Rockwell Medical, Inc.

Good afternoon, ladies and gentlemen, and welcome to the Rockwell Medical first quarter 2022 results call. At this time, all participants are in a list-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question at that time, please press star 1 on your telephone. As a reminder, this conference call is being recorded. At this time, I would like to introduce Jason Fekelstein. In special relations, please go ahead.

Good afternoon. This is Jason Finkelstein of Argo Partners, the investor relations representative for Rockwell Medical. Joining me from Rockwell Medical on today's call are Dr. Russell Ellison, President and Chief Executive Officer, and Russell Skipsed, Executive Vice President, Chief Financial Officer, and Chief Business Officer. Dr. Mark Hoffman, Chief Medical Officer, and Tim Cole, Senior Vice President of Sales and Marketing, will be available for Q&A. Before we begin, I would like to remind everyone that this conference call and webcast will contain forward-looking statements about the company within the meaning of the federal securities laws including, but not limited to, the types of statements identified as forward-looking in our annual report on Form 10-K and our subsequent periodic reports filed with the SEC, which are all available on our website in the investor relations section. These statements are subject to risks and uncertainties that could cause actual results to differ. Please note that these forward-looking statements reflect our opinions and expectations only as of today. Except as required by law, we specifically disclaim any obligation to update or revise these forward-looking statements in light of new information or future events. Factors that could cause actual results or outcomes to differ materially from those expressed in or implied by such forward-looking statements are discussed in greater detail in our periodic reports filed with the SEC. This conference call could be accessed on Rockwell Medical's Investor Relations webpage. The call is being recorded for audio rebroadcast and also be accessed on the same webpage. At this time, I would like to turn the conference call over to Rockwell Medical's President and Chief Executive Officer, Dr. Russell Ellison. Russell?

Thank you, Jason. Good afternoon, and thank you for joining us. Rockwell Medical is a biotech company. but with revenue, and that makes us fairly unique. We have a proprietary drug technology called ferric pyrophosphate citrate, or FPC, which is a next-generation therapy for iron deficiency. Iron deficiency is a significant problem in many different patient populations. We believe we have a significant opportunity with FPC in the rapidly growing area of home infusion therapy, where we are confident that there's a large unmet need for effective ion therapy, that FPC can effectively address that unmet need, that FPC can be safety administered at the home setting, and based on our prior experience, we can efficiently navigate the clinical and regulatory process. Finally, we are reengineering our dialysis products business. which will generate a gross profit for the first time in several years. This is a business that Rockwell was originally founded on. This is a business that we believe may be able to generate a modest amount of cash flow to help fuel our growth opportunities for FPC. We have made meaningful progress to improve this business, which we expect will reduce our cash burn in dialysis by about 15 million dollars on an annualized basis. With respect to home infusion therapy, we are pleased to be soon beginning our Phase II clinical trial with FPC in patients receiving infusion therapy in the home setting. Healthcare is increasingly shifting to the home. It was recently reported that Medicare is providing funding for states to expand home and community-based healthcare services and to increase access McKinsey & Company reported in February that up to $265 billion worth of care services for Medicare beneficiaries could shift to the home by 2025. This rapid growth is driven by a lower cost of care and a higher patient satisfaction. Home infusion therapy, in which various medications are given via IV infusion at home rather than an infusion center, is a rapidly growing segment of home health care. Many patients that are receiving infusion therapy at home suffer from diseases like GI disorders, heart disease, and cancer that are associated with iron deficiency, which is extremely difficult to treat with the traditional forms of iron. Iron deficiency is serious because iron is critically important for the body. It's a necessary building block for red blood cells, and it serves as a fuel for muscle energetics, both for organs like the heart, as well as skeletal muscle. Mild iron deficiency may sometimes be treated with oral supplements or dietary changes, but moderate to severe iron deficiency is typically accompanied by inflammation, which blocks the absorption of oral iron. Untreated iron deficiency anemia is associated with serious health complications, including organ dysfunction, infection, extended hospital stays, severe fatigue, and depression. Prescription IV iron is the most common treatment for addressing more severe cases, but the current products have limitations. They require an outpatient visit for administration and are associated with the risk of rare but severe reactions. Because of inflammation, the iron can be stored in the liver and not be readily accessible to tissues, so high doses are required. However, even with the limitations of current iron therapy, the global IV iron market exceeds one billion annually. In December, we received feedback from the FDA regarding our investigational new drug application in support of our proposed phase two trial of FPC as home infusion therapy. The study proposal includes a novel dosing regimen one that is fine-tuned to match the preferences of caregivers and patients receiving health care at home. FDA requested additional preclinical data related to the chemical stability and the microbiology of the administration materials that we proposed for the study. We have successfully completed these lab experiments, and on May 6, we provided FDA with the requested supplemental data. Rockwell must wait 30 calendar days from the date of submission before initiating any clinical trials as the FDA reviews the submission. We do remain confident in the potential of FPC and are prepared to move forward with the initiation of the Phase II trial in June, pending the review and clearance of our application by the FDA. Our planned Phase II trial in home infusion will be the first randomized controlled trial of IV iron ever done in the home setting. a true blue water opportunity. For the development of FPC in this indication, we plan to leverage the predictable kinetics of the drug along with its excellent safety profile, which has been established in randomized trials and subsequently in more than 1.5 million doses administered in hemodialysis patients in clinical practice. This trial will be our first step towards bringing FPC to a broader group of patients. separate and distinct from the dialysis population. We estimate the total addressable market for FPC in the home infusion setting to be over $600 million in the U.S. alone. Now turning to dialysis, we are reengineering our dialysis concentrate business, which in the second half of this year is expected to generate a gross profit for the first time in several years. This is a business that we believe may be able to generate a modest amount of cash flow in the future to help fuel our growth opportunities for FPC. We have made meaningful progress to improve this business, which we expect will reduce our cash burn from these activities by about $15 million on an annualized basis. In addition, going forward, we have some protection against inflationary price increases in certain key supply costs. The supply chain problems that the U.S. has experienced over the past couple of years have had a severe impact on the supply of concentrates to dialysis clinics, causing some clinics to encounter serious shortages. However, Rockwell Medical has been working to revise certain terms of its supply contracts with customers in an effort to stabilize its concentrates business. And last month, we announced an amended and expanded agreement to supply our concentrate products to our longtime customer, and partner, Davida, Inc., which is a leading provider of kidney care in the U.S. with a market capitalization of approximately $10 billion. The amended supply agreement is designed to enable Rockwell Medical's concentrate business to potentially operate profitably in the future with the aim of building a steady, reliable supply of life-saving concentrates in the U.S. With Dialysis Concentrates accounting for approximately 98% of our 2021 revenue and with approximately 90% of our 2021 sales coming from distributors and customers for use in the U.S., this new agreement is a significant milestone for Rockwell. In addition to the revised agreement, DaVita will also invest up to $15 million in Rockwell. $7.5 million has already been funded. and is convertible at $1 per share. DaVita may potentially invest another $7.5 million. Next, I'll turn to our pharmaceutical products, Triferic and Triferic Avenue, which is ferric pyrophosphate citrate for use in dialysis patients. Since the commercial launch of Triferic in 2019 and the launch of Triferic Avenue in 2021, market adoption has been limited. Despite our sustained efforts to market the products, sales in the U.S. have not met our expectations, especially considering what we believe is a differentiated product profile. Dialysis is paid for under Medicare's bundled and capitated reimbursement scheme, which discourages clinics from adopting innovative products. We also face significant competition from other forms of IV iron, which have been well established in the market. Due to these headwinds, we have curtailed our investment in the promotion of Triferic and Triferic Avenue in the U.S., and instead have been seeking a commercial partner for these products that has a more diverse portfolio and with the commercial horsepower that can drive Triferic adoption. For the right company, we believe that Triferic and Triferic Avenue have strong potential to grow. In the meantime, Triferic and Triferic Avenue continue to be supported by Rockwell Medical, and are commercially available to clinics and patients. Despite our challenges with these products domestically, we believe that international sales of Triferic can ultimately be a strong source of revenue and value in the coming years, as dialysis payer models in many countries outside the US are more accommodating for innovative products. Our international partners continue to make solid progress with Triferic. In South Korea, Jail Pharmaceutical received regulatory approval in January from the Korean Regulatory Authority and is preparing for commercial launch. In Turkey, our partner Drogasan has initiated the process required to gain regulatory approval from the Turkish authorities. In China, our partner Wanbang Pharmaceuticals completed patient enrollment ahead of schedule in its phase three study. And our partner in India, Sun Pharma, has a clear path forward with guidance from the regulatory authority and anticipates launching the required clinical trial in this quarter. I'm pleased with all the progress we have made in a short period of time. We will continue to work to bring value to the healthcare community, to patients, and to our shareholders. With that, I'll turn the call over to Russell Skivsted, our Chief Financial Officer and Chief Business Officer, for a brief financial overview. Russell?