Competing Narratives and the Future of CorMedix Inc. (NYSEAMERICAN:CRMD)

CorMedix Inc. (NYSEAMERICAN:CRMD) is still largely about Neutrolin, the company’s prize asset targeting the reduction and prevention of catheter-related infections and thrombosis in patients requiring central venous catheters during dialysis, intensive care treatment, and oncology treatment.

At this point, the narrative continues to be about the developing “conversation” between the company and the FDA. According to the company’s latest conference call, the FDA recently agreed that CorMedix could request consideration of Neutrolin for approval under the LPAD Pathway (Limited Population Pathway for Antimicrobial and Antifungal Drugs).

CorMedix Inc. (NYSEAMERICAN:CRMD) management has framed this as a very positive indication of things to come because it implies the potential for streamlined development as a paradigm for Neutrolin, including regulatory “flexibility” where evidencing efficacy and gaining full approval for patients with “serious disease and limited or no treatment options”. Company management suggests that this boils down to fewer or shorter clinical trials.

The company also recently noted that “The CorMedix team has completed its analysis of the data from LOCK-IT-100 that was requested by the FDA. You will soon be hearing from Phoebe details of where we are in this effort and what lies ahead.”

Given this context, that’s a huge upcoming catalyst.

The Big Picture

Speaking of catalysts, CRMD shares were recently added to the Russell 2000 index of small caps. That has very real implications in today’s world of indexed exposure and passive fund management. For small cap equity fund managers, the Russell 2000 is the benchmark index of choice, which means, to keep pace, CRMD may see investment flows as an index-balancing effect. We saw this on Friday, resulting in a huge move higher as the stock was added by indexed passage managers. But we will see other flows as well in the weeks and months to come.

This is a mechanical tailwind for shares.

That suggests a coming potentially significant positive catalyst in a tape that has felt to us, quite frankly, as riddled with short-side bets. Naturally, however, this view must be balanced because a binary outcome distribution is still very much a reality here – there is no guarantee at all that this will end in a go-to-market strategy.

Technically, Friday’s breakout presents a positive chart context, with both major moving averages now below and rising in the context of an otherwise reasonably well established bullish trend that took root last summer around the $1/share area. In other words, significant positive information has already been discounted, but the stock has also very clearly consolidated those gains and a run toward new catalysts can’t be dismissed as a reasonable base-case view.