- CorMedix stock cratered 54% premarket
- The FDA rejected the second application for DefenCath
- There will be a third attempt around the end of Q1 2023
CorMedix (NASDAQ: CRMD) stock is down 54% premarket as the FDA said no, nyet and nix to their lead candidate DefenCath. This is not something that a biopharmaceutical company wants to happen of course but then this isn’t wholly a surprise, given that the FDA had rejected it before.
This also gives us a useful little insight into the most important part of any pharma investment – the Food and Drug Administration, or FDA. If they say yes then it’s possible, but not certain, that money will be made. If they say no then it’s pretty much certain that money won’t be made. The entire enterprise thus depends upon whether the man from the FDA, he say yes or not.
The specific idea they’ve been developing is that DefenCath/Neutrolin. This is an anti-infective solution for reducing catheter-related infections and thrombosis in patients who need venous catheters in clinical settings. For example, those needing hemodialysis, parenteral nutrition, or certain oncology treatments. We can imagine this being an interesting field given the massive rise in diabetes – which can lead to kidney disease – and kidney disease itself. For, yes, having something stuck into your bloodstream three times a week does have infection possibilities and they are the bane of the procedure.
But as we’ve noted, it’s necessary to get the FDA’s nod.
This FDA approval being the very thing that CorMedix didn’t manage to achieve. Clearly there was a lot of speculation that it would though. For there’s been a considerable run-up in the stock in recent weeks. In mid-June CorMedix stock was trading just inder $3 and yesterday at well over $7. Today it’s back down that 54% to around that starting point. This is one thing to note – the date at which the FDA will release information about a particular decision is often known well in advance. What isn;t known is what the decision is going to be. So, there can be significant speculation about what the FDA decision will be leading up to the known date. As there clearly was here, that run up and then the disappointment at the decision.
Usually at this point a pharmaceutical company rather quietly steals away. Because if the drug and or treatment doesn’t gain FDA approval then it really just doesn’t have much value. Oddly enough, this isn’t quite true at CorMedix. Despite this being the second rejection it isn’t, in fact, the full and final one. For what the FDA is worried about is not the device, the idea or the treatment, but the manufacturing. They’re worried about purity and process at the manufacturing plants, not the idea itself. So, this is something that is – potentially at least – remediable and CorMedix is already working on that. The result of this is that there will be another attempt at approval around the end of Q1 2023.
Which leaves us as traders in an interesting position. We can see what CorMedix stock does if people even think the FDA will approve DefenCath. We know there’s another attempt coming. So, should we buy in at these disappointed prices and see what happens? Trading decisions should probably be based on something a little more formal as analysis than just “third time lucky” though.