What happened

Shares of CorMedix (NYSEMKT:CRMD) dropped over 27% after the company provided an update from a recent meeting with the U.S. Food and Drug Administration. The micro-cap pharma company met with regulators to discuss the next steps for Neutrolin, a product that recently wrapped up phase 3 clinical trials. The trials were studying its potential to serve as a catheter lock for patients with end-stage renal disease who are undergoing dialysis; the solution is meant to reduce the risk of infections from using a catheter.

But investors are questioning whether or not substantial progress was made at the meeting -- and they're right to have significant questions. CorMedix, which has seen shares rise over 250% in the last year (but only 1% in the last three years), has yet to provide concrete answers. That's why the stock had settled to a 23.9% loss as of 1:11 p.m. EST.

A businessman with his face in his palm standing next to a declining stock chart

Image source: Getty Images.

So what

The meeting had questionable significance. The FDA told CorMedix it could seek marketing approval under the limited population pathway for antimicrobial and antifungal drugs (LPAD). That's not necessarily news, as it really only narrows down the paperwork needed to complete the application. The company still doesn't know if the data collected from a single study of Neutrolin will be sufficient for the FDA to accept a new drug application (NDA) in the first place.

The uncertainty comes down to the fact that the company never submitted a complete data analysis to the FDA for the phase 3 trial. That includes a statistical review for both the expanded patient population (initial data were submitted before all enrolled patients completed the study) and secondary endpoints. CorMedix said it will finalize its analysis "within the next several months."

Now what

CorMedix has a market cap of just $200 million -- and most micro-cap companies are relegated to those ranks for good reason. Wall Street still has significant doubts over the company's ability to earn approval for Neutrolin, based on the data collected so far. That's in part because the company hasn't released a full data set, while the update from the meeting with the FDA doesn't exactly provide much clarity about the road ahead.

If the micro-cap pharma has to run additional trials, that could delay the market launch of its product by more than one year -- if the product is ever approved.