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CORMEDIX INC Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 9, 2010 08:33AM

CORMEDIX INC (CRMD) filed Quarterly Report for the period ended 2010-09-30. Cormedix Inc has a market cap of $16 million; its shares were traded at around $1.4 .



Highlight of Business Operations:

Research and Development Expense. R&D expense was $4,417,884 for the nine months ended September 30, 2010, an increase of $3,423,689, from $994,195 for the nine months ended September 30, 2009. The increase was primarily attributable to our issuance of 828,024 shares of our common stock on March 30, 2010 to our licensors valued at $3.125 per share, or $2,587,576 as a result of anti-dilution adjustments in connection with the conversion of our outstanding convertible debt to common stock upon the closing of the IPO. The increase was also attributable to stock-based compensation expense of $318,648 related to all stock options granted to our CMO and a portion of the stock options granted to our CEO in connection with the IPO. Also contributing to the higher R&D expense were the clinical development costs related to our Phase II clinical trial of CRMD001 which began in June 2010, and higher manufacturing costs related the development of CRMD003 and costs related to the hiring of two employees in the areas of clinical operations and product development during the third quarter of 2010.

General and Administrative Expense. G&A expense was $1,906,872 for the nine months ended September 30, 2010, an increase of $816,486 from $1,090,386 for the nine months ended September 30, 2009. The increase was primarily attributable to stock-based compensation expense of $497,362 related to a portion of the stock options granted to our CEO, and all of the stock options granted to our Chief Financial Officer and Board members in connection with the IPO, in addition to the issuance of 4,059 shares of our common stock to a consultant valued at $32.05 per share or $130,091. The increase in G&A expense also reflects the increased costs of operating as a publicly-traded company following the IPO in March 2010, which include filing fees related to the listing of our common stock, as well as increased legal, accounting and investor relations consulting fees and increased compensation expense as a result of our hiring a Chief Financial Officer in February 2010.

Interest expense was $3,093,763 for the nine months ended September 30, 2010, an increase of $1,595,253 from $1,498,510 for the nine months ended September 30, 2009. The increase was primarily attributable to charges related to the conversion of all our convertible notes, of which the aggregate amount of principal and accrued interest as of March 30, 2010 was $18,897,167, in connection with the IPO. These charges consisted primarily of a beneficial conversion feature charge of $1,137,762 related to the 30% discount at which the Third Bridge Notes converted into common stock, a write-off of debt discount of $1,135,076, and a write-off of deferred financing fees of $358,495.

As a result of our significant research and development expenditures and the lack of any approved products to generate product sales revenue, we have not been profitable and have generated operating losses since we were incorporated in July 2006. Prior to the IPO, we had funded our operations principally with $14,364,973 in convertible notes sold in private placements and $625,464 in related party notes, which were also convertible. We received net proceeds of $10,457,270 from the IPO, after deducting underwriting discounts, commissions and offering expenses payable by us upon the closing of the IPO on March 30, 2010. All of our convertible notes were automatically converted into 1,237,293 shares of common stock and 2,338,576 units comprised of 4,677,152 shares of common stock and 2,841,603 warrants at an exercise price of $3.4375.

Net cash used in operating activities was $2,429,847 for the nine months ended September 30, 2010. The net loss of $9,402,433 for the nine months ended September 30, 2010 was higher than cash used in operating activities by $6,972,586. The primary reasons for the difference are the stock issued in connection with our license agreements anti-dilution provision of stock issuances of $2,587,576, the charge for the beneficial conversion feature related to the Third Bridge Notes of $1,137,762, non-cash interest expense of $462,430 on our outstanding debt during the first quarter of 2010, the write-offs of debt discount and deferred financing costs of $1,135,076 and $358,495, respectively, as a result of the conversion of our notes, stock-based compensation charges of $816,010, an increase in accrued expenses of $345,808 relating primarily to clinical research organization consultant costs, patent fees, and accrued legal, accounting and filing fees.

Net cash provided by financing activities was $10,457,270 for the nine months ended September 30, 2010. Net cash provided by financing activities consisted of the sale of equity securities issued in our IPO, through which we received gross proceeds of $12,512,500. The gross proceeds of $12,512,500 were offset by underwriting discounts and commissions of $1,063,563, corporate finance fees of $225,250, and reimbursable legal fees for counsel to the underwriters of $90,000, in addition to other offering costs and expenses of $676,417, consisting primarily of legal, accounting, printing and filing fees. Net cash provided by financing activities was $105,365 for the nine months ended September 30, 2009.

Read the The complete Report



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