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Item 1. Business

2021-03-31 compared with 2020-03-17 · 577 added, 452 removed, 180 unchanged (85% of the section changed)

Rockwell Medical, Inc., together with its subsidiaries, (collectively, “we,” “our,” “us,” the “Company” or "Rockwell") is a biopharmaceutical company dedicated to transforming anemia and improving outcomes for patients across the globe.

We are initially targeting end-stage renal disease (“ESRD”) and chronic kidney disease with innovative therapies and products for the treatment of iron deficiency and hemodialysis (also referred to as “dialysis”).

Our business strategy is to bring our pharmaceutical products to market ourselves in the United States and to utilize partners to develop and commercialize such products in international markets.

Triferic® (ferric pyrophosphate citrate) is the Company’s proprietary iron therapy that replaces iron and maintains hemoglobin in dialysis patients without increasing iron stores.

We believe Triferic is applicable to a wide variety of disease states in which iron deficiency is an issue, and we are initially targeting patients with ESRD.

The Company has developed two formulations of Triferic:

Dialysate Triferic, which adds Triferic to the dialysate, and I.V.

Triferic, which delivers Triferic intravenously.

Dialysate Triferic is the first and only FDA approved product indicated to replace iron and maintain hemoglobin concentration in adult hemodialysis patients.

The Company has developed two presentations of Dialysate Triferic for ESRD patients.

The first presentation is a liquid, single-patient presentation of Dialysate Triferic, which was approved by the FDA in 2015.

The second presentation is a powder packet, multiple-use formulation of Dialysate Triferic, which was approved by the FDA in 2016.

During 2019, we built a commercial organization for our Triferic products and launched Dialysate Triferic in the United States in May 2019.

We have also developed an intravenous formulation of Triferic, hereinafter referred to as I.V.

Triferic, which is a novel formulation of Triferic that would be used for the same indication as Dialysate Triferic, if approved.

We submitted a new drug application (“NDA”) for I.V.

Triferic in May 2019, with a Prescription Drug User Fee Act ("PDUFA") action date of March 28, 2020.

We plan to leverage the medical and commercial capabilities we established in 2019 to support the potential launch of I.V.

We are also an established manufacturer and leader in delivering high-quality hemodialysis concentrates and dialysates to dialysis providers and distributors in the United States and abroad.

We manufacture, sell and distribute hemodialysis concentrates and other medical products and supplies used in the treatment of patients with ESRD.

Our website is included as an inactive textual reference only and nothing on the website is incorporated by reference into this Annual Report on Form 10-K.

Unless otherwise indicated in this Annual Report on Form 10-K “we,” “our,” “us,” the “the Company,” "Rockwell," “Rockwell Medical” and other similar terms refer to Rockwell Medical, Inc., together with its consolidated subsidiaries.

You are advised to read this Annual Report on Form 10-K in conjunction with other reports and documents that we file from time to time with the Securities and Exchange Commission (“SEC”).

In particular, please read our definitive proxy statement, which will be filed with the SEC in connection with our 2021 annual meeting of stockholders, our quarterly reports on Form 10-Q and any current reports on Form 8-K that we may file from time to time.

You can access free of charge on our website copies of these reports as soon as practicable after they are electronically filed with the SEC.

The SEC also maintains a website on the internet that contains reports, proxy and information statements and other information regarding issuers, such as us, that file electronically with the SEC.

The address of the SEC’s website is http://www.sec.gov.

OVERVIEW OF BUSINESS

Rockwell Medical is a commercial-stage, biopharmaceutical company developing and commercializing our next-generation parenteral iron technology platform, Ferric Pyrophosphate Citrate ("FPC"), which we believe has the potential to lead to transformative treatments for iron deficiency in multiple disease states, that we believe could reduce healthcare costs and improve patients’ lives.

We are also one of the two major suppliers of life-saving hemodialysis concentrate products to kidney dialysis clinics in the United States.

We have two novel, FDA approved therapies, Triferic and Triferic AVNU, which are the first two products developed from our FPC platform.

We are marketing both products to kidney dialysis centers for their patients receiving dialysis.

In 2021, we intend to advance our FPC platform strategy by starting a Phase II trial for the treatment of iron deficiency anemia in patients outside of dialysis, who are receiving intravenous ("IV") medications in the home infusion setting.

The trend toward providing medical care, including the delivery of medicines, at home make the home infusion market a rapidly growing area of healthcare.

We believe that the home infusion setting is a natural path for expansion of our platform as many of the patients suffer from diseases that are associated with iron deficiency and anemia.

In our R&D pipeline, we are also investigating FPC’s impact in the treatment of hospitalized patients with acute heart failure, with the potential to begin another Phase II program in these patients in 2022.

We are the second largest supplier of hemodialysis concentrates in the United States, with a reputation for excellent service, quality, and reliability.

We believe that this reputation, which is based on over 25 years of service to the kidney dialysis centers, combined with about $60 million in annual revenue, approximately 300 dedicated employees, expertise in manufacturing and logistics and the added expertise in pharmaceutical development and commercialization brought to the Company by recent additions to our management team, gives us a solid foundation on which to grow.

At Rockwell Medical, we are dedicated to replacing the currently inadequate standard of care for treatment of iron deficiency in acute and chronic disease by leveraging our proprietary FPC platform technology.

Our proprietary drug platform, FPC, is a next-generation parenteral iron therapeutic.

We believe our FPC platform has several advantages over other parenteral iron therapies.

Importantly, it provides iron that is immediately available for critical body processes once it is administered.

It has been demonstrated to be safe and well-tolerated, with a safety profile similar to placebo.

Iron deficiency can develop into a serious medical condition that is often overlooked and undertreated in several illnesses because it is hard to treat.

It is a common comorbidity in many disease states, such as end-stage kidney disease, chronic kidney disease, acute heart failure, cancer and multiple chronic gastrointestinal conditions.

Iron deficiency impacts patients’ health in many ways, including anemia, organ dysfunction, slower recovery, diminished energy and reduced quality of life.

Strategy Evolution and Overview

Rockwell Medical has evolved its strategy over the past year to develop into a more medically-, scientifically- and data-driven company.

We believe future clinical, regulatory and commercial success require the right people with the right

experience to navigate us to the right data.

There has been an evolution of both our management and board, providing us with greater relevant experience.

In particular, we have added board members and employees with significant medical and commercial experience in iron deficiency anemia and the dialysis sector, drug development and commercialization, small-cap public company finance and management and clinical nurse educator patient support.

We believe these changes support an improved execution of our strategy to generate data that will support future commercial growth, fair reimbursement and regulatory approvals.

Our strategy is to accelerate Rockwell’s growth by creating and developing pharmaceutical products based on our FPC technology for disease states where patients can benefit the most from an effective treatment for iron deficiency, while concurrently refining our dialysis business to drive incremental growth and efficiencies.

We plan to leverage and build on the foundation provided by our current dialysis business serving kidney dialysis centers by developing a pipeline of additional potential drug therapies in multiple disease states.

We’ve preliminarily identified three disease states where we believe FPC may have the biggest impact.

Dialysis Business:

We are the second largest supplier, and one of the two major suppliers of hemodialysis concentrates in the United States.

We manufacture, sell and deliver hemodialysis concentrates, which are used to maintain human life by removing toxins and balancing electrolytes in the dialysis patient’s bloodstream.

We have core capabilities in manufacturing hemodialysis concentrates in three facilities, totaling 159,000 square feet, located in Michigan, Texas and South Carolina.

We also have core capabilities in the logistics of delivering these products to dialysis clinics throughout most of the United States.

Our first two branded products from our FPC platform, Triferic ® (dialysate) and Triferic AVNU ® (IV), are used to maintain hemoglobin in patients undergoing hemodialysis.

We are building on our reputation and industry presence by commercializing then to medium and small dialysis organizations.

We began commercializing Triferic and Triferic AVNU in the United States in the second half of 2019 and in early 2021, respectively.

Our strategy for increasing Triferic adoption is to continue to generate data in clinics showing the benefits of Triferic in real world protocols.

In addition, we expect to study Triferic use with the innovations that we believe have the potential to change future medical practices (e.g.

introduction and adoption of HIF-PHIs as described below).

We believe that positive data from these studies would better position Triferic for long-term growth.

We are developing strategic alliance partners for development, regulatory approval and commercialization of Triferic outside of the United States.

Home Infusion Program:

We are initiating a clinical trial program of FPC for the treatment of iron deficiency anemia in the home-infusion setting.

Many patient groups requiring home infusion therapies suffer from chronic diseases that are associated with a high incidence of iron deficiency and anemia.

Home infusion represents a large and rapidly-growing segment of healthcare where we believe FPC may have distinct advantages over currently available iron replacement therapy options.

Pipeline Development:

We are investigating the use of our FPC platform for the treatment of hospitalized patients with acute heart failure.

We believe that FPC may deliver rapidly bioavailable iron to the heart and improve cardiac energetics.

This effect could help patients recover faster, resulting in shorter hospital stays and fewer 30-day re-admissions, which would be a meaningful reduction healthcare costs and human suffering.

General Information

We were incorporated in the state of Michigan in 1996, and re-domiciled to the state of Delaware in 2019.

Our headquarters is located at 30142 Wixom Road, Wixom Michigan 48393.

Our telephone number is (248) 960-9009 and our website is http://www.rockwellmed.com .

The information contained on, or that can be accessed through, our website is not part of this Annual Report on Form 10-K.

We have included our website in this Annual Report on Form 10-K solely as an inactive textual reference.

Triferic ® , CitraPure ® , RenalPure ® and SteriLyte ® are registered trademarks of Rockwell.

This Annual Report on Form 10-K contains references to our trademarks and trademarks belonging to other entities.

Solely for convenience, trademarks and trade names referred to in this Annual Report, including logos, artwork, and other visual displays, may appear without the ® or TM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names.

We do not intend our use or display of other companies’ trade names or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other company.

Our Growth Strategy

We plan to accelerate our growth by combining the solid foundation, strength and reputation of our dialysis business with the high-growth potential from therapeutics derived (or generated) from our FPC platform in multiple disease states where patients can benefit the most from an effective treatment for iron deficiency.

In parallel with continually seeking to drive incremental growth and efficiencies in our dialysis business unit, our strategy is to accelerate the growth of our business in large, higher-margin markets by creating and developing pharmaceutical products based on our proprietary FPC technology that address iron deficiency in patients who are currently under-treated.

Dialysis Business:

We are one of the two major suppliers of hemodialysis concentrates in the United States.

Over the past 25 years we have developed a core expertise in manufacturing and delivering hemodialysis concentrates.

Because these concentrates are used to maintain human life by removing toxins and balancing electrolytes in the dialysis patient’s bloodstream, we manufacture them under cGMP regulations as described below.

Our concentrates are manufactured in three facilities, totaling 159,000 square feet, located in Michigan, Texas and South Carolina, from which we deliver these products to dialysis clinics throughout most of the United States.

We utilize our own delivery fleet as well as third parties.

We employ approximately 300 people in the concentrates unit of our dialysis business.

The “Rockwell Medical” name has earned a reputation for dependability, quality and service within our customer base.

This reputation was further strengthened during the recent challenges presented, not only by the COVID-19 pandemic, but also by the multitude of recent natural disasters where our team has been challenged by hurricanes, flooding and freezing, while still meeting production demands.

Our dialysis business in concentrates and our growth opportunities with FPC technology are synergistic.

We are leveraging our leadership position in the dialysis sector to commercialize our first two FPC-based products, Triferic and Triferic AVNU, which are indicated for the replacement of iron to maintain hemoglobin in adult patients with hemodialysis-dependent chronic kidney disease.

We commercialize the Triferic products ourselves in the United States, and are partnering with established local pharmaceutical companies for the regulatory approval and commercialization outside of the United States.

Although we have an excellent reputation for dependability and service within the dialysis sector, with concentrates and Triferic, our growth opportunities for both in the US dialysis market are challenged by the consolidated ownership of dialysis clinics, a capitated reimbursement model and the demographics of the patient population.

The two largest dialysis organizations treat approximately 73% of the patients in the United States.

One manufactures its own concentrates and IV iron and we already supply concentrates to the other.

Through our partnership with Baxter International, we currently supply concentrates to a significant percentage of the small and medium sized dialysis organizations.

In a sector, such as kidney dialysis, with capitated reimbursement for the dialysis procedure and all included inputs, new product success depends on compelling data demonstrating improved patient outcomes and/or pharmacoeconomics versus the current standard of care in practice in the clinics.

Once Medicare determined that Triferic and Triferic AVNU would be reimbursed under the fixed bundled rate, market adoption became more dependent on the generation of these data, which were not required for the drug's approval from the FDA.

Notwithstanding the growth limitations mentioned above, we have made progress and continue to be confident that Triferic has the potential to be the treatment of choice for the maintenance of hemoglobin in dialysis patients.

Toward this end, we have increased our efforts in generating real world data in clinics with current protocols, which we believe will help with the adoption of Triferic and Triferic AVNU as these results are developed and disseminated over time.

In addition, we believe the hemodialysis industry may experience a great deal of change over the next several years.

We plan to take the steps necessary to generate the data necessary to potentially allow Triferic and Triferic AVNU to benefit from these new innovations, such as the potential approval of a class of drugs, known as hypoxia-inducible factor prolyl hydroxylase inhibitors ("HIF-PHIs"), as well as the new, solid-state dialysis equipment in development.

We plan to study Triferic in combination with these potential new innovations as they become available.

A key element of our dialysis business strategy is to also improve the strength of our concentrates business by creating efficiencies and enhancing our manufacturing and transportation operations.

We have launched projects to identify ways to improve the overall profitability of these core operations.

Specifically, we are reviewing our entire supply chain to identify opportunities for improvement, prioritizing initiatives that will have the largest impact on long-term efficiency, profitability and growth.

Home Infusion:

Our accelerated growth strategy is to go beyond our foundational business in dialysis by leveraging the efficacy and safety data from Triferic.

We are planning to develop an FPC-based therapeutic for iron deficiency to be given in the home infusion setting.

The number of patients served by home infusion therapy has grown from approximately 800,000 in 2010 to over 3,000,000 in 2019.

The home infusion setting is expected to continue this rapid expansion, which has been further supported in the COVID-19 environment.

Many patient groups requiring home infusion therapies suffer from diseases that are associated with an incidence of iron deficiency and anemia.

For example, it is estimated that 40%-55% of all home parenteral nutrition patients are iron deficient (see Market Opportunity below).

We believe, based on our data with hemodialysis patients, FPC as a home infusion therapy for iron deficiency anemia may have distinct advantages over currently available iron replacement therapy options (see Platform Technology below).

Based on feedback received in March 2021 from the FDA, we plan on initiating a Phase 2 clinical study in home infusion patients with iron deficient anemia during the second half of 2021 to confirm the dose and duration of FPC treatment.

We expect data from the trial in the second half of 2022 (see Clinical Pipeline below).

Pipeline Development

In our R&D pipeline, we are also exploring FPC’s impact in the treatment of hospitalized heart failure patients.

More than one million people in the United States are hospitalized each year for acute heart failure.

Clinical improvement in heart failure has already been demonstrated with older first-generation forms of IV iron in clinical trials in the outpatient setting.

We believe that FPC may deliver rapidly bioavailable iron to the heart and improve cardiac energetics during hospitalization.

This effect could help patients recover faster resulting in shorter hospital stays and fewer 30-day re-admissions.

If so, these outcomes would translate into a meaningful reduction in healthcare costs and human suffering.

We expect to communicate with the FDA in 2021 regarding a development pathway for this indication.

We continue exploring other potential patient populations for application of our technology.

We are considering disease states where patients can benefit the most from an effective treatment for iron deficiency, and where the development path, cost estimates and reimbursement are the most favorable.

Platform Technology - Ferric Pyrophosphate Citrate

Ferric Pyrophosphate Citrate (“FPC”) is a next-generation parenteral iron that is an important advance in the treatment of iron deficiency anemia, with the potential to be developed for numerous indications.

FPC is structurally and functionally different from traditional macromolecular IV iron, or parenteral iron carbohydrate complexes.

It is unique in molecular structure and mode-of-action.

All components of FPC are normal constituents in the blood.

Importantly, FPC has already been shown to be efficacious in clinical trials and is well-tolerated with over one million doses administered to date.

The first two formulations based upon the FPC platform received approval for the replacement of iron to maintain hemoglobin in adult patients with hemodialysis-dependent chronic kidney disease ("HDD-CKD").

Other formulations of our FPC platform, in other disease states, are currently being researched and developed.

FPC is a novel complex iron salt, developed to replace iron losses in patients with anemia in an entirely new way.

This unique and differentiated molecule consists of an iron atom complexed to one pyrophosphate and two citrate anions.

FPC is a form of protected iron in which citrate and pyrophosphate are tightly complexed to the iron.

The molecule is water soluble, making the iron completely bioavailable, and has the ability to deliver iron directly and completely to transferrin, the body's iron transport protein.

This transferrin-bound iron is immediately delivered to the bone marrow to be incorporated into hemoglobin, as well as to other tissues such as skeletal muscle and smooth muscle (e.g.

As a result, this novel approach to iron management has the potential for application in the treatment of iron disorders and iron deficiency anemia in multiple disease states.

This mechanism uses the body’s own means to transport iron safely to tissues that need iron (e.g.

red blood cells and muscle).

The structure of FPC minimizes the potential for the iron to be taken up into the body’s storage cells, such as those present in the liver and other tissues, which is a problem with traditional macromolecular IV iron.

Iron release from body storage cells can be slowed or blocked when inflammation is present.

Because of its mechanism of action, FPC increases bioavailable iron unimpeded by inflammation without excessively increasing body iron stores or causing inflammation, iron toxicity, or oxidative stress.

FPC iron is delivered to the bone marrow regardless of other underlying conditions that might otherwise block the release of iron.

Some of the challenges of managing iron in sick patients, including inflammation, hepcidin block, and functional iron deficiency, can be overcome with FPC due to its ability to provide immediately bioavailable iron.

Our first FPC-based product, Triferic, is used proactively in hemodialysis patients to maintain iron homeostasis, such that the amount of iron delivered to the patient and to the bone marrow for erythropoiesis closely approximates the amount lost during hemodialysis.

FPC bypasses the hepcidin induced block caused by inflammation, of iron-release from the macrophages and liver (see “Our Triferic Portfolio” below).

Consequently, tissue iron overload is avoided, unlike when traditional macromolecular IV iron are administered proactively.

FPC delivers iron and maintains hemoglobin without increasing iron stores (ferritin) and thus addresses an unmet need in hemodialysis patients.

FPC has demonstrated an excellent safety profile.

No reported instances of anaphylaxis or other serious adverse events have been received during more than 1.2 million doses administered.

Triferic may be administered even to patients with history of allergic reactions to IV iron.

We are actively evaluating additional indications for potential development (see "Pipeline" below).

We currently commercialize Triferic, Triferic AVNU and our dialysis concentrates portfolio of products.

We partner with Baxter Healthcare Corporation, a subsidiary of Baxter International, Inc.

("Baxter"), for commercialization of our concentrates products in the United States and certain other countries.

We partner with Nipro Medical Corporation for our concentrate products in certain countries not included in our Baxter agreement, as described below.

Our clinical development programs are all based on FPC, our proprietary platform technology.

We are directly executing on clinical development programs in the United States, while our international development efforts in dialysis for local regulatory approval are conducted by our partners.

Our Dialysis Concentrate Products

We are an established leader in manufacturing and delivering high-quality hemodialysis concentrates and dialysates, along with certain ancillary products, to dialysis providers and distributors in the United States and abroad.

We manufacture, sell and distribute hemodialysis concentrates and other medical products and supplies used in the treatment of patients with End-Stage Kidney Disease (“ESKD”).

As one of the two major suppliers in the United States, our dialysis concentrate products are used to maintain human life by removing toxins and replacing critical nutrients in the dialysis patient’s bloodstream.

In 2019, we estimate that we supplied approximately 25% of the United States domestic market with dialysis concentrates, with the majority of our sales being made in the United States.

In 2020, we estimate that we supplied approximately 27% of the United States domestic market with dialysis concentrates, with the majority of our sales are being made in the United States.

We also supply dialysis concentrates to distributors serving a number of foreign countries, primarily in the Americas and the Pacific Rim.

We believe that Triferic is an innovative treatment for iron replacement and has the potential to be developed in other disease states where iron replacement is required.

We are actively evaluating additional indications for potential development.

If we determine that a new indication demonstrates the potential for a sufficient return on investment, we will evaluate initiating clinical development of Triferic for such indication(s), provided we have the funding to do so.

We are regulated by the FDA under the Federal Food, Drug and Cosmetics Act, as well as by other federal, state and local agencies.

We hold several FDA product approvals including for both drugs and medical devices.

As of December 31, 2019, we had approximate balances of $11.8 million of cash and cash equivalents, $14.3 million of investments available-for-sale, working capital of $24.5 million and an accumulated deficit of $306.5 million .

Net cash used in operating activities for the twelve months ended December 31, 2019 was approximately $27.3 million .

We will require significant additional capital to sustain our operations and make the investments needed to execute our longer-term business plan.

On February 4, 2020, we entered into an underwriting agreement (the “Underwriting Agreement”) with Cantor Fitzgerald & Co., as underwriter (the “Underwriter”), pursuant to which we (i) agreed to issue and sell an aggregate of 3,191,489 shares of our common stock (the “Shares”) to the Underwriter and (ii) granted the Underwriter an over-allotment option for 30 days to purchase up to an additional 478,723 shares that may be sold upon the exercise of such option by the Underwriter (the “Offering”).

The Shares were purchased by the Underwriter from us at a price of $2.22 per share.

The Offering was made pursuant to our effective Registration Statement on Form S-3 (File No.

333-227363), which was previously filed with the SEC under the Securities Act.

The Offering closed on February 6, 2020.

On February 19, 2020, the Underwriter exercised its over-allotment option in full and an additional 478,723 shares were sold to the Underwriter on February 21, 2020.

We raised a total of $8.0 million, net of estimated issuance costs of $0.2 million, relating to the Offering.

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, as collateral agent, and the lenders party thereto to obtain term loans in an amount up to $35.0 million.

$22.5 million was drawn under the Loan Agreement on the date of closing and the remaining $12.5 million will be available for subsequent draws based on our achievement of certain milestones.

Net proceeds at closing were approximately $21 million after deducting estimated fees and expenses of $1.5 million.

Interest on the loans will accrue either in cash or a combination of cash and in kind interest, at our election.

Cash interest will accrue at a rate equal to the greater of (i) Prime Rate (as defined in the Loan Agreement) and (ii) 4.75% plus 4.00%, for an initial interest rate of 8.75% per annum.

We have 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.

We are entitled to make interest-only payments for thirty months, or up to thirty-six months if certain conditions are met.

The Loan Agreement contains representations and warranties, affirmative and negative covenants, and events of default that are customary for credit facilities of this type.

The term loans will mature on March 16, 2025.

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.

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 commercialization of Dialysate Triferic and I.V.

Triferic, if approved, and executing plans for enhancing its medical capabilities and generating additional data for Triferic.

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.

Our Initial Market Opportunity – Hemodialysis

Hemodialysis is the primary treatment modality for ESRD employed in the United States with approximately 90% of all dialysis patients receiving in-center hemodialysis.

We do not currently compete in the peritoneal or home dialysis segments.

Hemodialysis treatments are primarily performed in freestanding clinics, as well as in some hospitals.

The majority of dialysis services are performed by national and regional for-profit dialysis chains.

Based on data published by the United States Renal Data Systems (“USRDS”) we estimate that there are approximately 7,300 Medicare-certified hemodialysis treatment clinics in the United States.

The two largest national for-profit dialysis chains service approximately 73% of the domestic in-center hemodialysis market.

According to the most recent statistics published by USRDS, there were approximately 523,000 dialysis patients in the United States as of the end of 2017, of which approximately 468,000 were receiving hemodialysis.

Based on a global market study published by a major dialysis products manufacturer, the global ESRD population receiving some form of treatment was estimated to be over 3.2 million patients at the end of 2017 with the overall global patient population growing approximately 6% annually.

Data from USRDS and the European Renal Association indicates that there are more than two million patients undergoing hemodialysis globally.

According to the National Kidney Foundation, 10% of the worldwide population is affected by chronic kidney disease and millions die each year because they do not have access to affordable treatments.

We have observed that the ESRD patient population in the United States has grown steadily over the past several decades and we expect the United States dialysis population to grow approximately 3% annually over the next several years.

The Asia-Pacific market is projected to experience rapid growth in both the incidence of kidney disease and total treatment in the ESRD population over the next decade.

One common side-effect of dialysis treatments is iron deficiency anemia.

The great majority of hemodialysis patients receive dialysis treatment three times per week, or approximately 150 times per year.

Most patients have their dialysis treatment performed at a free-standing clinic for permanent loss of kidney function; these are called “chronic” patients.

Some have their treatment performed at hospitals for temporary loss of kidney function; these are called “acute” patients.

A small percentage of chronic patients receives their treatment at home; these are called “home” dialysis patients.

In each setting, a dialysis machine dilutes concentrated solution, such as Rockwell’s concentrate products, with purified water.

The resulting solution is called dialysate.

Dialysate is pumped through an artificial kidney or filter (called a dialyzer) while the patient’s blood is pumped through a semi-permeable membrane inside the dialyzer in the opposite direction the dialysate is flowing.

The dialysate can exchange bicarbonate, sodium, calcium, magnesium and potassium into the patient’s blood while removing fluid and waste.

Dialysate generally contains dextrose, sodium chloride, calcium, potassium, magnesium, sodium bicarbonate and citric acid or acetic acid.

The patient’s physician chooses the proper concentrations required for each patient based on each particular patient’s needs.

In addition to using concentrate products during every in-center treatment, a dialysis provider also uses other products such as blood tubing, fistula needles, dialyzers, drugs, specialized component kits, dressings, cleaning agents, filtration salts and other supplies, some of which we sell.

Triferic (Ferric Pyrophosphate Citrate)

Triferic is the first and only FDA-approved iron replacement product indicated for the replacement of iron to maintain hemoglobin in adult patients with hemodialysis-dependent chronic kidney disease ("HDD-CKD").

Each hemodialysis treatment results in a small amount of blood loss due to trapping of red blood cells in the extracorporeal blood circuit and blood loss from vascular access.

This blood loss, when combined with repeated blood draws, increased blood losses from the gastrointestinal (“GI”) tract and stimulation of erythropoiesis by use of erythropoiesis stimulating agents (“ESAs”), frequently results in iron deficiency and anemia in hemodialysis patients.

In total, hemodialysis-related and GI iron losses amount to about 1 g - 1.5 g of elemental iron annually, not taking into consideration possible blood losses from dialyzer clotting or bleeding from surgical procedures related to vascular access.

We believe Triferic addresses an important unmet need in the treatment of ongoing iron losses and anemia in ESRD patients.

Triferic’s unique mode-of-action distinguishes it from conventional I.V.

iron products because Triferic donates iron to transferrin, immediately, and completely, as soon as it enters the blood, providing bioavailable iron to the body.

The iron bound to transferrin is transported to the bone marrow to make hemoglobin.

Triferic delivers approximately 5 – 7 mg of iron with every hemodialysis treatment to the bone marrow and maintains hemoglobin without increasing iron stores (ferritin).

In addition to the unique mechanism of action of Triferic, our first formulation of the drug is delivered via the dialysate, which is an innovative mode of delivery that we believe adds a convenience factor for the dialysis units.

We developed Dialysate Triferic as the first and only FDA-approved product indicated to replace iron and maintain hemoglobin concentration in adult hemodialysis patients.

We developed I.V.

Triferic, a novel intravenous (“IV”) formulation of Triferic that would be used for the same indication, if approved, and we have a PDUFA date of March 28, 2020.

Descriptions of Dialysate Triferic and I.V.

Triferic are set forth below.

Dialysate Triferic

Dialysate Triferic received FDA approval in January 2015 and remains the only FDA-approved therapy indicated to replace iron and maintain hemoglobin in adult hemodialysis patients.

In May 2019, we commenced commercial sales of Dialysate Triferic in the United States.

In 2013, we successfully completed two pivotal Phase 3 efficacy trials, called CRUISE-1 and CRUISE-2, for Dialysate Triferic.

The CRUISE studies were identical single-blind, placebo controlled, parallel group, multi-center studies comparing Triferic delivered via hemodialysis bicarbonate concentrate to placebo group receiving standard hemodialysis solution, with approximately 600 subjects split evenly between the two studies and treatment arms.

Oral or IV iron supplementation was prohibited, and ESA doses were held constant.

Both CRUISE studies successfully met their primary endpoint, demonstrating a statistically significant mean change in hemoglobin from baseline to end-of-treatment.

All of our concentrate products are manufactured according to Association for the Advancement of Medical Instrumentation guidelines and the FDA's Current Good Manufacturing Practice ("cGMP").

Our concentrate products are diluted with purified water on-site at the clinic in the dialysis machine, creating dialysate, which works to clean the patient’s blood.

CitraPure Citric Acid Concentrat e

Our CitraPure Concentrate is citric acid-based, and 100% acetate-free, in contrast to the acetate-based products used for many years.

CitraPure does not promote inflammation associated with acetate-based products and the reduction in inflammation is beneficial to improving patient outcomes.

Citrate acts as an anticoagulant and has been shown in clinical studies to reduce the need for heparin during dialysis treatment (CitraPure is not indicated for heparin sparing).

CitraPure is packaged as a liquid and as a dry powder acid concentrate for use with our Dry Acid Concentrate Mixer.

CitraPure is packaged as dry acid concentrate in 25 gallon cases and liquid acid concentrate in 55 gallon drums and four one gallon jugs to a case.

Dri-Sate Dry Acid Concentrate

Our Dri-Sate Concentrate is our original acetic acid-based product.

Dri-Sate is packaged as a dry powder acid concentrate for use with our Dry Acid Concentrate Mixer.

Dri-Sate is packaged as dry acid concentrate in 25 gallon cases.

RenalPure Liquid Acid Concentrate

Our RenalPure Liquid Concentrate is our original acetic acid-based product and is packaged in 55 gallon drums and four one gallon jugs to a case.

Dry Acid Concentrate Mixer

Our Dry Acid Concentrate Mixer is designed for our CitraPure and Dri-Sate Dry Acid products and enables the clinic to mix acid concentrate on-site.

Clinics using our Dry Acid Concentrate products realize numerous advantages, including lower cost per treatment, reduced storage space requirements, reduced number of deliveries and more flexibility in scheduling deliveries, while enabling us to reduce distribution and warehousing costs.

RenalPure and SteriLyte Bicarbonate Concentrate

RenalPure bicarbonate is a dry powder mixed on-site at the clinic and is packaged for bulk and individual treatment and SteriLyte bicarbonate is a liquid packaged in four one gallon jugs to a case and is used mainly in acute care settings.

Ancillary Products

We offer certain ancillary products to selected customers including cleaning agents, 6% bleach for disinfection, citric and descale, filtration salts and other supplies used by hemodialysis providers.

Our Triferic Portfolio

Triferic - The First and Only FDA-Approved Therapy to Replace Iron and Maintain Hemoglobin.

Triferic (dialysate) and Triferic AVNU (IV) are currently the only FDA-approved therapies indicated to replace iron and maintain hemoglobin in adult hemodialysis patients.

These were our first products based on our FPC platform technology.

Triferic (dialysate) in a liquid form was approved in 2015.

In 2016, the powder version of Triferic (dialysate) was also approved.

These two formulations provide a convenient means to administer Triferic (dialysate) in a clinical setting.

Triferic AVNU, approved in 2020, has the same indication for use as Triferic (dialysate), but it is formulated for delivery as an IV infusion.

Each hemodialysis treatment results in a small amount of blood loss due to trapping of red blood cells in the extracorporeal blood circuit and blood loss from the vascular access.

This blood loss, when combined with repeated blood draws, increased blood loss from the gastrointestinal (“GI”) tract and stimulation of erythropoiesis by use of erythropoiesis stimulating agents (“ESAs”), frequently results in iron deficiency in hemodialysis patients.

Hemodialysis-related blood loss averages about 1g to 1.5g of elemental iron annually, not taking into consideration possible blood losses from dialyzer clotting or bleeding from surgical procedures related to vascular access.

We believe Triferic addresses an important unmet need in the treatment of ongoing iron losses and anemia in ESKD patients.

Triferic’s unique mode-of-action (see “Platform Technology” above) distinguishes it from traditional macromolecular IV iron because Triferic donates iron to transferrin, immediately, and completely, as soon as it enters the blood, providing immediately bioavailable iron to the body.

The iron bound to transferrin is transported to the bone marrow to facility the body’s manufacture of hemoglobin.

Triferic delivers approximately 5 mg to 7 mg of iron to the bone marrow with every hemodialysis treatment and maintains hemoglobin without increasing iron stores (ferritin).

Triferic (dialysate)

Triferic (dialysate) and Triferic AVNU are currently the only FDA-approved therapy indicated to replace iron to maintain hemoglobin in adult hemodialysis patients.

We believe that Triferic, due to its unique mechanism of action, facilitates both potential clinical and cost-saving benefits.

Triferic is an innovative iron therapy that replaces the ongoing iron losses that routinely occur in the vast majority of hemodialysis patients.

Our first formulation of the drug is delivered via the dialysate, which is an innovative mode of delivery that we believe adds a convenience factor for the dialysis units.

The first presentation of Triferic (dialysate) is a liquid, single-patient dose, which was approved by the FDA in 2015.

The second presentation is a powder packet, multiple-use formulation of Triferic (dialysate), which was approved by the FDA in 2016.

We built a commercial organization for our Triferic products and launched both Triferic products in the United States in May 2019.

CRUISE Studies

In 2013, we successfully completed two pivotal Phase 3 efficacy trials, called CRUISE-1 and CRUISE-2, for Triferic.

The CRUISE studies were identical single-blind, placebo controlled, parallel group, multi-center studies comparing Triferic delivered via hemodialysis bicarbonate concentrate to a placebo group receiving standard hemodialysis solution, with approximately 600 subjects split evenly between the two studies and treatment arms.

Oral or IV iron supplementation was

withheld, and ESA doses were held constant.

Both CRUISE studies successfully met their primary endpoint, demonstrating a statistically significant difference in hemoglobin concentrations between the placebo group and Triferic.

Triferic also met key secondary endpoints including maintenance of hemoglobin, maintenance of reticulocyte hemoglobin and increase in serum iron pre-to-post treatment without an increase in ferritin.

A supportive clinical trial, called the PRIME study, demonstrated that Dialysate Triferic significantly reduced the need for ESA and IV iron during dialysis compared to the placebo arm dialyzed using conventional dialysate.

A supportive clinical trial, called the PRIME study, demonstrated that Triferic (dialysate) significantly reduced the need for ESA and IV iron during dialysis compared to the placebo arm dialyzed using conventional dialysate.

The PRIME study was a nine-month, prospective, randomized, placebo-controlled, double-blinded, multi-center study in the United States that randomized patients equally to dialysate containing Triferic versus conventional dialysate.

5 unchanged sentences

According to data from Dialysis Outcomes and Practice Patterns Study, a study of hemodialysis practices in the United States, hypo-responsive patients, as defined in the PRIME study, represent more than 20% of the dialysis population.

Finally, patients treated with Triferic in this study used 51% less IV iron than the placebo.

Finally, overall patients treated with Triferic in this study used 51% less IV iron than those treated with the placebo.

In January 2014, we completed our long-term safety study for Triferic which was a prospective, randomized, double-blinded, placebo-controlled, crossover, multicenter, multinational, Phase 3 study with an enrollment of 718 hemodialysis patients in the United States and Canada.

This large-scale long-term safety study, coupled with the successful Phase 3 CRUISE studies, dosed over 100,000 Triferic administrations and demonstrated a safety profile similar to placebo.

Dialysate Triferic received a reimbursement J-code on January 1, 2016 from the Centers for Medicare & Medicaid Services (“CMS”), providing that Dialysate Triferic 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 Dialysate Triferic a separate J-Code, which became effective on July 1, 2019.

In June 2018, the Company determined, based on feedback provided from CMS’s Innovation Center (“CMMI”), that Dialysate Triferic 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 Dialysate Triferic with reimbursement within the bundle of payments to dialysis providers, while continuing to develop I.V.

Triferic (discussed below).

We commercially launched Dialysate Triferic in May 2019.

We are also developing I.V.

Triferic, an intravenous formulation of Triferic, for use by hemodialysis patients in the United States as well as international markets.

Triferic was developed pursuant to a Special Protocol Assessment (“SPA”) with the FDA.

As part of the SPA, the FDA agreed that an equivalence approach would be acceptable for I.V.

In other words, rather than conducting additional safety and efficacy trials, the FDA agreed that our NDA would be acceptable if we are able to show equivalence between I.V.

Triferic and Dialysate Triferic by comparing pharmacokinetic (“PK”) parameters of total iron and transferrin-bound iron of I.V.

Triferic to Dialysate Triferic.

The formal equivalence study was completed during 2018, and I.V.

Triferic met bioequivalence criteria compared with Dialysate Triferic.

Triferic is a new formulation and new method of administration, the FDA advised us that it requires a new 505(b)1 NDA.

We held a pre-NDA meeting with the FDA during which the FDA agreed that the equivalence study was adequate for submission of an NDA.

No other material issues were raised regarding our studies and a potential NDA filing.

Based on the data from the equivalence study and feedback received during the pre-NDA meeting, on May 28, 2019, we submitted a NDA seeking FDA approval to market I.V.

Triferic in the United States for the clinical indication of replacing iron and maintain hemoglobin in adult dialysis patients.

We have a PDUFA date of March 28, 2020.

On November 1, 2018, CMS issued interpretive guidance on the availability of Medicare reimbursement for certain products indicated to treat renal disease (the “CMS Guidance”).

As set forth in the CMS Guidance, Dialysate Triferic would not be eligible for add-on reimbursement under the CMS Transitional Drug Add On Pricing Adjustment (“TDAPA”) program.

However, based on the CMS Guidance, we believed that, if approved by the FDA on or after January 1, 2020, I.V.

Triferic would be eligible for separate sole source payment with a separate J-Code for a two-year timeframe.

However, on October 31, 2019, CMS finalized revised guidance regarding the TDAPA program that significantly limited the eligibility of new products for TDAPA to only certain NDA types, as classified by the FDA.

Pursuant to the revised guidance, I.V.

Triferic will not be eligible for TDAPA.

Limitations of Existing Therapies for Anemia in Hemodialysis Patients

The current standard of care for treating anemia in HDD-CKD patients includes injectable ESAs and IV iron products.

ESAs and IV iron products are often used together to address the two primary causes of anemia in dialysis patients:

low erythropoietin (“EPO”) levels and iron deficiency.

Reimbursement

Triferic (dialysate) received a reimbursement J-code on January 1, 2016 from the Centers for Medicare & Medicaid Services (“CMS”), providing that it would be reimbursed for administration to dialysis patients within the existing fixed-price “bundle” of payments that CMS provides to dialysis providers.

In June 2018, the Company determined, based on feedback provided from CMS’s Innovation Center (“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 (IV).

On April 26, 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.We commercially launched Triferic (dialysate) in May 2019.

Triferic AVNU (IV)

We also developed Triferic AVNU, an IV formulation of Triferic, for use by hemodialysis patients in the United States as well as international markets.

Triferic AVNU was developed pursuant to a Special Protocol Assessment (“SPA”) with the FDA.

As part of the SPA, the FDA agreed that an equivalence approach would be acceptable for Triferic AVNU.

As a result, rather than conducting additional safety and efficacy trials, the FDA agreed that our NDA would be acceptable, if we were able to show equivalence between Triferic AVNU and Triferic (dialysate) by comparing pharmacokinetic (“PK”) parameters of total iron and transferrin-bound iron of Triferic AVNU to Triferic (dialysate).

The formal equivalence study was completed during 2018, and Triferic AVNU met bioequivalence criteria compared with Triferic (dialysate).

Triferic AVNU was approved by the FDA on March 27, 2020.

The approval and commercial availability of Triferic AVNU is an important advance for the portfolio given that Triferic AVNU can be administered to any hemodialysis patient regardless of the type of bicarbonate technology, or machine technology including hemodiafiltration, used.

Use of Triferic (dialysate) is limited to clinics that use a central loop or liquid jugs to deliver bicarbonate.

However, Triferic AVNU must be delivered at every dialysis session via slow IV infusion, over 3-4 hours, which may be logistically challenging for some clinics.

In November 2018, CMS issued interpretive guidance on the availability of Medicare reimbursement for certain products indicated to treat renal disease.

Under this guidance, Triferic (dialysate) is ineligible for add-on reimbursement under the CMS Transitional Drug Add On Pricing Adjustment (“TDAPA”) program.

However, based on that guidance, we believed that Triferic AVNU would remain eligible for add-on reimbursement, so long as it was approved by the FDA on or after

January 1, 2020.

In October 2019, CMS revised its guidance to significantly limit the eligibility of new products for TDAPA to only certain NDA types, as classified by the FDA.

Based on the guidance issued by CMS in 2019, Triferic AVNU is not eligible for add-on reimbursement and will be reimbursed within the “bundle,” as with Triferic (dialysate).

We are also continuing to research other presentations of, and delivery methodologies for, Triferic for potential application in ESKD patients within the dialysis sector in an effort to maximize the commercial potential of Triferic.

Furthermore, we intend to initiate clinical studies that would assess Triferic with new prolyl hydroxylase inhibitors in the clinical setting (See Clinical Development and R&D below).

Once a new prolyl hydroxylase inhibitor is available for use, we expect to initiate a study of Triferic to maintain hemoglobin levels.

MARKETING, SALES AND INTERNATIONAL

Market Opportunity

The United States hemodialysis market is currently the largest market in the world for dialysis products.

As of 2018, there were an estimated 551,000 hemodialysis patients.

Hemodialysis is the primary treatment modality for ESKD employed in the United States, with approximately 88% of all dialysis patients receiving in-center hemodialysis.

There were an estimated 485,000 in-center hemodialysis patients in the United States, representing approximately 73 million treatments annually.

We do not currently compete in the other two segments, peritoneal, representing approximately 10% of the total patients, or home dialysis, representing approximately 2% of the total patients.

Hemodialysis treatments are primarily performed in freestanding clinics and in some hospitals.

LDO = Large Dialysis Organization MDO = Mid-sized Dialysis Organization SDO = Small Dialysis Organization

Based on a global market study published by a major dialysis products manufacturer, the global ESKD population receiving some form of treatment was estimated to be over 3.2 million patients at the end of 2017 with the overall global patient population growing approximately 6% annually.

Data from USRDS and the European Renal Association indicates that there are

more than two million patients undergoing hemodialysis globally.

According to the National Kidney Foundation, 10% of the worldwide population is affected by chronic kidney disease and millions die each year because they do not have access to affordable treatments.

We have observed that the ESKD patient population in the United States has grown steadily over the past several decades and we expect the United States dialysis population to grow approximately 3% annually over the next several years.

The Asia-Pacific market is projected to experience rapid growth in both the incidence of kidney disease and total treatment in the ESKD population over the next decade.

One common side-effect of dialysis treatments is iron deficiency anemia.

The great majority of hemodialysis patients receive dialysis treatment three times per week, or approximately 153 times per year.

Most patients have their dialysis treatment performed at a free-standing clinic for permanent loss of kidney function.

These are commonly referred to as “chronic” patients.

Patients that have their treatment performed at hospitals for temporary loss of kidney function are typically referred to as “acute” patients.

The small percentage of chronic patients that receives their treatment at home are referred to as “home” dialysis patients.

In each setting, a dialysis machine dilutes concentrated solution, such as Rockwell’s concentrate products, with purified water.

The resulting solution is called dialysate.

The dialysate can exchange bicarbonate, sodium, calcium, magnesium and potassium into the patient’s blood, while removing fluid and waste.

Dialysate generally contains dextrose, sodium chloride, calcium, potassium, magnesium, sodium bicarbonate and citric acid or acetic acid.

The patient’s physician chooses the proper concentrations required for each patient based on each particular patient’s needs.

Limitations of Existing Anemia Therapies for HDD-CKD Patients

The primary causes of anemia in dialysis patients are loss of renal erythropoietin (“EPO”) production and iron deficiency due to chronic inflammation and increased blood losses related to uremia and hemodialysis.

The result is an iron loss of∼5–7mg per dialysis session.

The current standard of care for treating anemia in HDD-CKD patients are injectable ESAs and traditional macromolecular IV iron.

ESAs and traditional macromolecular IV iron are often used together.

HDD-CKD patients have abnormalities in iron metabolism caused by ongoing blood loss during the hemodialysis treatment, repeated blood draws to follow laboratory parameters and a limited diet.

Furthermore, absorption of iron from the diet and mobilization from body stores is reduced due to increases in a peptide called hepcidin.

Hepcidin is the master regulator of iron uptake and distribution and is elevated in patients with inflammation, such as ESKD patients on dialysis.

Since iron is a critical component of hemoglobin production, reduced levels of iron can cause iron deficiency anemia.

EPO is a hormone that is produced by the kidneys and stimulates red blood cell production in the bone marrow.

In patients with CKD, the kidneys do not make enough EPO and as a result the bone marrow makes fewer red blood cells, causing anemia.

ESAs are synthetic recombinant versions of human EPO that are administered to CKD patients to stimulate EPO production.

In patients with HDD-CKD, the kidneys do not make enough EPO and as a result the bone marrow makes fewer red blood cells, causing anemia.

ESAs are synthetic recombinant versions of human EPO that are administered to HDD-CKD patients to stimulate red blood cell production.

Administration of ESAs creates a significant demand for iron in the bone marrow, since iron is a critical building block for hemoglobin that is contained in red blood cells.

CKD patients often have deficient serum iron levels, which can be caused by a number of factors including, but not limited to, blood lost during hemodialysis treatments and related lab testing, the limited diets of CKD patients, and iron sequestration and reduced absorption of dietary iron which are caused by elevated levels of hepcidin, a hormone that regulates iron metabolism.

Since iron is a critical component of hemoglobin production, reduced levels of iron can cause iron deficiency anemia.

IV iron is used to support anemia management in dialysis patients to achieve or maintain an iron replete state prior to, during and following initiation of ESA therapy.

IV iron products are macromolecular complexes which are taken up by macrophages where iron gets stored.

Traditional IV iron carbohydrate products are macromolecular carbohydrate complexes which are taken up by macrophages which transfer to the liver where iron gets stored.

Iron complexes are metabolized within the macrophages to release iron so that it can bind to transferrin in plasma - the iron carrier in the circulation.

Transferrin carries the iron to the bone marrow for hemoglobin generation during red cell production.

Due to the inflammation present in hemodialysis patients, hepcidin, the master molecule responsible for regulation of iron absorption from the GI tract and export of recycled iron from the macrophages is released, thereby blocking the release of iron from macrophages, which is referred to as iron sequestration.

Due to the inflammation present in hemodialysis patients, hepcidin, the master molecule responsible for regulation of iron absorption from the GI tract and export of recycled iron from the macrophages is elevated, thereby blocking the release of iron from macrophages, which is referred to as iron sequestration.

This reduces the efficiency of iron delivery to the bone marrow for erythropoiesis, leading to a state of functional iron deficiency.

Since IV iron finds a depot in macrophages it can be administered in large doses and is therefore ideally suited as a replacement therapy in iron depleted patients.

Consistent with this mechanism of action, IV iron products were approved as large dose injection/infusion to replenish and restore iron stores in iron-depleted patients (serum ferritin level < 200 ng/mL) with iron deficiency anemia.

However, since IV iron has been the only therapy available for hemodialysis patients for over 30 years it has been commonly used off-label

in hemodialysis patients in a proactive manner for maintaining iron balance and preventing the development of iron deficient state.

When iron-carbohydrate complexes are administered IV to hemodialysis patients, a significant portion of the iron is sequestered and the dose needed to deliver sufficient iron to the bone marrow far exceeds the amount of iron lost, hence causing progressive and cumulative tissue iron overload with concomitant elevation of serum ferritin levels.

In summary, we believe that cumulative tissue iron overload caused by IV iron over time is potentially hazardous to patients.

The long term safety of IV iron remains to be established.

Furthermore, the carbohydrate moiety in IV iron complexes is thought to be responsible for anaphylactic reactions seen in all IV iron complexes although rarely.

Our Triferic Portfolio

Triferic is structurally and functionally different from IV iron and is specifically FDA-approved to treat the small amounts of iron losses that all dialysis patients experience.

Triferic is unique in molecular structure, mode-of-action (bypassing the hepcidin induced block to iron release from the macrophages) and the FDA-approved clinical indication (to replace iron and maintain hemoglobin in adult hemodialysis patients).

All components of Triferic are physiologic and present in all mammals.

Triferic is used proactively in hemodialysis patients to maintain iron homeostasis such that the amount delivered to the patient and to the bone marrow for erythropoiesis closely approximates the amount lost.

Consequently, tissue iron overload is avoided, unlike when iron-carbohydrate complexes are administered proactively.

Triferic delivers iron and maintains hemoglobin without increasing iron stores (ferritin) and thus addresses an unmet need.

Finally, Triferic has demonstrated an excellent safety profile in clinical trials and in the Company’s sample demonstration program.

No reported instances of anaphylaxis have been received during more than 1,000,000 doses administered and Triferic can be administered even to patients with history of allergic reactions to IV iron.

The First and Only FDA-Approved Therapy to Replace Iron and Maintain Hemoglobin .

As of now, Triferic is the only FDA-approved therapy indicated to replace iron and maintain hemoglobin in adult hemodialysis patients.

We believe that Triferic, due to its unique mechanism of action, facilitates potential clinical and cost-saving benefits.

Triferic is an innovative iron therapy that replaces the ongoing iron losses that routinely occur in the vast majority of hemodialysis patients.

Effective January 1, 2016, Triferic received a CMS reimbursement code, commonly referred to as a J-Code, for the liquid presentation of Dialysate Triferic.

An additional J-code for the Triferic powder packet presentation of Dialysate Triferic was received effective July 1, 2019.

Dialysate and I.V.

Formulations .

We have two primary formulations of Triferic for commercialization:

Dialysate Triferic and I.V.

We launched Dialysate Triferic, a formulation that is delivered through dialysate, including a liquid form and a powder form, in May 2019.

We received FDA approval to market Dialysate Triferic in liquid form in 2015 and in powder form in 2016.

Dialysate Triferic is reimbursed within the CMS bundled rate for dialysis providers.

We have also developed I.V.

Triferic, an I.V.

formulation of Triferic, for which we submitted an NDA in May 2019.

Importantly, I.V.

Triferic can be delivered to patients who receive their treatment with dialysis machines using bicarbonate cartridges, which we believe is the predominant form of bicarbonate delivery in Europe and certain other non-U.S.

International Opportunities .

Our strategy for Triferic outside the United States is to license it to key partners for development and/or commercialization.

To date, we have established partnerships in China, India, Canada, Peru and Chile.

We are actively pursuing international licensing opportunities in other countries and regions, with a focus on Europe, Japan and Latin America.

Based on our discussions with market participants, we believe that many international markets disproportionately utilize dialysis machines that operate using dry bicarbonate cartridges or bags, whereas the majority of the United States market utilizes machines that operate using a liquid bicarbonate solution.

As a result, we believe the international market opportunity for I.V.

Triferic is greater than that of Dialysate Triferic due to the fact that Dialysate Triferic must be mixed with a liquid bicarbonate solution prior to administration.

Triferic, on the other hand, can be infused regardless of the type of dialysis machines or hemodialysis solutions that are being utilized.

We have received regulatory approval for Dialysate Triferic in Peru, and we expect to receive regulatory approval for Dialysate Triferic in Chile in 2020.

We also have a license agreement (the "Wanbang Agreement") with Wanbang Biopharmaceutical, Co., Ltd.

(“Wanbang”), for the development and commercialization of Triferic in China, which grants to Wanbang rights to both Dialysate Triferic and I.V.

Triferic in China.

Develop Additional Product Presentations and Clinical Programs for Triferic in ESRD .

We are also continuing to evaluate, research, and explore other presentations of Triferic for potential application in ESRD patients.

In addition, we believe that Triferic represents an innovative development within ESRD and we will be initiating preclinical studies that will evaluate the compatibility of Triferic with the new prolyl hydroxylase inhibitors versus IV iron.

Dialysis Concentrate Products

We manufacture, sell, deliver and distribute hemodialysis concentrates, along with certain ancillary products.

As one of the two major suppliers in the United States, our dialysis concentrate products, as more fully described below, are used to maintain human life by removing toxins and replacing critical nutrients in the dialysis patient’s bloodstream.

We use Baxter Healthcare

Corporation (“Baxter”) as our exclusive marketer and distributor in the United States and in select foreign markets pursuant to an Exclusive Distribution Agreement, as amended (collectively, the “Distribution Agreement”).

Since macromolecular IV iron finds a depot in macrophages, it is administered in large doses and is, therefore, suited as a replacement therapy in iron depleted patients.

Consistent with this mechanism of action, traditional macromolecular IV iron was approved as large dose injection/infusion to replenish and restore iron stores in iron-depleted patients (serum ferritin level < 200 ng/mL) with iron deficiency anemia.

Since macromolecular IV iron has been the only therapy available for hemodialysis patients for over 30 years, it has been commonly used off-label in hemodialysis patients in a proactive manner for maintaining iron balance and preventing the development of iron deficient state.

When iron-carbohydrate complexes are administered intravenously to hemodialysis

patients, a significant portion of the iron is sequestered, therefore, the dose needed to deliver sufficient iron to the bone marrow far exceeds the amount of iron lost, causing progressive and cumulative tissue iron overload with concomitant elevation of serum ferritin levels.

In summary, we believe that cumulative tissue iron overload caused by high doses of macromolecular IV iron over time may lead to complications such as infections and cardiovascular disease, which are potentially hazardous to patients’ long-term health.

Furthermore, the carbohydrate moiety in IV iron complexes is thought to be responsible for anaphylactic reactions occasionally seen in IV iron complexes.

HIF-PHI Opportunity

A class of drugs, known as hypoxia-inducible factor prolyl hydroxylase inhibitors ("HIF-PHIs"), are in development for a variety of indications, including the treatment of anemia for patients with chronic kidney disease.

HIF-PHIs are designed to stimulate erythropoiesis and manage iron utilization, and can be administered orally.

Certain HIF-PHI compounds, including roxadustat and vadadustat, have reached or completed Phase 3 development in the United States, and an NDA for roxadustat was submitted in the United States in December 2019 and remains pending FDA review.

If approved, HIF-PHIs could potentially offer a more convenient alternative to injectable ESAs for treatment of anemia in CKD patients, while potentially increasing iron availability for hemoglobin synthesis.

Based on published presentations of data from a roxadustat trial, we believe the introduction of HIF-PHIs may be an opportunity for us to establish Triferic as a preferred therapy for iron replacement with this new class of drugs.

Based on our understanding of the trial, Triferic given at each dialysis could be sufficient for the iron needs of the average roxadustat dialysis patient (see Clinical Pipeline below for more information on our study plans).

Home Infusion

Home infusion therapy includes specialized services that allow patients to receive intravenous medications at home.

Providers are specialized, closed-door pharmacies with expertise in sterile compounding and clinical management of IV therapies.

The therapy is supported by multi-disciplinary clinical teams (pharmacists, nurses, dietitians and doctors).

Many patient groups requiring home infusion therapies suffer from chronic diseases that are associated with a risk of iron deficiency and anemia.

As an example, one group in particular at high risk for developing iron deficiency anemia (“IDA”) is patients who require parenteral nutrition.

It is estimated that 40-55% of all patients on parenteral nutrition are iron deficient.

Patients with IDA can exhibit symptoms of fatigue, shortness of breath, rapid or irregular heartbeats and glossitis - all which affect quality of life.

The majority of these patients are undertreated, due in part to limitations with currently available IV iron products.

Home infusion represents a large and rapidly growing segment of healthcare where we believe FPC may have distinct advantages over currently available iron replacement therapy options.

Diseases Often Treated With Infusion Therapy At Home

Diseases commonly requiring infusion therapy include infections that are unresponsive to oral antibiotics, cancer and cancer-related pain, dehydration, gastrointestinal diseases or disorders which prevent normal functioning of the gastrointestinal system, and more.

A recent National Home Infusion Association (NHIA) study found that in 2019 home infusion and specialty providers cared for more than 3 million patients in the United States, representing a 300% increase since the last industry study in 2008.

Until the 1980s, patients receiving infusion therapy had to remain in the inpatient setting for the duration of their therapy, which often lasted for several hours.

Heightened emphasis on cost-containment in health care, as well as developments in the clinical administration of the therapy, led to strategies to administer infusion therapy in alternate settings.

For individuals requiring long-term therapy, inpatient care is not only tremendously expensive but also prevents the individual from resuming normal lifestyle and work activities.

The technological advances that enabled safe and effective administration of infusion therapies in the home, the desire of patients to resume normal lifestyles and work activities while recovering from illness, and the cost-effectiveness of home care are important.

Consequently, home infusion therapy has evolved into a comprehensive medical therapy that is a much less costly alternative to inpatient treatment in a hospital or skilled nursing facility.

Home infusion has been proven to be a safe and effective alternative to inpatient care for many disease states and therapies.

For many patients, receiving treatment at home or in an outpatient infusion suite setting is preferable to inpatient care.

A thorough patient assessment and home assessment are performed before initiating infusion therapy at home to ensure that the patient is an appropriate candidate for home care (Source:

www.nhia.org).

Home infusion therapy allows patients that require multiple on-going infusions of medications to receive them in the comfort of their own home.

The benefits include, increased quality of life, shorter hospital/skilled nursing facility length of stay, lower rates of depression and fatigue, less opioid use and reduced risk of hospital/facility acquired infections.

Growth In Home Infusion

The home and specialty infusion marketplace is experiencing rapid growth and provides a favorable reimbursement opportunity for suitable drugs because of the benefits listed above.

In addition to these factors, COVID-19 and its impact has accelerated existing trends.

We believe the home infusion sector will continue to grow in the future.

Growth will be driven by:

(1) high rates of patient demand, and satisfaction with services, (2) site of care optimization programs driving by commercial payers, (3) legislation to expand coverage for Medicare beneficiaries and (4) a robust pipeline of specialty IV treatments.

Iron Deficiency Anemia In Home Infusion

IDA is a common comorbidity for many different types of patients with diseases that are treated with home infusion therapy.

It is recommended that patients receiving home parenteral nutrition be screened regularly for anemia.

Treatment with parenteral iron for these patients with iron deficiency is recommended.

Inadequate response to treatment may be related to continued blood loss, inflammation, ineffective absorption or poor adherence to therapy.

Treatment patterns are inadequate for patients on home infusion therapy with IDA.

IV iron supplementation is more effective than oral formulations, however, concern for adverse events is a deterrent.

Home infusion of traditional macromolecular IV iron is limited due to the risk of hypersensitivity and need for medical supervision of the injection, and concerns about incompatibility with other infused drugs (e.g., stability of parenteral nutrition lipids when delivered with carbohydrate-based IV iron preparations).

An office visit for infusion of IV iron is costly, inconvenient, and often does not fit the physician practice care model.

Limitations with the current approach can lead to a vicious cycle of late diagnosis and treatment, inconsistent follow-up, and increased risk of office visits or hospitalizations.

For home parenteral nutrition (“HPN”) patients specifically, there is a significant opportunity for FPC for home infusion and an unmet need for effective proactive iron maintenance therapy.

There are approximately 113,000 HPN patients annually, of which 83,000 patients require short-term care (averaging 45 days) and 30,000 patients require long-term care.

An estimated 40% to 55% of such patients are iron deficient and the majority of patients have a negative iron balance due to low/no dietary iron absorption and inflammation.

The current treatment for these patients is daily infusions of parenteral nutrition

supplements, which last for 8 to 12 hours per day.

Traditional parenteral iron is infrequently used due to risk of hypersensitivity and concerns regarding incompatibility with lipids.

Oral iron is also considered to be inadequate due to patient inability to absorb.

We believe that the inadequacy and burden of current treatments presents an opportunity for our FPC pipeline.

We believe FPC is uniquely suited for use as a home infusion therapy:

• Home infusion clinicians are hesitant to recommend macromolecular IV iron supplementation at home due to the potential for severe hypersensitivity risk - however rare.

FPC has been demonstrated to have a safety profile similar to placebo in prospective randomized clinical trials.

• Treatment with loading doses of traditional IV iron therapy can temporarily address iron deficiency, but iron deficiency may persist due to inflammation.

FPC provides 100% immediately bioavailable iron, bypassing storage in the liver.

Iron from FPC is bioavailable even in the presence of inflammation and elevated hepcidin.

• Managing iron with loading doses of macromolecular IV iron is inconsistent for home infusion patients.

FPC can be dosed consistently in low doses as a physiologic maintenance dose to address an on-going negative iron balance and prevent iron deficiency anemia.

Sales and Marketing

Domestic Dialysis

We use Baxter as our exclusive commercial partner responsible for marketing our Dialysis Concentrate Products within the United States and in select foreign markets pursuant to an exclusive Distribution Agreement, as amended (collectively, the “Distribution Agreement”).

In June 2017, we entered into the First Amendment to Exclusive Distribution Agreement with Baxter which, among other things, enabled us to negotiate directly with DaVita, Inc.

("DaVita") on a long-term contract for the supply of our concentrate products.

In August 2019, we signed a new Products Purchase Agreement with DaVita (the "Products Purchase Agreement").

In August 2019, we signed a new Products Purchase Agreement (the "Products Purchase Agreement") with DaVita.

The Products Purchase Agreement provides for an increase in the product sale prices relative to the prices charged for products under the previous agreement with DaVita.

In March 2020, we entered into a Second Amendment to the Exclusive Distribution Agreement with Baxter (the “Second Amendment”).

The Second Amendment provides for, among other things, a commitment by Rockwell to maintain a specified manufacturing capacity for Baxter, a cap upon the net amount of reimbursable transportation expenses and modified extension terms.

We also supply dialysis concentrates to distributors serving a number of foreign countries, primarily in the Americas and the Pacific Rim.

Nipro Medical Corporation distributes our dialysis concentrates in certain countries in Latin America that are not covered under the Baxter Distribution Agreement.

Nipro Medical Corporation is our primary distributor of our dialysis concentrates in certain countries in Latin America that are not covered under the Baxter Distribution Agreement.

Dialysate concentrates accounted for approximately 98.5% of our 2020 revenue.

Approximately 91.0% of our 2020 sales were to distributors and customers for use in the United States.

All of our concentrate products are manufactured according to Association for the Advancement of Medical Instrumentation guidelines and current good manufacturing practices (“cGMP”) established pursuant to Title 21 of the Code of Federal Regulations, Part 820 (“21 CFR 820”).

Our concentrate products are diluted with purified water on-site at the clinic in the dialysis machine, creating dialysate, which works to clean the patient’s blood.

CitraPure Citric Acid Concentrate

Our CitraPure Concentrate is citric acid-based, and 100% acetate-free, in contrast to the acetate-based products used for many years.

CitraPure does not promote inflammation associated with acetate-based products and the reduction in inflammation is beneficial to improving patient outcomes.

Citrate acts as an anticoagulant and has been shown in clinical studies to reduce the need for heparin during dialysis treatment (CitraPure is not indicated for heparin sparing).

CitraPure is packaged as a liquid and as a dry powder acid concentrate for use with our Dry Acid Concentrate Mixer.

CitraPure is packaged as dry acid concentrate in 25 gallon cases and liquid acid concentrate in 55 gallon drums and four one gallon jugs to a case.

Dri-Sate Dry Acid Concentrate

Our Dri-Sate Concentrate is our original acetic acid-based product.

Dri-Sate is packaged as a dry powder acid concentrate for use with our Dry Acid Concentrate Mixer.

Dri-Sate is packaged as dry acid concentrate in 25 gallon cases.

RenalPure Liquid Acid Concentrate

Our RenalPure Liquid Concentrate is our original acetic acid-based product and is packaged in 55 gallon drums and four one gallon jugs to a case.

Dry Acid Concentrate Mixer

Our Dry Acid Concentrate Mixer is designed for our CitraPure and Dri-Sate Dry Acid products and enables the clinic to mix acid concentrate on-site.

RenalPure and SteriLyte Bicarbonate Concentrate

Ancillary Products

We offer certain ancillary products to selected customers including cleaning agents, filtration salts and other supplies used by hemodialysis providers.

Our Growth Strategies

Commercialization of Triferic .

The United States hemodialysis market is currently the largest market in the world for dialysis products.

There are an estimated 468,000 hemodialysis patients in the United States, or approximately 73 million treatments annually, approximately 98% of which are conducted in hemodialysis centers.

Dialysate Triferic.

During 2019, we built a sales, marketing, and medical infrastructure to support the launch of Dialysate Triferic.

The launch is being supported by a combination of sales representatives, nurse educators and medical science liaisons.

Triferic In The United States

Our primary customers in the United States for sales of Triferic (dialysate), Triferic AVNU and our dialysis concentrates are dialysis provider organizations.

The dialysis provider market is considerably consolidated, with the top 10 provider organizations treating approximately 90% of in-center hemodialysis patients.

We market and sell Triferic (dialysate), Triferic AVNU directly to these medium-sized, and independent dialysis chains.

Triferic (dialysate).

We have assembled a sales and marketing leadership team and a field-based sales team to support the commercialization of Triferic (dialysate) in the United States.

The team consists of sales and marketing leaders who have extensive experience selling and marketing products within the ESKD marketplace.

This leadership is supported by experienced sales representatives responsible for effectively promoting the product within the United States and clinical nurse educators and medical science liaisons responsible for supporting the integration of Triferic (dialysate) and Triferic AVNU into United States dialysis clinics.

We believe this sales force is appropriately sized for marketing Triferic to the nephrology community within the United States.

Our initial target customers include selected medium and small sized dialysis chains and independent dialysis centers.

The launch of Dialysate Triferic has enabled us to engage with key customers in the dialysis industry regarding the potential clinical and pharmacoeconomic benefits of Triferic and is providing us with valuable experience to support our future commercial and medical initiatives, as well as the potential launch of I.V.

We submitted an NDA for I.V.

Triferic in May 2019, with a PDUFA date of March 28, 2020.

We expect to launch I.V.

Triferic in the U.S.

market in the fourth quarter of 2020, subject to FDA approval.

Research to Support Triferic Value Proposition .

To support the launch of our Triferic products in the United States and globally, we are evaluating potential clinical studies and real-world data initiatives that we believe have the potential to support the value proposition for both Dialysate Triferic and I.V.

Such initiatives, if successful, have the potential to provide valuable clinical and pharmacoeconomic data that can be used by our medical teams to educate dialysis providers of the benefits of Triferic.

As an example, we have reached an agreement with EMA on a Phase 3 clinical study design for I.V.

Triferic in the European Union that would include a primary endpoint related to ESA dosing.

If successful, this trial will provide the data necessary to support a filing for regulatory approval in the E.U.

and potentially provide additional data for our U.S.

We are also collecting data from sites that are purchasing Dialysate Triferic in the United States so that we can assess the impact of Dialysate Triferic on various clinical and pharmacoeconomic measures.

International Commercialization of Triferic .

We are working to commercialize Triferic and our Triferic products in various markets across the globe.

We are actively engaged in licensing negotiations for Triferic in a number of regions and countries.

We believe that I.V.

Triferic is a more relevant method of delivery in a number of countries and will support our out-licensing efforts for those territories.

We intend to leverage the development, regulatory, commercial presence and expertise of potential business partners to accelerate sales of our products throughout the world.

To date, our international licensing agreements for Triferic have been focused primarily on Dialysate Triferic due to the fact that Dialysate Triferic is approved in the United States, thereby simplifying the approval process in certain international countries.

We expect that our international licensing activities in the future will be more focused on I.V.

Triferic given the larger market opportunity for the product in certain major markets, including Europe, Japan and China.

In 2016, we licensed the commercialization rights for Dialysate Triferic for the Chinese market to Wanbang, a subsidiary of Shanghai Fosun Pharmaceutical (Group) Co., Ltd.

("Fosun Pharma").

The People’s Republic of China is expected to become the largest ESRD market in the world over the next several years.

Commercial sales activity in this market will commence following regulatory or registration approval.

Under the terms of the Wanbang Agreement, we received an upfront payment of $4 million, which we are recognizing as revenue over the term of the agreement.

Rockwell may also receive milestone payments of up to an additional $35 million over the life of the agreement in regulatory and revenue milestone payments, beginning with regulatory approval.

We are also entitled to a transfer price on product sold to Wanbang that includes a double digit royalty, and Wanbang is responsible for the cost of the clinical trials and regulatory approval program in China.

We retain manufacturing responsibilities for Dialysate Triferic for China.

In March 2019, we entered into an amendment to the Wanbang Agreement that provided Wanbang with rights to I.V.

Triferic in China.

On January 14, 2020, we entered into license and supply agreements with a wholly-owned subsidiary of Sun Pharmaceutical Industries Ltd.

(together, “Sun Pharma”), for the rights to commercialize Dialysate Triferic (ferric pyrophosphate citrate) in India.

Under the terms of the agreements, Sun Pharma will be the exclusive development and commercialization partner for Dialysate Triferic in India and we will supply the product to Sun Pharma.

In consideration for the license, we received an upfront fee of $100,000, and will be eligible for milestone payments and royalties on net sales.

A Joint Alliance Committee, comprised of members from the Company and Sun Pharma, will guide the development and execution for Dialysate Triferic in India.

The launch of Triferic (dialysate) has enabled us to engage with key customers in the dialysis industry regarding the potential

clinical and pharmacoeconomic benefits of Triferic and is providing us with valuable experience to support our future commercial and medical initiatives.

Triferic AVNU (IV) .

Triferic AVNU (IV) was FDA approved on March 27, 2020.

We initiated a limited evaluation program with sample product in the fourth quarter of 2020 and we began commercial sales of Triferic AVNU in the first quarter of 2021.

Research to Support the Triferic Value Proposition.

The kidney dialysis market in the U.S.

is a concentrated market, where two companies service 73% of the patients.

The dialysis procedure, including all inputs, is reimbursed under capitated reimbursement, which means it is a fixed price.

This means any new product success depends on compelling data demonstrating improved patient outcomes and/or pharmacoeconomics versus the current standard of care in practice in the clinics.

Once it was determined by Medicare that Triferic would be reimbursed under the fixed bundled rate, market adoption became dependent on the generation of these data, which were not required for approval from the FDA.

We have made progress and continue to be confident that Triferic has the potential to be the treatment of choice for the maintenance of hemoglobin in dialysis patients.

Toward this end, we have increased our efforts in generating real world data in clinics with current protocols, which we believe will help with the adoption of Triferic as these results are created and disseminated over time.

In addition, we believe the hemodialysis industry may experience a great deal of change over the next several years.

We plan to take the steps necessary to generate the data necessary to potentially allow Triferic to benefit from these new innovations, such as the potential approval of a class of drugs, known as hypoxia-inducible factor prolyl hydroxylase inhibitors ("HIF-PHIs"), as well as the new, solid-state equipment in development.

We plan to study Triferic in combination with these potential new innovations as they become available (see Clinical Pipeline below).

International Dialysis.

Our strategy for growth includes the expansion of Triferic sales outside the United States by licensing it to key partners for development and/or commercialization.

Partnering in these regions allows us to better leverage the development, regulatory, commercial presence and expertise of business partners to accelerate sales of our products throughout the world.

To date, we have established partnerships in China, India, Korea, Canada, Peru and Chile.

We continue to pursue international licensing opportunities in other countries and regions.

In 2016, we licensed the commercialization rights for Triferic (dialysate) and Triferic AVNU for the Chinese market to Wanbang Biopharmaceutical ("Wanbang"), a subsidiary of Shanghai Fosun Pharmaceutical (Group) Co., Ltd..

Wanbang estimates there are almost 600,000 patients receiving hemodialysis in the People’s Republic of China and it is expected to become the largest ESRD market in the world over the next several years.

Wanbang recently enrolled patients in a Phase III trial.

If approved, Wanbang will commence commercialization of Triferic following the regulatory approval (for more information see Clinical Development below).

We have licensed the commercialization rights for Triferic (dialysate) for the Indian market to a wholly-owned subsidiary of Sun Pharmaceutical Industries Ltd.

(together, “Sun Pharma”).

It is estimated there are approximately 120,000 patients receiving hemodialysis in India.

Sun Pharma has submitted the NDA for Triferic in India and is currently working with the Indian Central Drugs Standard Control Organization for the optimal regulatory path for approval of Triferic (dialysate) in India.

A Joint Alliance Committee, comprised of members from the Company and Sun Pharma, will guide the development and execution for Triferic (dialysate) in India.

Sun Pharma will be responsible for all clinical, regulatory and commercialization activities.

We have licensed the commercialization rights for Triferic (dialysate) and Triferic AVNU for the Korean market to Jeil Pharmaceuticals (“Jeil”).

It is estimated there are approximately 78,000 hemodialysis patients in Korea.

Jeil has recently submitted the NDA for both Triferic (dialysate) and Triferic AVNU with the goal of being able to commercially launch Triferic (AVNU) in 2022.

We have also executed a distribution agreement to market our Triferic products in Canada with RMC Health Care Inc.

We expect to file for regulatory approval of I.V.

Triferic in 2020, and if approved, we are entitled to receive a transfer price based on our partner’s sales price in Canada.

Further, in 2017, we licensed the liquid formulation of Dialysate Triferic to Commercializadora Biorenal SpA in Chile and Quimica Europea in Peru.

These distributors are responsible for obtaining regulatory approvals, and we are entitled to receive a fixed transfer price for sales of Dialysate Triferic in those markets.

In January 2019, we received regulatory approval for Dialysate Triferic in Peru, representing the first approval of a Triferic product outside the United States, and we expect our partner to commercialize the product beginning in 2020.

Additional Potential Indications for Triferic .

We are currently evaluating development of other clinical indications for Triferic.

These clinical applications include other indications where iron deficiency is prevalent, including cardiovascular disease, peritoneal dialysis, total parenteral nutrition (“TPN”) and possibly treating cancer patients with functional iron deficiency.

Enhance Dialysis Concentrates Business :

During 2019, we identified certain potential enhancements to our dialysis concentrates business in an effort to improve its profitability.

Specifically, we:

(i) implemented price increases on selected products with certain customers, including DaVita;

(ii) evaluated our ability to be more efficient in our manufacturing or transportation operations, and established a plan to implement certain measures during 2020 to improve our efficiency in these areas;

and (iii) evaluated the expansion of our business to include additional products for sale to customers in the United States and other jurisdictions such as Latin America.

Clinical Development

Dialysate Triferic is approved for commercial sale in the United States and Peru, and 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 I.V.

Triferic 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 the People’s Republic of China, Wanbang, we completed two clinical pharmacology studies in 2019, which demonstrated no ethnic difference in Triferic PK in Chinese subjects compared to U.S.

In December 2019, we and Wanbang met with the National Medical Products Administration ("NMPA"), China’s equivalent of the FDA, to discuss the results of the PK studies and whether they would be sufficient to support a regulatory submission for Dialysate Triferic in China.

During the meeting, we and Wanbang received guidance from NMPA that an additional clinical study would be required to support a regulatory submission, and accordingly we are working with Wanbang to determine the scope and timing of such clinical study.

Under our agreement with Wanbang, Wanbang is responsible for all clinical development costs required to support the approval of Triferic in China.

As a post-approval requirement under the Pediatric Research Equity Act, we are required to conduct a further clinical study of the effectiveness of Dialysate Triferic in a pediatric patient population.

We have reached agreement with the FDA on the design of this study, and in 2019 we entered into a contract with a Contract Research Organization (CRO) and initiated start-up work for the conduct of the study.

We expect to begin enrollment in the study during 2020.

The study design has also been agreed with the EMA under a Pediatric Investigation Plan (PIP).

The results of the pediatric study will support an EU marketing application if and when we are able to complete the other clinical trials that are required.

We believe that Triferic has the potential to be developed for use in other indications in which iron replacement is required.

We have engaged a third-party consultant to assist in evaluating the medical and commercial viability of Triferic in potential new indications.

If this research demonstrates that a new indication has the potential for a sufficient return on investment, and if funding is available, we would look to potentially initiate clinical programs in such new indications.

In addition, we are assessing potential investment in clinical programs to evaluate additional product presentations of Triferic within ESRD.

Distribution Agreement with Baxter

Pursuant to the Distribution Agreement, Baxter is our exclusive agent for commercializing our hemodialysis concentrate and ancillary products in the United States and various foreign countries for an initial term of 10 years ending October 2, 2024.

We retain sales, marketing and distribution rights for our hemodialysis concentrate products for our international customers and in those countries in which we have an established commercial presence.

During the term of the Distribution Agreement, Baxter has agreed not to manufacture or sell any competitive concentrate products in the United States hemodialysis market, other than specified products.

The Distribution Agreement does not include any of the Company’s drug products.

In June 2017, we entered into the First Amendment to Exclusive Distribution Agreement with Baxter (the “Amendment”) (See “Item 3 – Legal Proceedings”).

The terms of the Amendment included, among other things, reduced pricing on certain accounts.

While reducing pricing, the Amendment provided incentives to Baxter to pursue new customers and increase future sales.

Under the Distribution Agreement, Baxter purchases concentrate-related products from us at pre-determined gross margin-based prices per unit adjusted each year during the term and subject to an annual true up.

The Distribution Agreement also requires Baxter to meet minimum annual purchase levels, subject to a cure period and certain other relief, in order to maintain its exclusive distribution rights.

The minimum purchase levels increase each year over the term of the Distribution Agreement.

Purchases in any calendar year that exceed the minimum may be carried forward and applied to future years’ minimum requirements.

The Distribution Agreement also contains provisions governing the operating relationship between the parties, our obligations to maintain specified manufacturing capacity and quality levels, remedies, as well as representations, warranties and indemnification obligations of the parties.

We continue to manage customer service, transportation and certain other functions for our current customers.

Baxter pays us an amount equal to our related costs plus a slight mark-up for these services.

Upon the mutual determination of us and Baxter, the Distribution Agreement also provides that Baxter will pay us up to $10 million to build a new manufacturing facility in the Pacific time-zone that will serve customers in the western United States.

The fee payable in connection with building the facility will be reduced to the extent that the facility is not operational within 12 months after the start of construction.

Except for any leased components, we will own and operate the facility when completed.

Either party may terminate the Distribution Agreement upon the insolvency or material breach of the other party or in the event of a force majeure.

In addition, Baxter may also terminate the Distribution Agreement at any time upon 270 days’ prior written notice to us or if (i) prices increase beyond certain thresholds and notice is provided within 45 days after the true up payment is due for the year in which the price threshold is exceeded, (ii) a change of control of the Company occurs and 270 days’ notice is provided, or (iii) upon written notice that Baxter has been enjoined by a court of competent jurisdiction from selling in the United States any product covered by the Distribution Agreement due to a claim of intellectual property infringement or misappropriation relating to such product.

If Baxter terminates the Distribution Agreement under the discretionary termination or the price increase provisions, it would be subject to a limited non-compete obligation in the United States with respect to certain products for a period of two years.

Pursuant to the Distribution Agreement, we received an upfront fee of $20 million.

If a “Refund Trigger Event” occurs, we would be obligated to repay a portion of the upfront fee and any paid portion of the facility fee.

A “Refund Trigger Event” means any of the following:

(i) a change of control of the Company involving any of certain specified companies;

(ii) a termination by Baxter due to the Company’s bankruptcy or breach, or due to price increases that exceed the stated thresholds;

(iii) a termination by either party due to a force majeure;

(iv) settlement or adjudication of any claim, action or litigation relating to a covered product that materially and adversely affects Baxter’s commercialization of the product;

and (v) any regulatory action or ruling relating to a covered product that materially and adversely affects Baxter’s commercialization of the product.

In the event of a Refund Trigger Event occurring from January 1, 2019 to December 31, 2021, Baxter would be eligible for a 25% refund of the Distribution Agreement’s upfront fee.

The Distribution Agreement may be extended an additional five years by Baxter if Baxter achieves a specified sales target and pays an extension fee of $7.5 million.

If the first extension occurs, the Distribution Agreement term may later be extended an additional five years at Baxter’s option at no additional cost.

Distribution and Delivery Operations

The majority of our domestic dialysis concentrate products are delivered through our subsidiary, Rockwell Transportation, Inc., which operates a fleet of trucks used to deliver products to our customers.

Rockwell distribution and delivery will continue to operate under the Distribution Agreement on behalf of Baxter for domestic business.

We perform delivery services that are generally not available from common carriers or our competitors, such as stock rotation, non-loading-dock delivery and drum pump-off service.

As a result, we believe we offer a higher level of service than other providers.

Dialysate Triferic is generally delivered to our customers by our third-party logistics provider in the United States.

Sales and Marketing

The top ten dialysis providers treat approximately 426,000 hemodialysis patients in their centers according to an article published by Nephrology News in 2019.

We believe this constitutes approximately 91% of the in-center hemodialysis patients in the United States as of 2019.

We market and sell Dialysate Triferic, and intend to market and sell I.V.

Triferic, directly to these customers and independent clinics in the United States.

Our global 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.

During the fourth quarter of 2018 and throughout 2019, we assembled sales and marketing leadership and a field-based sales team to support the commercialization of Dialysate Triferic in the United States.

The team consists of sales and marketing leaders who have extensive experience selling and marketing products within the ESRD marketplace.

This leadership is supported by experienced sales representatives responsible for effectively promoting the product within the United States and clinical nurse educators responsible for supporting the integration of Triferic into United States dialysis clinics.

We believe this sales force is appropriately sized for marketing Triferic to the nephrology community within the United States This infrastructure will be leveraged for the launch of I.V.

Triferic, if approved.

Our dialysis concentrate products are sold to customers in the United States through Baxter and DaVita in accordance with the Distribution Agreement and the Product Purchase Agreement, respectively.

Our dialysis concentrate products are sold to international customers through independent sales agents, distributors and direct.

Medical Affairs

We believe that Triferic represents innovation for iron replacement within ESRD.

We believe that medical education will play an integral role in helping to further the awareness and understanding of how Triferic can address the replacement of ongoing iron losses and maintenance of hemoglobin in ESRD patients.

Accordingly, we have invested in our Medical Affairs capabilities by hiring a Chief Medical Officer in November 2019, who will also lead any clinical investigations of Triferic in such new indications for the product that we identify as feasible and commercially attractive, and hiring a team of Medical Science Liaisons.

In addition, we have enhanced our Medical Advisory Board with preeminent key opinion leaders in the anemia management space.

We anticipate applying this medical expertise in ESRD to educate dialysis clinicians through disease state presentations, publications, journals, product literature, medical industry trade conferences and congresses, and other channels including digital, social and healthcare related mediums and web-based applications.

We anticipate targeting our medical education efforts to senior and operating management of dialysis companies, dialysis service providers, nephrologists, clinic administrators, nurses, medical directors and technical and purchasing personnel.

We filed for regulatory approval of Triferic AVNU (IV) in May of 2020, and if approved and granted favorable placement on both national and providence formularies, we would be entitled to receive a transfer price based on our partner’s sales price in Canada.

It is estimated that approximately 17,000 patients are receiving hemodialysis in Canada.

In 2017, we licensed the liquid formulation of Triferic (dialysate) to Quimica Europea in Peru.

In January 2019, we received regulatory approval for Triferic (dialysate) in Peru, representing the first approval of a Triferic product outside the United States.

Quimica Europea is currently working on submission of Triferic (dialysate) for placement upon Peru’s national formulary.

In 2017, we licensed the liquid formulation of Triferic (dialysate) to Commercializadora Biorenal SpA (Biorenal) in Chile.

In June 2020 we received regulatory approval for Triferic (dialysate) in Chile.

Biorenal is currently working on submission of Triferic (dialysate) for placement upon Chile’s national formulary.

Concentrates:

In territories that are not governed under our agreement with Baxter, our primary distributor is Nipro Medical Corporation which distributes our concentrates products within the LATAM region;

however, we also sell through independent sales agents, distributors and direct.

We currently operate in one market segment, the hemodialysis market, which involves the manufacture, sale and distribution of hemodialysis products to hemodialysis clinics, including pharmaceutical, dialysis concentrates, dialysis kits and other ancillary products used in the dialysis process.

DaVita, Inc., accounted for 50% of our concentrate sales in 2020 and 49% of our concentrate sales in 2019.

Our accounts receivable from this customer were $1.1 million and $1.2 million as of December 31, 2020 and 2019, respectively.

In August 2019, we signed a new Products Purchase Agreement with DaVita, with an initial term expiring on December 31, 2023.

In October 2014, we entered into the Distribution Agreement with Baxter, which was amended in June 2017 and March 2020, pursuant to which Baxter received exclusive distribution rights for our concentrate products in the United States, a commitment by Rockwell to maintain a specified manufacturing capacity for Baxter, a cap upon the net amount of reimbursable transportation expenses and modified extension terms.

Our domestic customer contracts for the supply of dialysis concentrate products that permitted assignment to Baxter without consent have been assigned to Baxter.

As a result, for 2020 and 2019, our direct sales to Baxter aggregated approximately 25% and 27% of sales, respectively, and we had a receivable from Baxter of $1.6 million and $2.0 million as of December 31, 2020 and 2019, respectively.

Another customer, Nipro Medical Corporation, accounted for 7% and 9% of our sales in 2020 and 2019, respectively.

No other customers accounted for more than 10% of our sales in any of the last three years.

DaVita, Baxter, the accounts administered by Baxter, and Nipro Medical Corporation are important to our business, financial condition and results of operations.

The loss of any significant accounts could have a material adverse effect on our business, financial condition and results of operations.

See Item 1A “Risk Factors” for a discussion of certain risks related to our key customers.

The majority of our international sales in each of the last two years were sales to domestic distributors that were resold to end users outside the United States.

Our total international sales, including sales made through domestic distributors for resale outside the United States, aggregated 9% and 11% of our overall sales in 2020 and 2019, respectively.

See Item 1A “Risk Factors” for a discussion of certain risks related to our foreign sales.

Dialysis Concentrate Solutions and Dialysis Products Market Competition

In the United States, the principal competitor for our concentrate products is Fresenius Medical Care NA (“Fresenius”), a vertically integrated manufacturer and marketer of dialysis devices, drugs and supplies and dialysis clinic operator, which has substantially greater financial, technical, manufacturing, marketing, and research and development resources than us.

In the United States, our principal competitor for concentrate products is Fresenius Medical Care NA (“Fresenius”), a vertically integrated manufacturer and marketer of dialysis devices, drugs and supplies and operator of dialysis clinics, which has substantially greater financial, technical, manufacturing, marketing, and research and development resources than us.

Fresenius, through its Fresenius Kidney Care division, operates approximately 2,600 clinics and treats approximately 37% of the in-center hemodialysis patients in the United States.

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Iron Delivery Market Competition

We expect to differentiate Triferic for iron maintenance therapy for hemodialysis patients based on its unique mode of action, clinical benefits, ability to lower treatment cost for providers, ease of administration and excellent safety profile.

Historically, IV iron has been used to treat iron deficiency anemia, and currently, the drug Venofer ® is generally regarded as having dominant market share over other IV iron drug products, such as Sanofi’s Ferrlecit ® .

We expect to differentiate Triferic (dialysate) and Triferic AVNU for iron maintenance therapy for hemodialysis patients based on its unique mode of action, clinical benefits, ability to lower treatment cost for providers, ease of administration and excellent safety profile.

Historically, macromolecular IV iron have been used to treat iron deficiency anemia, and currently, the drug Venofer® is generally regarded as having dominant market share in dialysis over other Macromolecular IV iron drug products, such as Sanofi’s Ferrlecit®.

Venofer® is owned by Switzerland-based Vifor Pharma Management Ltd.

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Fresenius has a sublicense agreement that allows Fresenius to distribute Venofer® to the dialysis market in the United States and Canada.

Other IV iron competitors include Watson's generic IV iron drug, Nulecit ® .

IV iron is a repletion therapy and not an iron maintenance therapy, and therefore, technically, Triferic and IV iron are not competing products as their molecular structure, mode-of-action and FDA-approved clinical indication to treat anemia are different.

Both therapies are needed to treat dialysis patients, where Triferic is administered during every dialysis treatment and IV iron is administered when there is excessive blood loss in a patient.

Accordingly, as Triferic gains market share, we expect IV iron use will decline.

We are also aware of a class of drugs, known as hypoxia-inducible factor ("HIF") prolyl hydroxylases inhibitors ("PHIs"), or HIF-PHIs, that are in development for a variety of indications, including the treatment of anemia for patients with chronic kidney disease.

HIF-PHIs are designed to stimulate erythropoiesis and manage iron utilization and can be administered orally.

Certain HIF-PHI compounds, including roxadustat and vadadustat, have reached or completed Phase 3 development in the United States, and a NDA for roxadustat was submitted in the United States in December 2019.

If successfully developed and approved, HIF-PHIs could potentially offer a more convenient, more effective and/or safer alternative to injectable ESAs for treatment of anemia in CKD patients while potentially increasing iron availability for hemoglobin synthesis.

However, we believe iron replacement therapies, such as Triferic, will continue to be required to address ongoing iron losses in hemodialysis patients as disclosed in the recent roxadustat phase III dialysis study results, where approximately half of the patients on roxadustat were administered IV iron.

Other Macromolecular IV iron competitors include Actavis’ generic Macromolecular IV iron drug, Nulecit®.

Since macromolecular IV iron products are indicated for repletion therapy and not explicitly for iron maintenance therapy, they are not technically direct competitors to Triferic.

The molecular structures, modes-of-action and FDA-approved clinical indications are different.

Both therapies are needed to treat dialysis patients, where Triferic is given at every dialysis treatment to maintain iron levels, macromolecular IV iron are intended to be administered only to treat excessively low (or absolute) iron deficiency.

Accordingly, as Triferic gains market share, we expect Macromolecular IV iron use will decline.

The markets for drug products are highly competitive.

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The first product on the market in a particular therapeutic area typically is able to obtain and maintain a significant market share.

In a highly competitive marketplace and with

evolving technology, additional product introductions or developments by others could render our products or technologies noncompetitive or obsolete.

In a highly competitive marketplace and with evolving technology, additional product introductions or developments by others could render our products or technologies noncompetitive or obsolete.

In addition, pharmaceutical and medical device companies are largely dependent upon health care providers being reimbursed by private insurers and government payers.

Drugs approved by the FDA might not receive reimbursement from private insurers or government payers.

Reimbursement

Prior to 2011, CMS had paid providers for dialysis treatments under the Medicare program in two parts:

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Regulations provide that the rate is recalculated each year.

As a result, dialysis drugs are now viewed by providers as an additional cost rather than as a source of revenue.

As a result, dialysis drugs are typically viewed by providers as an additional cost that must be provided within the fixed bundled payment.

Both Triferic (dialysate) and Triferic AVNU are reimbursed within the bundle for dialysis treatment.

This reimbursement status makes commercialization more difficult, as dialysis centers may view Triferic as increasing their costs and lowering their operating margins.

To counter this, we must show improved patient outcomes and experiences, which would justify the lower operating margins for dialysis providers.

Medical Affairs

We believe that Triferic represents innovation for iron replacement within ESKD.

Medical affairs will be increasingly important as additional data on the use of Triferic become available, as discussed above and in “Clinical Pipeline” below.

CLINICAL PIPELINE

Triferic portfolio

Rockwell plans to conduct a study to evaluate the efficacy, safety and compatibility of Triferic and roxadustat for the maintenance of hemoglobin in HDD-CKD patients.

The primary objective of the study will be to evaluate the efficacy of roxadustat-Triferic in maintaining erythropoiesis in adult patients with chronic kidney disease receiving hemodialysis.

Efficacy will be measured primarily by the change from baseline in hemoglobin (Hgb).

Secondary objectives will include:

the efficacy of roxadustat-Triferic as compared to roxadustat alone based on Hgb response and level during the study, the need for IV iron use in subjects treated with roxadustat-Triferic as compared to roxadustat alone, and the efficacy of roxadustat-Triferic based on Hgb response in inflamed subjects (stratify).

Commencement of the study is pending FDA approval of roxadustat and its commercial availability in the United States.

As of March 2021, the FDA has recommended an advisory panel review the new drug application for roxadustat.

Real World Data

To support the sales of our Triferic products, we are evaluating potential clinical studies and are conducting real-world data initiatives that we believe have the potential to support the value proposition for both Triferic (dialysate) and Triferic AVNU (IV).

As part of this program we are collecting data from sites that are purchasing Triferic (dialysate) in the United States so that we can assess the impact of Triferic (dialysate) on various clinical and pharmacoeconomic measures.

Results from a study, conducted by New York University and reported in Critical Care Medicine, showed $296,000 in cost savings from Triferic.

The study, which was independent of Rockwell, reviewed the effects of long-term use of Triferic in a large outpatient dialysis clinic, and showed substantial cost savings due to reductions in ESA and macromolecular IV iron use without impacting patient safety and hemoglobin targets.

In a retrospective data review of 100 patients that were followed before and after implementation of Triferic dialysate, there was a relative reduction in average weekly ESA dose of 26.4%, total use of IV iron replacement therapy decreased with a relative reduction in the use of all iron products (iron sucrose 65.7%, sodium ferric gluconate 98.2%) while anemia targets were met.

This clinic determined that the reduction of these agents resulted in a net savings of more than $296,000 in one fiscal year.

Pediatric Study

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 (dialysate) in a pediatric patient population.

We began enrollment in the study during 2020.

International

In December 2019, we and Wanbang met with the National Medical Products Administration ("NMPA"), China’s equivalent of the FDA, to discuss the results of the PK studies and confirm that according to previously received guidance they would be sufficient to support a regulatory submission for Triferic (dialysate) in China.

During the meeting, we and Wanbang received new guidance from NMPA that an additional clinical Phase 3 study would be required to support a regulatory submission.

The start of this clinical study was impacted by the COVID-19 pandemic.

Wanbang recently initiated patient enrollment in this clinical study in January 2021.

Under the Wanbang Agreement, Wanbang is responsible for all clinical development costs required to support the approval of Triferic in China.

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.

We may request additional guidance depending on the uptake of Roxadustat after its approval and launch in the EU.

Home Infusion

The FDA has feedback on our proposed clinical development plans which we intend to incorporate into the next iteration of clinical protocols and FDA correspondence and dialogue.

FDA has accepted our proposed development strategy to pursue an approval via the 505(b)(1) pathway as a novel NDA for FPC for treatment of IDA in adult patients.

The FDA further agreed with our approach to cross-reference non-clinical pharmacology and toxicology from our prior INDs and does not foresee the need for additional studies in these areas.

We plan to take advantage of the early consultation opportunities provided by FDA in a pre-IND meeting to further clarify study design, patient selection and study endpoints for our Phase II study of a FPC for treatment of IDA in adult patients receiving home infusion therapies.

We currently expect to have this meeting and be able to initiate the clinical trial in the second half of this year.

Other Therapeutic Product Candidates in Development

Heart Failure

We plan to investigate the potential for FPC as a treatment for hospitalized acute heart failure patients.

Iron deficiency, which is independent of anemia, is a common co-morbidity in all forms of heart failure (50-70%).

Iron deficiency can worsen cardiac function, but is currently under-recognized and under treated, which we believe represents a significant unmet need.

There is a significant body of clinical evidence to support the use of IV iron therapy for improvement of cardiac energetics and cardiac function in the outpatient setting (not for the improvement of Hgb).

Iron uptake, and thereby the clinical benefit during a hospital stay, is limited by the bioavailability for current traditional macromolecular IV iron.

FPC uniquely suited for hospitalized acute heart failure – 200mg of immediately bioavailable iron can be delivered during an average 5-day hospital stay (equivalent to over 1 gram of currently available traditional macromolecular IV iron).

We expect to request advice from the FDA in second half of 2021 to review a proposed clinical development program, starting with a mechanistic clinical proof of concept study that would determine if FPC administration can impact myocardial energetics and cardiac function.

Quality Assurance and Control

We have established a Quality Management System ("QMS") which defines systems and procedures used to assure quality in the design, manufacture, and delivery of our finished device and pharmaceutical products.

Our quality system activities are planned and executed to ensure compliance to the requirements of 21 CFR Parts 820, 210, and 211.

Dialysis Concentrate Solutions Business

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We have established an organizational structure and quality system procedures to ensure our device products are designed and produced to meet product quality requirements and FDA guidelines.

Dialysis products are manufactured and tested using validated equipment and defined process controls to ensure rigid conformance to specifications.

Dialysis products are manufactured and tested using validated equipment and defined process controls to ensure rigorous conformance to specifications.

To assure quality and consistency of our dialysis concentrates, analytical testing is performed using validated instrument methods to verify that the chemical and microbial properties of each product lot complies with the specifications required by industry standards.

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These contract manufacturers are FDA registered drug manufacturing establishments.

We follow defined procedures to qualify manufacturers of our products and to review and approve all manufactured products to ensure compliance with FDA cGMP regulations.

We ensure our contract manufactures have established robust quality systems and employ validated processes to ensure the quality and compliance of our drug products to their specifications prior to distribution.

We follow defined procedures to qualify manufacturers of our products and to review and approve all manufactured products to ensure compliance with FDA cGMP

We ensure our CMOs have established robust quality systems and employ validated processes to ensure the quality and compliance of our drug products to their specifications prior to distribution.

The raw materials and packaging materials for our hemodialysis concentrates, the components for our hemodialysis kits and the ancillary hemodialysis products distributed by us are generally available from several potential suppliers.

The raw materials for our concentrate products consist primarily of chemical ingredients and packaging components, all of which meet or exceed the requirements of United States Pharmacopeia (“USP”).

Key raw materials for our hemodialysis concentrates include citric acid USP, calcium chloride USP, dextrose USP, glacial acetic acid USP, magnesium chloride USP, potassium chloride USP, sodium bicarbonate hemodialysis grade USP and sodium chloride USP, as well as key packaging components such as bottles, caps, bags, boxes and labels.

There are multiple potential suppliers for each of these raw materials.

We generally negotiate pricing and approximate material quantities for our chemicals on an annual basis and utilize blanket purchase orders with monthly release schedules to meet our needs for production.

We have engaged CMO's for the manufacture and packaging of Triferic.

We have two suppliers for the active pharmaceutical ingredient (“API”) utilized in Triferic, two packagers for the powder formulation of Triferic (dialysate) and one fill and finish vendor for the liquid formulation of Triferic (dialysate) and Triferic AVNU.

New production is generally initiated via purchase orders, though we will evaluate the need for supply agreements based on our forecasted product needs.

The lead time to qualify and obtain regulatory approval for an additional CMO could be lengthy.

Any material dispute, lack of quality of the product, or loss of any significant drug product supplier could have a material adverse effect on our business, financial condition and results of operations.

See Item 1A “Risk Factors” for a discussion of certain risks related to our key suppliers.

Distribution and Delivery Operations

Rockwell distribution and delivery will continue to operate under the Distribution Agreement on behalf of Baxter for domestic business.

MATERIAL AGREEMENTS

Distribution Agreement with Baxter

Pursuant to the Distribution Agreement, Baxter is our exclusive agent for commercializing our hemodialysis concentrate and ancillary products in the United States to clinics other than DaVita and various foreign countries for an initial term of 10 years ending October 2, 2024.

The Distribution Agreement does not include any of the Company’s drug products.

In June 2017, we entered into the First Amendment to the Distribution Agreement with Baxter (the “Amendment”).

The Amendment provides for, among other things, reduced pricing on certain accounts and incentives to Baxter to pursue new customers and increase future sales.

In March 2020, we entered into the Second Amendment to the Distribution Agreement with Baxter (the “Second Amendment”).

The Distribution Agreement also requires Baxter to meet minimum annual purchase levels, subject to a cure period and certain other relief, in order to maintain its exclusive distribution rights.

The minimum purchase levels increase each year over the term of the Distribution Agreement.

Purchases in any calendar year that exceed the minimum may be carried forward and applied to future years’ minimum requirements.

The Distribution Agreement, as amended by the Second Amendment, also contains provisions regarding our obligations to maintain specified manufacturing capacity and quality levels.

We continue to manage customer service, transportation and certain other functions for our current customers.

For customer service, Baxter pays us an amount equal to our related costs plus a slight mark-up for these services.

For transportation costs, Baxter pays us an amount equal to our related costs, subject to the defined caps contained within the Second Amendment, which are based upon defined percentages of liquid concentrate product being shipped.

The Distribution Agreement also provides that, upon the mutual determination of us and Baxter, Baxter will pay us up to $10 million to build a new manufacturing facility in the Pacific time-zone that would serve customers in the western United States.

The fee payable in connection with construction of the facility will be reduced to the extent that the facility is not operational within 12 months after the start of construction.

Except for any leased components, we will own and operate the facility when completed.

Either party may terminate the Distribution Agreement upon the insolvency or material breach of the other party or in the event of a force majeure.

Pursuant to the Distribution Agreement, we received an upfront fee of $20 million in October 2014.

If a “Refund Trigger Event” occurs prior to December 31, 2021, we would be obligated to repay 25% of the upfront fee and any paid portion of the facility fee.

A “Refund Trigger Event” means any of the following:

(i) a change of control of the Company involving any of certain specified companies;

(ii) a termination by Baxter due to the Company’s bankruptcy or breach, or due to price increases that exceed the stated thresholds;

(iii) a termination by either party due to a force majeure;

(iv) settlement or adjudication of any claim, action or litigation relating to a covered product that materially and adversely affects Baxter’s commercialization of the product;

and (v) any regulatory action or ruling relating to a covered product that materially and adversely affects Baxter’s commercialization of the product.

The Distribution Agreement may be extended for an additional five years by Baxter if Baxter achieves a specified sales target and pays an extension fee of $7.5 million.

If the first extension occurs, the Distribution Agreement term may later be extended an additional five years at Baxter’s option at no additional cost.

Product License Agreements

We are party to a Licensing Agreement between the Company and Charak, LLC (“Charak”) dated January 7, 2002 (the “2002 Agreement”) that grants the Company exclusive worldwide rights to certain patents and information related to our Triferic products.

On October 7, 2018, we entered into a Master Services and IP Agreement (the “Charak MSA”) with Charak and Dr.

Ajay Gupta, who is the former Executive Vice President and Chief Scientific Officer of the Company.

Pursuant to the Charak MSA, the parties entered into three additional agreements described below related to the license of certain soluble ferric pyrophosphate (“SFP”) intellectual property owned by Charak, as well as the Employment Agreement (defined below).

The Charak MSA provided for a payment of $1,000,000 to Dr.

Gupta, payable in four quarterly installments of $250,000 each on October 15, 2018, January 15, 2019, April 15, 2019 and July 15, 2019, and reimbursement for certain legal fees incurred in connection with the Charak MSA.

As of December 31, 2019, all payments under the Charak MSA were paid.

Pursuant to the Charak MSA, the aforementioned parties entered into an Amendment, dated as of October 7, 2018 (the “Charak Amendment”), to the 2002 Agreement, under which Charak granted the Company an exclusive, worldwide, non-transferable license to commercialize SFP for the treatment of patients with renal failure.

The Charak Amendment amends the royalty payments due to Charak under the 2002 Agreement such that the Company is liable to pay Charak royalties on net sales by the Company of products developed under the license, which includes the Company’s Triferic product, at a specified rate until December 31, 2021 and thereafter at a reduced rate from January 1, 2022 until February 1, 2034.

Additionally, the Company shall pay Charak a percentage of any sublicense income during the term of the agreement, which amount shall not be less than a minimum specified percentage of net sales of the licensed products by the sublicensee in jurisdictions where there exists a valid patent claim, on a country-by-country basis, and not be less than a lower rate of the net sales of the licensed products by the sublicensee in jurisdictions where there exists no valid patent claim, on a country-by-country basis.

Also pursuant to the Charak MSA, the Company and Charak entered into a Commercialization and Technology License Agreement Triferic IV, dated as of October 7, 2018 (the “IV Agreement”), under which Charak granted the Company an exclusive, sublicensable, royalty-bearing license to SFP for the purpose of commercializing certain intravenous-delivered products incorporating SFP for the treatment of iron disorders worldwide for a term that expires on the later of February 1, 2034 or upon the expiration or termination of a valid claim of a licensed patent.

The Company is liable to pay Charak royalties on net sales by the Company of products developed under the license at a specified rate until December 31, 2021.

From January 1, 2022 until February 1, 2034, the Company is liable to pay Charak a base royalty at a reduced rate on net sales and

an additional royalty on net sales while there exists a valid claim of a licensed patent, on a country-by-country basis.

The Company shall also pay to Charak a percentage of any sublicense income received during the term of the IV Agreement, which amount shall not be less than a minimum specified percentage of net sales of the licensed products by the sublicensee in jurisdictions where there exists a valid claim, on a country-by-country basis, and no be less than a lower rate of the net sales of the licensed products by the sublicensee in jurisdictions where there exists no valid claim, on a country-by-country basis.

Also pursuant to the Charak MSA, the Company and Charak entered into a Technology License Agreement TPN Triferic, dated as of October 7, 2018 (the “TPN Agreement”), pursuant to which Charak granted the Company an exclusive, sublicensable, royalty-bearing license to SFP for the purpose of commercializing worldwide certain Total Parenteral Nutrition (TPN) products incorporating SFP.

The license grant under the TPN Agreement continues for a term that expires on the later of February 1, 2034 or upon the expiration or termination of a valid claim of a licensed patent.

During the term of the TPN Agreement, the Company is liable to pay Charak a base royalty on net sales and an additional royalty on net sales while there exists a valid claim of a licensed patent, on a country-by-country basis.

The Company shall also pay to Charak a percentage of any sublicense income received during the term of the TPN Agreement, which amount shall not be less than a minimum royalty on net sales of the licensed products by the sublicensee in jurisdictions where there exists a valid claim, on a country-by-country basis, and not be less than a lower rate of the net sales of the licensed products by the sublicensee in jurisdictions where there exists no valid claim, on a country-by-country basis.

The foregoing summary does not purport to be a complete description of the terms of the MSA, the Amendment, the IV Agreement and the TPN Agreement and each is qualified in their entirety by reference to the full text of such documents, which are filed as exhibits to this Annual Report on Form 10-K.

GOVERNMENT REGULATION

We are regulated by the FDA under the Federal Food, Drug and Cosmetics Act, as well as by other federal, state and local agencies.

We hold several FDA product approvals including for both drugs and medical devices.

The testing, manufacture and sale of our hemodialysis concentrates and the ancillary products we distribute are subject to regulation by numerous governmental authorities, principally the FDA and corresponding state and foreign agencies.

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Noncompliance with applicable requirements can result in, among other things, fines, injunctions, civil penalties, recall or seizure of products, total or partial suspension of production, failure of the government to grant pre-market clearance or pre-market approval for devices, withdrawal of marketing clearances or approvals and criminal prosecution.

We are developing and commercializing selected drug candidates, such as Triferic.

We are developing and commercializing selected drug candidates, such as Triferic, Triferic AVNU and other candidates utilizing the FPC Platform.

The development and regulatory approval process for new drugs and additional indications for approved drugs includes preclinical testing and human clinical trials and is lengthy and uncertain.

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For any devices that are cleared through the 510(k) process, modifications or enhancements that could significantly affect safety or effectiveness, or constitute a new or major change in the intended use of the device, will require new 510(k) submissions.

It usually takes from three to six months from the date of submission to obtain 510(k) clearance, and may take substantially longer.

It usually takes from three to six months from the date of submission to obtain 510(k) clearance, and

may take substantially longer.

Our hemodialysis concentrates (acid and bicarbonate) and other ancillary products are categorized as Class II devices.

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and (v) review and approval of the NDA by the FDA.

An NDA generally is required for products with new active ingredients, new indications, new routes of administration, new dosage forms or new strengths.

An NDA generally is required for products with new active ingredients, indications, routes of administration, dosage forms or strengths.

An NDA requires that complete clinical studies of a product’s safety and efficacy be submitted to the FDA, the cost of which is substantial.

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If our marketed drug is found to be potentially harmful or does not comply with applicable requirements, we also may recall the product.

The FDA regulates the post-approval marketing and promotion of drugs, including standards and regulations for direct-to-consumer advertising, off-label promotion, industry-sponsored scientific and educational

activities and promotional activities involving the internet.

Drugs may be marketed only for the approved indications and in accordance with the provisions of the approved labeling.

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Many countries require additional governmental approval for price reimbursement under national health insurance systems.

Product License Agreements

On October 7, 2018, we entered into a Master Services and IP Agreement (the “Charak MSA”) with Charak and Dr.

Ajay Gupta, who serves as Executive Vice President and Chief Scientific Officer of the Company.

The Charak MSA provided for a payment of $1,000,000 to Dr.

As of December 31, 2019, all payments under the Charak MSA were paid.

December 31, 2021 and thereafter at a reduced rate from January 1, 2022 until February 1, 2034.

Additionally, the Company shall pay Charak a percentage of any sublicense income during the term of the agreement, which amount shall not be less than a minimum specified percentage of net sales of the licensed products by the sublicensee in jurisdictions where there exists a valid claim, on a country-by-country basis, and no be less than a lower rate of the net sales of the licensed products by the sublicensee in jurisdictions where there exists no valid claim, on a country-by-country basis.

Also pursuant to the Charak MSA, the Company and Charak entered into a Commercialization and Technology License Agreement I.V.

Triferic, dated as of October 7, 2018 (the “IV Agreement”), under which Charak granted the Company an exclusive, sublicensable, royalty-bearing license to SFP for the purpose of commercializing certain intravenous-delivered products incorporating SFP for the treatment of iron disorders worldwide for a term that expires on the later of February 1, 2034 or upon the expiration or termination of a valid claim of a licensed patent.

The Company is liable to pay Charak royalties on net sales by the Company of products developed under the license at a specified rate until December 31, 2021.

From January 1, 2022 until February 1, 2034, the Company is liable to pay Charak a base royalty at a reduced rate on net sales and an additional royalty on net sales while there exists a valid claim of a licensed patent, on a country-by-country basis.

The license grant under the TPN Agreement continues for a term that expires on the later of February 1, 2034 or upon the expiration or termination of a valid claim of a licensed patent.

The Company shall also pay to Charak a percentage of any sublicense income received during the term of the TPN Agreement, which amount shall not be less than a minimum royalty on net sales of the licensed products by the sublicensee in jurisdictions where there exists a valid claim, on a country-by-country basis, and no be less than a lower rate of the net sales of the licensed products by the sublicensee in jurisdictions where there exists no valid claim, on a country-by-country basis.

Trademarks and Patents

PATENTS, TRADEMARKS AND TRADE SECRETS

We have several trademarks and service marks used on our products and in our advertising and promotion of our products, and we have applied for registration of such marks in the United States and several foreign countries.

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and 50 foreign).

Patents and patent applications owned or licensed by us include claims to I.V.

and Dialysate Triferic compositions, formulations and methods of making, as well as other patent claims, including Erythropoietin Stimulation Agent ("ESA") sparing methods using Triferic, and parenteral nutritional compositions including Triferic.

United States

Triferic (I.V.

and Dialysate)

Patents and patent applications owned or licensed by us include claims to FPC in both dialysate and IV compositions, formulations and methods of making, as well as other patent claims, including Erythropoietin Stimulation Agent ("ESA") sparing methods using Triferic, and parenteral nutritional compositions including Triferic.

United States Foreign

Description Issued Expiration Pending Issued Expiration Pending

Triferic (IV and Dialysate) 2 2029 (1) 1 3 (2) 2028 (1) 29

Triferic (ESA Sparing) — 2034 2 13 (3) 2034 21

Triferic (TPN) 1 2029 — 9 (4) 2026 —

Other 1 — 3 1 — —

Total 4 6 26 50

Expiration date in U.S.

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European patent validated in 28 European states (not included in total).

European patent validated in 3 European states (not included in total).

Two European patents validated in 3 European states (not included in total).

European patent validated in 12 European states (not included in total).

See Item 1A “Risk Factors” for a discussion of certain risks related to our intellectual property.

There are multiple potential suppliers for each of these raw materials.

We have engaged CMOs for the manufacture and packaging of Triferic.

We have two suppliers for the active pharmaceutical ingredient (“API”) utilized in Triferic, two packagers for the powder formulation of Dialysate Triferic and one fill and finish vendor for the liquid formulation of Dialysate Triferic and I.V.

New production is generally initiated via purchase orders, though we will evaluate the need for supply agreements based on our forecasted product needs.

The lead time to qualify and obtain regulatory approval for an additional CMO could be lengthy.

See Item 1A “Risk Factors” for a discussion of certain risks related to our key suppliers.

We operate in one market segment, the hemodialysis market, which involves the manufacture, sale and distribution of hemodialysis products to hemodialysis clinics, including pharmaceutical, dialysis concentrates, dialysis kits and other ancillary products used in the dialysis process.

One customer, DaVita, accounted for 49% of our sales in 2019 and 46% of our sales in 2018 .

Our accounts receivable from this customer were $1.2 million and $2.5 million as of December 31, 2019 and 2018 , respectively.

In August 2019, we signed a new Products Purchase Agreement with DaVita, with an initial term expiring on December 31, 2023.

In October 2014, we entered into the Distribution Agreement with Baxter, which was amended in June 2017, pursuant to which Baxter received exclusive distribution rights for our concentrate products in the United States.

Our domestic customer contracts for the supply of dialysis concentrate products that permitted assignment to Baxter without consent have been assigned to Baxter.

As a result, for 2019 and 2018 , our direct sales to Baxter aggregated approximately 27% and 26% of sales, respectively, and we had a receivable from Baxter of $2.0 million and $2.8 million as of December 31, 2019 and 2018 , respectively.

Another customer, Nipro Medical Corporation, accounted for 9% and 10% of our sales in 2019 and 2018 , respectively.

DaVita, Baxter, the accounts administered by Baxter, and Nipro Medical Corporation are important to our business, financial condition and results of operations.

The loss of any significant accounts could have a material adverse effect on our business, financial condition and results of operations.

No other customers accounted for more than 10% of our sales in any of the last three years.

See Item 1A “Risk Factors” for a discussion of certain risks related to our key customers.

The majority of our international sales in each of the last two years were sales to domestic distributors that were resold to end users outside the United States.

Our total international sales, including sales made through domestic distributors for resale outside the United States, aggregated 11% and 14% , of our overall sales in 2019 and 2018 , respectively.

See Item 1A “Risk Factors” for a discussion of certain risks related to our foreign sales.

Human Capital

As of December 31, 2020, we had 300 employees, substantially all of whom are full time employees.

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Our employees are employed on an “at‑will” basis.

Research & Development

We have invested heavily in the testing and development of Triferic and our Triferic products.

We have engaged outside service providers, contract research organizations, consultants and legal counsel to assist us with clinical trials, product development and obtaining regulatory approval.

We completed human clinical trials and other testing in 2013 and submitted our NDA for Dialysate Triferic to the FDA in 2014.

We received FDA approval for Dialysate Triferic in January 2015.

Since the approval of Dialysate Triferic, we have conducted additional clinical studies of Triferic for other indications and presentations, including the IV formulation, a proof of concept clinical study in peritoneal dialysis patients, and a pediatric study of Triferic.

We have incurred product development and research costs aggregating approximately $6.9 million and $5.6 million in 2019 and 2018, respectively, with such costs primarily related to Triferic.

Such costs also included efforts to address manufacturing issues in an effort to achieve FDA approval of Calcitriol, which we have since discontinued.

We expect that research and product development spending in 2020 will focus on the Triferic platform, with projects that may include the pediatric study to satisfy FDA and EMA requirements, a Phase 3 study in Europe to support registration for approval, post-marketing studies to further demonstrate the pharmacoeconomics and patient outcomes of Triferic and additional studies of Triferic in new indications.

Corporate Information

We were originally incorporated in the state of Michigan in 1996, and re-domesticated to the state of Delaware in 2019.

Our executive offices are located at 411 Hackensack Avenue, Suite 501, Hackensack, New Jersey 07601.

Our telephone number is (248) 960-9009 and our website is http://www.rockwellmed.com .

Our website is included as an inactive textual reference only and nothing on the website is incorporated by reference into this Annual Report on Form 10‑K.

You are advised to read this Annual Report on Form 10-K in conjunction with other reports and documents that we file from time to time with the SEC.

In particular, please read our definitive proxy statement, which will be filed with the SEC in connection with our 2020 annual meeting of stockholders, our quarterly reports on Form 10-Q and any current reports on Form 8-K that we may file from time to time.

You can access free of charge on our website copies of these reports as soon as practicable after they are electronically filed with the SEC.

The SEC also maintains a website on the internet that contains reports, proxy and information statements and other information regarding issuers, such as us, that file electronically with the SEC.

The address of the SEC’s website is http://www.sec.gov.

Our key human capital management objectives are to identify, recruit, integrate, retain and motivate our new and existing employees.

We believe that our compensation and benefit programs are appropriately designed to attract and retain qualified talent.

Employees receive an annual base salary and are eligible to earn performance-based cash bonuses.

To create and maintain a successful work environment, we offer a comprehensive package of additional benefits that support the physical and mental health and wellness of all of our employees and their families.

Additionally, we grant equity awards in order to allow for directors, officers and senior-level employees to share in the performance of the Company.

We are committed to a safe workplace for our employees and have implemented health and safety management processes into our operations.

In response to the COVID-19 pandemic, we have implemented additional safety measures for the protection of our employees, including work-from-home measures for applicable employees and additional cleaning and protective measures.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business