Q2 2019 Earnings Call

August 8, 2019

Operator: Good afternoon, ladies and gentlemen, and welcome to the Rockwell Medical 2019 second quarter results call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press the star then zero on your touch-tone telephone. Please be reminded that this call is being recorded. I would now like to turn the conference over to your host, Ms. Elana Allen. You may begin your conference.

Good afternoon, ladies and gentlemen, and welcome to the Rockwell Medical 2019 second quarter results call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press the star then zero on your touch-tone telephone. Please be reminded that this call is being recorded. I would now like to turn the conference over to your host, Ms. Elana Allen. You may begin your conference.

At this time all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time, if anyone should require assistance. During the conference. Please press. The Star then zero on you touched on some additional leased giving might it be school is being recorded I would now like to change the conference over to your host.

Yes, I'll add Allen you may begin your conference.

Thank you Leah.

Elana Allen: Thank you, Leah. Welcome to Rockwell Medical's second quarter 2019 earnings results call. This is Elana Allen of In-Site Communications, the investor relations representative for Rockwell Medical. With me on today's call are Stuart Paul, President and Chief Executive Officer, and Angus Smith, Chief Financial Officer, of Rockwell Medical. Before we begin, I wanted to note that certain matters we will discuss may constitute forward-looking statements within the meaning of the federal securities laws. Words such as may, might, will, should, believe, expect, anticipate, estimate, continue, could, potential, predictions, forecast, project, plan, intend, or similar expressions or statements regarding intent, belief, or current expectations are forward-looking statements. While Rockwell believes these forward-looking statements are reasonable, undue reliance should not be placed on any such forward-looking statements, which are based on information available to us as of today and which are subject to inherent uncertainty.

Welcome to Rockwell Medicals second quarter 2019 earnings results call. This is a long and Allen of insight Communications Investor Relations representative for Rockwell medical.

With me on today's call are Stuart Polk, President and Chief Executive Officer, and Angus Smith, Chief Financial Officer of Rockwell Medical.

Before we begin I wanted to note that certain matters, we will discuss making today constitute forward looking statements within the meaning of the federal Securities laws words, such as May might will should believe expect anticipate estimate continue could potential predict forecast project plan intend or similar expressions or statements regarding intent belief or current expectations are forward looking statements. While Rockwell believes these forward looking statements are reasonable.

Undue reliance should not be placed on any such forward looking statements, which are based on information available to us as of today and which are subject to inherent uncertainties. These forward looking statements are based upon current estimates and assumptions and are subject to various risks and uncertainties, including without limitation those set forth in Rockwell SEC filings, many of which are beyond our control and subject to change.

Elana Allen: These forward-looking statements are based upon current estimates and assumptions and are subject to these various risks and uncertainties, including without limitation those set forth in Rockwell's SEC filings, many of which are beyond our control and subject to change. Actual results could be materially different. Risks and uncertainties include statements about the unique J-code for the Triferic powder packet, timing and the success of our NDA submission for IV Triferic, the potential market opportunity for IV Triferic and other Rockwell products, pricing and reimbursement status for IV Triferic, dialysate Triferic, and other Rockwell products, including eligibility for add-on reimbursement under TDAPA pursuant to CMS Proposed Rule, liquidity and capital resources, expected duration of Rockwell's existing liquidity and working capital, success of our recently announced commercialization plans for dialysate Triferic, and the success of our efforts to maintain, grow, and improve the profitability of our business.

These forward-looking statements are based upon current estimates and assumptions and are subject to these various risks and uncertainties, including without limitation those set forth in Rockwell's SEC filings, many of which are beyond our control and subject to change. Actual results could be materially different. Risks and uncertainties include statements about the unique J-code for the Triferic powder packet, timing and the success of our NDA submission for IV Triferic, the potential market opportunity for IV Triferic and other Rockwell products, pricing and reimbursement status for IV Triferic, dialysate Triferic, and other Rockwell products, including eligibility for add-on reimbursement under TDAPA pursuant to CMS Proposed Rule, liquidity and capital resources, expected duration of Rockwell's existing liquidity and working capital, success of our recently announced commercialization plans for dialysate Triferic, and the success of our efforts to maintain, grow, and improve the profitability of our business.

Actual results could be materially different risks and uncertainties include statements about the unique J code for the Triferic powder packet timing and the success of our Andes submission for Ivy Triferic, the potential market opportunity for Ivy Triferic and other Rockwell product pricing and reimbursement status for Ivy Triferic Dialysate, Triferic and other Russell products, including eligibility for add on reimbursement under Tdev her pursuant to CMS proposed rule.

Liquidity and capital resources expected duration of rough with existing liquidity and working capital success of our recently announced commercialization plans for dialysate Triferic and the success of our efforts to maintain glue and improve the profitability of our business.

Rockwell expressly disclaims any obligation to update or alter any statements whether as a result of new information future events or otherwise except as required by law.

Elana Allen: Rockwell expressly disclaims any obligation to update or alter any statements, whether as a result of new information, future events, or otherwise, except as required by law. This conference call can be accessed on Rockwell Medical's Investor Relations webpage. This call is being recorded on 8 August 2019 for audio rebroadcast and can also be accessed on the same webpage. The call will be followed by a question and answer session. At this time I would like to turn the conference call over to Rockwell.

Rockwell expressly disclaims any obligation to update or alter any statements, whether as a result of new information, future events, or otherwise, except as required by law. This conference call can be accessed on Rockwell Medical's Investor Relations webpage. This call is being recorded on 8 August 2019 for audio rebroadcast and can also be accessed on the same webpage. The call will be followed by a question and answer session. At this time I would like to turn the conference call over to Rockwell.

This conference call can be accessed on Rockwell Medicals Investor Relations Web page. This call is being recorded on August 18, 2019 for audio rebroadcast and can also be accessed on the same web page the call will be followed by a question and answer session.

At this time I would like to turn the conference call over to Rockwell Ceos would fall Stuart.

David Bouchey: CEO Stuart Paul. Stuart, thank you, Elana.

CEO Stuart Paul. Stuart, thank you, Elana.

Thank you on that good afternoon, everyone and thank you for joining our call.

Stuart Paul: Good afternoon, everyone, and thank you for joining our call. Q2 was pivotal for Rockwell as we made significant headway advancing our Triferic portfolio. Today I'll share updates around our initial commercialization efforts for Dialysate Triferic, our NDA for the IV formulation of Triferic, progress in markets outside the United States, including just released data from two studies in China, and recent CMS announcements. We continue to see Triferic as an innovative therapeutic platform, and we're excited about our initial efforts to build awareness of its unique therapeutic attributes. As you may know, we have multiple formulations of Triferic for treatment of hemodialysis patients.

The second quarter was pivotal for Rockwell as we made significant headway advancing our triferic portfolio today I'll share updates around our initial commercialization efforts for dialysate Triferic.

Our N.D.A. for the Ivy formulation of Triferic progress in markets outside the United States.

Including just released data from two studies in China, and recent CMS announcements.

We continue to see Triferic is an innovative therapeutic platform and we're excited about our initial efforts to build awareness of its unique therapeutic attributes.

And as you May know, we have multiple formulations of triferic for treatment of hemo dialysis patients.

Our just recently launched I'll say formulation, which comes in both a powder packet and the liquid and fuel and the Ivy version for which we submitted an IND da to the FDA in May that was recently accepted for filing with the PDUFA date of March 28 2020.

Stuart Paul: Our just recently launched Dialysate formulation, which comes in both a powder packet and a liquid ampule, and the IV version for which we submitted an NDA to the FDA in May that was recently accepted for filing with a PDUFA date of 28 March 2020. There are more than 2 million people in the world today who receive hemodialysis treatments, including over 450,000 in the United States. Because these patients lose iron during each treatment, anemia is a chronic issue for which roughly 80% receive traditional IV iron to address the condition. Maintaining healthy hemoglobin levels is extremely important for these patients and current treatment protocols.

Our just recently launched Dialysate formulation, which comes in both a powder packet and a liquid ampule, and the IV version for which we submitted an NDA to the FDA in May that was recently accepted for filing with a PDUFA date of 28 March 2020. There are more than 2 million people in the world today who receive hemodialysis treatments, including over 450,000 in the United States. Because these patients lose iron during each treatment, anemia is a chronic issue for which roughly 80% receive traditional IV iron to address the condition. Maintaining healthy hemoglobin levels is extremely important for these patients and current treatment protocols.

There are more than 2 million people in the world today, who receive hemo dialysis treatments, including over 450000 in the United States.

And because these patients lose iron during each treatment anemia is a chronic issue for which roughly 80% receive traditional ivy iron to address the condition.

Maintaining healthy hemoglobin levels is extremely important for these these patients and current treatment protocols traditional Ivy iron and Esa use replaces stimulating agents are costly and I've been associated with both higher ferritin levels and adverse events.

Brandon Folkes: Traditional IV iron and ESAs, erythropoiesis stimulating.

Traditional IV iron and ESAs, erythropoiesis stimulating.

Stuart Paul: Agents are costly and have been associated with both higher ferritin levels and adverse events. Triferic, on the other hand, delivers actually the iron and the hemoglobin maintenance that hemodialysis patients need without increasing ferritin levels and without the risks associated with other therapeutics, as the first and only FDA approved therapy indicated to replace iron and maintain hemoglobin levels. Triferic mimics natural iron homeostasis and its physiologic mechanism of action donates iron directly and completely to transferrin, and we believe that Triferic is appropriate for substantially all hemodialysis patients and has the potential to shift the way that anemia is managed in this population. Our estimates suggest a peak market opportunity of $400 million in the US alone, and our expectation is that over time we will be able to penetrate a substantial portion of this market by establishing Triferic as the standard of care.

Agents are costly and have been associated with both higher ferritin levels and adverse events. Triferic, on the other hand, delivers actually the iron and the hemoglobin maintenance that hemodialysis patients need without increasing ferritin levels and without the risks associated with other therapeutics, as the first and only FDA approved therapy indicated to replace iron and maintain hemoglobin levels. Triferic mimics natural iron homeostasis and its physiologic mechanism of action donates iron directly and completely to transferrin, and we believe that Triferic is appropriate for substantially all hemodialysis patients and has the potential to shift the way that anemia is managed in this population. Our estimates suggest a peak market opportunity of $400 million in the US alone, and our expectation is that over time we will be able to penetrate a substantial portion of this market by establishing Triferic as the standard of care.

Triferic on the other hand.

Develops delivers actually the iron and the hemoglobin maintenance that that hemo dialysis patients need without increasing ferritin levels and without the risks associated with other therapeutics.

As the first and only FDA approved therapy indicated to replace iron and maintain hemoglobin levels Triferic mimics natural iron homeostasis and its physiologic mechanism of action donate iron directly and completely transparent.

And we believe the Triferic is appropriate for substantially all hemo dialysis patients and has the potential to shift the way that anemia is managed in this population.

Our estimates suggest the peak market opportunity a $400 million in the us alone.

And our expectation is that over time, we will be able to penetrate a substantial portion of this market by establishing triferic is the standard of care.

So against this backdrop, we achieved several significant milestones during the second quarter, starting with the launch of Dialysate Triferic.

Stuart Paul: So against this backdrop, we achieved several significant milestones during Q2, starting with the launch of Dialysate Triferic. During the quarter we realized our first commercial sales of Dialysate Triferic with a handful of targeted accounts.

So against this backdrop, we achieved several significant milestones during Q2, starting with the launch of Dialysate Triferic. During the quarter we realized our first commercial sales of Dialysate Triferic with a handful of targeted accounts.

During the quarter, we realized our first commercial sales of dialysate triferic with a handful of targeted accounts through consistent.

With our pre though consistent with our previous statements or sales for the quarter were not material. We're still very much in the early stages of our launch and executing on our strategic medical and commercialization plan for Dialysate Triferic.

Stuart Paul: Though consistent with our previous statements, our sales for the quarter were not material. We're still very much in the early stages of our launch and executing on our strategic medical and commercialization plan for dialysis. Triferic is one of our top priorities for 2019, and we're confident that we are engaging with the appropriate target group of dialysis clinics in this initial phase. Our 2019 plan remains to drive adoption by providing medical education to providers in increasing awareness and understanding of Triferic's medical and potential pharmacoeconomic advantages. Our approach is a phased launch of Dialysate Triferic with an initial focus on centers of excellence in the US and our sample sites. Our initial success has come from single site or small independent chains, and we're working actively with multi-site independents and medium-sized dialysis organizations or MDOs to accelerate adoption.

Though consistent with our previous statements, our sales for the quarter were not material. We're still very much in the early stages of our launch and executing on our strategic medical and commercialization plan for dialysis. Triferic is one of our top priorities for 2019, and we're confident that we are engaging with the appropriate target group of dialysis clinics in this initial phase. Our 2019 plan remains to drive adoption by providing medical education to providers in increasing awareness and understanding of Triferic's medical and potential pharmacoeconomic advantages. Our approach is a phased launch of Dialysate Triferic with an initial focus on centers of excellence in the US and our sample sites. Our initial success has come from single site or small independent chains, and we're working actively with multi-site independents and medium-sized dialysis organizations or MDOs to accelerate adoption.

It's one of our top priorities for 2019, and we're confident that we are engaging with the appropriate target group of dialysis clinics and this initial phase.

Our 2019 plan remains to drive adoption by providing medical education to providers in increasing awareness and understanding of Triferic medical and potential pharmacoeconomic advantages.

Our approach is a phased launch of dialysate triferic with an initial focus on centers of excellence in the us and our sample sites. Our initial success has come from single site or small independent chains.

And we are working actively with multi site independence and medium sized dialysis organizations or Mds goes.

To accelerate adoption.

More on that in our plans for large sized dialysis organizations or elbows later.

Stuart Paul: More on that in our plans for large size dialysis organizations or LDOs later, but let me share some of the feedback that we're hearing from the early adopters. First, clinics appreciate the ability of Triferic to maintain hemoglobin without increasing ferritin levels. This feedback is especially important in light of results from the recent Spherix Renal anemia survey for Q2 2019, which showed that 73% of surveyed nephrologists expressed concerns about ferritin levels exceeding 1000. The survey also indicated that the median ferritin level at which nephrologists become concerned is 800, and notably, approximately half of US dialysis patients have ferritin levels above 800.

More on that in our plans for large size dialysis organizations or LDOs later, but let me share some of the feedback that we're hearing from the early adopters. First, clinics appreciate the ability of Triferic to maintain hemoglobin without increasing ferritin levels. This feedback is especially important in light of results from the recent Spherix Renal anemia survey for Q2 2019, which showed that 73% of surveyed nephrologists expressed concerns about ferritin levels exceeding 1000. The survey also indicated that the median ferritin level at which nephrologists become concerned is 800, and notably, approximately half of US dialysis patients have ferritin levels above 800.

Let me share some of the feedback that we're hearing from the early adopters first clinics appreciate the ability of triferic to maintain hemoglobin without increasing ferritin levels.

This feedback is especially important in light of results from the recent spirits renal anemia survey for Q2, 2019, which showed that 73% of serving Nephrologists expressed concerns about ferritin levels exceeding 1000.

The survey also indicated that the median ferritin level at which Nephrologist become concerned is 800, and notably approximately half of us dialysis patients have ferritin levels above 800.

Second customers praised the convenience factor of our powder packet formulation, because a single packet of dialysate triferic.

Stuart Paul: Second, customers praised the convenience factor of our powder packet formulation because a single packet of Dialysate Triferic can deliver enough iron for 10 patients, and clinics have noted a reduction in the nursing time associated with iron administration, freeing up nurses to spend more time with their patients. Third, in contrast to traditional IV iron, Triferic can deliver bioavailable iron even to patients with inflammation. Traditional IV iron can face significant bioavailability challenges in inflamed patients because of the hepcidin block, and this can result in the buildup of iron in the liver and in the other tissues. This positive response to Triferic is encouraging, and as previously indicated, we believe the sales cycle in hemodialysis centers is roughly three to four months, and as anticipated, sales are developing slowly.

Second, customers praised the convenience factor of our powder packet formulation because a single packet of Dialysate Triferic can deliver enough iron for 10 patients, and clinics have noted a reduction in the nursing time associated with iron administration, freeing up nurses to spend more time with their patients. Third, in contrast to traditional IV iron, Triferic can deliver bioavailable iron even to patients with inflammation. Traditional IV iron can face significant bioavailability challenges in inflamed patients because of the hepcidin block, and this can result in the buildup of iron in the liver and in the other tissues. This positive response to Triferic is encouraging, and as previously indicated, we believe the sales cycle in hemodialysis centers is roughly three to four months, and as anticipated, sales are developing slowly.

To deliver enough iron for 10 patients in clinics as noted a reduction in the nursing time associated with Iron administration, freeing up nurses to spend more time with their patients.

And third in contrast to traditional IB iron Triferic can deliver bio available iron.

Given to patients with inflammation traditional Ivy iron can face significant bio availability challenges and inflamed patients because of the hepcidin blocking and this can result in the build up of iron in the liver and then the other tissues.

This positive response to Triferic is encouraging and as previously indicated we believe the sales cycle in hemo dialysis centers is roughly three to four months and as anticipated sales are developing slowly.

Stuart Paul: As with any transformative therapeutic product, it will take some time for customers to change their mindsets, their behaviors, and protocols within their hemodialysis clinics. Furthering our phased commercialization approach, we are targeting medium, small, and independent dialysis centers that together treat roughly 25% of the hemodialysis patients in the US, and we've engaged in senior-level discussions with all of the medium-sized dialysis organizations regarding system-wide arrangements, though in some cases we're in discussions to carve out smaller clusters of centers within these organizations as an interim step. Negotiations with these chains are more complex, and one item frequently requested by these potential customers is real-world data, which we believe will be a compelling driver of future adoption. And to that end, we have numerous initiatives in process that we believe will yield the data we need to accelerate adoption with the larger providers.

As with any transformative therapeutic product, it will take some time for customers to change their mindsets, their behaviors, and protocols within their hemodialysis clinics. Furthering our phased commercialization approach, we are targeting medium, small, and independent dialysis centers that together treat roughly 25% of the hemodialysis patients in the US, and we've engaged in senior-level discussions with all of the medium-sized dialysis organizations regarding system-wide arrangements, though in some cases we're in discussions to carve out smaller clusters of centers within these organizations as an interim step. Negotiations with these chains are more complex, and one item frequently requested by these potential customers is real-world data, which we believe will be a compelling driver of future adoption. And to that end, we have numerous initiatives in process that we believe will yield the data we need to accelerate adoption with the larger providers.

As with any transformative therapeutic product it will take some time for customers to change their mindsets their behaviors and protocols within their hemo dialysis clinics.

Furthering our phased commercialization approach, we are targeting medium small and independent dialysis centers that together treat roughly 25% of the hemo dialysis patients in the us.

And we've engaged in senior level discussions with all of the medium sized dialysis organizations regarding system wide arrangements, though in some cases, we are in discussions to carve out smaller clusters of centers within these organizations as an interim step.

Negotiations with these chains are more complex and one item frequently requested by these potential customers is real world data, which we believe will be a compelling driver of future adoption.

And to that end, we have numerous initiatives in process that we believe will yield the data we need to accelerate adoption with the larger providers.

First we've entered into an agreement with a mid sized dialysis chain to receive data from their use of triferic. During the sample program and going forward I am pleased to report that we received the data in July and we are in the process of analyzing that data.

Stuart Paul: First, we've entered into an agreement with a mid-sized dialysis chain to receive data from their use of Triferic during the sample program and going forward. I'm pleased to report that we received the data in July, and we are in.

First, we've entered into an agreement with a mid-sized dialysis chain to receive data from their use of Triferic during the sample program and going forward. I'm pleased to report that we received the data in July, and we are in.

Brandon Folkes: The process of analyzing that data.

The process of analyzing that data.

Second we are working to obtain data from other clinics that participated in the sample program, including a leading academic institution.

Stuart Paul: Second, we're working to obtain data from other clinics that participated in the sample program, including a leading academic institution. Third, we are reanalyzing data from previously completed clinical trials that we believe can provide useful information for our discussions with MDOs. As we move forward from a sales perspective, we plan to expand our focus to include the large dialysis organizations next year following the introduction of IV Triferic if approved in the US, and this could potentially increase the patient pool for Triferic fourfold. Turning to reimbursement, as discussed last quarter, dialysate Triferic will be reimbursed within the CMS bundled payment for hemodialysis, and in late April CMS issued a preliminary recommendation which if finalized would establish a new J-code J1444 for the dialysate Triferic powder packet.

Second, we're working to obtain data from other clinics that participated in the sample program, including a leading academic institution. Third, we are reanalyzing data from previously completed clinical trials that we believe can provide useful information for our discussions with MDOs. As we move forward from a sales perspective, we plan to expand our focus to include the large dialysis organizations next year following the introduction of IV Triferic if approved in the US, and this could potentially increase the patient pool for Triferic fourfold. Turning to reimbursement, as discussed last quarter, dialysate Triferic will be reimbursed within the CMS bundled payment for hemodialysis, and in late April CMS issued a preliminary recommendation which if finalized would establish a new J-code J1444 for the dialysate Triferic powder packet.

Third we are re analyzing data from previously completed clinical trials that we believe can provide useful information for our discussions with MD goes.

And as we move forward from a sales perspective, we plan to expand our focus to include the large dialysis organizations next year. Following the introduction of Ivy Triferic if approved in the us and this could potentially increase the patient pool for Triferic four fold.

Turning to reimbursement as discussed last quarter Dialysate, Triferic will be reimbursed within the CMS bundled payment for hunt for hemo dialysis.

And late April CMS issued a preliminary recommendation, which get finalized would establish a new J code Jay 1444.

For the dialysate Triferic powder packet.

Stuart Paul: This unique J-code went into effect on 1 July 2019, and it's separate from the existing J-code J1443 for the liquid ampule version of Dialysate Triferic. Let me now turn to the IV formulation of Triferic. In May we completed the submission of our new drug application to the FDA for the IV formulation of Triferic, and we're pleased that on 2 August the FDA accepted for filing our NDA with a PDUFA date of 28 March 2020. And as you may recall, IV Triferic for adult hemodialysis patients was developed pursuant to a Special Protocol Assessment or SPA through which the FDA agreed that an equivalence approach to dialysate Triferic would be acceptable for review. The NDA is supported by data from our equivalence study which demonstrated that IV Triferic delivers the same quantity of iron to patients as does the dialysate Triferic formulation.

This unique J-code went into effect on 1 July 2019, and it's separate from the existing J-code J1443 for the liquid ampule version of Dialysate Triferic. Let me now turn to the IV formulation of Triferic. In May we completed the submission of our new drug application to the FDA for the IV formulation of Triferic, and we're pleased that on 2 August the FDA accepted for filing our NDA with a PDUFA date of 28 March 2020. And as you may recall, IV Triferic for adult hemodialysis patients was developed pursuant to a Special Protocol Assessment or SPA through which the FDA agreed that an equivalence approach to dialysate Triferic would be acceptable for review. The NDA is supported by data from our equivalence study which demonstrated that IV Triferic delivers the same quantity of iron to patients as does the dialysate Triferic formulation.

This unique J code went into effect on July 1st 2019.

And it's separate from the existing J code Jay 1443 for the liquid Ampoule version of Dialysate Triferic.

Let me now turn to the Ivy formulation of Triferic.

In May we completed the submission of our new drug application to the FDA for the IB formulation of Triferic and we're pleased that on August 2nd the FDA accepted for filing our IND da with a PDUFA date of March 28 2020.

And as you may recall IB Triferic for adult Hemo dialysis patients was developed pursuant to a special protocol assessment or SP through which the FDA agreed that in equivalents approach to dialysate triferic would be acceptable for review.

The NDA is supported by data from our equivalent study, which demonstrated that IB triferic delivers the same quantity of iron to patients as does the dialysate triferic formulation.

Stuart Paul: An open-label randomized multi-period single-dose study was conducted to establish the equivalence of doses between dialysate and IV administration. We presented results of this study at the Annual Dialysis Conference or ADC in March of this year.

An open-label randomized multi-period single-dose study was conducted to establish the equivalence of doses between dialysate and IV administration. We presented results of this study at the Annual Dialysis Conference or ADC in March of this year.

And open label randomized multi period single dose study was conducted to establish the equivalents of doses between dialysate and Ivy administration.

We presented results of this study at the annual dialysis conference or ADCC in March of this year.

On July 29th CMS issued a preliminary proposed rule that proposes to update payment policies and rates under the srd prospective payment system beginning January Onest 2020.

Stuart Paul: On 29 July, CMS issued a preliminary proposed rule that proposes to update payment policies and rates under the ESRD Prospective Payment System beginning 1 January 2020. It contains proposed revisions to the eligibility requirements for the CMS Transitional Drug Add-on Payment Adjustment Program or TDAPA, which has the potential to provide two years of add-on reimbursement for certain qualifying new drugs under the proposed revisions to the TDAPA rules. If finalized, certain ESRD drugs approved by the FDA under specific types of NDAs would be ineligible for TDAPA effective as of 1 January 2020. While we've not yet received an official NDA classification code from the FDA for our IV Triferic NDA, the classification of each of our prior NDAs for Triferic would fall into the category of drugs to be excluded from TDAPA under the proposed rule.

On 29 July, CMS issued a preliminary proposed rule that proposes to update payment policies and rates under the ESRD Prospective Payment System beginning 1 January 2020. It contains proposed revisions to the eligibility requirements for the CMS Transitional Drug Add-on Payment Adjustment Program or TDAPA, which has the potential to provide two years of add-on reimbursement for certain qualifying new drugs under the proposed revisions to the TDAPA rules. If finalized, certain ESRD drugs approved by the FDA under specific types of NDAs would be ineligible for TDAPA effective as of 1 January 2020. While we've not yet received an official NDA classification code from the FDA for our IV Triferic NDA, the classification of each of our prior NDAs for Triferic would fall into the category of drugs to be excluded from TDAPA under the proposed rule.

It contains pro proposed revisions to the eligibility requirements for the CMS transitional drug add on payment adjustment program or the Dabaa, which has the potential to provide two years of add on reimbursement for certain qualifying new drugs.

Under the proposed revisions to the to dapper rules, if finalized certain srd drugs approved by the FDA under specific types of NDS would be in eligible for to Dabaa effective as of January one 2020.

And while we have not yet received an official end da classification code from the FDA for IB Triferic and da the classification of each of our prior NDS for Triferic would fall into the category of drugs to be excluded from to DAP under the proposed rule.

Stuart Paul: If our IV Triferic NDA is classified in a similar manner or in any of the other excluded NDA types, it would not qualify for TDAPA under the proposed rule. CMS is accepting comments on the proposals outlined in the preliminary rule through 27 September 2019, and notably the FDA's policies and procedures around the classification code state that the codes are not indicative of the extent of innovation or therapeutic value that a particular drug represents. We believe Triferic is in fact innovative and we plan to engage with CMS both now and as additional data becomes available for Triferic to highlight the attributes that distinguish it from the current standard of care.

If our IV Triferic NDA is classified in a similar manner or in any of the other excluded NDA types, it would not qualify for TDAPA under the proposed rule. CMS is accepting comments on the proposals outlined in the preliminary rule through 27 September 2019, and notably the FDA's policies and procedures around the classification code state that the codes are not indicative of the extent of innovation or therapeutic value that a particular drug represents. We believe Triferic is in fact innovative and we plan to engage with CMS both now and as additional data becomes available for Triferic to highlight the attributes that distinguish it from the current standard of care.

If our Ivy Triferic and da is classified in a similar manner or in any of the other excluded in da types. It would not qualify for to dapple under the proposed rule.

CMS is accepting comments on the proposals outlined in the preliminary rule through September 27 2019.

And notably the FDA policies and procedures around the classification codes state that the codes are not indicative of the extent of innovation or therapeutic value that a particular drug represents.

We believe Triferic is in fact innovative and we plan to engage with CMS, both now and as additional data becomes available for Triferic to highlight the attributes that distinguish it from the current standard of care.

While we are still analyzing the impact of the proposed rule and what it would mean to finalize even without to dapple, we remain enthusiastic about triferic future and see this as a near term setback. It doesn't change our longer term view of the peak market opportunity in the United States, which has previously stated is based on an assumed market price for Triferic that is within the CMS reimbursement bundle and not on a sustained higher price based on to data eligibility.

Stuart Paul: While we're still analyzing the impact of the proposed rule and what it would mean if finalized, even without TDAPA, we remain enthusiastic about Triferic's future and see this as a near-term setback. It doesn't change our longer-term view of the peak market opportunity in the United States, which, as previously stated, is based on an assumed market price for Triferic that is within the CMS reimbursement bundle and not on a sustained higher price based on TDAPA eligibility. In July, CMS also released a new reimbursement proposal intended to incentivize greater use of home dialysis and kidney transplants for Medicare beneficiaries with end-stage renal disease. Both home dialysis and transplant have support among healthcare providers, and patients as preferable alternatives to in-center or hemodialysis, but they're not as commonly used today.

While we're still analyzing the impact of the proposed rule and what it would mean if finalized, even without TDAPA, we remain enthusiastic about Triferic's future and see this as a near-term setback. It doesn't change our longer-term view of the peak market opportunity in the United States, which, as previously stated, is based on an assumed market price for Triferic that is within the CMS reimbursement bundle and not on a sustained higher price based on TDAPA eligibility. In July, CMS also released a new reimbursement proposal intended to incentivize greater use of home dialysis and kidney transplants for Medicare beneficiaries with end-stage renal disease. Both home dialysis and transplant have support among healthcare providers, and patients as preferable alternatives to in-center or hemodialysis, but they're not as commonly used today.

In July CMS also released a new reimbursement proposal intended to incentivize greater use of home dialysis and kidney transplants for Medicare beneficiaries with end stage renal disease.

Both home dialysis and transplant have support among healthcare providers and patients is preferable alternatives to in center hemodialysis, but they're not as commonly used.

Today patients on home dialysis generally must go into the clinic to receive Ivy iron due to the risk of anaphylaxis and while Triferic is not currently indicated for use in the home. We believe triferic has the potential to be made available in this environment and could ultimately be a more convenient alternative to Ivy iron.

Stuart Paul: Patients on home dialysis generally must go into the clinic to receive IV iron due to the risk of anaphylaxis. While Triferic is not currently indicated for use in the home, we believe Triferic has the potential to be made available in this environment and could ultimately be a more convenient alternative to IV iron. We are actively evaluating various regulatory strategies to progress our development of Triferic for home use. Turning to the global market opportunity, the IV formulation stands to expand the market.

Patients on home dialysis generally must go into the clinic to receive IV iron due to the risk of anaphylaxis. While Triferic is not currently indicated for use in the home, we believe Triferic has the potential to be made available in this environment and could ultimately be a more convenient alternative to IV iron. We are actively evaluating various regulatory strategies to progress our development of Triferic for home use. Turning to the global market opportunity, the IV formulation stands to expand the market.

We are actively evaluating various regulatory strategies to progress our development of Triferic for home use.

Turning to the global market opportunity the Ivy formulation stands to expand the market potential of our triferic portfolio significantly in many large markets like Europe , and China dialysis centers use drive by carbon at cartridges or bags and so their existing protocols with integrate easily with Ivy triferic.

Brandon Folkes: Potential of our Triferic portfolio, significantly.

Potential of our Triferic portfolio, significantly.

Stuart Paul: In many large markets like Europe and China. Dialysis centers use dry bicarbonate cartridges or bags, and so their existing protocols would integrate easily with IV Triferic. Developing our presence in these markets is a priority for us, and we're making good progress. As announced this morning, our partner in China, Wanbang Biopharmaceuticals, recently completed two clinical pharmacology studies of Dialysate Triferic with positive results. With these encouraging study results in hand, the next step will be for Wanbang to schedule the equivalent of a pre-NDA meeting with the NMPA, formerly known as the CFDA in China, to determine whether the data from these studies are sufficient to support a filing for regulatory approval.

In many large markets like Europe and China. Dialysis centers use dry bicarbonate cartridges or bags, and so their existing protocols would integrate easily with IV Triferic. Developing our presence in these markets is a priority for us, and we're making good progress. As announced this morning, our partner in China, Wanbang Biopharmaceuticals, recently completed two clinical pharmacology studies of Dialysate Triferic with positive results. With these encouraging study results in hand, the next step will be for Wanbang to schedule the equivalent of a pre-NDA meeting with the NMPA, formerly known as the CFDA in China, to determine whether the data from these studies are sufficient to support a filing for regulatory approval.

Developing our presence in these markets is a priority for us and we're making good progress.

As announced this morning, our partner in China, One bank biopharmaceutical recently completed two clinical pharmacology studies of Dialysate Triferic with positive results.

With these encouraging study results in hand, the next step will be from one bank to schedule the equivalent of a pre NDA meeting with the end and PA, formerly known as the CF da in China to determine whether the data from these studies are sufficient to support a filing for regulatory approval.

Commercial sales activity in this market would commence following regulatory approval.

Stuart Paul: Commercial sales activity in this market would commence following regulatory approval, and as part of our licensing agreement with Wanbang, we are entitled to up to $35 million of regulatory and sales-based milestones, including an $8 million milestone payment upon regulatory approval of Triferic in China and a transfer price that incorporates a markup to cost of goods sold and a percentage of net sales in the low- to mid-20% range. Wanbang is responsible for the cost of the clinical trials and regulatory approval program in China, and we retain manufacturing responsibilities for Triferic for China. China is expected to become the largest ESRD market in the world over the next several years.

Commercial sales activity in this market would commence following regulatory approval, and as part of our licensing agreement with Wanbang, we are entitled to up to $35 million of regulatory and sales-based milestones, including an $8 million milestone payment upon regulatory approval of Triferic in China and a transfer price that incorporates a markup to cost of goods sold and a percentage of net sales in the low- to mid-20% range. Wanbang is responsible for the cost of the clinical trials and regulatory approval program in China, and we retain manufacturing responsibilities for Triferic for China. China is expected to become the largest ESRD market in the world over the next several years.

And as part of our licensing agreement with one being we are entitled to up to $35 million of regulatory and sales based milestones, including an $8 million milestone payment upon regulatory approval of Triferic in China.

And the transfer price that incorporates a markup to cost of goods sold and a percentage of net sales in the low to mid 20% range.

One thing is responsible for the cost of the clinical trials and regulatory approval program in China.

And we retain manufacturing responsibilities for Triferic for China, China is expected to become the largest srd market in the world over the next several years.

In Japan.

Stuart Paul: In Japan, our just completed market research confirms a total market opportunity of more than $250 million in that country, and we are actively working to advance our partnership discussions. In Europe, we're in ongoing discussions as well with potential partners that can help us penetrate that market. In Canada, we expect to submit our application for regulatory approval for IV Triferic in the near future. As for our concentrate business, which still accounts for the lion's share of sales at present, we recently finalized a four-and-a-half-year contract with DaVita. The contract is extremely important to us as DaVita represents roughly half of our concentrate sales at this point. The contract includes a price increase relative to our previous agreement, and this new contract is a positive step forward for our concentrates business.

In Japan, our just completed market research confirms a total market opportunity of more than $250 million in that country, and we are actively working to advance our partnership discussions. In Europe, we're in ongoing discussions as well with potential partners that can help us penetrate that market. In Canada, we expect to submit our application for regulatory approval for IV Triferic in the near future. As for our concentrate business, which still accounts for the lion's share of sales at present, we recently finalized a four-and-a-half-year contract with DaVita. The contract is extremely important to us as DaVita represents roughly half of our concentrate sales at this point. The contract includes a price increase relative to our previous agreement, and this new contract is a positive step forward for our concentrates business.

Our just completed market research confirms a total market opportunity of more than $250 million in that country and we are actively working to advance our partnership discussions.

In Europe , we're in ongoing discussions as well with potential partners that can help us penetrate that market.

In Canada, we expect to submit our application for regulatory approval for IB Triferic in the near future.

And as for our concentrate business.

Which still accounts for the lion's share of sales at present, we recently finalized a four and a half year contract with Davita.

The contract is extremely important to us as davita represents roughly half of our concentrate sales at this point. The contract includes a price increase relative to our previous agreement and this new contract is a positive step forward for our concentrates business.

Stuart Paul: We are continuing to identify additional ways to enhance the profitability of the business and to extend our customer base both in the US and abroad. In summary, we're pleased that we hit our two most critical milestones in the second quarter, launching Dialysate Triferic and submitting our NDA for the IV formulation. We believe we're building a steady pathway to sustainable long term growth. I'll now turn the call over to our CFO Angus Smith to review our second quarter financials. Angus, thank you, Stuart.

We are continuing to identify additional ways to enhance the profitability of the business and to extend our customer base both in the US and abroad. In summary, we're pleased that we hit our two most critical milestones in the second quarter, launching Dialysate Triferic and submitting our NDA for the IV formulation. We believe we're building a steady pathway to sustainable long term growth. I'll now turn the call over to our CFO Angus Smith to review our second quarter financials. Angus.

We are continuing to identify additional ways to enhance the profitability of the business and to extend our customer base, both in the U.S and abroad.

In summary, we're pleased that we hit our two most critical milestones in the second quarter.

Launching dialysate Triferic and submitting our end da for the IB formulation.

We believe we are building a steady pathway to sustainable long term growth.

I will now turn the call over to our CFO Angus Smith to review, our second quarter financials, and I guess.

Angus Smith: thank you, Stuart. Let me walk you through our financial results for the second quarter of 2019. Sales during the quarter of 2019 were $14.8 million compared to sales of $14.9 million during the three months ended 30 June 2018. Our sales during the quarter and to date have substantially consisted of sales of our dialysis concentrate products to DaVita, Baxter, and international customers, as well as deferred revenues related to the Baxter Distribution agreement for our dialysis concentrates products and our licensing agreement with Wanbang for Triferic in China. As Stuart mentioned, we recently signed a new agreement with DaVita for our concentrates products that extend through 2023 and this business remains a strategic asset for us as we supply approximately 25% of the US market for hemodialysis concentrates.

Thank you Stuart let me walk you through our financial results for the second quarter of 2019.

Angus Smith: Let me walk you through our financial results for the second quarter of 2019. Sales during the quarter of 2019 were $14.8 million compared to sales of $14.9 million during the three months ended 30 June 2018. Our sales during the quarter and to date have substantially consisted of sales of our dialysis concentrate products to DaVita, Baxter, and international customers, as well as deferred revenues related to the Baxter Distribution agreement for our dialysis concentrates products and our licensing agreement with Wanbang for Triferic in China. As Stuart mentioned, we recently signed a new agreement with DaVita for our concentrates products that extend through 2023 and this business remains a strategic asset for us as we supply approximately 25% of the US market for hemodialysis concentrates.

Sales during the quarter of 2019.

Were $14.8 million compared to sales of $14.9 million during the three months ended June Thirtyth 2018.

Our sales during the quarter and to date have substantially consisted of sales of our dialysis concentrate products to Davita Baxter and international customers as well as deferred revenues related to the Baxter distribution agreement for our dialysis concentrates products and our licensing agreement with Wanbang for Triferic and China.

As Stuart mentioned, we recently signed a new agreement with Davita for our concentrates products that extend through 2023 and this business remains a strategic asset for us as we supply approximately 25% of the us market for hemo dialysis concentrates.

Gross profit increased in the second quarter of 2019 compared to the second quarter of 2018, due primarily to an inventory reserve expense for Triferic of $5.4 million for the three months ended June Thirtyth 2018.

Angus Smith: Gross profit increased in the second quarter of 2019 compared to the second quarter of 2018 due primarily to an inventory reserve expense for Triferic of $5.4 million for the three months ended 30 June 2018, partially offset by a gross profit decrease in our dialysis concentrates products. The decrease in gross profit for our dialysis concentrates products was primarily attributable to increased labor, materials, and overhead costs. Operating loss for the second quarter of 2019 improved to $10.4 million from $12.3 million in the second quarter of 2018. The improvement was driven primarily by the year over year increase in gross profit and lower settlement expenses, partially offset by increases in sales and marketing expenses, and research and product development expenses.

Gross profit increased in the second quarter of 2019 compared to the second quarter of 2018 due primarily to an inventory reserve expense for Triferic of $5.4 million for the three months ended 30 June 2018, partially offset by a gross profit decrease in our dialysis concentrates products. The decrease in gross profit for our dialysis concentrates products was primarily attributable to increased labor, materials, and overhead costs. Operating loss for the second quarter of 2019 improved to $10.4 million from $12.3 million in the second quarter of 2018. The improvement was driven primarily by the year over year increase in gross profit and lower settlement expenses, partially offset by increases in sales and marketing expenses, and research and product development expenses.

Partially partially offset by a gross profit decrease in our dialysis concentrates products.

The decrease in gross profit for our dialysis concentrates products was primarily attributable to increased labor materials and overhead costs.

Operating loss for the second quarter of 2019 improved to $10.4 million from $12.3 million in the second quarter of 2018.

The improvement was driven primarily by the year over year increase in gross profit and lower settlement expenses, partially offset by increases in sales and marketing expense and research and product development expenses.

Angus Smith: The increases in certain expense items reflect investments we are making that are aligned with both our short-term and long-term objectives such as optimizing the launch of Triferic in the US and advancing IV Triferic towards a potential FDA approval in 2020.

The increases in certain expense items reflect investments we are making that are aligned with both our short-term and long-term objectives such as optimizing the launch of Triferic in the US and advancing IV Triferic towards a potential FDA approval in 2020.

The increase in certain expense items reflect investments, we are making that are aligned with both our short term and long term objectives, such as optimizing the launch of Triferic in the us and advancing Ivy triferic towards a potential FDA approval in 2020.

Selling and marketing expenses were $2.2 million in the second quarter of 2019 compared to $200000 in the second quarter of 2018, the increase in sales and marketing expense reflects the investments we are making in professional and marketing capabilities to support the launch of our Triferic portfolio, both now and in the future.

Angus Smith: Selling and marketing expenses were $2.2 million in Q2 2019 compared to $200,000 in Q2 2018. The increase in sales and marketing expense reflects the investments we are making in professional and marketing capabilities to support the launch of our Triferic portfolio both now and in the future. Research and product development expenses were approximately $3 million in Q2 2019 compared with $1.6 million in Q2 2018. The increase was due primarily to investments we made during the quarter for our Triferic portfolio, including a $1.3 million NDA application fee for IV Triferic, and the development of professional medical capabilities to support the launch of Dialysate Triferic and IV Triferic if approved.

Selling and marketing expenses were $2.2 million in Q2 2019 compared to $200,000 in Q2 2018. The increase in sales and marketing expense reflects the investments we are making in professional and marketing capabilities to support the launch of our Triferic portfolio both now and in the future. Research and product development expenses were approximately $3 million in Q2 2019 compared with $1.6 million in Q2 2018. The increase was due primarily to investments we made during the quarter for our Triferic portfolio, including a $1.3 million NDA application fee for IV Triferic, and the development of professional medical capabilities to support the launch of Dialysate Triferic and IV Triferic if approved.

Research and product development expenses were approximately $3 million in the second quarter of 2019, compared with $1.6 million in the second quarter of 2018.

The increase was due primarily to investments we made during the quarter for our triferic portfolio, including a $1.3 million and da application fee for Ivy Triferic and the development of professional medical capabilities to support the launch of Dialysate, Triferic and Ivy Triferic if approved.

Net loss for the second quarter of 2019 was $10.3 million or 18 cents per basic and diluted share compared with a loss of $12.2 million or 24 cents per basic and diluted share in the second quarter of 2018.

Angus Smith: Net loss for the second quarter of 2019 was $10.3 million or $0.18 per basic and diluted share compared with a loss of $12.2 million or $0.24 per basic and diluted share in the second quarter of 2018. Net loss for the second quarter of 2019 included approximately 1.9 million of non-cash charges for depreciation, amortization, and stock-based compensation. Net cash used in operating activities was $10.4 million for the second quarter of 2019. The increase in cash used in operating activities was primarily due to the $1.3 million NDA application fee for IV Triferic and an $800,000 upfront payment on a CRO contract for our upcoming Triferic Pediatric study as well as a change in other working capital of negative $1.9 million. In June we announced the pricing of an underwritten public offering of our common stock with gross proceeds of $17.5 million.

Net loss for the second quarter of 2019 was $10.3 million or $0.18 per basic and diluted share compared with a loss of $12.2 million or $0.24 per basic and diluted share in the second quarter of 2018. Net loss for the second quarter of 2019 included approximately 1.9 million of non-cash charges for depreciation, amortization, and stock-based compensation. Net cash used in operating activities was $10.4 million for the second quarter of 2019. The increase in cash used in operating activities was primarily due to the $1.3 million NDA application fee for IV Triferic and an $800,000 upfront payment on a CRO contract for our upcoming Triferic Pediatric study as well as a change in other working capital of negative $1.9 million. In June we announced the pricing of an underwritten public offering of our common stock with gross proceeds of $17.5 million.

Net loss for the second quarter of 2019 included approximately $1.9 million of noncash charges for depreciation amortization and stock based compensation.

Net cash used in operating activities was.

$10.4 million for the second quarter of 2019.

The increase in cash used in operating activities was primarily due to the $1.3 million NDA application fee for Ivy Triferic and an $800000 upfront payment on a CRL contract for our upcoming peak Triferic pediatric study as well as a change in other working capital of negative $1.9 million.

In June we announced the pricing of an underwritten public offering of our common stock with gross proceeds of $17.5 million in July the underwriters in this offering partially exercised their over allotment option, resulting in additional growth proceeds of $1.3 million.

Angus Smith: In July, the underwriters in this offering partially exercised their overallotment option, resulting in additional gross proceeds of $1.3 million. The funds from this offering will be used to support our ongoing investments in the Triferic portfolio, including the commercialization of Dialysate Triferic and IV Triferic, research and development expenses, as well as for general corporate purposes. As of 30 June 2019, we had approximately $35.2 million of cash, cash equivalents, and investments available for sale and working capital of approximately $33.4 million. We anticipate that our cash and investments on hand are sufficient to fund our business plan for at least the next 12 months. I will now turn the call back to Stuart.

In July, the underwriters in this offering partially exercised their overallotment option, resulting in additional gross proceeds of $1.3 million. The funds from this offering will be used to support our ongoing investments in the Triferic portfolio, including the commercialization of Dialysate Triferic and IV Triferic, research and development expenses, as well as for general corporate purposes. As of 30 June 2019, we had approximately $35.2 million of cash, cash equivalents, and investments available for sale and working capital of approximately $33.4 million. We anticipate that our cash and investments on hand are sufficient to fund our business plan for at least the next 12 months. I will now turn the call back to Stuart.

The funds from this offering will be used to support our ongoing investments in the triferic portfolio, including the commercialization of dialysate Triferic and Ivy Triferic.

Research and development expenses as well as for general corporate purposes.

As of June Thirtyth, 2019, we had approximately $35.2 million of cash cash equivalents and investments available for sale.

And working capital of approximately $33.4 million.

We anticipate that our cash and investments on hand are sufficient to fund our business plan for at least the 12 month next 12 months I will now turn the call back to Stuart.

Stuart Paul: Thank you, Angus.

Thank you Angus.

In closing, let me reiterate that we're deeply committed to improving the standard of care for anemia management in hemodialysis patients globally.

Stuart Paul: In closing, let me reiterate that we're deeply committed to improving the standard of care for anemia management in hemodialysis patients globally. The commencement of commercial sales of Dialysate Triferic is a significant first step in.

In closing, let me reiterate that we're deeply committed to improving the standard of care for anemia management in hemodialysis patients globally. The commencement of commercial sales of Dialysate Triferic is a significant first step in.

The commenced the commencement of commercial sales of Dialysate Triferic is a significant first step and rolling out what we believe will be a transformative portfolio of products that address a significant unmet medical need.

Brandon Folkes: Rolling out what we believe will.

Rolling out what we believe will.

Stuart Paul: Be a transformative portfolio of products that address a significant unmet medical need. Early positive feedback from our initial customers is encouraging as we look to advance our platform over time. Supported by our strong management team, a world-class medical advisory board, and a robust patent portfolio, Rockwell Medical is fully dedicated to improving patient care while delivering value to our shareholders. We will now open up the call to questions. Operator, ladies and gentlemen, if.

Be a transformative portfolio of products that address a significant unmet medical need. Early positive feedback from our initial customers is encouraging as we look to advance our platform over time. Supported by our strong management team, a world-class medical advisory board, and a robust patent portfolio, Rockwell Medical is fully dedicated to improving patient care while delivering value to our shareholders. We will now open up the call to questions. Operator.

Early positive feedback from our initial customers is encouraging as we look to advance our platform over time.

Supported by our strong management team a world class Medical Advisory Board in a row of robust patent portfolio Rockwell medicals fully dedicated to improving patient care, while delivering value to our shareholders. We will now open up the call to questions operator.

Operator: ladies and gentlemen, if You have a question at this time, please press the star and then the number one key on your touch-tone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key.

Ladies and gentlemen, if you have a question at this time. Please press Star then the number one.

Operator: You have a question at this time, please press the star and then the number one key on your touch-tone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key.

Touchstone telephone.

Yeah. Good question Jade are you wish to remove yourself from the queue. Please press the pound.

Your first question comes from the line of Chris Raymond from Piper Jaffray. Your line is open.

Operator: Your first question comes from the line of Chris Raymond from Piper Jaffray. Your line is open. Hi guys, this is Nicole Gabreski for Chris. Thanks for taking the question just on TDAPA.

Your first question comes from the line of Chris Raymond from Piper Jaffray. Your line is open.

Nicole Gabreski: Hi guys, this is Nicole Gabreski for Chris. Thanks for taking the question just on TDAPA So as far as you can tell. What was the genesis of the proposed changes by CMS to the TDAPA program? I guess you know, reading through some of the language, it appears that the proposed change was in response to concern about generic drugs taking advantage of TDAPA's. Two-year exclusion from the bundle. But that said, what's an effective approach to convincing CMS that the proposed NDA classification system is not an appropriate tool for judging the level of innovation a new product brings to dialysate patients?

Hi, guys. This is Nicole go breast cancer, Chris Thanks for taking the question.

Just on T. gap, so as far as you can tell what was the Genesis of the proposed changes by CMS to the program.

Elana Allen: So as far as you can tell.

Operator: What was the genesis of the proposed changes by CMS to the TDAPA program? I guess you know, reading through some of the language, it appears that the proposed change was in response to concern about generic drugs taking advantage of TDAPA's.

Yes.

Going through some of the language. It appears that the proposed changes in response to concerns.

About generic drug taking advantage of today.

Elana Allen: Two-year exclusion from the bundle.

Exclusion from the bundle, but that said, what's an effective approach to convincing CMS issued the proposed and.

Operator: But that said, what's an effective approach to convincing CMS that the proposed NDA classification system is not an appropriate tool for judging the level of innovation a new product brings to dialysate patients?

The kitchen system is not inappropriate tool for judging the level of innovation and new product offerings to.

Patients.

Hey, Nicole the Stewart so so thanks, thanks for joining us today and.

Stuart Paul: Hey Nicole, this is Stuart.

Stuart Paul: Hey Nicole, this is Stuart. Thanks, thanks for joining us today. You know, as you know, CMS is accepting comments on the proposals outlined. In the preliminary rule through September. Their preliminary ruling was very interesting. You know, from our perspective, obviously on the surface, it seems to exclude the generics and identify. Dosage forms and. Formulations as by NDA type that the. FDA has used for their internal classification.

Brandon Folkes: Thanks, thanks for joining us today. You know, as you know, CMS is accepting comments on the proposals outlined.

As you know CMS is.

Accepting comments on the proposals outlined.

Stuart Paul: In the preliminary rule through September.

In the preliminary rule through September .

Their preliminary ruling was very interesting.

Stuart Paul: Their preliminary ruling was very interesting.

From our perspective, obviously on the surface it seems too.

Brandon Folkes: You know, from our perspective, obviously on the surface, it seems to exclude the generics and identify.

To exclude the generics and identify.

Dosage forms and.

Stuart Paul: Dosage forms and.

Formulations of as by Andy eight type that the FDA is used for their internal classification scheme that we're not really intended to judge or comment on the innovative level of these of these therapeutics. So.

Brandon Folkes: Formulations as by NDA type that the.

Stuart Paul: FDA has used for their internal classification.

Brandon Folkes: Scheme that were not really intended to judge or comment on the innovative level of these therapeutics. So, you know, look, I mean, we're looking at it. If we're excluded, it's a near term.

Scheme that were not really intended to judge or comment on the innovative level of these therapeutics. So, you know, look, I mean, we're looking at it. If we're excluded, it's a near term. Setback, but we still don't really have a full answer on this and we. Certainly are planning, as I mentioned earlier, to have significant interaction with them.

You know look I mean, we're looking at it if were excluded.

It's a near term setback, but we still don't really have.

Stuart Paul: Setback, but we still don't really have a full answer on this and we.

A full answer on this and we certainly are planning as I mentioned earlier to to have significant interaction with them.

Brandon Folkes: Certainly are planning, as I mentioned earlier, to have significant interaction with them.

It doesn't the proposed revision does not change our peak market opportunity as we view it.

Stuart Paul: It doesn't, you know, the proposed revision.

It doesn't, you know, the proposed revision. Does not change our peak market opportunity as we view it.

Brandon Folkes: Does not change our peak market opportunity as we view it.

And we certainly believe Triferic continues to have the potential to provide enormous benefit to patients.

Brandon Folkes: We certainly believe Triferic continues to.

We certainly believe Triferic continues to. Have the potential to provide an enormous.

Stuart Paul: Have the potential to provide an enormous.

Brandon Folkes: Benefit to patients in the hemodialysis sector. So at the end of the day, we'll be engaging with CMS in the coming weeks and certainly providing commentaries that are geared toward explaining and helping them fully digest and understand the level of innovation that Triferic provides patients.

Benefit to patients in the hemodialysis sector. So at the end of the day, we'll be engaging with CMS in the coming weeks and certainly providing commentaries that are geared toward explaining and helping them fully digest and understand the level of innovation that Triferic provides patients.

In the hemo dialysis sector.

So.

At the end of the day now, we'll be engaging with CMS and.

In the coming weeks and and certainly providing commentaries that are are geared toward.

Explaining and helping them fully digest and understand the level of innovation that triferic provides patients.

Great. Thank you.

Operator: Great, thank you.

Nicole Gabreski: Great, thank you.

Your next question comes from the line of David Keith from Securities. Your line is open.

Operator: Your next question comes from the line of David Bouchey from IFS Securities. Your line is open.

Hi, guys. Thank you for taking my question.

David Bouchey: Hi guys. Thank you for taking my question. This is kind of almost an anniversary for me. It was almost two years ago that I started coverage of the company, although sometimes it seems like it's been longer than that. But I do have to say I'm impressed that you guys have been able to hit the milestones that you have. You've locked in CitraPure and the other dialysis prices for the next few years with DaVita. You've gotten Triferic at least the dialysate version on the market and you even got TDAPA eligibility for at least once. We hope you can do it again. So that having been said.

This is kind of the almost an anniversary for me. It was almost two years ago that I started coverage of the company.

Although sometimes it seems like it's been longer than that.

But I do have to say I'm impressed that you guys have been able to hit the milestones that you have.

You've locked in Citrapure and the other dialysis while prices for the next few years with Davita you've gotten.

Triferic at least the dialysate version on the market and you even got to that the eligibility for at least once we hope you can do it again.

So that having been said.

How close are you to getting all the cost benefit data that you need.

David Bouchey: How close are you to getting all the cost benefit data that you need?

How close are you to getting all the cost benefit data that you need?

Oh from the Dialysate Triferic program from the free sample program and from.

David Bouchey: From the Dialysate Triferic program, from the free sample program, and from the launch of Triferic.

From the Dialysate Triferic program, from the free sample program, and from the launch of Triferic.

The launch of Triferic.

So yes, Dave first off great great too to chat with you again I appreciate the questions and your coverage over the last couple of years.

Brandon Folkes: So yeah, you know, Dave, first off, great, great to chat with you again and appreciate the questions and your coverage over the last couple years.

Stuart Paul: So yeah, you know, Dave, first off, great, great to chat with you again and appreciate the questions and your coverage over the last couple years.

You know.

Brandon Folkes: You know, I think it's a bit.

You know, I think it's a bit.

I think it's a bit about this real world. This focus on real world data as I was mentioning.

Stuart Paul: About this real-world, this focus on real-world data.

About this real-world, this focus on real-world data.

Brandon Folkes: As I was mentioning, you know, customers that we're in discussion with and, you know, we're taking a very phased, measured approach to bringing new accounts on board. We're too excited about the sales we're getting in terms of the initial feedback, as I mentioned, the early adopters. But it's a very measured, targeted approach and what people are generally wanting to see is a level of real-world data.

As I was mentioning, you know, customers that we're in discussion with and, you know, we're taking a very phased, measured approach to bringing new accounts on board. We're too excited about the sales we're getting in terms of the initial feedback, as I mentioned, the early adopters. But it's a very measured, targeted approach and what people are generally wanting to see is a level of real-world data.

Customers that.

We're in discussion with and we're taking a very phase measured approach to bringing new accounts on board. We're excited about the sales were getting.

In terms of the initial feedback as I mentioned, the early adopters, but it's a very measured targeted approach and what people are generally wanting to see is.

The level of real World data.

That perhaps as a as recent as 2019 generated data from procedures with with Triferic and so we continue to work on pulling that together.

Brandon Folkes: That perhaps is as recent as 2019 generated data from procedures with Triferic. And so we continue to work on pulling that together.

That perhaps is as recent as 2019 generated data from procedures with Triferic. And so we continue to work on pulling that together.

We've entered into an agreement as I mentioned with the mid sized dialysis chain.

Stuart Paul: You know, we've entered into an agreement.

You know, we've entered into an agreement.

Brandon Folkes: As I mentioned, with a mid-sized dialysis chain to pull that data over fully once and for all and really get through it. There's a significant body of data there, and so I'm excited that we're rolling through that, and we continue to process and analyze data from the sample program. So we do have a number of important sites and even prestigious institution that has significant experience with Triferic, and you know, pulling the data and getting it to a final point where we're ready for use is, you know, it's a bit of a process, and we want.

As I mentioned, with a mid-sized dialysis chain to pull that data over fully once and for all and really get through it. There's a significant body of data there, and so I'm excited that we're rolling through that, and we continue to process and analyze data from the sample program. So we do have a number of important sites and even prestigious institution that has significant experience with Triferic, and you know, pulling the data and getting it to a final point where we're ready for use is, you know, it's a bit of a process, and we want.

To pull that data over fully once and for all and really get through Theres, a significant body of data there and so.

Im excited that were rolling through that and we continue to process and analyze data.

From the sample program. So we do have a number of.

Important sites and even.

Prestigious institution.

That has significant experience with triferic.

And pulling the data and getting it to a final point, where we're ready for uses.

It's a bit of a process and we want to do it well and we're working with the right parties to make it happen and again I think.

Stuart Paul: To do it well and we're working with the right parties to make it happen.

To do it well and we're working with the right parties to make it happen.

Brandon Folkes: And again, I think, you know, taking a measured, targeted approach to who we felt would make the most sense to.

And again, I think, you know, taking a measured, targeted approach to who we felt would make the most sense to.

Taking a.

A measured targeted approach to who we felt would make the most sense to work with.

Stuart Paul: Work with, to pull the data and.

Work with, to pull the data and.

To pull the data and then apply it and the specific targeted discussions that we're having with key accounts. We we've we've been very.

Brandon Folkes: Then apply it in the specific targeted discussions that we're having with key accounts, you know. We've been very focused on managing that process accurately, correctly, and without, you know, without significant rush to make it happen. We want to, we want to make it right. So I hope that kind of gets to the core of your question.

Then apply it in the specific targeted discussions that we're having with key accounts, you know. We've been very focused on managing that process accurately, correctly, and without, you know, without significant rush to make it happen. We want to, we want to make it right. So I hope that kind of gets to the core of your question.

Focused on managing that process.

Accurately and correctly and without.

Without significant rush to make it happen, we want to we want to make it right.

So.

I hope that that kind of gets to the core of your question.

I think so.

David Bouchey: I think so. Stuart, can you give us any clarity on what a price range for the IV version of Triferic might be when you launch next year?

Stuart can you give us any clarity on what a price range for the Ivy version of Triferic might be when you launch next year.

Hey, David to Tangguh speaking.

Angus Smith: Dave, it's Angus speaking. Thank you for the question. Obviously we haven't given any guidance on where we think pricing can shake out, and obviously we're continuing to analyze the impact of the proposed rule on potential pricing alternatives. We're still going through our price research on IV Triferic. The best I can give you at this stage. We've given you details on our last call about where Dialysate Triferic is priced. Clearly, pricing for IV Triferic will depend on sort of unique attributes of that product as well as whether or not it ends up in the bundle or it's reimbursed separately. So we're still going through our analysis there, and we'll update the market accordingly once we have a better idea of where we're going to be.

Okay. Thank you for the question.

Obviously, we haven't given any guidance on.

On where we think pricing can shake out.

And obviously, we're continuing to analyze state the impact of the proposed rule.

On potential pricing alternatives, we're still going through our price research on Ivy Triferic.

The best I can give you at this stage we've given.

You details and on our last call about where where dialysate triferic is priced.

Clearly.

Pricing for Ivy Triferic will will will depend on sort of unique attributes of that product as well as.

Whether or not it ends up.

In the bundle hordes reimbursed separately, so we're still going through our through our analysis, there and we'll update the market. Accordingly. Once once we we have a better idea of where we're going to be.

All right and I guess is the sales and training fourth now fully staffed are you going to be hiring more people.

David Bouchey: Angus, is the sales and training force now fully staffed or are you going to be hiring more people?

Angus Smith: No, as we've said before, you know, we're bringing the team on as we get, as we go through the year, and so we expect to be fully staffed, you know, towards, towards the end of 2019. And then again, we'll evaluate where we are when we launch IV Triferic next year if it's approved.

No as we've said before you know where we're bringing the team on as we get to as we go through the year and so we expect to be fully staffed.

Towards towards the end of 2019, and then again, we'll evaluate where we are when we launch Triferic next year, if it's approved.

Stuart Paul: Yeah.

Stuart Paul: Yeah. You know, I think just to add on to that, Dave, it's important that people understand we're taking the necessary steps to build a world class field organization. It's not going to be a massive army. It's very focused.

I think just to add on to that Dave It's important that people understand we're taking the necessary steps to build a world class field organization, it's not going to be a massive army it's very focused.

Brandon Folkes: You know, I think just to add on to that, Dave, it's important that people understand we're taking the necessary steps to build a world class field organization.

Stuart Paul: It's not going to be a massive army. It's very focused.

Brandon Folkes: But we're bringing on people who have.

But we're bringing on people who have.

But we are bringing on people who have the right experience curve and the right.

Stuart Paul: The right experience curve and the right.

The right experience curve and the right.

Level of nephrology experience that we think can help us hit the ground running as we take this measured approach with our key accounts that were on boarding working through the data. We also have a.

Brandon Folkes: Level of nephrology experience that we think can help us hit the ground running as we take this measured approach with our key accounts that we're onboarding, working through the data. We also have a medical science liaison field that reports up through our chief medical officer that is out there essentially.

Level of nephrology experience that we think can help us hit the ground running as we take this measured approach with our key accounts that we're onboarding, working through the data. We also have a medical science liaison field that reports up through our chief medical officer that is out there essentially.

A medical science liaison field that reports up through our Chief Medical office.

That is out there essentially focusing on medical education.

Stuart Paul: Focusing on medical education.

Focusing on medical education.

So with all of the targeted accounts that were bringing on board I think we have a.

Brandon Folkes: So with all of the targeted accounts that we're bringing on board, I think we have a good measured approach to getting everybody where they need to be.

So with all of the targeted accounts that we're bringing on board, I think we have a good measured approach to getting everybody where they need to be.

Okay. Good.

Measured approach to getting everybody, where they need to be by the end of the year.

Stuart Paul: By the end of the year.

By the end of the year.

Okay, and when will you start the pediatric trial do you have the protocols in place for that.

David Bouchey: Okay, and when will you start the pediatric trial? Do you have the protocols in place for that?

Yes, so so as we've said we signed the CRL contract during the second quarter.

Angus Smith: Yeah. So as we've said, we signed the CRO contract during Q2 for that. Protocols are in place and we're looking to begin enrollment later this year.

For for that protocols are in place and we're looking to begin enrollment later this year.

Hi, Thanks, I'll, let somebody else ask some questions now thank you thanks, Dave.

David Bouchey: All right, thanks. I'll let somebody else ask some questions now.

Angus Smith: Thank you. Thanks, Dave.

Your next question comes from the line of Greg.

Operator: Your next question comes from the line of Raghuram Selvaraju from H.C. Wainwright. Your line is open.

Hello from H.C. Wainwright your line is open.

Good afternoon, guys. This is Edward on for Rob I appreciate taking the questions.

Ram Selvaraju: Good afternoon, guys. This is Edward Anthram. I appreciate you taking the questions. Just looking at the NDA for Triferic for next year, I'm wondering what specific gating items remain to be completed before that review could occur.

[Analyst] (HC Wainwright): Good afternoon, guys. This is Edward Anthram. I appreciate you taking the questions. Just looking at the NDA for Triferic for next year, I'm wondering what specific gating items remain to be completed before that review could occur.

Just looking at the NDA for Triferic for next year I'm wondering what's the gating items remained to be completed.

Hey, Edward its Stuart so.

Stuart Paul: Hey Edward, it's Stuart.

Brandon Folkes: So, you know, as far as gated items, I think the process is underway. You know, we've been waiting 60 days post filing to have confirmation that, you know, that we would have the acceptance from FDA. We got the letter and the PDUFA date. I think at this point, you know, it's always interesting under an SPA special protocol assessment of this sort.

So, you know, as far as gated items, I think the process is underway. You know, we've been waiting 60 days post filing to have confirmation that, you know, that we would have the acceptance from FDA. We got the letter and the PDUFA date. I think at this point, you know, it's always interesting under an SPA special protocol assessment of this sort.

You know as far as getting items I think the process is underway, we've been waiting six days post filing too.

To have confirmation that.

That we would have the acceptance from FDA, we got the letter and the PDUFA date I think at this point.

You know, it's always interesting under an ESP a special protocol assessment of this sort.

Where we are.

Brandon Folkes: Where we feel we've done a really good job of taking FDA guidance in that SPA and meeting the bioequivalence endpoints that were mapped out and discussed as part of that agreement. I think we're in pretty good shape here. You know, FDA has good experience with our prior NDA submissions around powder and ampule for dialysate. So, you know, we look forward to receiving, you know, whatever questions FDA may have for us about the IV formulation. So we anticipate that there'll be questions coming. And you know, and I think consistent with our prior filings we have a view toward really knocking the questions down quite adequately without stopping the clock, you know, without taking forever to get the questions answered. So, you know, it's important from that perspective just to keep the process moving and kind of get through all the different questions that may come.

Where we feel we've done a really good job of taking FDA guidance in that SPA and meeting the bioequivalence endpoints that were mapped out and discussed as part of that agreement. I think we're in pretty good shape here. You know, FDA has good experience with our prior NDA submissions around powder and ampule for dialysate. So, you know, we look forward to receiving, you know, whatever questions FDA may have for us about the IV formulation. So we anticipate that there'll be questions coming. And you know, and I think consistent with our prior filings we have a view toward really knocking the questions down quite adequately without stopping the clock, you know, without taking forever to get the questions answered. So, you know, it's important from that perspective just to keep the process moving and kind of get through all the different questions that may come.

Phil we've done a really good job of taking FDA guidance and that SPD and.

And meeting the bio equivalence endpoints that were.

Mapped out and discussed as part of that agreement I think we're in pretty good shape here.

FDA has good experience with our prior and the submissions around powder and and fuel for dialysate. So we look forward to receiving.

Whatever questions F. da may have for us.

About the Ivy formulation, so we anticipate that there will be questions coming in.

And I think consistent with our prior filings.

We have a view toward.

Really knocking the questions down quite.

Adequately without stopping the clock it without taking forever to get the questions answered so.

It's an important from that perspective, just to keep the process moving and kind of get through all the different questions that may come. So certainly we'll have we'll expect to get questions and.

Brandon Folkes: So certainly we'll expect to get questions, and I've anticipated perhaps in certain areas where some of those questions may come from, but we just, we have to wait and see what they say.

So certainly we'll expect to get questions, and I've anticipated perhaps in certain areas where some of those questions may come from, but we just, we have to wait and see what they say.

And I've anticipated, perhaps in certain areas.

Where some of those questions may come from but we just we have to wait and see what they say.

That makes sense and looking at the Chinese data that came out earlier today, just a few questions on that I noticed that there was some information about lean body mass for Chinese patients and I don't remember seeing this in any of your previous data.

Ram Selvaraju: That makes sense. And looking at the Chinese data that came out earlier today, just a few questions on that, I noticed that there was some information about lean body mass for Chinese patients, and I don't remember seeing this in any of your previous data. I was just wondering how important that lean body mass data might be and how might some of the increasing obesity in China and the US maybe affect the frequency of chronic kidney disease and how the efficacy might change for certain hemodialysis therapies? And could this be a potential advantage for Triferic?

[Analyst] (HC Wainwright): That makes sense. And looking at the Chinese data that came out earlier today, just a few questions on that, I noticed that there was some information about lean body mass for Chinese patients, and I don't remember seeing this in any of your previous data. I was just wondering how important that lean body mass data might be and how might some of the increasing obesity in China and the US maybe affect the frequency of chronic kidney disease and how the efficacy might change for certain hemodialysis therapies? And could this be a potential advantage for Triferic?

Just wondering how important that.

Ms data might be and how might some of the increasing obesity in China and the us maybe affect the frequency.

Chronic kidney disease, and how the efficacy might change for certain you know Dallas therapies and could this be a potential advantage for.

Triferic.

Yeah, No great question, I think whats interesting to US is the fact that there may be differences in lean body mass between the Chinese population in the <unk> The American population.

Brandon Folkes: Yeah, no, great question. I think what's interesting to us is the fact that there may be differences in lean body mass between the Chinese population and the American population. But the really nice thing was that the data showed us that there was really not a significant difference in the PK and pharmacokinetic pharmacodynamic.

Stuart Paul: Yeah, no, great question. I think what's interesting to us is the fact that there may be differences in lean body mass between the Chinese population and the American population. But the really nice thing was that the data showed us that there was really not a significant difference in the PK and pharmacokinetic pharmacodynamic.

But but the really nice thing was that the data showed us that there was really not a significant difference in the PK and.

Pharmacokinetic Pharmaco dynamic.

Activity of Triferic.

Brandon Folkes: Activity of Triferic in either population. From that perspective, that gives us a good signal that it should work well in Chinese patients, despite the differences in body mass. I think from the standpoint of obesity and changes in diet and, you know, Triferic, I mean, clearly we haven't run a trial around diabetes and so forth, but I think, you know. What we love about Triferic is that it is very physiologic. Hemodialysis patients are quite chronically inflamed. In our view on, as I stated, our view on ferritin levels and challenges in managing IV irons, and even ESAs, and this patient population.

Activity of Triferic in either population. From that perspective, that gives us a good signal that it should work well in Chinese patients, despite the differences in body mass. I think from the standpoint of obesity and changes in diet and, you know, Triferic, I mean, clearly we haven't run a trial around diabetes and so forth, but I think, you know. What we love about Triferic is that it is very physiologic. Hemodialysis patients are quite chronically inflamed. In our view on, as I stated, our view on ferritin levels and challenges in managing IV irons, and even ESAs, and this patient population.

In either population so from that perspective that gives us a good signal that it should work well.

In Chinese patients despite the differences in and body mass.

I think from the standpoint of obesity and changes in diet and.

You know Triferic, we I mean, clearly we haven't run to a trial around diabetes and so forth, but I think we just we love what we love about Triferic is that it is very fuzzy logic and hemo dialysis patients are quite chronically inflamed.

And.

And you know in our view on as I stated our view on ferritin levels and.

And challenges in managing irons, and even the assays.

And this patient population.

Our art.

Brandon Folkes: They come with their share of issues.

They come with their share of issues. Right.

They come with their share of of issues right.

Stuart Paul: Right.

Brandon Folkes: So at the end of the day, the physiologic nature of how Triferic donates iron to transferrin and goes around the reticuloendothelial system, the macrophages, the liver.

So at the end of the day, the physiologic nature of how Triferic donates iron to transferrin and goes around the reticuloendothelial system, the macrophages, the liver.

So at the end of the day.

The physiologic nature of how Triferic donates iron to transparent.

And goes around the particular into failure will system. The macrophages liver go straight to the bone marrow is a very important.

Stuart Paul: Goes straight to the bone marrow is.

Goes straight to the bone marrow is.

Brandon Folkes: A very important aspect of being on the side of helping to potentially.

A very important aspect of being on the side of helping to potentially. Be.

Aspect of.

Being on the side of helping too.

Potentially.

Be a better much better therapeutic for these patients given the state of chronic inflammation that they have.

Ram Selvaraju: Be.

Brandon Folkes: A much better therapeutic for these patients, given the state of chronic inflammation that they have.

A much better therapeutic for these patients, given the state of chronic inflammation that they have.

That's a good answer doesn't makes a lot of sense.

Ram Selvaraju: That's a good answer. Definitely makes a lot of sense. And then, as we look at the NMPA filings, I was just wondering what some potential scenarios might be. If they come back and say that you need additional studies, what might those studies look like? And then how long would a submission process take? Should the regulatory material that you currently have be deemed sufficient?

[Analyst] (HC Wainwright): That's a good answer. Definitely makes a lot of sense. And then, as we look at the NMPA filings, I was just wondering what some potential scenarios might be. If they come back and say that you need additional studies, what might those studies look like? And then how long would a submission process take? Should the regulatory material that you currently have be deemed sufficient?

And then as we look at the NPK filings I was just wondering what some potential scenarios might be if they come back and say that you need additional studies what might those studies look like and then how long would a submission process take.

Sure the regular regulatory material that you currently have be deemed sufficient.

Yes. Thanks for the question. This angle I think at your as Stuart mentioned that the key next step for US there is to have a meeting with the NPK.

Angus Smith: Yeah, thanks for the question. It's Angus. You know, I think, you know, as Stuart mentioned, the key next step for us there is to have a meeting with the NMPA. I think that's going to be very determinative in terms of next steps. Our hope is we're putting the finishing touches on the data package to submit to them and request a meeting, which we're hopeful will come sometime later this year and that will help us determine what the next steps are. We remain hopeful that these two studies we've completed will be sufficient for a regulatory submission. If they're not, we'll solicit feedback from NMPA. But, you know, that's really kind of where we are at this stage.

I think thats going to be very determinant of income for next steps.

Our hope as were putting the finishing touches on the data package to submit to them and request the meeting.

Which we're hopeful will come sometime later this year and that will help us determine what the next steps are.

We remain hopeful that that these two studies, we've completed will be self sufficient for regulatory submission if they're not we'll solicit feedback from an mtpa.

But.

That's really kind of kind of where we are at this stage.

Angus Smith: And then, you know, our hope would be that if we can get a regulatory submission in relatively short order, that we're looking at an approval within 12 months or so.

And then, you know, our hope would be that if we can get a regulatory submission in relatively short order, that we're looking at an approval within 12 months or so.

And then our hope would be that that if we can get a regulatory submission and.

In relatively short order that we're looking at looking at that upper end approval within within 12 months or so.

From time sometime that from time of submission I should be should be clear.

Angus Smith: From time of submission. I should be clear.

From time of submission. I should be clear.

Right right.

Ram Selvaraju: Right, right. Then, Angus, I guess two more questions for you really quickly on the financials.

[Analyst] (HC Wainwright): Right, right. Then, Angus, I guess two more questions for you really quickly on the financials.

And then it gets I guess two more question for you really quickly on the financials.

When looking at the inventory reserve expenses I was wondering if you could talk about the trend in future quarters, and whether it was going to be a substantial variability between these different periods and then when we look at R&D spend just wondering what a steady state quarterly R&D would be now that some of the trials are winding down, but you might increase spending for the pediatric trial, if you initiate in the fourth quarter.

Ram Selvaraju: When looking at the inventory reserve expenses, I was wondering if you could talk about the trend in future quarters and whether there's going to be a substantial variability between these different periods. Then when we look at R&D spend, just wondering what a steady state quarterly R&D would be now that some of the trials are winding down. But you might increase spending for the pediatric trial if you initiate in the fourth quarter.

When looking at the inventory reserve expenses, I was wondering if you could talk about the trend in future quarters and whether there's going to be a substantial variability between these different periods. Then when we look at R&D spend, just wondering what a steady state quarterly R&D would be now that some of the trials are winding down. But you might increase spending for the pediatric trial if you initiate in the fourth quarter.

Sure. So so you know inventory reserves.

Stuart Paul: Sure.

Angus Smith: Sure. So, you know, inventory reserves, you know, if you look over the course of the last 18 months or so, you know, the large inventory reserve expense that we have been booked, that we've booked has been due to, you know, largely to exogenous events and, you know, sort of timing of launch. And so those, you know, there was a few quarters in 2018 when we had large inventory reserve exposure.

Angus Smith: So, you know, inventory reserves, you know, if you look over the course of the last 18 months or so, you know, the large inventory reserve expense that we have been booked, that we've booked has been due to, you know, largely to exogenous events and, you know, sort of timing of launch. And so those, you know, there was a few quarters in 2018 when we had large inventory reserve exposure.

If you look at over the course of the last 18 months or so does the large inventory reserve expense that we have been booked and weve booked has been due to.

Yes, largely to examine this events and sort of timing of launch and so.

Those see though there were a few quarters in 2018, when we had large inventory reserve expense.

And again it was related to decisions around.

Angus Smith: And again, it was related to decisions around separate reimbursement and TDAPA and things of that nature. I should highlight that inventory reserve expense is noncash. It reflects a reserve to inventory we have on hand that we've already paid for, but it's just reflective of our expectations for the product, for the sales volume, for Triferic as we go forward. So kind of predicting where that goes from quarter to quarter.

And again, it was related to decisions around separate reimbursement and TDAPA and things of that nature. I should highlight that inventory reserve expense is noncash. It reflects a reserve to inventory we have on hand that we've already paid for, but it's just reflective of our expectations for the product, for the sales volume, for Triferic as we go forward. So kind of predicting where that goes from quarter to quarter.

Around separate reimbursement and to DAP and things of that nature.

I should highlight that inventory reserve expenses non cash it reflects a reserve to inventory we have on hand.

That we've already paid for but it's just reflective of our expectations for the product for for the sales and sales volume for Triferic.

As we go forward, so kind of predicting where that goes from quarter to quarter.

Is is difficult, but in the in the absence of any sort exantus events or major changes to our forecast down there shouldn't be any significant down.

Angus Smith: is difficult, but in the absence of any sort of exogenous events or major changes to our forecast, there shouldn't be any significant.

is difficult, but in the absence of any sort of exogenous events or major changes to our forecast, there shouldn't be any significant.

Movement in the inventory reserve and we're down to I think about a million dollars, just north of $1 million or so of Triferic CPI on our books.

Angus Smith: Movement in the inventory reserve. We're down to, I think, about $1 million, just north of $1 million or so of Triferic API on our book.

Movement in the inventory reserve. We're down to, I think, about $1 million, just north of $1 million or so of Triferic API on our book.

Okay and regarding the R&D run rate going forward.

Ram Selvaraju: Okay. Regarding the R&D run rate going forward.

[Analyst] (HC Wainwright): Okay. Regarding the R&D run rate going forward.

Angus Smith: Yeah, so we haven't provided any expense reimbursement expense guidance, but what I'll say is, you know, we had R&D expense for Q2 was roughly $3 million. Reflected in that number was a $1.3 million NDA application fee, which obviously won't recur anytime soon. But you know, offsetting that will be increases in R&D expense related to both the ramp up of our pediatric trial and the continued ramp in our medical professional capabilities to support the launch of Triferic. So on one hand you've got an expense that goes away next quarter, but on the other hand there will be expenses that come on board to replace that. So without giving explicit guidance on R&D for the next several quarters, that's probably the best I can give you.

Yeah. So yeah, we haven't provided any expense reimbursement and expense guidance, but what I'll say is you know we had R&D expense for the second quarter was roughly $3 million.

Reflected in that number was at $1.3 million in da application fee, which obviously won't won't recur.

Anytime soon but offsetting that will be.

Increases in R&D expense related to.

Both the ramp up of our pediatric trial.

And.

The continued ramp in our medical.

Professional capabilities to support the launch of Triferic. So.

On one hand, you've got an expense that goes away next quarter, but on the other hand their build will be expenses that come on board to to replace that so without without giving explicit guidance on R&D.

For the next several quarters Thats, probably the best I can give you.

Perfect well thats, great. Congratulations guys on all the progress I look forward to future updates. Thanks. Thank you.

David Bouchey: Perfect.

[Analyst] (HC Wainwright): Perfect. Well, that's great. Congratulations guys on all the progress, and I look forward to future updates. Thanks.

Ram Selvaraju: Well, that's great. Congratulations guys on all the progress, and I look forward to future updates. Thanks.

Angus Smith: Thank you.

Again, ladies and gentlemen, if you have a question at this time. Please press Star then the number one key on attach telling children.

Operator: Again, ladies and gentlemen. If you have a question at this time, please press the star and the number one key on your touch-tone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Your next question comes from the line of Brandon Folkes from Cantor Fitzgerald. Your line is open.

Good question has been answered or you wish stream movies helpful. Thank you. Please press the pound key.

Your next question comes from the line of Brandon Folkes from Cantor Fitzgerald. Your line is open.

Hi, This is Brian on for Brandon Folkes. My first question. If you could provide some color on which types of centers have placed orders of dialysis triferic. Thanks.

Brandon Folkes: Hey, this is Brian on for Brandon Folkes. My first question, if you could provide.

[Company Representative] (Cantor Fitzgerald): Hey, this is Brian on for Brandon Folkes. My first question, if you could provide. Some color on which types of centers? Have placed orders of dialysis? Triferic. Thanks.

Stuart Paul: Some color on which types of centers?

Brandon Folkes: Have placed orders of dialysis?

David Bouchey: Triferic. Thanks.

Sure.

Angus Smith: Sure.

Stuart Paul: Sure.

Thanks for joining us today, and you know I'd say as I mentioned on the earlier comments, we've been targeting.

Brandon Folkes: Thanks for joining us today. You know, I'd say as I mentioned on the earlier comments, we've been targeting specific, single- and medium-sized dialysis centers in the early days of the launch.

Thanks for joining us today. You know, I'd say as I mentioned on the earlier comments, we've been targeting specific, single- and medium-sized dialysis centers in the early days of the launch.

Specific single and medium sized dialysis centers.

In the early days long so it's still very early days, we have a handful of accounts on board.

Stuart Paul: It's still very early days.

It's still very early days.

Brandon Folkes: We have a handful of accounts on board. So we do have a good array of accounts that are placing orders, learning how to transform their clinic into successful use of Triferic, and begin to really pick up the use as we move forward, hopefully into the rest of the year. I think with respect to the larger clinics, as I mentioned, with the IV Triferic PDUFA date out there, next year in March 2020, we would expect to move into some of the larger organizations who have really developed more, I would say, of an interest in the IV formulation. So, you know, singles and midsize at this stage.

We have a handful of accounts on board. So we do have a good array of accounts that are placing orders, learning how to transform their clinic into successful use of Triferic, and begin to really pick up the use as we move forward, hopefully into the rest of the year. I think with respect to the larger clinics, as I mentioned, with the IV Triferic PDUFA date out there, next year in March 2020, we would expect to move into some of the larger organizations who have really developed more, I would say, of an interest in the IV formulation. So, you know, singles and midsize at this stage.

So we do have a good array of accounts that are placing orders learning how to transform their clinic into successful use of triferic.

And begin to really.

Pick up the use as we move forward hopefully and to the rest of the year.

I think you know with respect to the larger clinics as I mentioned, you know with the Ivy Triferic.

PDUFA date out there next year in March of 2020, we would expect to move into some of the larger organizations, who have really developed more I would say of an interest on the Ivy formulation. So.

You know singles and mid size at this stage.

Great and then if you could just talk about some of the awareness and medical education efforts you have planned around dialysis Triferic and how you can leverage these ones to Ivy is approved thanks sure sure well and that was part of the rationale launching dialysate Triferic is we wanted to get out there and start building our medical education capabilities. Our goal is to transform the standard of care.

Ram Selvaraju: Great.

[Company Representative] (Cantor Fitzgerald): Great. And then if you could just talk. About some of the awareness and medical education efforts you have planned around Dialysate Triferic, and how you can leverage these once the IV is approved. Thanks.

Brandon Folkes: And then if you could just talk.

Stuart Paul: About some of the awareness and medical education efforts you have planned around Dialysate Triferic, and how you can leverage these once the IV is approved.

Angus Smith: Thanks.

Stuart Paul: Sure.

Stuart Paul: Sure. Sure.

David Bouchey: Sure.

Brandon Folkes: Well, you know, and that was part of the rationale in launching Dialysate Triferic: we wanted to get out there and start building our medical education capabilities. You know, our goal is to transform the standard of care in the treatment of anemia. We needed to get out there and start building our medical science liaison team, which we now have. Our MSLs are in the field, actively visiting centers and discussing the science and the medical side of the treatment. You know, you can't underestimate the amount of attention and time required to do this properly and do it in a focused way. You know, we're targeting the right centers where we feel that we can have an impact fairly quickly, get them on board, and move on to the next phases of this.

Well, you know, and that was part of the rationale in launching Dialysate Triferic: we wanted to get out there and start building our medical education capabilities. You know, our goal is to transform the standard of care in the treatment of anemia. We needed to get out there and start building our medical science liaison team, which we now have. Our MSLs are in the field, actively visiting centers and discussing the science and the medical side of the treatment. You know, you can't underestimate the amount of attention and time required to do this properly and do it in a focused way. You know, we're targeting the right centers where we feel that we can have an impact fairly quickly, get them on board, and move on to the next phases of this.

In the treatment of anemia and.

We needed to get out there and start building our medical science liaison team, which we now have our MSR sales are in the field.

Actively visiting centers and discussing the science and the medical side of the treatment. So.

You can't underestimate the amount of attention and time required to do this properly and do it in a focused way. So you know we're we're targeting the right centers, where we feel that we can have.

And impact fairly quickly get them onboard and move on to the next.

Next phases of this.

Great Thats my questions on yes.

Ram Selvaraju: Great.

[Company Representative] (Cantor Fitzgerald): Great. That's my questions. Congrats on the quarter and thanks for answering my questions.

Stuart Paul: That's my questions. Congrats on the quarter and thanks for answering my questions.

Congrats on the quarter and thanks for answering my questions.

Thank you thanks for joining us.

David Bouchey: Thank you.

Stuart Paul: Thank you. Thanks for joining us.

Brandon Folkes: Thanks for joining us.

I'm showing no further question at this time I would now like to change the conference back to you as CEO Paul.

Operator: I am showing no further questions at this time. I would now like to turn the conference back to our CEO, Stuart Paul.

Okay.

David Bouchey: Thank you.

Stuart Paul: Thank you.

Okay, everyone. Thank you so much for joining us. This afternoon, we'll be in touch and look forward to talking with you on the next conference call.

Brandon Folkes: Okay, everyone, thank you so much for joining us this afternoon.

Okay, everyone, thank you so much for joining us this afternoon.

Stuart Paul: We'll be in touch and look forward.

We'll be in touch and look forward.

Brandon Folkes: To talking with you on the next conference call.

To talking with you on the next conference call.

Ladies and gentlemen. This concludes today's conference. Thank you for your participation and have a wonderful day you may all disconnect.

Operator: Ladies and gentlemen, this concludes today's conference. Thank you for your participation, and have a wonderful day. You may all disconnect.

Q2 2019 Earnings Call

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