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

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

common stock under our ATM program.

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

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

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

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

Our continued

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

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

We expect to continue to fund

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

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

We may seek to sell additional equity or debt securities

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

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

Moreover, the incurrence of indebtedness

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

Raising additional funds through

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

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

be favorable to us or our stockholders.

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

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

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

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

property rights.

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

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

operating cash flow deficits.

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

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

We currently estimate that

as of December 31, 2023, we have sufficient cash, cash equivalents and short-term investments to fund operations for at least twelve months

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

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

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

Additional financing may be needed to build

out our commercial infrastructure and to continue our operations.

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

to slow or discontinue the commercial launch of DefenCath.

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

research and development programs.

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

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

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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.

Our management’s discussion and analysis of our financial condition

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

generally accepted in the United States, or GAAP.

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

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

On an ongoing basis, we evaluate these estimates and

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

the circumstances.

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

that are not readily apparent from other sources.

Actual results and experiences may differ materially from these estimates.

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

Our significant

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

Quantitative and Qualitative Disclosures About Market Risk

Financial Statements and Supplementary Data

the financial statements included at the end of this Annual Report on Form 10-K beginning on page F-1.

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

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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

What changed 10-K

Item 7. Management’s Discussion and Analysis