ROCKWELL MEDICAL, INC. 10-Q

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 ability to successfully launch FDA-approved Triferic AVNU; our ability to develop FPC for other indications; our ability to 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 Rockwell Medical, Inc. and subsidiaries (collectively, “we”, “our”, “us”, or the “Company”), is a biopharmaceutical company dedicated to improving outcomes for patients with iron deficiency and iron-deficiency anemia, with an initial focus on patients with end-stage kidney disease (ESKD) and on dialysis. The Company is focused on developing its proprietary ferric pyrophosphate citrate (“FPC”) therapeutic platform. 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. We initiated commercial sales of Triferic Dialysate during the second quarter of 2019 and received approval by the U.S. Food and Drug Administration ("FDA") for the intravenous formulation of Triferic, Triferic AVNU, on March 27, 2020. We plan to leverage our experience with Triferic to develop our FPC platform for iron deficiency and iron deficiency anemia in other disease states. Our lead indication is developing FPC for the treatment of iron deficiency anemia in patients undergoing home infusion therapy. 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. Our mission is to transform anemia management in a wide variety of disease states across the globe, while improving patients’ lives. Accordingly, we are building the foundation to become a leading medical and commercial organization in the field of iron deficiency. 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. Triferic 27 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. 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. 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. 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 have also developed 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, with the same indications as the dialysate formulation (indicated to replace iron and maintain hemoglobin concentration in adult HDD-CKD hemodialysis patients) and we began recruiting clinics for participation in a sample evaluation program for Triferic AVNU during the third quarter of 2020. Due to a minor scheduling delay in the production of packaging for salable product, commercialization will likely be postponed until the first quarter of 2021. Like Triferic Dialysate, 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 sell directly to DaVita, Inc. and 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 nine months September 30, 2020, 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. 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 without a development partner in Europe. 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, pivotal, clinical study that is required to support a submission for regulatory approval 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 28 up with the Indian regulatory authorities to determine the requirements for approval of Triferic in India. Lastly, pursuant to the licensing agreement with Jeil Pharmaceutical Co., Ltd ("Jeil Pharma"), our licensee in South Korea, meetings between Jeil Pharma and the regulatory authorities in South Korea will be initiated. Jeil Pharma has informed us they do not believe they would need to perform a clinical trial in advance of approval. We anticipate sales in South Korea to begin in early 2022. See "Item 1A — Risk Factors" below for a discussion of the potential impact of COVID-19 our overall business and 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 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. Growth Opportunities In the third Quarter of 2020 we initiated our plan to leverage our development and regulatory experience with our FPC platform for use in other indications. We plan to meet with the FDA for a Type C meeting to discuss our plan for developing FPC for the treatment of iron deficiency anemia in patients undergoing home infusion therapy. Over 3.2 million patients are treated annually using home infusion therapy. The incidence of iron deficiency is estimated to be as high as 60% in this patient population. Iron deficiency anemia is largely undertreated in part due to limitations of the currently available iron replacement drugs. Due to concerns about hypersensitivity reactions, IV iron is infrequently prescribed as a home infusion therapy. This means that patients need to visit a physician office for an infusion which is costly and inconvenient. As a result, physicians are often hesitant to proactively treat iron deficiency and the majority of patients are left to deal with the disease on their own. Those who become severely anemic are reactively given blood transfusions, which comes with significant risk. We also plan to meet with FDA in 2021 to discuss our development plans for FPC to improve cardiac function in hospitalized acute congestive heart failure patients. More than a million patients are hospitalized each year with acute decompensated heart failure. Iron deficiency is a common co-morbidity in 50% to 70% of these patients. While there is increasing evidence regarding the positive impact of IV iron replacement therapy in the chronic ambulatory heart failure patient, the evidence in the acute population is scarce. One limitation of currently available parenteral iron products is that the iron must be processed and stored in the liver before it is released and becomes available as a fuel for cardiac muscle energetics. We believe FPC may be a significant advantage for the acute heart failure patient due to the fact that it provides 100% immediately bioavailable iron, which may mean it is faster acting and could make a meaningful impact within the context of the hospital stay. 29 Results of Operations for the three months ended September 30, 2020 and 2019 The following table summarizes our operating results for the periods presented below (dollars in thousands): For the Three Months Ended September 30, 2020 % of Revenue 2019 % of Revenue % Change Net Sales $ 15,280 $ 15,407 (0.8) % Cost of Sales 14,934 97.7 % 15,424 100.1 % (3.2) Gross Profit (Loss) 346 2.3 (17) (0.1) (2,135.3) Selling and Marketing 1,669 10.9 1,827 11.9 (8.6) General and Administrative 3,622 23.7 4,623 30.0 (21.7) Research and Product Development 1,745 11.4 1,475 9.6 18.3 Operating Loss $ (6,690) (43.8) % $ (7,942) (51.5) % (15.8) % Net Sales During the three months ended September 30, 2020, our net sales were $15.3 million compared to net sales of $15.4 million during the three months ended September 30, 2019. The decrease of $0.1 million was primarily due to a decrease in international sales of dialysis concentrates products. Triferic Dialysate net sales for the three months ended September 30, 2020 included approximately $0.2 million of Triferic Dialysate product sales to United States customers. Gross Profit Cost of sales during the three months ended September 30, 2020 was $14.9 million, resulting in gross profit of $0.4 million during the three months ended September 30, 2020, compared to cost of sales of a $15.4 million and a gross loss of $17,000 during the three months ended September 30, 2019. Gross profit increased by $0.4 million in the third quarter of 2020 compared to the third quarter of 2019, due primarily to a large inventory reserved of $1.1 million recorded in the third quarter of 2019 compared to $0.3 million inventory reserve recorded in the third quarter of 2020; offset by an increase in labor and material costs $0.3 million to address protocols put in place 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 of future gross profits. Selling and Marketing Expense Selling and marketing expenses were $1.7 million during the three months ended September 30, 2020, compared with $1.8 million during the three months ended September 30, 2019. The decrease of $0.1 million is primarily due to a decrease in marketing costs related to Triferic Dialysate offset by an increase in costs associated with the launch of Triferic AVNU, our new FDA-approved intravenous formula. General and Administrative Expense General and administrative expenses were $3.6 million during the three months ended September 30, 2020, compared with $4.6 million during the three months ended September 30, 2019. The decrease of $1.0 million is due primarily to a decrease in stock compensation of $0.6 million, relating to a decrease in incentive compensation from forfeited equity awards associated with the departure of our former Chief Financial in July 2020; a decrease in consulting expense of $0.3 million, relating to strategic development; a decrease in accounting costs of $0.2 million , relating to a decrease in internal audit fees; and a decrease in legal expense of $0.1 million, relating to previous litigation that has since been resolved; partially offset by an increase of $0.3 million for increased training cost and severance pay related to our former President and Chief Executive Officer. Research and Product Development Expense Research and product development expenses were $1.7 million for the three months ended September 30, 2020, compared with $1.5 million during the three months ended September 30, 2019. The increase of $0.2 million was due primarily 30 to increase in costs relating to our scientific programs. 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 September 30, 2020 was $5,861, consisting of interest income of $1,767 and $4,094 of realized gains on investments. Other income for the three months ended September 30, 2019 was $103,386, consisting of $97,100 of interest income and $6,268 of realized gains on investments. Other expense for the three months ended September 30, 2020 was $0.7 million of interest expense related to our debt facility (see Note 15 for more information on our debt facility). Other expense for the three months ended September 30, 2019 was $16,365 of interest expense. Results of Operations for the nine months ended September 30, 2020 and 2019 The following table summarizes our operating results for the periods presented below (dollars in thousands): For the Nine Months Ended September 30, 2020 % of Revenue 2019 % of Revenue % Change Net Sales $ 47,033 $ 45,812 2.7 % Cost of Sales 44,693 95.0 % 44,085 96.2 % 1.4 Gross Profit 2,340 5.0 1,727 3.8 35.5 Selling and Marketing 5,738 12.2 7,149 15.6 (19.7) General and Administrative 11,767 25.0 16,341 35.7 (28.0) Settlement Expense, net of Reimbursement — — 430 0.9 (100.0) Research and Product Development 5,183 11.0 4,930 10.8 5.1 Operating Loss $ (20,348) (43.3) % $ (27,123) (59.2) % (25.0) % Net Sales During the nine months ended September 30, 2020, our net sales were $47.0 million compared to net sales of $45.8 million during the nine months ended September 30, 2019. The increase of $1.2 million was primarily due to higher domestic dialysis concentrate sales of $0.8 million and an increase in Triferic Dialysate sales of approximately $0.4 million compared to the nine months ended September 30, 2019. Triferic was launched in the third quarter of 2019 via the sample evaluation program and there were nominal revenues for the same period in 2019. Gross Profit Cost of sales during the nine months ended September 30, 2020 was $44.7 million, resulting in gross profit of $2.3 million during the nine months ended September 30, 2020, compared to cost of sales of $44.1 million and a gross profit of $1.7 million during the nine months ended September 30, 2019. Gross profit increased by $0.6 million during the nine months ended September 30, 2020 compared to the nine months ended September 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 third quarter of 2019 and had no to minimal impact during the nine months ended September 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 of future gross profits. Selling and Marketing Expense Selling and marketing expenses were $5.7 million during the nine months ended September 30, 2020, compared with $7.1 million during the nine months ended September 30, 2019. The decrease of $1.4 million is due primarily to the decrease in marketing costs of $2.2 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 third quarter of 2019. We expect those costs to continue to level off quarter over quarter going forward. General and Administrative Expense 31 General and administrative expenses were $11.8 million during the nine months ended September 30, 2020, compared with $16.3 million during the nine months ended September 30, 2019. The $4.5 million decrease was driven primarily by decreases to stock compensation, legal, recruiting and consulting fees, partially offset by an increase in labor costs. The decrease in stock compensation primarily relate to the resignation of our former President and Chief Executive Officer in April 2020 and former Chief Financial Officer effective July 2020. Research and Product Development Expense Research and product development expenses was $5.2 million for the nine months ended September 30, 2020, compared with $4.9 million during the nine months ended September 30, 2019, an increase of $0.3 million. Research and product development expenses for the nine months ended September 30, 2020 included clinical trials and other product development expenses of $1.8 million for Triferic, compared to $1.4 million during the nine months ended September 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 nine months ended September 30, 2020, compared to $0.4 million in for the nine months ended September 30, 2019. Settlement expense for the nine months ended September 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 nine months ended September 30, 2020 was $247,682, consisting of interest income of $239,594 and $8,088 of realized gains on investments. Other income for the nine months ended September 30, 2019 was $313,393, consisting of $289,101 of interest income and $24,292 of realized gains on investments. Other expense for the nine months ended September 30, 2020 was $2.1 million, consisting of warrant modification expense of $0.8 million and interest expense of $1.3 million related to our debt facility (see Note 15 for more information on our debt facility). Other expense for the nine months ended September 30, 2019 was $16,365 of interest expense. 32 Liquidity and Capital Resources As of September 30, 2020, we had approximately $67.3 million of cash, cash equivalents and investments available-for-sale, and working capital of $65.2 million. Net cash used in operating activities for the nine months ended September 30, 2020 was approximately $21.1 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 nine months ended September 30, 2020, the Company sold 1,128,608 of shares of its common stock pursuant to the Sales Agreement with the Agent for proceeds of $2.3 million, net of issuance costs. As of September 30, 2020, approximately $32.3 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. 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 is no longer eligible to draw on a second tranche of $5.0 million, which was tied to the achievement of certain milestones by a specified date. The Company may 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-nine 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 nine months ended September 30, 2020 and 2019, interest expense amounted to $1.3 million and $16,000, respectively. 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. We cannot assure you that we can maintain compliance with the covenants under our Loan Agreement, which may result in an event of default. Our ability to comply with these covenants may be adversely affected by events beyond our control. For example, the Loan Agreement contains certain financial covenants relating to sales and, as a result of the ongoing COVID-19 pandemic and its effect on our sales activities, among other factors, we may not be able to satisfy such covenants in the future. Based on our annualized Triferic sales through September 30, 2020, we may not satisfy this covenant as of December 31, 2020. If we are unable to comply with the covenants under our Loan Agreement, we intend to pursue all available cure options in order to regain compliance. However, we may not be able to mutually agree with Innovatus on appropriate remedies to cure a breach of a covenant, which could give rise to an event of default. If we are unable to avoid an event of default, any required repayments could have an adverse effect on our liquidity. As of September 30, 2020, the Company was in compliance with all the reporting and financial covenants. 33 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.” On September 23, 2020, the Company entered into a Securities Purchase Agreement with certain purchasers named therein, pursuant to which the Company agreed to issue and sell to several institutional and accredited investors in a registered direct offering 21,818,544 shares of common stock and warrants to purchase up to 23,178,809 shares of common stock (the “Warrants”) at a combined purchase price equal to $1.51 per share. Each Warrant is exercisable for one share of common stock at an exercise price of $1.80 per share. The Warrants are immediately exercisable and will expire on September 25, 2022. The Company also offered to certain purchasers pre-funded warrants to purchase up to an aggregate of 1,360,265 shares of common stock (the “Pre-Funded Warrants”), in lieu of shares of common stock. The purchase price of each Pre-Funded Warrant is equal to the price at which a share of common stock is sold to the public in the offering, minus $0.001, and the exercise price of each Pre-Funded Warrant is $0.001 per share. The Pre-Funded Warrants were exercised in conjunction with the issuance of common stock under the Securities Purchase Agreement. The Company received gross proceeds of approximately $35.0 million in connection with the offering, before deducting placement agent fees and related offering expenses of approximately $2.3 million. Based on the equity and debt financing described 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. 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 34 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 $21.1 million for the nine months ended September 30, 2020. The net loss for this period was higher than net cash used in operating activities by $1.1 million, which was primarily attributable to non-cash expenses of $2.8 million, consisting primarily of $1.1 million of amortization of the right to use assets, $0.8 million of warrant modification expense, $0.6 million of depreciation and amortization, ($0.3) million of stock-based compensation and a ($1.6) million net change in assets and liabilities. Net cash used in operating activities was $22.0 million for the nine months ended September 30, 2019. The net loss for this period was higher than net cash used in operating activities by $4.9 million, which was primarily attributable to non-cash expenses of $7.2 million, consisting of $3.9 million of stock-based compensation, $1.4 million of amortization of the right to use assets, $0.6 million of depreciation and amortization, and a ($2.3) million net change in assets and liabilities. Cash Provided by (Used In) Investing Activities Net cash provided by investing activities was $2.6 million during the nine months ended September 30, 2020. The net cash provided was primarily due to the sales of our available-for-sale investments of $27.1 million, offset by $23.5 million used for the purchase of investments available-for-sale and $1.0 million for the purchase of equipment. Net used in investing activities was $4.9 million during the nine months ended September 30, 2019. The cash used was primarily due to the purchase of our available-for-sale investments of $30.5 million, offset by $34.2 million provided by the sale of investments available-for-sale, $0.8 million for the purchase of research and development licenses acquired from a related party and $0.4 million for the purchase of equipment. Cash Provided by Financing Activities Net cash provided by financing activities was $63.3 million during the nine months ended September 30, 2020. The net cash provided was primarily due to net proceeds of $21.2 million related to the Loan Agreement and $40.7 million and $2.3 million from the sale of our common stock, related to our public offerings and our at-the market offering, respectively. Net cash provided by financing activities was $18.6 million during the nine months ended September 30, 2019. The net cash provided was primarily due to net proceeds of $17.3 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. 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. 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 35 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 September 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.