Your kidneys are responsible for filtering impurities out of your blood. If one day your kidneys stop working, you can get your blood filtered via a robot kidney. This process, known as dialysis, is something half-a-million people in the US do several times a week.
Dialysis is great for filtering blood, but it can cause anemia and iron deficiency because you lose a lot of blood during repeated dialysis. So you need iron to prevent anemia. Should you take iron pills? Iron serum? Intravenous Iron? These are all options.
Rockwell Medical $RMTI is a Michigan company with a treatment for anemia caused by dialysis, and the company has an FDA approval decision date (PDUFA) on March 28, 2020.
History of the Company
Rockwell Medical is pretty old for a pharmaceuticals company, getting its listing on the Nasdaq in 1998. Since then, the company has become the second-largest supplier of dialysis concentrates (the salt and sugar solution used to filter the blood in dialysis) in the US. However, selling concentrates is not a huge market, and this most recent quarter they had revenues of only $15.3 million.
In 2015, the company got FDA approval to sell its anemia management drug called Triferic. Triferic is sold directly to dialysis centers and those dialysis centers are encouraged to mix the drug into the dialysate before administering it to patients. Here’s a video describing how this all works.
Video on how to mix Triferic into dialysate from Triferic.com
After launching in September 2015, Triferic has had a rough time commercially. For 3 years the drug had $0 in sales. This company soon become the object of ridicule on Twitter. Here’s StatNews reporter @AdamFeuerstein in a tweet from 2017.
In 2018 the company fired its CEO and hired new CEO Stuart Paul in an effort to turn things around. This proved to be a comedy-of-errors as the former-CEO tried to un-fire himself and a power struggle ensured. This is covered in more detail by StatNews’s article – A deeply troubled drug company fires its CEO, who then unfires himself. Comedy, chaos ensue.
This most recent quarter in March 2020, the company reported sales of Triferic of only $200k.
The Drug with the Catalyst
Rockwell Medical is looking to get a new formulation of Triferic, called IV Triferic, FDA approved on March 28th. IV Triferic was designed to be administered intravenously instead of being mixed with the dialysate. FDA approval would allow dialysis centers more flexibility in administering the drug and hopefully lead to larger sales.
Rocky Stock History
Over this past year, the stock is down 66% due mostly to stock dilution. Here’s a rundown.
- Rockwell does a secondary offering for $17.5 million worth of stock at $3. Stock drops by 47% after the announcement.
- Rockwell announces a supply agreement with Sun Pharma for commercialization of Triferic in India. Stock jumps 17%.
- Rockwell raises another $7.5 million at $2.35 in a secondary offering. Stock drops by 14%.
- Rockwell reports earnings, revenues were $15.5 million which were less than the same period last year. Sales of Dialysate Triferic were $200k. Stock drops 24%.
Rockwell Medical still loses about $24 million a year, so until sales of Triferic pick-up, Rockwell will need to continue to dilute to run operations. Currently, the company is valued about 2x sales.
Investors are hoping for an FDA approval for Rockwell’s drug IV Triferic, however, we don’t expect that this approval will move the stock in a significant way. After approval, if Rockwell can make meaningful sales, that could certainly bring value to the company, and to shareholders.
- Stock: Rockwell Medical $RMTI
- FDA Approval Date: March 28, 2020
- Catalyst Score: 1/5
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