CorMedix shares bounded to a four-year high Monday after the biotech company inked an expanded deal for its leading drug, DefenCath.
DefenCath is a combination of an antimicrobial called taurolidine and the anticoagulant heparin. It's administered at the end of dialysis sessions to reduce the risk of bloodstream infections that can occur with catheters.
On Monday, CorMedix said a large dialysis customer began ordering and implementing DefenCath in its patients. The company will use DefenCath in at least 50% more patients than initially planned.
In response, CorMedix hiked its second-quarter sales guidance and now expects $35 million to $40 million, vs. the previous forecast for $31 million. The company also expects continued growth in the back half of the year.
CorMedix shares surged 21.7% to 16.56, hitting their highest point since February 2021.
CorMedix Surges On Broadened Deal
RBC Capital Markets analyst Leonid Timashev says the news puts to bed investors' questions about whether CorMedix can drive ordering from a large dialysis organization.
The company expects to reach 10% of clinics in July with a broader rollout in August to reach 6,000 patients by year-end, Timashev said. He said CorMedix had to offer a discount to accommodate the size of the customer, but the opportunity is for a total of 40,000 to 50,000 patients.
He reiterated his outperform rating and 17 price target on CorMedix stock.
"We believe the (large dialysis organization) partnership serves as a key proof point for DefenCath's value proposition, and likely helps support efforts to maximize volume uptake," he said in a note.
Reimbursement Hurdle Looms
Needham's Serge Belanger said CorMedix is coming up against a reimbursement hurdle.
A Centers for Medicare and Medicaid Services policy, the Transitional Drug Add-on Payment Adjustment, provides dialysis facilities additional payments for using new and innovative drugs.
During the first two years of DefenCath use, reimbursement was at the average sales price, which is about $240 to $250 per vial. In years three through five, reimbursement is based on the prior year's total DefenCath expenditures divided by the total dialysis treatments.
"Based on this calculation, (large dialysis organization) volume usage of DefenCath is key for TDAPA reimbursement," Belanger said in a report. "CRMD has agreements with 60% of U.S. outpatient dialysis centers with remaining 40% concentrated in one LDO (DaVita) with whom the co. is negotiating."
Belanger raised his price target on CorMedix stock to 20 from 15, and kept his buy rating.
Highly Rated Biotech Stock
CorMedix stock ranks third out of more than 700 biotech stocks tracked by Investor's Business Daily, behind Exelixis and Catalyst Pharmaceuticals.
Shares have a strong IBD Digital Relative Strength Rating of 97 out of a best-possible 99. The RS Rating tracks a stock's 12-month performance, pitting it against all other stocks. So, over the past 12 months, CorMedix stock has outranked 97% of all stocks.
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