Rockwell Medical Inc (RMTI) 2021 Q2 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to the Rockwell Medical Q2 2021 Results Call. (Operator Instructions). As a reminder, this conference is being recorded.

At this time, I would like to introduce Jason Finkelstein, Investor Relations. Please go ahead.

Good afternoon. This is Jason Finkelstein of Argot 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 Skibsted, Executive Vice President, Chief Financial Officer and Chief Business Officer. Dr. Marc Hoffman, Chief Medical Officer; and Tim Chole, Senior Vice President of Sales and Marketing will be available for Q&A.

Before we begin, I would like to remind everyone that this conference call and webcast will contain forward-looking statements about the company within the meaning of the federal securities laws, including, but not limited to, the types of statements identified as forward-looking in our quarterly report on Form 10-Q that was filed today, our annual report on Form 10-K that was filed on March 31, 2021, and our subsequent periodic reports filed with the SEC, which will be 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 can cause actual results or outcomes to differ materially from those expressed in or implied by such forward-looking statements are discussed in greater detail in our periodic reports filed with the SEC.

This conference call can be accessed on Rockwell Medical's Investor Relations web page. This call is being recorded for audio rebroadcast and can also be accessed on the same web page.

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

Thank you, Jason, and good afternoon, and thank you for joining us. In the second quarter of 2021, we continue to execute against our strategy to accelerate growth by combining the solid foundation, strength and reputation of our dialysis business with the development of our FPC platform in multiple disease states. Our concentrates business continues to perform to our expectations, both domestically and internationally. We are in the process of exploring with our 2 major customers, expanding this business geographically in the U.S.

As you may recall, in June, we submitted a pre-IND meeting request to FDA to gain feedback on our Phase II clinical trial proposal for FPC in home infusion. The proposed randomized placebo-controlled study is expected to evaluate 2 dosing regimens, 1 for treatment and the other for maintenance of FPC versus placebo. We have received a written response to our pre-IND submission and are working with FDA to seek clarification on and to refine study design elements for our planned Phase II study of FPC in patients with iron deficiency anemia, receiving long-term home infusion therapy. In the meantime, we continue to work on logistics and preparatory aspects of the trial. Our comments today regarding this planned study and potential indication are based on our current assumptions regarding the regulatory requirements for the trial, which are still being discussed with FDA.

Home infusion therapy is a rapidly growing segment of health care, a service model that allows patients requiring regular infusions of medications to be treated in the comfort of their own homes. For clarity, when we refer to home infusion, we are not referring to home hemodialysis. Home infusion therapy began growing rapidly about a decade ago, driven by improved technology that enabled a number of therapies to be safely given in a patient's home. It has proven to be a cost-effective and convenient alternative to infusion services provided at hospitals or outpatient clinics. Its growth has been further fueled recently by COVID-19 pandemic, which has caused patients and providers to rethink the risk-benefit trade-offs associated with bringing patients into clinics for regular infusions.

And as you might expect, patient satisfaction is extremely high when they are able to avoid visiting the clinic on a regular basis to receive IV infusions. Many of the patient groups on home infusion therapy are receiving treatment for chronic diseases that are associated with the risk of iron deficiency anemia, or IDA, a comorbidity that is associated with extreme fatigue and if left untreated, can lead to serious health risks, such as a compromised immune function and heart failure. And yet, the current treatment approach for IDA for many of these patients is a broken process. Oral iron is inexpensive but poorly tolerated, and in most cases not adequate to address moderate-to-severe IDA. Traditional IV iron products or iron carbohydrate complexes are available but are rarely given in the home infusion setting due to concerns about the risk of serious hypersensitivity reactions. There is the option to bring the patient into a clinic for infusions of IV iron, but this is costly and inconvenient, which is why it is rarely done. As a result of these limitations, IDA in these patients tends to go untreated. When the anemia progresses in severity, often a transfusion of blood is the only remaining treatment option, introducing an entirely new level of expense and risk to the patient.

In short, an unmet need exists for a parenteral iron product that is suitable for infusion at home to address the pervasive issue of IDA in patients receiving home infusion therapies. We believe the characteristics of FPC make it potentially well suited for this application.

In addition to home infusion, we also have pipeline activities associated with an additional and completely different application of FPC. The treatment of iron deficiency in hospitalized patients with acute heart failure, independent of anemia and with the therapeutic goal of improving cardiac symptoms and function by increasing iron availability to the heart. More than 1 million people in the United States are hospitalized each year for acute heart failure.

Clinical improvement in heart failure has already been demonstrated with traditional forms of IV iron in clinical trials in the outpatient setting. We believe that FPC may deliver rapidly bioavailable iron to the heart and thereby improved cardiac energetics during hospitalization. This event could help patients recover faster, resulting in shorter hospital stays and perhaps reduce the risk of 30-day readmissions. If so, these outcomes could translate into a meaningful reduction in health care costs and human suffering. We expect to communicate with the FDA later this year regarding a potential development pathway for this indication.

I'll now turn to our business development accomplishments within the quarter as they pertain to our existing dialysis business, which is comprised of revenue from both Triferic and concentrates. Specifically, during the quarter, we continued our international expansion, which we believe will be a strong source of revenue and value in the coming years as international dialysis markets are not capitated as the U.S. market is. For example, in April, Triferic AVNU received the notice of compliance or marketing approval from Health Canada for the replacement of iron to maintain hemoglobin in adult patients with hemodialysis-dependent chronic kidney disease. The approval of Triferic AVNU by Health Canada is the first international regulatory approval for our intravenous therapy and marks key progress for our strategy to bring Triferic to markets around the world.

There are more than 20,000 Canadians undergoing dialysis, and we expect Triferic AVNU to be an important new treatment option for dialysis clinics and the patients they serve in this region. In June, we entered into an exclusive license agreement with Drogsan Pharmaceuticals for the rights to commercialize Triferic AVNU in Turkey. Drogsan is a leading pharmaceutical company in Turkey with an established presence in the nephrology space. With approximately 65,000 patients receiving hemodialysis annually, Turkey represents a significant and expanding market opportunity for Rockwell. Also in June, we extended our agreement with long-term distribution partner, Nipro Medical Corporation to continue to distribute our dialysis concentrates to numerous countries in Latin America and the Caribbean, further solidifying our international footprint.

Our net sales for Triferic in the U.S. dialysis market were flat in Q2 compared to the first quarter of 2021. While the net number of active and ordering clinics increased, a number of clinics that were Triferic customers had to discontinue use due to being acquired by large dialysis organizations as well as due to other ownership or management changes. Triferic continues to experience headwinds, limiting our ability to accelerate adoption in the U.S. dialysis market. As we've previously disclosed, Triferic is sold into a heavily competitive space with bundled offerings from our competitors and a capitated reimbursement scheme.

Today, more than ever before, changes in medical practice and dialysis are slow to occur and are evidence based. A number of dialysis organizations have demonstrated genuine interest in adopting Triferic, but have been reluctant to proceed in the absence of published real-world evidence replicated in multiple different clinics demonstrating the clinical benefit and cost savings associated with Triferic.

We continue to generate these real-world data, which is something that takes time. Two single-center studies were recently published, each covering 2 years of retrospectively collected clinical data. One study is from a large academic facility and the other is from an independent dialysis clinic. Both studies show remarkably similar trends in the improvement of IV iron and ESA utilization with hemoglobin stability after the adoption of Triferic. We are encouraged as each new data cohort further validates the value proposition of Triferic.

At present, we are finalizing a manuscript on the largest data cohort we have conducted to date. This includes 14 clinics from a midsized dialysis organization that participated in this pilot implementation. We anticipate also presenting the preliminary data from this project at this year's ASN meeting.

There are several important trends that emerge from these real-world experiences. But perhaps the most important, which is clearly shown in the 14 clinic pilot study, is that a protocol which incorporates FPC prospectively and deliberately for the maintenance of hemoglobin is critical to achieving the potential clinical and economic benefits of reduced IV iron on ESL utilization. We are committed to continuing our efforts to generate additional data and expect to see more publications in the future. To be clear, we continue to believe Triferic is a safe, efficacious, important and innovative therapeutic for the maintenance of hemoglobin in patients on dialysis. Furthermore, we now have a growing body of real-world evidence that is repeatedly validated to clinical, operational and financial benefit to clinics. While we are committed to the continued commercialization of Triferic in the U.S., we will be intentional about future commercial spending as we acknowledge the challenges we are facing in the present environment.

I'll conclude by saying that considering the large opportunities ahead of us, and the steady revenue we have seen from our dialysis business, which includes sales of our concentrate products, I consider Rockwell Medical, very much a development-stage biopharmaceutical company with a stable base of revenue-generating products.

With that, I'll turn the call to Russell Skibsted for a brief financial overview. Russell?

Thanks, Russell. As Russell mentioned, in the first quarter, we continued to execute against the strategy we laid out to accelerate growth by combining the solid foundation, strength and reputation of our dialysis business with a high-growth potential from therapeutics generated from our FPC platform in multiple disease states outside of dialysis. We ended the second quarter with cash, cash equivalents and investments of approximately $41 million. We believe we remain in a strong financial position to drive our company's strategic initiatives. Net cash used in operating activities was $4.9 million for the quarter, which compared to $12.5 million in the first quarter.

As I mentioned on our last call, our Q1 use of cash was higher than normal due to both seasonal and some timing factors. Our use of cash in the second quarter was in line with our expectations, reflecting both the seasonal and timing impacts as well as some of the impact of our efficiency initiatives that we discussed as well.

During the second quarter, our net sales were $15.1 million. Net sales of hemodialysis concentrates rates were approximately $14.9 million. Our sales have remained roughly flat over the last 4 quarters and slightly lower than the prior year, primarily due to the effects of COVID on dialysis population served by our customers in the U.S. and which were especially pronounced in some international markets. We expect to see improved sales in the future as patient populations, again, grow and as we begin implementing growth initiatives with our partners, both in product and geographic expansion. Total sales of Triferic were approximately $273,000, roughly a 15% increase versus the sales of Triferic in the second quarter of 2020, but essentially flat versus the first quarter of this year.

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

Thanks, Russell. Our company has multiple near-term commercial and development milestones. Including the expected progress in the global expansion of Triferic as well as clinical development opportunities for our FPC platform. We are working to advance our dialysis business alongside the exciting opportunity to develop FPC for home infusion in patients with IDA and the potential program in hospitalized patients with acute heart failure.

Thank you for joining our call today and for your interest in Rockwell Medical. I would like to thank my team for their continued hard work and fortitude. I have every conviction that our proprietary FPC platform can yield important new innovations before long. I want to sincerely thank our shareholders for their patience and belief in our efforts to unlock the value of our company.

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

(Operator Instructions)

Our first question comes from the line of Brandon Folkes with Cantor Fitzgerald.

So can you just elaborate on the extent of the clarifications on the home infusion trial? Do you believe you're close to an agreement there? Just any color in terms of how we should think about the trial start date. And then secondly, a lot of discipline on the G&A line. Is this something we should think of as the base going forward?

Brandon, I'll take your first question. We still anticipate pending these discussions with FDA, we should be able to initiate the trial this year. And there's actually a number of issues where we really want to seek clarity. These days, it's all done by letters and documents and e-mail and you don't really get a chance to have a face-to-face or even voice-to-voice dialogue where you can ask these questions real time. So unfortunately, we have to do it like this. And we intend to ask the questions and get the answers and take it from there. As far as your other question, can you just repeat that? Brandon?

I think he probably went on mute, but I think it was regarding the reduction in G&A expenses that we shared in the second quarter and whether or not we should be -- whether or not we're looking at that as being a giving guidance that that's the new normal in terms of our spend. And what -- it's a great question, Brandon, but we're not giving guidance at this time with respect to the expenses other than to say that we are literally going through the entire supply chain and all of the functions within the company to make sure that we're focusing on the expenses and expenditures that are necessary in order to deliver the value that we're doing, both in terms of the R&D programs, the dialysis business. And so we're -- luckily, we're being able to show some of that progress to date.

It's too early to tell what the -- what we should be looking at going forward. I will say, though, that we are really making some great progress in the supply chain analysis that we're doing with respect to primarily the concentrate business but really throughout the whole dialysis business. And we are really, I think, optimistic about what we're going to be able to achieve there, both in terms of not just operating efficiencies but also in terms of providing opportunities where we're going to be able to hopefully grow the business, with simple things, maybe like booking third-party freight or empty trucks that are returning after making deliveries, looking at things like -- and I've said this before, contract manufacturing opportunities. But we're also talking to our customers about going out and actually supplying a very large portion of the country that we're not currently supplying. So we think there's a lot of opportunity there, but it's a little bit premature for me to give much color on those initiatives just yet. So hopefully, that answered your question.

Thank you. Our next question comes from the of Ram Selvaraju with H.C. Wainwright.

This is [Muz] on for Ram. I have a few. Firstly, centering around the FPC Phase II trial. Are you considering the possibility of excluding COVID-19 patients? We saw a recent study published this year, which showed the prevalence of anemia in hospitalized patients with COVID-19 and now it was high and associated with poor outcomes. And if you do decide to include COVID-19 patients, do you think there's value in performing some kind of post hoc analysis of the group?

Marc, do you want to take it?

Sure. I'll take a stab at that. So thank you for the question. To be honest with you, we've not yet actually considered the impact of COVID-19. We understand that it will have a material impact on recruitment, and we've actually factored that into our clinical trial development plan? And part of it, as you've heard from the previous discussions was the benefit of home infusion is less health care contact. So we've built that into the plan. As far as the impact of COVID-19 as a co-factor, as I said, that's not yet been factored in, the FDI has also not issued any kind of guidance with regard to our product on the use in COVID-19. I know in a number of clinical trials over the past year, there have been both subgroup and post-hoc analysis of COVID-19 patients. So I think it's something that we'll seek further advise on.

Okay. That's very useful for us. And then are you able to reveal details of any educational materials you may be developing for patients who are going to be on this trial, this FPC trial?

Not yet. That will be part of the protocol itself.

Okay. And then if I may squeeze a couple more in. We've seen reports of home dialysis supplies not being delivered into people's homes and instead just being kind of left outside due to kind of the abundance of caution and LIO-COVID-19. Do you see this kind of as an issue in your trial? Or is it...?

What I will say -- that's a good point. What I will say is that with the pharmacies and so on that we've talked about that in the home health care people that we've talked to that will be participating in the trial. This has not been an issue for them. At least not now, not up to now.

Okay. We're glad to hear that. And then just finally, are you able to update us on any potential new partnerships for the commercialization of Triferic in additional ex U.S. territories?

Beyond what we've discussed already, no, that's what we have right now. Obviously, we're talking to interested parties in other countries, but those discussions are still ongoing.

That concludes the Q&A session. I would now like to turn the call back to Dr. Ellison for closing remarks.

All right. Well, thank you all for joining us, and have a good evening.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.