Q1 2021 Rockwell Medical Inc Earnings Call

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Okay.

Thank you for standing by and welcome to the Rockwell Medical first quarter 2021 results call. At this time all participants are in a listen only mode.

After the speaker presentation, there will be a question and answer session to ask a question.

During the session you will need to press star one on your telephone please be advised that today's conference maybe recorded share.

If you require any further assistance please press star zero.

I'd like to hand, the conference over to your host Claudio stifling or Investor Relations.

Okay.

Good afternoon. This is Claudia <unk> of Argot partners, the Investor Relations representative for Rockwell Medical joining me from Rockwell Medical on todays call are Dr. Russell Ellison, President and Chief Executive Officer, and Russell to get debt Executive Vice President and Chief.

Financial Officer, and Chief Business Officer.

Doctor, Marc Hoffman, Chief Medical Officer, and Tim Cole <unk> Senior Vice President of sales and marketing will be available for Q&A.

Before we begin I would like to remind everyone that this conference call and webcast will contain forward looking statements about the company within the meaning of the federal securities laws, including but not limited to the types of statements identified as forward looking in our quarterly report on form 10-Q that was filed today our annual report on form.

10-K that was filed on March 31, 2021 and our subsequent periodic reports filed with the FCC, which will all be available on our website in the Investor Relations section.

These statements are subject to risks and uncertainties that could cause the actual results to differ.

Please note that these forward looking statements reflect our opinions only as of today.

Sept as required by law, we specifically disclaim any obligation to update or revise these forward looking statements in light of new information or future events factors.

Factors that could cause actual results or outcomes to differ materially from those expressed in or implied by such forward looking statements are discussed in greater detail in our periodic reports.

Filed with the SEC.

This conference call can be accessed on Rockwell Medical's Investor Relations webpage. This call is being recorded on May 17, 2021 for audio rebroadcast and can also be accessed on the same webpage.

At this time I would like to turn the conference call over to Rockwell Medical's, Chief Executive Officer, Dr. Russell Ellison Russell.

Good afternoon, and thank you for joining us.

Since it has only been about six weeks since our last earnings call, where we detailed for you on our strategy.

We will keep this call short.

In the first quarter of 2021, we continue to execute against our strategy to accelerate growth by combining the solid foundation strength and reputation of on dialysis business with what we believe are the high growth potential and therapeutics generated from our FPC platform in multiple disease states.

Our dialysis business the base at which is the sales of concentrates continue to steadily performed.

We are on the second largest supplier of hemodialysis concentrates in the United States and this business generates about $60 million in annual revenue and it gives us a solid foundation on which to grow.

Our net sales for Triferic in the U S dialysis market were lower in Q1 compared to the fourth quarter of 2020, while the net number of contracted clinics increased three.

Three clinics that were triferic customers had to discontinue use due to acquisition or management changes.

Number of clinics actively treating patients was flat quarter over quarter.

Q4, 2020 was our strongest period of sales to date, we went under contract with three new independent dialysis organizations, each of which made large purchases in preparation for Q1 implementation. However, there were delays in implementation in all three cases and repurchases did not occur in Q1.

We are expecting to see reorders from some of these clinics in Q2 as they begin ramping up and putting patients on therapy.

Triferic Avenue, our IV formulation of Triferic was commercially launched in February.

As we have said before we expect a slower uptake as clinics have found it difficult to accommodate the labor requirement of delivering a slow IV infusion have each dialysis session.

We are actively exploring alternative administration methods and we expect to have options to present to customers later this year.

Despite the challenges we have faced with Triferic and the cost conscious capitation payment environment of dialysis, we continue to make progress and we believe adoption will increase going forward as more of our real world data read out in the second half.

The clinics are utilized triferic are seeing positive results stable hemoglobin reduced interventions with other IV anemia drugs and the resulting cost savings.

Our customers are loyal as a result, and many are helping us generate that real world evidence that we expect will be critical to our future success.

Day more than $1 3 million doses have been given in the free all hemodialysis patient population, which has generated extensive safety and efficacy data for our F. P C technology.

These data are foundational as we pivot Rockwell medical to growth by developing pharmaceutical products that are based on our FPC platform for disease states outside of dialysis.

Today I'll focus my remaining comments on the F. B C home infusion program.

A major catalyst and potentially a very large growth opportunity.

Our decision to select home infusion is our priority development area is a strategic one.

A safe and effective treatment for iron deficiency anemia is a significant unmet need for patients receiving intravenous therapy at home.

As more and more patients are being treated in the home, we believe that need will intensify.

We believe the excellent safety and reliable efficacy of the FTC molecule make it an ideal candidate for treating these patients.

Based on my 30, plus years of experience in drug development I believe our experience with F. P. C significantly de risks its clinical development for use in the home infusion study.

On the safety and efficacy data, we've seen to date from its use in the dialysis setting.

Typically in clinical trials, you're trying to learn about the effectiveness of your product and youre assessing its safety and the patient population that you're studying.

With F. P. C. We're fortunate to have a large safety database of more than a million doses given the dialysis patients with no serious safety events.

So we believe the risk of an unexpected safety issue is significantly reduced.

And regarding efficacy, we know that FTC can improve iron deficiency anemia, no matter the underlying cause as long as the patient is not actively bleeding.

This is not the case with respect to the older IV iron products, where the effect of the dose who give us very much influenced by the patients condition and disease day, particularly by the presence of inflammation.

This means that the ability to demonstrate the safety and efficacy of M. P. C for use in the home infusion setting is substantially derisked compared to most other drugs in phase II trials.

The growth of home infusion is accelerating driven by new technologies that allow for therapies to be safely given in the home setting.

Likewise, there is a growing number of treatments that are being given in the home setting for an increasing number of diseases.

Cost saving is another driver of growth in the home infusion setting.

It's expensive to give long intravenous infusions in a clinic or a hospital setting.

Both private health insurers and Medicare have favorable reimbursement policies for home infusion.

Many patient groups, requiring home infusion therapies suffer from chronic diseases that are associated with a high incidence of iron deficiency anemia.

Importantly, most physicians who are prescribing nutrients are medicines for home infusion do not generally have practices set up for the IV infusions required for the other forms of parental rely on and frequent office visits can be difficult for home infusion patients.

This results in a vicious cycle of under diagnosis and under treatment of iron deficiency.

For example, in the home Parenteral nutrition population half of patients remained on deficient.

Contrast, this with the dialysis population, which is also at high risk for iron deficiency anemia, where less than 6% of patients have iron deficiency at any point.

And it's important to note the consequences of iron deficiency can be serious if left untreated, including an increased risk of extreme fatigue immune function compromised and heart failure.

Home infusion has the potential to be a much higher margin business than our FPC product portfolio on dialysis.

As we believe that the future F. P C based product with meet the criteria for Medicare part D and commercial insurance, and thus would be well positioned for diverse private and public reimbursement.

The FDA has confirmed that our proposed that P. C treatment for Ida and home infusion setting will be a 505 b. One submission. This means that we would submit a new drug application for the home infusion product, which if approved May day.

M be eligible for public and private reimbursement separate and distinct from the current products for dialysis, allowing for appropriate pricing.

With the ability to secure appropriate pricing and considering the suitability of the product in this area. We estimate total addressable market opportunity in the U S of up to $600 million.

We expect to have our pre IND meeting with the FDA and pending a successful outcome to shortly thereafter start our phase II trial.

Later this year.

This trial will be the first well controlled randomized clinical trial of any iron product for the treatment of anemia in patients undergoing home infusion.

I look forward to updating you as we progress.

With that I'll turn the call to Russell skips debt for a brief financial overview Russell.

Thanks Russell.

As also mentioned in the first quarter, we continued to execute against the strategy, we laid out to accelerate growth by combining the solid foundation strength and reputation of our dialysis business with the high growth potential on therapeutics generated from our STC platform in multiple disease states outside of dialysis.

Yes.

Our dialysis business, which is comprised of revenue from both Triferic and concentrates continued to steadily performed.

Net sales of hemodialysis concentrates were approximately $15 2 million in the first quarter of 2021, which is about $400000 lower than in the first quarter of 2020, but about $400000 higher than in the fourth quarter of 2020.

We believe the drop from the prior year and the increase from the prior quarter, primarily due to the COVID-19 abnormalities.

Which seem to be heading back towards a semblance of normalcy.

Total sales of Triferic were approximately $300000 roughly an 11% increase versus the sales of triferic in the first quarter 2020. However for the reasons Russell mentioned earlier it was a decrease from the approximate $359000 and Triferic sales in.

The quarter just prior.

Our international programs are progressing as expected, albeit a bit slower due to COVID-19, but progressing nonetheless.

We ended the first quarter of 2021 with cash cash equivalents and investments of approximately $46 1 million, which.

Which we believe puts us in a strength position to drive our company strategic initiatives.

Our cash burn in Q1 is normally higher due to onetime annualized payments in.

In Q1, 2021, specifically our cash burn was further affected by some timing issues related to the receipt of payments for product sales and reimbursements from one of our large customers, which was subsequently received in early April.

Overall, our cash burn for the first quarter was in line with our expectations and we continue to expect in aggregate in 2021, our cash burn will be lower than it was in 2020.

I'll now turn the call back to Russell Ellison for his closing remarks.

Thanks Russell.

Our company has multiple near term commercial and development milestones coming up in 2021 and 2022.

Milestones include expected progress on the global expansion of Triferic as well as clinical development opportunities for our FPC platform.

We're working to advance our dialysis business alongside the exciting near term opportunity to develop FPC for home infusion and patients with Ida.

I'll turn the line over to the operator for questions.

Thank you as a reminder to ask a question you will need to press star one on your Touchtone telephone once again Thats star one on your Touchtone telephone to ask a question to withdraw your question press the pound key.

Please standby, while we compile the Q&A roster.

Okay.

Our first question comes from the line.

Brandon Folkes.

Cantor Fitzgerald yeah.

Your line is open.

Yes.

Hi, Thanks for taking my questions.

Maybe just two from me.

Can you talk through the gating factors between now and beginning the phase two for home infusion is it just the pre IMD meeting any other.

So we should be focusing on.

Secondly, can you just share any feedback during the cold day that you receive from the NYU study.

On this thing last quarter. So just would be interested in getting a feedback there and then lastly, any update on the cost optimization in the concentrates business. Thank you very much.

Thanks, a lot Brandon.

Have a F. Marc Hoffman, our Chief Medical Officer to address your first two questions and then Russell skips debt, our Chief Financial Officer.

I will address your last one.

Go ahead Mark.

Well. Thank you. Thank you for your question Brandon So.

Just one piece of the question was what is in between us and the home.

Home infusion study and you are correct. We are in the presence of putting together our pre IND package.

Meet with D E and then assuming confirmation on.

Our study plan will progress to the phase two study program.

Your second and any questions on that.

Okay.

Second question was regarding.

While you data.

Why you data was published as a.

On a snapshot and critical care Medicine Journal and we are in the presence I'm sorry, we're not in the <unk>.

Process of reaching out to NYU to explore the possibility of producing a full manuscript on the data.

On the data was produced by NYU independently and share.

Very positive results for both the clinical and economic benefits with the implementation of Stryker.

Okay.

And then Brandon on your other question about the.

What we're calling the whiteboard process, taking a look at the where we can get some efficiencies out of the concentrate business. We've we've kicked off the program with respect to taking a look at all of the processes that we're doing it.

It's just the early stages right now where we're literally getting data.

On putting the data together so that we can look at it and figure out exactly where.

We're going to get the most bang for Buck in terms of those.

Those efficiencies.

One of the areas I think we may be able to see the biggest impact is potentially looking at ways to.

Either bring additional revenue into the.

Into the facilities to manufacture, which we've done a little bit.

And we've already just even in the first half of this year. The first quarter of this year. We've already started generating some revenue on that so I'll be able to update you with a little more detail hopefully on our next call, but the on on.

On the transportation side of things I think we're trying to identify maybe some of the.

For.

The quickest movement some of the routes, where we may be able to book some additional revenue.

With the trucks that are traveling empty.

That we haven't we haven't finalized that analysis, yet, but we're getting close and we're also getting closer to implementing.

Some additional software that we've been working on to optimize.

With that we are.

Putting our routs together to see if we can cut some efficient or create some efficiency there as well.

So with that hopefully we'll have more to.

Update you on on our next call, but unless you have any other questions.

Great. Thank you very much.

Thanks Brendan.

Thank you I would now like to pass the call back to the Russell Ellison for closing remarks.

Okay.

Thank you all for joining us today and have a good evening.

This concludes today's conference call. Thank you for participating you may now disconnect.

Yeah.

Hum.

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