Item 2. Management’s Discussion and Analysis
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and related notes in “Item 1. Condensed Consolidated Financial Statements”. References in this report to the “Company,” “we,” “our” and “us” are references to Rockwell Medical, Inc. and its subsidiaries.
Forward-Looking Statements
We make forward-looking statements in this report and may make such statements in future filings with the Securities and Exchange Commission, or SEC. We may also make forward-looking statements in our press releases or other public or shareholder communications. Our forward-looking statements are subject to risks and uncertainties and include information about our expectations and possible or assumed future results of our operations. When we use words such as “may,” “might,” “will,” “should,” “believe,” “expect,” “anticipate,” “estimate,” “continue,” “could,” “plan,” “potential,” “predict,” “forecast,” “project,” “intend,” or similar expressions, or make statements regarding our intent, belief, or current expectations, we are making forward-looking statements. Our forward looking statements also include, without limitation, statements about our liquidity and capital resources; our plans and ability to successfully commercialize our products; our timing and ability to obtain add-on reimbursement for our products; our ability to successfully launch FDA approved Triferic AVNU; whether we can successfully execute on our business strategy and development of new indications; and statements regarding our anticipated future financial condition, operating results, cash flows and business plans.
While we believe that our forward-looking statements are reasonable, you should not place undue reliance on any such forward-looking statements, which are based on information available to us on the date of this report or, if made elsewhere, as of the date made. Because these forward-looking statements are based on estimates and assumptions that are subject to significant business, economic and competitive uncertainties, many of which are beyond our control or are subject to change, actual results could be materially different. Factors that might cause such a difference include, without limitation, the risks and uncertainties discussed in this report, “Item 1A — Risk Factors” in our Form 10-K for the year ended December 31, 2019 and from time to time in our other reports filed with the SEC, including in this Form 10-Q.
Other factors not currently anticipated may also materially and adversely affect our results of operations, cash flow and financial position. There can be no assurance that future results will meet expectations. Forward-looking statements speak only as of the date of this report and we expressly disclaim any intent to update or alter any statements whether as a result of new information, future events or otherwise, except as may be required by applicable law.
Overview and Recent Developments
We are a biopharmaceutical company dedicated to transforming iron deficiency and iron deficiency anemia and improving outcomes for patients across the globe, with an initial focus on ESKD. We are also a manufacturer of hemodialysis concentrates for dialysis providers and distributors in the United States and abroad. We supply the domestic market with dialysis concentrates and we also supply dialysis concentrates to distributors serving a number of foreign countries, primarily in the Americas and the Pacific Rim. Substantially, all of our sales have been concentrate products and ancillary items, though we initiated commercial sales of our proprietary therapeutic, Triferic Dialysate, during the second quarter of 2019.
We are focused on developing our proprietary ferric pyrophosphate (“FPC”) therapeutic platform, and the first product developed from this platform is Triferic, the first-FDA approved product for the replacement of iron and maintenance of hemoglobin in adult hemodialysis patients. Our mission is to develop and commercialize the FPC platform to transform the treatment of iron deficiency and iron deficiency anemia in a wide variety of disease states across the globe while improving patients’ lives. Accordingly, as an initial step, we are building the foundation to become a leading medical and commercial organization in the field of dialysis.
Triferic
Triferic is the Company’s first proprietary iron therapy from the FPC therapeutic platform that replaces iron and maintains hemoglobin in dialysis patients without increasing iron stores. Triferic Dialysate was the first FDA approved product indicated to replace iron and maintain hemoglobin concentration in adult HDD-CKD hemodialysis patients. On March 27, 2020, the FDA approved Triferic AVNU, a novel intravenous formulation of Triferic that would be used for the same indication. Descriptions of Triferic Dialysate and Triferic AVNU are set forth below.
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Triferic Dialysate
Triferic Dialysate, our dialysate formulation of Triferic, received FDA approval in 2015 and remains the first FDA-approved therapy indicated to replace iron and maintain hemoglobin in adult hemodialysis patients. Triferic Dialysate received a reimbursement J-code on January 1, 2016 from the Centers for Medicare & Medicaid Services (the "CMS"), providing that Triferic Dialysate would be reimbursed for administration to dialysis patients within the existing fixed-price “bundle” of payments that CMS provides to dialysis providers. On April 26, 2019, pursuant to a request we submitted earlier in 2019, we were notified of a preliminary recommendation by CMS to grant our powder packet formulation of Triferic Dialysate a separate J-Code, which became effective on July 1, 2019.
In June 2018, the Company determined, based on feedback provided from CMMI, that Triferic Dialysate was unlikely to obtain add-on reimbursement in the near term. As a result, the Company changed its commercialization strategy to plan for the commercial launch of Triferic Dialysate with reimbursement within the bundle of payments to dialysis providers, while continuing to develop Triferic AVNU (discussed below). We commercially launched Triferic Dialysate in May 2019.
Triferic AVNU (formerly I.V. Triferic)
We are also developing Triferic AVNU, an intravenous injection formulation of Triferic, for use by hemodialysis clinics in the United States as well as international markets. On March 27, 2020, we received FDA approval for Triferic AVNU, and we intend to initiate a sample evaluation program for Triferic AVNU during the third quarter of 2020 with commercialization expected to follow in the fourth quarter of 2020. Triferic AVNU will be reimbursed within the existing fixed-price bundle of payments that CMS provides to dialysis providers.
While we intend to market and sell Triferic Dialysate and Triferic AVNU directly in the United States, our international strategy is to partner with and license these products to established companies in other regions of the world to assist in the further development (primarily clinical trials and regulatory activities), if necessary, and commercialize in those regions. We continue to pursue international licensing opportunities in a number of countries and specific regions.
Dialysis Concentrates
We manufacture, sell, deliver and distribute hemodialysis concentrates, along with a line of ancillary dialysis products abroad. We use Baxter as our exclusive marketer and distributor in the United States and in select foreign markets. Dialysate concentrates accounted for approximately 96% of our revenues for the year ended December 31, 2019, with ancillary products and Triferic accounting for most of the remainder. We receive a pre-defined gross profit margin on our concentrate products sold pursuant to the Baxter Agreement, subject to an annual true-up of costs.
Calcitriol (Active Vitamin D) Injection
Calcitriol, an active Vitamin D injection for the management of hypocalcemia in patients undergoing chronic hemodialysis, is FDA approved under an Abbreviated New Drug Application ("ANDA"). To date, we have not commercially launched Calcitriol. Following a strategic review of this product, including pricing, commercial distribution and marketing, manufacturing efficiencies and capacity (including potential capital investment), we have determined commercialization of Calcitriol in the United States would not be viable at this time. The decision was based, in part, on the fact that prevailing market prices for similar Vitamin D products are lower than our cost to produce Calcitriol on a dose-equivalent basis, and as a result, it would be difficult for us to market Calcitriol profitably. As a result of this decision, we recorded an inventory reserve reflecting the remainder of our Calcitriol inventory. As of June 30, 2020, this reserve totaled $0.7 million. We are in the process of disposing of all inventory and in March 2020, we notified the FDA of our intention to withdraw the ANDA. On May 4, 2020, the ANDA was withdrawn.
Clinical Development
Although Triferic is approved for commercial sale in the United States, it is not approved for sale in other major markets globally. We have received regulatory guidance from the European Medicines Agency ("EMA") regarding the clinical studies that are needed to file for approval of Triferic AVNU in Europe. At the present time, we do not intend to commence these clinical studies, absent finding a development partner in Europe or raising additional capital. In conjunction with our licensee in China, Wanbang Biopharmaceutical, Co., Ltd. ("Wanbang"), we completed two clinical pharmacology studies in China during 2019. We expect Wanbang to initiate an additional clinical study during 2020 that is required to support a submission for regulatory approval
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in China. In addition, pursuant to the licensing agreement with Sun Pharmaceutical Industries Ltd. ("Sun Pharma"), our licensee in India, meetings between Sun Pharma and the regulatory authorities in India have been initiated. Sun Pharma continues to follow up with the Indian regulatory authorities to determine the requirements for approval of Triferic in India. See "Item 1A - Risk Factors" below for a discussion of the potential impact of COVID-19 on such clinical studies.
As a post-approval requirement under the Pediatric Research Equity Act, we are required to conduct a further clinical study of the effectiveness of Triferic in a pediatric patient population. We have reached agreement with the FDA and EMA on the design of this study. We have engaged a contract research organization and are in process of selecting sites in the United States and selected EU countries. We expect to initiate enrollment in the study during the third quarter of 2020. We expect that the data from this study could be used as part of the overall clinical data package to support approval by the EMA, if and when we are able to complete the other clinical trials needed to support making such a filing. See "Item 1A - Risk Factors" below for a discussion of the potential impact of COVID-19 on such clinical studies.
Additionally, we plan to leverage our development and regulatory experience with Triferic and believe that our FPC technology has the potential to be developed for use in other indications, in which iron replacement is required. In addition, we are assessing potential investments to evaluate other product presentations of Triferic within ESKD.
Results of Operations for the three months ended June 30, 2020 and 2019
The following table summarizes our operating results for the periods presented below (dollars in thousands):
For the Three Months Ended June 30,
2020
% of Revenue
2019
% of Revenue
% Change
Net Sales
$
15,896
$
14,846
7.1
%
Cost of Sales
15,015
94.5
%
14,113
95.1
%
6.4
Gross Profit
881
5.5
733
4.9
20.1
Selling and Marketing
1,997
12.6
2,219
14.9
(10.0
)
General and Administrative
2,871
18.1
5,497
37.0
(47.8
)
Settlement Expense, net of Reimbursement
—
—
430
2.9
—
Research and Product Development
1,616
10.2
2,958
19.9
(45.4
)
Operating Loss
$
(5,603
)
(35.3
)%
$
(10,371
)
(69.9
)%
(46.0
)%
Net Sales
During the three months ended June 30, 2020, our net sales were $15.9 million compared to sales of $14.8 million during the three months ended June 30, 2019. The increase of $1.1 million was primarily due to increased sales in our dialysis concentrates products. Triferic Dialysate net sales for the three months ended June 30, 2020 included approximately $0.2 million of Triferic Dialysate product sales to United States customers. Triferic was launched in Q2 2019 via the sample evaluation program and there were nominal revenues for the same period in 2019.
Gross Profit
Cost of sales during the three months ended June 30, 2020 was $15.0 million, resulting in gross profit of $0.9 million during the three months ended June 30, 2020, compared to cost of sales of a $14.1 million and a gross profit of $0.7 million during the three months ended June 30, 2019. Gross profit increased by $0.2 million in the second quarter of 2020 compared to the second quarter of 2019, due primarily to the increase in sales of $1.0 million; offset by an increase in labor and material costs $0.8 million to address requirements to support demand arising from the ongoing COVID-19 pandemic. Gross profits are primarily related to our concentrates business at this time. The Company anticipates that potential future sales of Triferic will impact the mix on our future gross profits.
Selling and Marketing Expense
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Selling and marketing expenses were $2.0 million during the three months ended June 30, 2020, compared with $2.2 million during the three months ended June 30, 2019. The decrease of $0.2 million is primarily due to a decrease in marketing costs associated with the initial investment in a specialty commercial team and marketing programs to support the launch of Triferic in Q2 2019.
General and Administrative Expense
General and administrative expenses were $2.9 million during the three months ended June 30, 2020, compared with $5.5 million during the three months ended June 30, 2019. The decrease of $2.6 million is due primarily to a decrease in stock compensation of $2.0 million, relating to a decrease in incentive compensation from forfeited equity awards associated with the departure of our former President and Chief Executive Officer in April 2020; a decrease in legal expense of $0.7 million, relating to previous litigation that has since been resolved; partially offset by an increase of $1.2 million for severance pay related to the same former President and Chief Executive Officer.
Research and Product Development Expense
Research and product development expenses were $1.6 million for the three months ended June 30, 2020, compared with $3.0 million during the three months ended June 30, 2019. The decrease of $1.4 million was due primarily to the payment for the Triferic AVNU NDA application fee of $1.3 million in Q2 2019. The Company is continuing to invest in its medical and scientific programs to support the global launch of Triferic and the advancement of our FPC technology platform.
Other Income (Expense)
Other income for the three months ended June 30, 2020 was $68,815, consisting of interest income of $66,750 and $2,065 of realized gains on investments. Other income for the three months ended June 30, 2019 was $78,611, consisting of $74,476 of interest income and $4,135 of realized gains on investments. Other expense for the three months ended June 30, 2020 was $1.4 million, consisting of interest expense of $0.5 million related to our debt facility (see Note 15 for more information on our debt facility) and warrant modification expense of $0.8 million. No interest expense was recorded for the three months ended June 30, 2019.
Results of Operations for the six months ended June 30, 2020 and 2019
The following table summarizes our operating results for the periods presented below (dollars in thousands):
For the Six Months Ended June 30,
2020
% of Revenue
2019
% of Revenue
% Change
Net Sales
$
31,753
$
30,405
4.4
%
Cost of Sales
29,759
93.7
%
28,662
94.3
%
3.8
Gross Profit
1,994
6.3
1,744
5.7
14.4
Selling and Marketing
4,069
12.8
5,321
17.5
(23.5
)
General and Administrative
8,144
25.6
11,717
38.5
(30.5
)
Settlement Expense, net of Reimbursement
—
—
430
1.4
(100.0
)
Research and Product Development
3,438
10.8
3,456
11.4
(0.5
)
Operating Loss
$
(13,657
)
(43.0
)%
$
(19,181
)
(63.1
)%
(28.8
)%
Net Sales
During the six months ended June 30, 2020, our net sales were $31.8 million compared to sales of $30.4 million during the six months ended June 30, 2019. The increase of $1.4 million was primarily due to higher domestic dialysis concentrate sales of $1.0 million and an increase in Triferic Dialysate sales of approximately $0.4 million compared to the six months ended June 30, 2019. Triferic was launched in the second quarter of 2019 via the sample evaluation program and there were nominal revenues for the same period in 2019.
Gross Profit (Loss)
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Cost of sales during the six months ended June 30, 2020 was $29.8 million, resulting in gross profit of $2.0 million during the six months ended June 30, 2020, compared to cost of sales of $28.7 million and a gross profit of $1.7 million during the six months ended June 30, 2019. Gross profit increased by $0.3 million during the six months ended June 30, 2020 compared to the six months ended June 30, 2019. The increase was due primarily to a gross margin increase of $0.3 million in our Triferic Dialysate product in 2020. In comparison, the launch and sales of Triferic Dialysate occurred in the second quarter of 2019 and had no to minimal impact during the six months ended June 30, 2019. Gross profits are primarily related to our concentrates business at this time. The Company anticipates that potential future sales of Triferic will impact the mix on our future gross profits.
Selling and Marketing Expense
Selling and marketing expenses were $4.1 million during the six months ended June 30, 2020, compared with $5.3 million during the six months ended June 30, 2019. The decrease of $1.2 million is due primarily to the decrease in marketing costs of $2.0 million, partially offset by an increase in costs associated with hiring, training and educating new employees of $0.8 million. The fluctuation in these costs are mainly due to the timing of the Triferic Dialysate launch in the second quarter of 2019. We expect those costs to level off quarter over quarter going forward.
General and Administrative Expense
General and administrative expenses were $8.1 million during the six months ended June 30, 2020, compared with $11.7 million during the six months ended June 30, 2019. The $3.6 million decrease was driven primarily by decreases to stock compensation, legal, recruiting and consulting fees, partially offset by an increase in labor costs. The increase in labor costs and decrease in stock compensation primarily relate to the resignation of our former President and Chief Executive Officer in April 2020.
Research and Product Development Expense
Research and product development expenses was $3.4 million for both the six months ended June 30, 2020 and 2019. Research and development expenses for the six months ended June 30, 2020 included clinical trials and other product development expenses of $1.2 million for Triferic, compared to $0.7 million during the six months ended June 30, 2019. The Company is continuing to invest in its medical and scientific programs to support the global launch of Triferic and the advancement of our FPC technology platform.
Settlement Expense, net of Reimbursement
Settlement expense was nil for the six months ended June 30, 2020, compared to $0.4 million in for the six months ended June 30, 2019. Settlement expense for the six months ended June 30, 2019 reflected the terms of the confidential settlement agreement and mutual release entered into in August 2018 relating to the Company’s former Chief Executive Officer, Robert Chioini, former Chief Financial Officer, Thomas Klema, and a former and then current director.
Other Income (Expense)
Other income for the six months ended June 30, 2020 was $241,821, consisting of interest income of $237,827 and $3,994 of realized gains on investments. Other income for the six months ended June 30, 2019 was $210,025, consisting of $192,002 of interest income and $18,023 of realized gains on investments. Other expense for the six months ended June 30, 2020 was $1.5 million, consisting of warrant modification expense of $0.8 million and interest expense of $0.6 million related to our debt facility (see Note 15 for more information on our debt facility). No interest expense was recorded for the six months ended June 30, 2019.
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Liquidity and Capital Resources
As of June 30, 2020, we had approximately $40.0 million of cash, cash equivalents and investments available-for-sale, and working capital of $40.0 million. Net cash used in operating activities for the six months ended June 30, 2020 was approximately $16.2 million.
On March 22, 2019, the Company entered into a sales agreement with Cantor Fitzgerald & Co. (the “Agent”), pursuant to which the Company may offer and sell from time to time shares of the Company’s common stock through the Agent up to $40.0 million. As of December 31, 2019, the Company sold 1,840,443 shares of its common stock pursuant to the Sales Agreement for gross proceeds of approximately $5.4 million, at a weighted average selling price of approximately $2.92. The Company paid approximately $0.3 million in commissions and offering fees related to the sale of the common stock.
During the six months ended June 30, 2020, the Company sold 987,716 of shares of its common stock pursuant to the Sales Agreement with the Agent for proceeds of $2.0 million, net of issuance costs. As of June 30, 2020, approximately $32.6 million remains available for sale under this facility.
On February 4, 2020, the Company entered into an underwriting agreement with Cantor Fitzgerald & Co., as underwriter, pursuant to which the Company agreed to issue and sell up to 3,670,212 shares of its common stock, which included 478,723 shares optional shares that may be sold pursuant to an over-allotment option granted to the underwriters. On February 6, 2020, the Company closed the sale of 3,191,489 shares of its common stock at the public offering price of $2.22 per share (the “Offering”). On February 19, 2020, the underwriter exercised its over-allotment option to purchase an additional 478,723 shares at a price of $2.22 per share, which closed on February 21, 2020. The Company raised a total of $8.0 million, net of issuance costs of $0.1 million, relating to the sale of the common stock in the Offering. The Offering was made pursuant to the Company’s effective Registration Statement on Form S-3 (File No. 333-227363), which was previously filed with the SEC.
On March 16, 2020, Rockwell Medical, Inc. and Rockwell Transportation, Inc., as Borrowers, entered into a Loan and Security Agreement (the "Loan Agreement") with Innovatus Life Sciences Lending Fund I, LP (“Innovatus”), as collateral agent and the lenders party thereto, pursuant to which Innovatus, as a lender, agreed to make certain term loans to the Company in the aggregate principal amount of up to $35.0 million (the “Term Loans”). Funding of the first $22.5 million tranche was completed on March 16, 2020. The Company will be eligible to draw on a second tranche of $5.0 million upon achievement of certain milestones, including the FDA approval of the Company’s New Drug Application for Triferic AVNU. The Company will be eligible to draw on a third tranche of $7.5 million upon the achievement of certain additional milestones, including the achievement of certain Triferic sales thresholds. Net draw down proceeds were $21.2 million with closing costs of $1.3 million.
The Company is entitled to make interest-only payments for thirty months, or up to thirty-six months if certain conditions are met. The Term Loans will mature on March 16, 2025 and will bear interest at the greater of (i) Prime Rate (as defined in the Loan Agreement) and (ii) 4.75%, plus 4.00%, with an initial interest rate of 8.75% per annum. The Company has the option, under certain circumstances, to add 1.00% of such interest rate amount to the then outstanding principal balance in lieu of paying such amount in cash. For the six months ended June 30, 2020 and 2019, interest expense amounted to $0.6 million.
The Loan Agreement is secured by all assets of the Company and Rockwell Transportation, Inc. Proceeds will be used for working capital purposes. The Loan Agreement contains customary representations and warranties and covenants, subject to customary carve outs, and includes financial covenants related to liquidity and trailing twelve months sales of Triferic, with the latter beginning with the period ending December 31, 2020, or September 30, 2020 if the Company draws the second tranche of $5.0 million. As of June 30, 2020, we were in compliance with all the reporting and financial covenants. However, if the Company is unable to maintain compliance with the reporting and financial covenants in the future, the Company could experience an event of default under the Loan Agreement, which would negatively impact the Company’s liquidity. For more information, see the risk factor entitled “Our Loan Agreement with Innovatus contains certain covenants that could adversely affect our operations and, if an event of default were to occur, we could be forced to repay the outstanding indebtedness sooner than planned and possibly at a time when we do not have sufficient capital to meet this obligation. The occurrence of any of these events could cause a significant adverse impact on our business, prospects and share price.” in “Item 1A-Risk Factors.”
Based on the capital raise and debt financing noted above, management believes the Company currently has sufficient funds to meet its operating requirements for at least the next twelve months from the date of the filing of this report.
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The Company will require additional capital to sustain its operations and make the investments it needs to execute upon its longer-term business plan, including the commercial launch and medical education programs of Triferic Dialysate and Triferic AVNU, and the further development of our FPC pipeline programs. If the Company is unable to generate sufficient revenue from its existing long-term business plan, the Company will need to obtain additional equity or debt financing. If the Company attempts to obtain additional debt or equity financing, the Company cannot assume that such financing will be available on favorable terms, if at all.
General
The actual amount of cash that we will need to execute our business strategy is subject to many factors, including, but not limited to, the expenses and revenue associated with the commercial launch of Triferic Dialysate and Triferic AVNU; the timing and magnitude of cash received from drug product sales; and the timing and expenditures associated with the development of Triferic for international markets; the timing and expenditures associated with the development of further innovative administration techniques of Triferic for dialysis patients; the timing and expenditures associated with the development of our FPC technology for patients with iron-deficiency anemia in other disease states; and the costs associated with ongoing litigation and investigatory matters.
We may elect to raise capital in the future through one or more of the following: (i) equity and debt raises through the equity and capital markets, though there can be no assurance that we will be able to secure additional capital or funding on acceptable terms, of if at all; and (ii) strategic transactions, including potential alliances and collaborations focused on markets outside the U.S., as well as potential combinations (including by merger or acquisition) or other corporate transactions.
We believe that our ability to fund our activities in the long term will be highly dependent upon our ability to successfully launch Triferic Dialysate and Triferic AVNU. Our commercialization of Triferic Dialysate and Triferic AVNU is subject to significant risks and uncertainties, including risks we will be successful in the commercialization of Triferic in accordance with our plans. If our commercialization of Triferic Dialysate and/or Triferic AVNU should be delayed for any reason or not proceed in accordance with our plans, we may be forced to implement cost-saving measures that may potentially have a negative impact on our activities and potentially the results of our research and development programs. If our launch of Triferic Dialysate and/or Triferic AVNU is unsuccessful or our commercial launch does not proceed as planned, we may be unable to secure the additional capital that we will require to continue our research and development activities and operations, which could have a material adverse effect on our business. If we are unable to raise the required capital, we may be required to curtail all of our activities and, ultimately, cease operations. Even if we are able to raise sufficient capital, such financings may only be available on unattractive terms, or result in significant dilution of stockholders’ interests and, in such event, the market price of our common stock may decline.
Cash Used in Operating Activities
Net cash used in operating activities was $16.2 million for the six months ended June 30, 2020. The net loss for this period was lower than net cash used in operating activities by $1.3 million, which was primarily attributable to non-cash expenses of $1.6 million, consisting primarily of $0.8 million of warrant modification expense, $0.7 million of amortization of the right to use assets, $0.4 million of depreciation and amortization, ($0.5) million of stock-based compensation and a ($2.9) million net change in assets and liabilities.
Net cash used in operating activities was $15.8 million for the six months ended June 30, 2019. The net loss for this period was higher than net cash used in operating activities by $3.2 million, which was primarily attributable to non-cash expenses of $4.5 million, consisting of $3.0 million of stock-based compensation, $1.0 million of amortization of the right to use assets, $0.4 million of depreciation and amortization, and a ($1.4) million net change in assets and liabilities.
Cash Provided by (Used In) Investing Activities
Net cash provided by investing activities was $0.7 million during the six months ended June 30, 2020. The net cash provided was primarily due to the sales of our available-for-sale investments of $17.5 million, offset by $16.5 million used for the purchase of investments available-for-sale and $0.3 million for the purchase of equipment.
Net used in investing activities was $3.8 million during the six months ended June 30, 2019. The cash used was primarily due to the purchase of our available-for-sale investments of $21.8 million, offset by $18.8 million provided by the sale of investments
33
available-for-sale, $0.5 million for the purchase of research and development licenses acquired from a related party and $0.3 million for the purchase of equipment.
Cash Provided by Financing Activities
Net cash provided by financing activities was $30.4 million during the six months ended June 30, 2020. The net cash provided was primarily due to net proceeds of $21.2 million related to the Loan Agreement and $8.0 million and $2.0 million from the sale of our common stock, related to our public offering and our at-the market offering, respectively.
Net cash provided by financing activities was $18.3 million during the six months ended June 30, 2019. The net cash provided was primarily due to net proceeds of $16.1 million and $2.1 million from the sale of our common stock, related to our public offering and our at-the market offering, respectively.
COVID-19 Impact
The COVID-19 pandemic and resulting global disruptions have adversely affected our business and operations, including, but not limited to, our sales and marketing efforts and our research and development activities, and the operations of third parties upon whom we rely. As noted above, we intend to initiate a sample evaluation program for Triferic AVNU during the third quarter of 2020 in order to prepare for a commercial launch. Quarantines, shelter-in-place, executive and similar government orders may negatively impact our sales and marketing activities, particularly if our sales representatives are unable to interact with current and potential customers to the same extent as before onset of the COVID-19 pandemic. Depending on the severity of the impact on our sales and marketing efforts, the timing of our commercial launch of Triferic AVNU could be adjusted into the first quarter of 2021.
The COVID-19 pandemic and resulting global disruptions have caused significant volatility in financial and credit markets. We have utilized a range of financing methods to fund our operations in the past; however, current conditions in the financial and credit markets may limit the availability of funding or increase the cost of funding. Due to the rapidly evolving nature of the global situation, it is not possible to predict the extent to which these conditions could adversely affect our liquidity and capital resources in the future.
Critical Accounting Policies and Significant Judgments and Estimates
Our critical accounting policies and significant estimates are detailed in our Annual Report on Form 10-K for the year ended December 31, 2019. Our critical accounting policies and significant estimates have not changed from those previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019, except for those subjects mentioned in the section of the notes to the condensed consolidated financial statements titled Adoption of Recent Accounting Pronouncements.
Recently issued and adopted accounting pronouncements :
We have evaluated all recently issued accounting pronouncements and believe such pronouncements do not have a material effect our financial statements. See Note 3 of the condensed consolidated financial statements at June 30, 2020.
Item 3 . Quantitative and Qualitative Disclosures about Market Risk
Per §229.305 of Regulation S-K, the Company, designated a Smaller Reporting Company as defined in §229.10(f)(1) of Regulation S-K, is not required to provide the disclosure required by this Item.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.